Huntley v. Southern Oregon Sales, 8501.

• Decision Date: 13 March 1939
• Docket Number: No. 8501.,8501.
• Citation: 102 F.2d 538
• Parties: HUNTLEY v. SOUTHERN OREGON SALES, Inc.
• Court: U.S. Court of Appeals — Ninth Circuit

102 F.2d 538 (1939)

HUNTLEY v. SOUTHERN OREGON SALES, Inc.^*

No. 8501.

Circuit Court of Appeals, Ninth Circuit.

March 13, 1939.

James W. Morris, Asst. Atty. Gen., Sewall Key, Norman D. Keller, S. Dee Hanson, Arnold Raum, and Harry Marselli, Sp. Assts. to Atty. Gen., and Carl C. Donaugh, U. S. Atty., and J. Mason Dillard, Asst. U. S. Atty., both of Portland, Or., for appellant.

A. E. Reames, of Medford, Or., for appellee.

Before GARRECHT, MATHEWS, and HANEY, Circuit Judges.

HANEY, Circuit Judge.

The question presented is whether a claim for refund of an amount paid by appellee to cover an illegal assessment of an income tax must be filed within two years after the amount was paid, as provided in § 322(b) (1) of the Revenue Act of 1928, 26 U.S.C.A. § 322 note, or whether it may be filed within four years after the amount was paid, as provided in Rev. St. § 3228, as amended by § 1112 of the Revenue Act of 1926, 26 U.S.C.A. § 1433. The court below decided that the latter statute was applicable.

During all times material herein, appellee was a cooperative association exempt from taxation by § 103(12) of the Revenue Act of 1928, 26 U.S.C.A. § 103 note. For the taxable year ending May 31, 1928, appellant assessed appellee $2,079.21, for a tax on its income. Appellee paid the tax, making the last payment thereon on May 4, 1929. Appellant also assessed appellee $6,187.33 for a tax on its income for the taxable year ending May 31, 1929. Appellee paid that tax, making the last payment thereon, on May 3, 1930.

On January 23, 1931, appellee made application to appellant for a redetermination that it was exempt from taxation, which application was denied on March 30, 1931, but such ruling was revoked on April 21, 1932, when it was determined that appellee was entitled to the exemption. On May 28, 1932 appellee filed a claim for repayment of the first year's taxes paid by it, and also filed a claim for the second year's taxes paid by it.

Thereafter, the claims were denied on the ground that the claims had not been filed within two years after the last installments of the taxes, and were therefore barred under the provisions of § 322(b) (1) of the Revenue Act of 1928. Appellee protested the rulings, but the same were adhered to then, and again after a subsequent protest by appellee. Thereafter, appellee filed this action to recover the taxes paid for both years.

From the judgment rendered against him, appellant brought this appeal. Appellee subsequently moved to strike the bill of exceptions and to dismiss the appeal. On October 29, 1937, we denied the first motion and granted the second. On petition of appellant we granted a rehearing on the ground that the requirement that a claim be filed within the time specified in the statute was jurisdictional, and that unless that requirement was met by the taxpayer, the court must dismiss for want of jurisdiction. See United States v. Chicago Golf Club, 7 Cir., 84 F.2d 914, 917, 106 A.L.R. 209.

Solution of the question is found by an analysis of the previous statutes enacted.

Rev.St. § 3226, 26 U.S.C.A. §§ 1672-1673 note, provided in part: "No suit shall be maintained in any court for the recovery of any internal tax alleged to have been erroneously or illegally assessed or collected * * * or of any sum alleged to have been excessive or in any manner wrongfully collected, until appeal shall have been duly made to the Commissioner of the¹ Internal Revenue, according to the provisions of law in that regard, and the regulations of the Secretary of the Treasury established in pursuance thereof, and a decision of the Commissioner has been had therein: Provided, That if such decision is delayed more than six months from the date of such appeal, then the said suit may be brought, without first having a decision of the Commissioner at any time within the period limited in the next section."

Rev.St. § 3227 provided in part: "No suit or proceeding for the recovery of any internal tax alleged to have been erroneously or illegally assessed or collected * * * or of any sum alleged to have been excessive or in any manner wrongfully collected, shall be maintained in any court, unless the same is brought within two years next after the cause of action accrued: Provided * * * that where any such claim was pending before the Commissioner, as provided in the preceding section, an action thereon may be brought within one year after such decision and not after. * * *"

Rev.St. § 3228 provided in part: "All claims for the refunding of any internal tax alleged to have been erroneously or illegally assessed or collected * * * or of any sum alleged to have been excessive or in any manner wrongfully collected, must be presented to the Commissioner of Internal Revenue within two years next after the cause of action accrued * * *."

The effect of these statutes, briefly summarized, was: a person could not maintain an action to recover either an "overpayment" of a tax or other amount, unless (1) he made a claim for refund (which constituted an appeal) (§ 3226) within two years after payment of the tax or other amount (§ 3228); (2) a decision was made by the Commissioner with respect to the claim for refund, except if such decision was delayed more than six months (§ 3226); and (3) such action was brought within two years after payment of the tax or other amount, except where the decision of the Commissioner with respect to the claim for refund was delayed for more than six months, in which case the action could be brought within one year after such decision was made. Stated in other words, a person could not sue to recover either an "overpayment" of a tax or other amount, unless he made a claim for refund (§ 3226) within two years after payment of such tax or other amount (§ 3228); if decision on the claim was made by the Commissioner within six months after presentment of the claim, then the person must sue, after such decision, and within two years from the date of payment; but if such decision was delayed for more than six months after presentment, then such person could sue either after expiration of such six months' period and within two years from the date of payment, or within one year after decision was made.

The law remained unchanged until enactment of the Revenue Act of 1916 (Act of Sept. 8, 1916, Ch. 463, 39 Stat. 756). By § 14(a) of that act, which is found under "Title I. — Income Tax", "Part II. — On Corporations", subdivision entitled "Assessment and Administration", it was provided in part: "* * * upon the examination of any return of income made pursuant to this title, the Act of August fifth, nineteen hundred and nine * * * and the Act of October third, nineteen hundred and thirteen * * * if it shall appear that amounts of tax have been paid in excess of those properly due, the taxpayer shall be permitted to present a claim for refund thereof notwithstanding the provisions of section thirty-two hundred and twenty-eight of the Revised Statutes."

Regarding this provision the Conference Committee report states: "This amendment provides that if an amount in excess of the amount properly due under an income-tax return * * * has been paid into the Treasury, a refund may be had of the excess amount paid, notwithstanding the provision of section 3228 of the Revised Statutes; and the House recedes * * *". Seidman's Legislative History of Federal Income Tax Laws 982. Regulations 33 (Revised) promulgated under the Revenue Act of 1916 contain nothing which throws any light on the question, except Art. 271 which provided: "In no case should the collector refuse to forward a claim to the commissioner for the reason that it was not presented to him within two years after payment of tax."

The effect of § 14(a) of the 1916 act was to remove any limitation of time within which claims for refund might be filed, where "amounts of tax have been paid in excess of those properly due". That the provision in the 1916 act was not applicable to those exempt from tax is suggested by the fact that it refers to an "examination of any return of income". Returns were required only from the corporations or associations which were "subject to the tax herein imposed" (§ 13(b) and exempt corporations were not required to file a return. Reg. 33 (Revised), Art. 203.

The Revenue Act of 1918 (Act of Feb. 24, 1919, 40 Stat. 1057) in "Title II. — Income Tax" "Part IV. — Administrative Provisions" under subheading "Refunds" provided: "Sec. 252. That if, upon examination of any return of income made pursuant to this Act, the Act of August 5, 1909 * * * the Act of October 3, 1913 * * * the Revenue Act of 1916, as amended, or the Revenue Act of 1917, it appears that an amount of income * * * tax has been paid in excess of that properly due, then, notwithstanding the provisions of section 3228 of the Revised Statutes, the amount of the excess shall be credited against any income * * * taxes, or installment thereof, then due from the taxpayer under any other return, and any balance of such excess shall be immediately refunded to the taxpayer: Provided, That no such credit or refund shall be allowed or made after five years from the date when the return was due, unless before the expiration of such five years a claim therefor is filed by the taxpayer."

At the same time, § 14(a) of the 1916 act was repealed. § 1400(a).

The legislative history of the foregoing provision discloses nothing except that such provision placed a limitation of five years within which "claims for credits or refund of income" might be filed. Seidman supra, 938. Regulations 45, promulgated under the 1918 act, provided in Art. 1037: "No suit shall be maintained in any court for the recovery of any tax alleged to have been erroneously or illegally assessed or collected * * * until an appeal by a claim for credit or refund shall have been duly made to the Commissioner and a decision of the Commissioner has been had therein, unless such decision is...