Mills v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 12038.
| Decision Date | 17 October 1928 |
| Docket Number | Docket No. 12038. |
| Parties | PEERLESS WOOLEN MILLS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
J. R. Sherrod, Esq., and F. O. Graves, Esq., for the petitioner.
A. C. Baird, Esq., and A. H. Willey, Esq., for the respondent.
This is a proceeding for the redetermination of a deficiency in income and profits tax for the fiscal year ended June 30, 1919, claimed by the petitioner to be in the amount of $76,974.26 and by the Commissioner to be in the amount of $18,658.98. At the hearing of this proceeding the petitioner waived its claim for special assessment and relied solely upon the point that there is no deficiency by reason of the fact that the statute of limitations has operated both to bar the collection of the portion of the unpaid assessment ($58,315.28) made upon the original return on October 30, 1919, and the assessment and collection of the deficiency determined in the amount of $18,658.98.
FINDINGS OF FACT.
The petitioner is a Georgia corporation with its principal office at Rossville. On September 15, 1919, it filed with the collector at Atlanta its income and profits-tax return, Form 1120, for the fiscal year ended June 30, 1919, showing a net income of $226,896.51 and a total tax liability of $116,630.58. There was attached to and filed with the return the following letter:
SEPTEMBER 9TH, 1919. Honorable A. O. BLALOCK Collector Internal Revenue,
Atlanta, Ga.
DEAR SIR: Enclosed herewith we hand you income and excess profits tax report for the year ending June 30th, 1919, together with check in the sum of $29,157.65, covering one-fourth of the tax shown to be due on the report. In this connection, however, we desire to call your attention to the fact that this report, with its various schedules, together with our report for the year 1917 and for the six month period ending June 30th, 1918, will be submitted to the Treasury Department for consideration under Section 328 of the Law. We are now carefully working out the information called for by the Department in connection with such consideration.
We also enclose completed capital stock tax report for the period ending June 30th, 1920, together with check in the sum of $461.00, covering this tax.
Very truly yours PEERLESS WOOLEN MILLS By J. L. HUTCHESON, President.
On October 30, 1919, the Commissioner assessed against the petitioner the tax shown to be due by the return, namely, $116,630.58. At the time of the filing of the return the petitioner paid on account of its tax liability $29,157.65 and on or about February 20, 1920, the additional sum of $29,157.65, leaving the amount of $58,315.28 unpaid on account of said assessment.
Sometime subsequent to the filing of the return the petitioner addressed a letter to the Commissioner requesting that its tax liability for the fiscal year ended June 30, 1919, be computed in accordance with the provisions of section 328 of the Revenue Act of 1918 and that it be given any relief to which it might be entitled. It also at some time not shown by the record filed a claim for the abatement of $58,315.28 of the tax assessed on October 30, 1919. The application for special assessment was given consideration by the Commissioner and an audit was made of its books of account from which it was determined that the correct net income of the petitioner for the fiscal year ended June 30, 1919, was $276,292.60 and that the tax determined to be due after giving such relief as the Commissioner found the petitioner entitled to under section 328 was $135,289.56, or $18,658.98 in excess of the amount of tax shown to be due by the return. The petitioner was advised of this determination by the Commissioner on August 3, 1925. On December 18, 1925, the Commissioner mailed to the petitioner the notice of deficiency required by section 274 of the Revenue Act of 1924. The letter reads as follows:
An audit of your corporation income and profits tax returns for the fiscal period January 1, 1918, to June 30, 1918, and the fiscal years ended June 30, 1919 and June 30, 1920, has resulted in the determination of overassessments of $8,243.31 for the period ended June 30, 1918 and the fiscal year ended June 30, 1920, and of a deficiency in tax of $18,658.98 for the year ended June 30, 1919, as shown in the attached statement.
In accordance with the provisions of Section 274 of the Revenue Act of 1924, you are allowed 60 days from the date of mailing of this letter within which to file an appeal to the United States Board of Tax Appeals contesting in whole or in part the correctness of this determination.
Where a taxpayer has been given an opportunity to appeal to the United States Board of Tax Appeals and has not done so within the 60 days prescribed and an assessment has been made, or where a taxpayer has appealed and an assessment in accordance with the final decision on such appeal has been made, no claim in abatement in respect of any part of the deficiency will be entertained.
If you acquiesce in this determination and do not desire to file an appeal, you are requested to sign the inclosed agreement consenting to the assessment of the deficiency and forward it to the Commissioner of Internal Revenue, Washington, D. C., for the attention of IT: E: SM: 60D: GVG-A-4780-B-2185-C-22255. In the event that you acquiesce in a part of the determination, the agreement should be executed with respect to the items agreed to.
STATEMENT
IT: E: SM: 60D
GVG-A-4780
B-2185
C-22255
In re: Peerless Woolen Mills, Rossville, Georgia
------------------------------------------------------------------------------------------
Year | Deficiency | Overassessment
| in tax |
-------------------------------------------------------------|------------|---------------
Period January 1, 1918, to June 30, 1918 ___________________ | __________ | $4,570.93
Fiscal year ended: | |
June 30, 1919 __________________________________________ | $18,658.98 | ______________
June 30, 1920 __________________________________________ | __________ | 3,672.38
|------------|---------------
Total ________________________________________________ | 18,658.98 | 8,243.31
------------------------------------------------------------------------------------------
After careful consideration and review of your protests dated April 7, 1925, August 27, 1925 and October 20, 1925, and all the evidence presented in support of your contentions at the conference held with your representatives on September 16, 1925, you are advised that the Bureau holds that comparison has been properly made with representative corporations as nearly as may be similarly circumstanced as contemplated in Section 328 of the Revenue Act of 1918. Accordingly, the overassessments and deficiency in tax indicated above, of which you are advised in Bureau letters dated March 12, 1925 and August 3, 1925, are sustained.
The right to appeal to the United States Board of Tax Appeals, as indicated on Page One of the letter, refers only to any deficiency in tax indicated herein inasmuch as there is no provision in the Revenue Act of 1924 granting the right of appeal against the determination of any overassessment found upon an audit of your returns.
A copy of this letter has been furnished your authorized representative, Mr. Albert W. Taber, Chattanooga, Tennessee.
In this letter the Commissioner makes no reference to the abatement claim in the amount of $58,315.28, and the record discloses no other action by the Commissioner relative thereto.
On November 10, 1924, the petitioner executed the following "Income and Profits Tax Waiver":
In pursuance of the provisions of existing Internal Revenue Laws. Peerless Woolen Mills, a taxpayer, of Rossville, Georgia, and the Commissioner of Internal Revenue, hereby consent to extend the period prescribed by law for a 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 said taxpayer for the year ended June 30, 1919 under the Revenue Act of 1924, 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. This waiver is in effect from the date it is signed by the taxpayer and will remain in effect for a period of one year after the expiration of the statutory period of limitation within which assessments of taxes may be made for the year or years mentioned, or the statutory period of limitation as extended by Section 277 (b) of the Revenue Act of 1924, or by any waivers already on file with the Bureau.
This waiver was executed by the petitioner by J. L. Hutcheson, president, and H. M. McCulloch, secretary, and bore petitioner's corporate seal, and was accepted by the Commissioner. On February 12, 1925, the petitioner executed a second "Income and Profits Tax Waiver" for Taxable Years Ended Prior to March 1, 1921." This consent to a later determination of tax was for the year "1919" and extended the period for the making of an assessment until December 31, 1925. This consent was executed by the petitioner by H. M. McCulloch, vice president, bore the corporate seal, and was accepted by the Commissioner. On September 23, 1925, the petitioner executed a further "Income and Profits Tax Waiver for Taxable Years Ended Prior to January 1, 1922" for the year "ended June 30, 1919" and extended the period for the making of an assessment until December 31, 1926. This was executed by the petitioner by J. L. Hutcheson,...
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