Parsons v. Anglim

• Decision Date: 21 June 1944
• Docket Number: No. 10401.,10401.
• Citation: 143 F.2d 534
• Parties: PARSONS v. ANGLIM, Collector of Internal Revenue.
• Court: U.S. Court of Appeals — Ninth Circuit

143 F.2d 534 (1944)

PARSONS v. ANGLIM, Collector of Internal Revenue.

No. 10401.

Circuit Court of Appeals, Ninth Circuit.

June 21, 1944.

Louis S. Beedy, Marie M. Nelson, and Thomas, Beedy & Paramore, all of San Francisco, Cal., for appellant.

Samuel O. Clark, Jr., Asst. Atty. Gen., Sewall Key, Helen R. Carloss, Edward First, and Valentine Brookes, Sp. Assts. to Atty. Gen., and Frank J. Hennessy, U. S. Atty., and Esther B. Phillips, Asst. U. S. Atty., both of San Francisco, Cal., for appellee.

Before WILBUR, DENMAN, and STEPHENS, Circuit Judges.

DENMAN, Circuit Judge.

This is an appeal from a decision of the district court denying a refund to appellant of $8,093.82, income taxes admittedly due from her deceased husband for the tax years 1918, 1919, 1920, 1926 and 1927. The facts are not disputed.

Appellant had tendered to the Collector of Internal Revenue checks for amounts due for the respective years, with a protest setting forth the facts of her acquisition of her husband's property as a joint tenant with right of survivorship, and the cases supporting her contention that she was not legally obligated to pay his tax as a transferee of her husband's property. At the same time she filed claims for refunds. The Collector accepted the tendered checks and the Commissioner refused the refunds. He disagreed with her contention, holding that appellant was liable as a transferee of all the husband's property by a transfer to her in joint tenancy, with right of survivorship, made after the husband's tax liability had arisen.

Appellant sued the Collector under the provisions of 26 U.S.C.A. Int.Rev. Code, § 3772(a) (1), (b) which authorizes the recovery of "any sum * * * in any manner wrongfully collected" "whether or not such * * * sum has been paid under protest or duress." That a person situated as appellant may be a taxpayer has been established, United States v. Updike, 281 U.S. 489, 50 S.Ct. 367, 74 L.Ed. 984; Karno-Smith Co. v. Maloney, 3 Cir., 112 F.2d 690; White v. Hopkins, 5 Cir., 51 F.2d 1595, and it would follow that she is entitled to all the remedial provisions within the taxing statutes.

On the trial the Collector abandoned the position of the Commissioner and admitted that appellant was not liable as transferee. We are thus compelled to assume in her favor that there can be no question of tax evasion or of fraud in her acquisition of the joint tenancy nor in the insolvency of the husband when he made the transfer, though later, when he died, he left no estate. The trial proceeded below on the Collector's contention that appellant paid the tax voluntarily for her husband. The district court found that the payment had been made with her protest, but nevertheless held

"(1) That the plaintiff was not a transferee within the meaning of Section 311 of the Revenue Act of 1928, 26 U.S.C.A. Int.Rev.Acts, page 434, or other similar statute.

"(2) That the plaintiff paid the taxes referred to voluntarily, and without demand, threat or coercion.

"(3) That the plaintiff is not entitled to recover her voluntary payment of taxes actually due to the United States and paid to the defendant."

On the trial it was agreed that the husband had not returned to the Commissioner his income for the years in question because he was then residing in and acquiring the income in the Philippine Islands and believed his only income tax obligation was to that government. Appellant testified that she came to California in 1930 and sometime thereafter heard that the federal tax agents were examining the books of residents of the Philippines for their income tax liability to the United States. Appellant said she did nothing about the taxes until 1938, when a business adviser pressed upon her the activities of the revenue agents in the Islands and "that sooner or later it would be demanded that I pay the taxes, her husband's and if I paid them before a certain date, which has been mentioned — I don't remember now — I would save considerable."

Appellant further testified to the acquisition of the joint tenancy in her husband's property and of the absence of any assets in his estate to meet his tax liability. Her realistic prescience that the Commissioner would treat her as a transferee who owned the tax, is shown by her testimony that "Well, I thought that I would eventually have to pay it, and the sooner I did it the better; that is the way I have always felt, if there is anything I have to do I like to get it over with."

Although not entitled by the taxing law to make a return for her deceased husband, appellant prepared forms of returns correctly showing his tax for each of the years in question. It was with these documents that she filed her affidavit of protest of nonliability, tendered her checks and filed her claims for refund.

Although appellant had rightly based her payment on the theory that the Commissioner would disagree with her protest and claim the tax as due from her as transferee, and although the Commissioner denied her the refunds on the ground that she was liable as such transferee, the Collector claims that because appellant was not acting under the duress of a demand on her by the Commissioner she must be deemed to have paid the tax as a volunteer gift on behalf of her deceased husband. To us it is inconceivable that one intending a donation would have acted as has the appellant in this case.

The legal effect of this decision is that a person who reasonably anticipates that the Commissioner will wrongfully demand a tax from him as a transferee, must wait until the Commissioner makes his demand, during which time interest and, quite likely, penalties will accrue in the government's favor if the Collector's contention be the law. The Commissioner might wait for twenty years, yet any attempt to stop interest and penalties by...