Mills v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 11926.
| Decision Date | 14 January 1928 |
| Docket Number | Docket No. 11926. |
| Citation | 9 BTA 1281 |
| Parties | GREYLOCK MILLS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Sanford Robinson, Esq., and Truman Henson, Esq., for the petitioner.
Henry Ravenel, Esq., for the respondent.
The taxes in controversy are income and excess-profits taxes for the calendar year 1917, period January 1, 1918, to June 30, 1918, and fiscal year ended June 30, 1919, and the deficiency is in the total sum of $111,287.91, as follows:
Calendar year 1917 ________________________ $42,476.36
Period January 1 to June 30, 1918 _________ 14,568.67
Fiscal year ended June 30, 1919 ___________ 54,242.88
The total amount alleged to have been overpaid is $47,090.60, with interest from October 5, 1925. The total principal amount of taxes in controversy is $158,378.51.
A motion to sever the issues and try the issue of statute of limitations was granted.
FINDINGS OF FACT.
The petitioner is a corporation organized and existing under and by virtue of the laws of the Commonwealth of Massachusetts, with principal office at North Adams.
The notice of deficiency was mailed to the petitioner on December 18, 1925.
The petitioner filed its return for the calendar year 1917 on April 5, 1918; its return for the period ended June 30, 1918, on June 15, 1919, and its return for the fiscal year ended June 30, 1919, on September 19, 1919.
On October 5, 1925, the collector of internal revenue at Boston, Mass., collected from the petitioner the sum of $18,791.62, being taxes asserted by the respondent to be due for the calendar year 1917 in addition to those shown on the return in the sum of $13,027.12, and interest thereon in the sum of $5,764.50. This tax was assessed on January 3, 1920.
On October 5, 1925, the collector also collected from the petitioner the sum of $28,298.98, being the balance of the tax shown to be due on its return for the fiscal year ended June 30, 1919, in the sum of $21,994.02, together with interest thereon in the sum of $6,304.96.
The Revenue Act of 1924 was enacted on June 2, 1924.
On or about January 12, 1923, the petitioner received Treasury Department letter dated January 11, 1923, which is the ordinary 30-day letter, covering an additional tax liability for the years 1917, 1918, and 1919 in the amount of $158,426.26.
On or about January 20, 1923, the petitioner received Treasury Department letter dated January 19, 1923, in which it is requested that petitioner execute a waiver form for the year 1917.
On or about January 23, 1923, the petitioner filed with the respondent its appeal from the Treasury Department letter dated January 11, 1923, a hearing being requested. On or about January 23, 1923, the petitioner filed with the respondent an instrument in writing designated "Income and Profits Tax Waiver," covering the year 1917. This instrument is as follows:
January 22-1923 (Date)
In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Greylock Mills of No Adams Mass., and the Commissioner of Internal Revenue, hereby consent to 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 the said corporation for the years 1917 under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts, 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.
GREYLOCK MILLS Taxpayer, SEAL. By C. T. PLUNKETT. D. H. BLAIR. Commissioner. A.
In addition to said instrument the petitioner filed with the respondent on February 6, 1923, another instrument in writing designated "Income and Profits Tax Waiver," covering the years 1917-1920, which is as follows:
____________________ (Date)
In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Greylock Mills, of No. Adams, Mass., and the Commissioner of Internal Revenue, hereby consent to 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 the said corporation for the years 1917-1920 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.
GREYLOCK MILLS Taxpayer, By C. T. PLUNKETT D. H. BLAIR Commissioner. A.
The waiver covering the years 1917-1920 bears notation in red pencil on the upper left-hand corner thereof as follows: "JNR 3/16/23"; and such notation was not on the waiver when it was filed by the petitioner.
The petitioner has not filed any other "Income and Profits Tax Waivers" or consents of any nature to a later determination, assessment or collection of any of the taxes in controversy.
On January 30, 1923, by letter mailed that day, a hearing was granted by the respondent to the petitioner covering the years 1917 to 1920, in accordance with the petitioner's request, this hearing being set for February 6, 1923.
On February 6, 1923, a hearing was held in the Income Tax Unit, petitioner being represented by counsel.
On April 11, 1923, the respondent issued an official ruling known as "Mim. 3085," and officially published same in Internal Revenue Bulletin, vol. II, No. 4, p. 29, dated April, 1923, and thereafter officially published same in Internal Revenue Bulletin, Cumulative Bulletin II-1, January-June, 1923, p. 174, in the following words:
Article 1012: Assessment of tax. II-4-822 Mim. 3085 TREASURY DEPARTMENT OFFICE OF COMMISSIONER OF INTERNAL REVENUE Washington, D. C., April 11, 1923.
Unlimited waivers for 1917 income taxes held to expire April 1, 1924.
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 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.
On August 27, 1925, a 30-day letter was mailed to the petitioner by the respondent, asserting a deficiency in tax amounting to $111,287.91 for the years 1917, 1918, and 1919.
On or about September 21, 1925, a protest was filed by the petitioner with the respondent to such notice.
On October 9, 1925, a letter was mailed to the petitioner by respondent granting a conference for October 19, 1925, in accordance with petitioner's request of September 21, 1925. On October 19, 1925, a conference was held at which the petitioner was represented by counsel.
On or about November 24, 1925, there was mailed to the petitioner by the respondent a letter in which it was stated that action would be withheld for a period of ten days in order for petitioner to advise whether it acquiesced in adjustments set forth in letter dated August 27, 1925.
On or about December 1, 1925, in answer to the letter of November 24, 1925, the petitioner's then counsel mailed to respondent a letter in which it was protested that the revision of an inventory led to an erroneous statement of taxable income.
On March 16, 1926, the petitioner filed with the collector of internal revenue at Boston, Mass., a claim for refund of taxes paid for the year 1917, of the rejection of which the petitioner was notified on or about September 30, 1926.
On or about September 17, 1919, the petitioner filed with the collector of internal revenue at Boston, a claim for credit of taxes paid for 1918, of the rejection of which petitioner was notified on or about August 31, 1926.
The petitioner never received notice from the respondent that the waivers had been accepted. The first time the petitioner knew that the respondent's name appeared on the waivers was on October 19, 1925, when the waivers were seen at a conference at the Income Tax Unit.
The petitioner received no communications from the respondent in regard to the taxes for the years 1917, 1918, and 1919, between February 23, 1923, and August 27, 1925, nor did the petitioner communicate with the respondent in this regard during such period.
The petitioner did not serve notice that at any time in the future if the tax were not assessed the petitioner would consider the waivers invalid, but at the conference at the Income Tax Unit on October 19, 1925, the petitioner informed the conferee that in the opinion of the petitioner the waivers were already invalid.
The assessment list for the taxes for the fiscal year ended June 30, 1919, was signed in behalf of the respondent on November 26, 1919.
Sidney Alexander, while head of the Special Audit Division of the Bureau of Internal Revenue, signed the two waivers on behalf of the respondent, sometime between December, 1919, and September, 1923, under specific authority of the respondent.
In the early part of March, 1923, the petitioner brought mandamus proceedings to compel the respondent to accept calendar year returns, but the suit was resolved in favor of the respondent on March 3, 1925.
In this case the question is presented as to whether the statute of limitations has run against the proposed deficiencies for the year 1917, the six-month period ended June 30, 1918, and the fiscal year ended June 30, 1919, and had run against taxes which were collected on October 5, 1925...
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