Maas Waldstein Co v. United States, 263

• Decision Date: 25 May 1931
• Docket Number: No. 263,263
• Citation: 51 S.Ct. 606,75 L.Ed. 1285,283 U.S. 583
• Parties: MAAS & WALDSTEIN CO. v. UNITED STATES
• Court: U.S. Supreme Court

283 U.S. 583

51 S.Ct. 606

75 L.Ed. 1285

MAAS & WALDSTEIN CO.

v UNITED STATES.

No. 263.

Submitted March 12, 1931.

Decided May 25, 1931.

Messrs. George E. Holmes, of New York City, W. A. Sutherland, of Atlanta, Ga., and Donald Havens, of New York City, for petitioner.

Messrs. Thos. D. Thacher, Sol. Gen., of Washington, D. C., Chas. B. Rugg, Asst. Atty. Gen., and Claude R. Branch, of Providence, R. I., and Charles R. Pollard, of Washington, D. C., for the United States.

Mr. Justice McREYNOLDS delivered the opinion of the Court.

The petitioner seeks to recover interest on an overpayment made June 20, 1918, on account of income and excess profits taxes assessed for the year 1917, which was refunded during 1922. The Court of Claims denied relief and we are asked to reverse this action.

The Revenue Act of 1917, 40 State. 300, 303, 304, 307, laid an income tax; also a tax upon excess profits equal to designated percentages of the net income, after making deductions therefrom as stated in section 203. The amount of such deductions depended upon invested capital, prewar operations, etc.

The provisions of that Act there specially applicable follow—

'Sec. 205. (a) That if the Secretary of the Treasury, upon complaint finds either (1) that during the prewar period a domestic corporation or partnership, or a citizen or resident of the United States, had no net income from the trade or business, or (2) that during the prewar period the percentage, which the net income was of the invested capital, was low as compared with the percentage, which the net income during such period of representative corporations, partnerships, and individuals, engaged in a like or similar trade or business, was of their invested capital, then the deduction shall be. * * *'

'Sec. 210. That if the Secretary of the Treasury is unable in any case satisfactorily to determine the invested capital, the amount of the deduction shall be the sum of (1) an amount equal to the same propertion of the net income of the trade or business received during the taxable year as the proportion which the average deduction (determined in the same manner as provided in section two hundred and three, without including the $3,000 or $6,000 therein referred to) for the same calendar year of representative corporations, partnerships, and individuals, engaged in a like or similar trade or business, bears to the total net income of the trade or business received by such corporations, partnerships, and individuals, plus. * * *'

Article 52, Treasury Department Regulations 41, promulgated under the Revenue Act of 1917, states: 'Section 210 provides for exceptional cases in which the invested capital can not be satisfactorily determined. In such cases the taxpayer may submit to the Commissioner of Internal Revenue evidence in support of a claim for assessment under the provisions of section 210.'

Revenue Act of 1921, c. 136, 42 Stat. 227, 316:

'Sec. 1324. (a). That upon the allowance of a claim for the refund of or redi t for internal revenue taxes paid, interest shall be allowed and paid upon the total amount of such refund or credit at the rate of one-half of 1 per centum per month to the date of such allowance, as follows: (1) if such amount was paid under a specific protest setting forth in detail the basis of and reasons for such protest, from the time when such tax was paid. * * *'

The petitioner, a domestic corporation, on March 28, 1918, filed its income and excess profits tax return for the year 1917. From this it appeared that, reckoned according to the rule commonly applicable, the tax amounted to $1,508,400.25. With the return petitioner sent a written communication, addressed to the Commissioner, copied in the margin.¹ This expressed the opinion 'that our tax is proportionately larger than that of other representative concerns in the same line of business' and 'that this disproportion arises from causes of the nature of those specified in Article 52, of Regulations No. 41.' And finally: 'Upon the above statement, which we are prepared to support and amplify if required, we request assessment in the manner provided for in Article 52, referring also to Articles 18 and 24, Regulations No. 41.'

On June 20, 1918, payment was made of the full amount of the tax reckoned upon the March 28 return. This was accompanied by a letter stating 'we filed a request dated March 28th for assessment in the manner provided for in Article 52, referring also to Articles 18 and 24, Regulations 41. Understanding that these questions will be passed upon at a later date, we shall be pleased to be advised that a hearing will be granted to us.' At this time no provision of law permitted recovery of interest upon refunded overpayments.

December 30, 1921, petitioner filed a formal claim for the refund of excess payment of income and excess-profits tax for 1917.

The petitioner now claims that the contents of its letter of March 28, 1918, reiterated in the later one, were sufficient to meet the requirements of section 1324(a), Act of 1921, that what was there written amounted to 'a specific protest setting forth in detail the basis of and reasons for such protest,' within the meaning of the statute. The Court of Claims (37 F.(2d) 196) held otherwise; and while its opinion cannot be wholly approved, the judgment is correct and must be affirmed.

The general purpose of the petitioner's communications to the commissioner was to induce the latter to set on foot an investigation of the company's affairs to the end that, after ascertaining the circumstances and in the exercise of a proper...