Franklin v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 9266.
| Decision Date | 13 July 1927 |
| Docket Number | Docket No. 9266. |
| Citation | 7 BTA 636 |
| Parties | WIRT FRANKLIN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Frank H. Bryan, Esq., for the petitioner.
A. G. Bouchard, Esq., for the respondent.
This case involves a deficiency in tax for the calendar year 1917, in the amount of $8,509.71. Such amount was assessed on September 28, 1923, and a claim for abatement of the same was filed. The claim for abatement was rejected by the Commissioner. The issues are (1) whether the Commissioner erred in disallowing as a deduction, depletion in the amount of $5,981.91, and (2) whether the collection of the alleged deficiency of $8,509.71 is barred by the statute of limitations. With respect to the first issue, it was stipulated by the respective counsel for the parties that the depletion allowance should be $6,608.97, instead of $6,204.44, as allowed, and that the net income as computed by the respondent should be reduced by the amount of $404.53.
FINDINGS OF FACT.
The taxpayer filed his tax return for the year 1917 on April 1, 1918, showing a tax liability of $80, and filed an amended return for said year on April 29, 1918, showing a tax liability of $19,035.15. On September 28, 1923, the Commissioner assessed an additional tax for 1917 against the taxpayer of $8,509.71. On October 14, 1923, the taxpayer filed with the collector a claim for abatement of such tax in the amount of $8,509.71, covering the additional tax so assessed. On September 22, 1925, the Commissioner mailed to the petitioner a letter stating that the claim for abatement in said amount of $8,509.71 had been rejected, and that the rejection would officially appear on the next schedule to be approved by the Commissioner. The taxpayer filed a bond to stay the collection of the alleged deficiency with the collector of internal revenue at Oklahoma City during December, 1925.
On December 17, 1926, the collector of internal revenue at Oklahoma City filed, in the office of the County Clerk of Oklahoma County, a lien against the property of the taxpayer in accordance with section 3186 of the Revised Statutes of the United States. No suit has ever been filed in the United States District Court for the Eastern District of the State of Oklahoma by the United States or by the collector of internal revenue for the collection district of Oklahoma against the taxpayer for the collection of any income tax for the calendar year 1917. The taxpayer resides in the City of Ardmore, Carter County, Okla., which is within the jurisdiction of said district court.
In accordance with the provisions of section 250(d) of the Revenue Act of 1921, the taxpayer and the Commissioner signed the following consent:
In pursuance of the provisions of subdivision (d) of section 250 of the Revenue Act of 1921 Wirt Franklin of Ardmore, Oklahoma, and the Commissioner of Internal Revenue, hereby consent to the determination, assessment, and collection of the amount of income, excess profits, or war profits taxes due under any return made by or on behalf of the said individual for the year 1917, under the Revenue Act of 1921 or under prior income, excess profits, or war profits tax acts or under section 38 of the Act entitled "An Act to provide Revenue, equalize duties, and encourage the industries of the United States, and for other purposes," approved August 5, 1909, irrespective of any period of limitations.
WIRT FRANKLIN, Taxpayer. D. H. BLAIR, Commissioner. FEB. 19-1923.
The Commissioner issued publicly on April 11, 1923, Mimeograph 3085, which reads as follows:
TREASURY DEPARTMENT OFFICE OF THE COMMISSIONER OF INTERNAL REVENUE Washington, D. C., April 11, 1923.
To Collectors of internal revenue, internal revenue agents in charge, and others concerned:
The form of waiver now in use extends the time in which assessments of 1917 income and excess-profits taxes may be made to one year from the date of signing by the taxpayer. Inasmuch as there are many waivers on file signed by the taxpayers containing no limitation as to the time in which assessments for 1917 may be made, all such unlimited waivers will be held to expire April 1, 1924.
D. H. BLAIR, Commissioner.
The sole question presented is whether collection of the deficiency is barred by the statute of limitations. The return of the petitioner was filed on April 1, 1918, and, except for the extension of time, the statute would have run on assessment and collection of the tax on April 1, 1923. Prior to that date the parties executed the document set forth in the findings, whereby the petitioner consented to the determination, assessment, and collection of taxes due for 1917 irrespective of any period of limitation.
The Revenue Act of 1921, under which the consent was executed, provided that the amount of any such taxes should "be determined and assessed within five years after the return was filed, unless both the Commissioner and taxpayer consent in writing to a later determination, assessment, and collection of the tax." It was further provided that no suit or proceeding for the collection of any such taxes should be begun after the expiration of five years after the date when the return was filed. The consent here under consideration provided no definite period within which the determination, assessment and collection were to be made. On April 11, 1923, the Commissioner publicly issued a formal...
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