Sabin v. United States

• Decision Date: 20 October 1930
• Docket Number: J-651.,No. H-391,H-391
• Citation: 44 F.2d 70
• Parties: SABIN v. UNITED STATES.
• Court: U.S. Claims Court

44 F.2d 70 (1930)

SABIN v. UNITED STATES.

Nos. H-391, J-651.

Court of Claims.

October 20, 1930.

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Arthur H. Deibert, of Washington, D. C. (Charles Harwood, of New York City, on the brief), for plaintiff.

Charles R. Pollard, of Washington, D. C., and Herman J. Galloway, Asst. Atty. Gen. (R. P. Hertzog, of Washington, D. C., on the brief), for the United States.

Before BOOTH, Chief Justice and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.

LITTLETON, Judge.

The tax in controversy is for 1915 and 1916. There is no controversy as to the correctness of the amounts collected. The issues relate entirely to the statute of limitation.

Plaintiff contends (1) that the instrument executed and filed by him March 6, 1922, did not constitute a valid consent or waiver under the provisions of section 250(d) of the Revenue Act of 1921 (42 Stat. 265), for the reason that such instrument was withdrawn and revoked by him prior to the date it was signed or agreed to in writing by the Commissioner of Internal Revenue; (2) that even if this instrument of March 6, 1922, be held to constitute a valid consent agreement under the Revenue Act of 1921, both the assessment and collection of the additional tax at the time made were illegal because they were made at an unreasonable time after notice of revocation and withdrawal was given by plaintiff; (3) that even though the instrument of March 6, 1922, constituted a valid consent agreement under the statute, it did not confer upon the commissioner any rights with respect to the tax for 1915 for the reason that the statute of limitations for that year had expired prior to the execution of the consent and, further, the waiver related to taxes due for 1915 "under the act of Congress dated September 8, 1916"; (4) that even if the assessment of the tax was not barred, collection thereof was barred because there was no waiver of the period of limitation with respect to collection; (5) that the allowance of the claim for refund filed by plaintiff is authorized under the provisions of section 607 of the Revenue Act of 1928 (26 USCA § 2607).

On the first issue we are of opinion that the waiver was valid. It appears that prior to the time when the matter of the waiver now in controversy arose an investigation and report had been made to the commissioner by the field agents, and that in connection with consideration thereof and audit of plaintiff's returns for the years involved by the commissioner he had directed the field agents to secure additional information from the taxpayer; that the agent had gone about such additional investigation whereupon the secretary of the plaintiff, who apparently had the entire matter in charge and was responsible for the compilation of necessary information required by the commissioner, advised the revenue agent on February 9, 1922, that it "has been practically impossible for me to compile the data requested"; that the reorganization of the Guaranty Trust Company had deprived him of the services of his assistants, making it necessary that he give the tax matter his personal attention; that it was necessary for him to go over numerous records from 1913 to 1916, inclusive, running into thousands of different accounts; and that it was impossible for him to find time enough to give sufficient attention to the matter. For these reasons a request on behalf of plaintiff was made for an extension to May 1, 1922. Presumably the agent transmitted this request to the commissioner. Later, on March 6, 1922, after a conversation on that date between the revenue agent at New York and the plaintiff's secretary with reference to the tax matter, the plaintiff signed a waiver which was addressed to the Commissioner of Internal Revenue, and, on the same day, plaintiff's secretary forwarded this waiver to the investigating revenue agent with a letter signed by him stating as follows:

"Agreeable to your conversation this morning, I am sending you herewith waiver signed by Mr. Sabin, waiving any statutory limitations in connection with taxes which may be found due for 1915 and 1916, together with a copy of my letter dated February 9, requesting an extension to May 1 for the additional information which the department has requested."

In this letter the agent was requested to take the matter up with Washington and "advise me as soon as possible whether it will be agreeable for them to grant this extension as requested." This letter and the waiver were forwarded to the commissioner's office at Washington.

On March 9, 1922, before these papers reached the attention of the Bureau of Internal Revenue at Washington, the commissioner's office wrote plaintiff with reference to the tax liability for the years involved and inclosed waivers of the statute of limitation. The provisions of these waivers are not disclosed by the record. Upon receipt of this letter by plaintiff, his secretary wrote the Deputy Commissioner of Internal Revenue who had signed the aforementioned letter in which he stated —

"Replying to your letter of March 9, would advise that Mr. Sabin signed waiver, as per the enclosed copy, on March 6, waiving statutory limitation in connection with additional taxes that might be found due for the years 1915 and 1916. * * *

"Should this waiver not prove entirely satisfactory, if you will kindly have same returned, I will substitute waivers as enclosed in your letter."

This letter was received by the Bureau of Internal Revenue on March 10, 1922. Thereafter, on April 8, 1922, the office of the Commissioner of Internal Revenue in a letter signed by the deputy commissioner acknowledged receipt of the waiver and of the letter offering to execute the waivers sent to the taxpayer by the bureau if the one of March 6 was not satisfactory and advised plaintiff that the original waiver had been received and was with the case. This was sufficient advice from the commissioner's office that the waiver had been accepted. On the same date the office of the Commissioner of Internal Revenue in a letter signed by the deputy commissioner addressed to the supervising internal revenue agent at New York, who had theretofore been directed to make an additional investigation, advised the supervising agent that the plaintiff had executed a waiver and that as "the interests of the Government will not necessarily be jeopardized" by the extension requested, the same was granted to May 1. Thereafter the matter proceeded in the usual way until November 1, 1922, six months after the revenue agent had completed his investigation and had furnished the commissioner with the additional information requested, when the plaintiff by his attorney in fact undertook to withdraw and revoke the waiver of March 6, 1922. On November 21, 1922, the commissioner's office in a letter signed by the deputy commissioner advised plaintiff's attorney in fact that that office refused the plaintiff's request to revoke and withdraw the waiver. At the time of the attempted revocation of the waiver the commissioner's signature had not been placed upon the same. On June 6, 1923, the commissioner advised plaintiff of the result of his audit of the returns for 1915 and 1916 and granted him a right to appeal from such determination. No appeal was taken and the additional tax so determined was assessed August 15, 1923. Demand for payment was made by the...