Russell v. United States, 58

CourtUnited States Supreme Court
Citation73 L.Ed. 255,49 S.Ct. 121,278 U.S. 181
Docket NumberNo. 58,58
PartiesRUSSELL et al. v. UNITED STATES
Decision Date02 January 1929

Messrs. Douglas Arant and Wm. S. Pritchard, both of Birmingham, Ala., for petitioners.

The Attorney General and Mr. E. G. Davis, of Washington, D. C., for the United States.

Mr. Justice McREYNOLDS delivered the opinion of the Court.

The United States, by bill filed January 23, 1925, sought to recover from petitioners, stockholders of the Pine Lumber Company, additional income and profit taxes for the year 1918 assessed against that corporation in March, 1924. The company made a return to the collector for 1918 on June 12, 1919, and afterwards paid the amount indicated thereby.

Petitioners claimed the suit was barred under the limitation specified by the applicable statute. They succeeded in the District Court; but the Circuit Court of Appeals held another view, and reversed the decree dismissing the bill.

The statutory provisions which require special consideration are printed below:

Revenue Act 1918, c. 18, 40 Stat. 1057, 1083:

'Sec. 250(d). Except in the case of false or fraudulent returns with intent to evade the tax, the amount of tax due under any return shall be determined and assessed by the Commissioner within five years after the return was due or was made, and no suit or proceeding for the collection of any tax shall be begun after the expiration of five years after the date when the return was due or was made. * * *'

Revenue Act 1921, c. 136, tit. II, 'Income Tax,' 42 Stat. 227, 265:

'Sec. 250(d). The amount of income, excess-profits, or war-profits taxes due under any return made under this Act for the taxable year 1921 or succeeding taxable years shall be determined and assessed by the Commissioner within four years after the return was filed, and the amount of any such taxes due under any return made under this Act for prior taxable years or under prior income, excess-profits, or war-profits tax Acts, * * * shall be determined and assessed within five years after the return was filed, * * * and no suit or proceeding for the collection of any such taxes due under this Act or under prior income, excess-profits, or war-profits tax Acts, * * * shall be begun, after the expiration of five years after the date when such return was filed, but this shall not affect suits or proceedings begun at the time of the passage of this Act. * * *'

Revenue Act 1924, c. 234, tit. II (effective January 1, 1924) 43 Stat. 253, 299, 300, 301, 303, 352:

'Sec. 277. (a) Except as provided in section 278 and in subdivision (b) of section 274 and in subdivision (b) of section 279 (274 and 279 are not here important)

'(1) The amount of income, excess-profits, and war-profits taxes imposed by the Revenue Act of 1921, and by such Act as amended, for the taxable year 1921 and succeeding taxable years, and the amount of income taxes imposed by this Act, shall be assessed within four years after the return was filed, and no proceeding in court for the collection of such taxes shall be begun after the expiration of such period.

'(2) The amount of income, excess-profits, and war-profits taxes imposed by * * * the Revenue Act of 1918, and by any such Act as amended, shall be assessed within five years after the return was filed, and no proceeding in court for the collection of such taxes shall be begun after the expiration of such period.' 26 USCA § 1057, note.

Sec. 278 (a) * * * (b) * * * (c) * * *

'(d) Where the assessment of the tax is made within the period prescribed in section 277 or in this section, (the italicized words are unimportant here) such tax may be collected by distraint or by a proceeding in court, begun within six years after the assessment of the tax. Nothing in this Act shall be construed as preventing the beginning, without assessment, of a proceeding in court for the collection of the tax at any time before the expiration of the period within which an assessment may be made.

'(e) This section shall not (1) authorize the assessment of a tax or the collection thereof by distraint or by a proceeding in court if at the time of the enactment of this Act such assessment, distraint, or proceeding was barred by the period of limitation then in existence, or (2) affect any assessment made, or distraint or proceeding in court begun, before the enactment of this Act.' 26 USCA § 1061, note, and section 1062, note.

'Sec. 280. If after the enactment of this Act the Commissioner determines that any assessment should be made in respect of any income, war-profits, or excess-profits tax imposed by the Revenue Act of 1916, the Revenue Act of 1917, the Revenue Act of 1918, or the Revenue Act of 1921, or by any such Act as amended, the amount which should be assessed (whether as deficiency or as interest, penalty, or other addition to the tax) shall be computed as if this Act had not been enacted, but the amount so computed shall be assessed, collected, and paid in the same manner and subject to the same provisions and limitations (including the provisions in case of delinquency in payment after notice and demand) as in the case of the taxes imposed by this title, except as otherwise provided in section 277.' 26 USCA § 1064, note.

'(Title XI) Sec. 1100. (a) The following parts of the Revenue Act of 1921 are repealed, to take effect (except as otherwise provided in this Act) upon the enactment of this Act, subject to the limitations provided in subdivisions (b) and (c):

'Title II (called 'Income Tax') as of January 1, 1924; * * *

'(b) The parts of the Revenue Act of 1921 which are repealed by this Act shall (except as provided in sections 280 and 316 (316 is not important here) and except as otherwise specifically provided in this Act) remain in force for the assessment and collection of all taxes imposed by such Act, and for the assessment, imposition, and collection of all interest, penalties, or forfeitures which have accrued or may accrue in relation to any such taxes, and for the assessment and collection, to the extent provided in the Revenue Act of 1921, of all taxes imposed by prior income, war-profits, or excess-profits tax acts, and for the assessment, imposition, and collection of all interest, penalties, or forfeitures which have accrued or may accrue in relation to any such taxes. * * *' 26 USCA § 1260.

From the foregoing it appears: Under the act of 1918, both assessment and suit within five years were necessary. The act of 1921 required that taxes imposed thereby should be assessed within four years; that taxes payable under the act of 1918, and earlier ones, should be assessed within five years; and it limited the period within which any suit might be brought to five years after the return. With the exceptions specified by section 278, the act of 1924 requires that assessment of taxes laid by it or the act of 1921 and any suit to collect the same shall come within four years after the return; also, in respect of taxes due under the acts of 1918, etc., that no assessment or suit shall be permitted later than five years after the return.

The exceptions to the general rule of section 277, which are specified by section 278, and here important, relate to those cases only where there has...

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