Joseph Reid Gas Engine Co. v. Lewellyn
| Decision Date | 27 January 1942 |
| Docket Number | 6322.,No. 6321,6321 |
| Citation | 42 F. Supp. 895 |
| Parties | JOSEPH REID GAS ENGINE CO. v. LEWELLYN, Former Collector of Internal Revenue. SAME v. HEINER, Collector of Internal Revenue. |
| Court | U.S. District Court — Western District of Pennsylvania |
Sachs & Caplan, of Pittsburgh, Pa., for plaintiffs.
Chas. F. Uhl, U. S. Atty., and Elliott W. Finkel, Asst. U. S. Atty., both of Pittsburgh, Pa., S. O. Clark, Jr., Asst. Atty. Gen., and Andrew D. Sharpe and Clarence E. Dawson, Sp. Assts. to Atty. Gen. for the United States.
These two actions are for the recovery of taxes paid by plaintiff which are alleged to have been illegally assessed against it.
The defendant in each case has moved for summary judgment in his favor. These motions are accompanied by a supporting affidavit and opposed by an affidavit filed by plaintiff. These motions are based on the ground that the complaint in each case fails to state a cause of action on which relief can be granted, in that no sufficient claims for refund have been filed by the plaintiff with the Commissioner of Revenue for any year or amount involved in these suits within the applicable statutory period of limitations for filing claims for refund of taxes paid.
The plaintiff takes the position that these motions can be granted only if they are sustained by the undisputed facts appearing in the pleadings. That is not our understanding of the proceedings under Rule 56(c) of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, which provides as to summary judgments:
"The judgment sought shall be rendered forthwith if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that, except as to the amount of damages, there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."
We therefore conclude we may consider not only the pleadings, but also the supporting and opposing affidavits submitted in connection with the motions for summary judgment.
The applicable statutes and regulations are:
(1) Section 284(c) of the Revenue Act of 1926, c. 27, 44 Stat. 9 (26 U.S.C.A. Int. Rev.Acts, page 220).
(2) Section 1113(a) of the Revenue Act of 1926, 26 U.S.C.A. Int.Rev.Acts, page 324.
By these statutes, there are these prerequisites for the recovery of overpayment of taxes: (1) the filing of a claim for refund within four years from the time the tax was paid; and (2) The institution of suit within five years from the date of the payment of tax, unless such suit was begun within two years after the disallowance of the claim for refund.
Treasury Regulations, in Article 1304 of Regulation 69, provide that claims for refund by taxpayers shall be made on Form 843, and that "all facts relied upon in support of the claim shall be clearly set forth in detail under oath."
The suit at No. 6321 was filed July 3, 1930, and involves taxes paid for the years 1917, 1919, and the first two installments of tax for the year 1920.
The facts bearing on the question of whether or not this action is barred by the statutes of limitations, are as follows:
For the year 1917 the plaintiff filed its return on April 1, 1918, reporting a tax of $36,963 which was paid June 15, 1918. On February 28, 1923, plaintiff filed a general claim for refund alleging the Revenue Act and Regulations were not in accordance with the Sixteenth Amendment and were void. Plaintiff was notified in a letter dated July 3, 1923, that this claim would be rejected, and the claim was rejected on Schedule No. 1761 dated August 29, 1923. No facts were submitted in support of the original claim, and another claim for refund was not filed until March 14, 1928. The allegations in this claim were also general and no facts were submitted in support thereof. In a letter dated July 6, 1928, plaintiff was advised that the latter claim would be rejected for the reason that the claim was barred when filed under the provisions of Section 284 of the 1926 Act, and the claim was rejected on Schedule No. 12768 dated August 24, 1928.
For the year 1919 plaintiff filed a tentative return on March 15, 1920, reporting a tax of $52,000, and on March 17, 1920, paid the sum of $12,878. Plaintiff's final return was filed July 15, 1920, reporting a tax of $51,942.61. This tax was paid in instalments on June 16, September 15, and December 17, 1920. No claim for refund was filed until March 14, 1928, and in a letter dated July 6, 1928, plaintiff was advised that this claim was barred under the provisions of Section 284 of the 1926 Act at the time it was filed. The claim was rejected on Schedule No. 12768 dated August 24, 1928.
For the year 1920 plaintiff filed a return on March 15, 1921, reporting a tax of $67,054. On March 22, 1921, plaintiff paid the sum of $16,736.50, and the balance of the tax was paid in instalments on June 15, September 19, and December 16, 1921. Only the first two instalments of $16,736.50, each paid on March 22 and June 15, 1921 were paid to the defendant Lewellyn.
On June 14, 1922, plaintiff filed an amended return for this year; and in May, 1925, additional tax of $2,807 was assessed against the plaintiff and was paid by the plaintiff June 1, 1925. Plaintiff agreed to the assessment and collection of this additional tax. Prior to the assessment of the additional tax, at the time the amended return was filed on June 14, 1922, plaintiff filed a general claim for refund of the sum of $734.95. In a letter dated March 28, 1925, plaintiff was notified that this claim would be rejected, and the claim was rejected on Schedule No. 3655 dated June 2, 1925. On March 14, 1928, plaintiff filed another refund claim for $49,500 containing only general allegations without any facts to support the grounds of the claim; and in a letter dated July 6, 1928, plaintiff was advised the claim would be rejected because the allegations were too general and no facts were submitted to support them. The claim was rejected on Schedule No. 12768 dated August 24, 1928.
The suit at No. 6322 was also filed July 3, 1930, and involved taxes paid for the years 1918, 1920; 1922 to 1926 inclusive.
The facts bearing on the question of whether or not this action is barred by the statutes of limitation, are as follows:
For the year 1918 plaintiff filed a return on June 16, 1919, reporting no tax due. In a letter dated April 12, 1921, plaintiff was advised of tax due in the amount of $59,967.56 which was assessed on the June 1921 Assessment List and paid by the plaintiff on August 27, 1921, partly in cash and partly by credit. No refund claim was filed until March 14, 1928. In a letter dated July 6, 1928, plaintiff was advised this claim was barred by the statute of limitations under the provisions of Section 284 of the Revenue Act of 1926, and the claim was rejected on Schedule No. 12768 dated August 24, 1928.
For the year 1922 plaintiff filed its return on March 15, 1923, reporting a tax due of $18,361.04. This tax was paid in instalments on March 15, June 15, September 14, and December 15, 1923. On the Assessment List of October 1926, additional tax was assessed in the amount of $1,461.07, which was paid December 6, 1926. Plaintiff agreed to the assessment and collection of this additional tax. No refund claim was filed by the plaintiff until March 14, 1928, when a claim for $18,361.04 was filed containing merely general allegations without any facts in support thereof. In a letter dated May 17, 1928, plaintiff was notified that its claim for this year would be rejected under the authority of Article 1304 of Regulations 69, because insufficient information was submitted by the plaintiff. The claim was rejected on Schedule No. 12232, dated June 7, 1928.
The allegations in this claim were as follows:
That the amount included as gross sales is over-estimated in the sum of $500,000.
That the inventory at the beginning of the year is understated in the sum of $200,000 and that the inventory at the end of the year is overstated in the sum of $200,000.
That the cost of manufacturing is understated in the sum of $500,000.
That the deductions allowed for expenses are understated in the sum of $100,000.
That the depreciation deduction allowed is understated in the sum of $100,000, due to its not having been based upon the cost or the fair market value of the properties at March 1, 1913, due to the insufficiency of the depreciation rate employed.
That the statutory net loss for 1921 applied as a deduction for the year 1922 is understated in the sum of $200,000.
There are other errors in the determination of the taxpayer's net income which should be corrected and refund made of the taxes paid as a result thereof.
This claim is filed to prevent the running of the statute of limitations.
No facts were submitted in support of these allegations in accordance with the requirements of Section 1113(a) of the Revenue Act of 1926 and Article 1304 of Regulations 69.
For the year 1923 plaintiff filed a return on June 14, 1924, reporting a tax due of $39,901.17. This tax was paid in instalments on March 20, June 17, September 16, and December 16, 1924. Additional tax of $707.75 was assessed in October 1926, and paid in December, 1926. Plaintiff agreed to the assessment and collection of this additional tax. No refund claim was filed until March 14, 1928, when plaintiff filed a claim for $39,901.17. The allegations in this claim were identical with the allegations in the claim for 1922, except that plaintiff omitted the reference to a statutory net loss appearing in the 1922 claim. In a letter dated May 17, 1928, plaintiff was notified its claim would be rejected because the information was insufficient under the provisions of Article 1304 of Regulations 69; and the claim was rejected on Schedule No. 12232 dated June 6, 1928. This suit was filed July 3, 1930, more than two years after rejection of the claim and more than five years after payment of all taxes except the...
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