United States v. C & R INVESTMENTS, INC., 9752.
| Decision Date | 05 December 1968 |
| Docket Number | No. 9752.,9752. |
| Citation | 404 F.2d 314 |
| Court | U.S. Court of Appeals — Tenth Circuit |
| Parties | UNITED STATES of America, Appellant, v. C & R INVESTMENTS, INC., a corporation, Appellee. |
Melva M. Graney, Atty., Dept. of Justice, Washington, D. C. (Mitchell Rogovin, Asst. Atty. Gen., and Lee A. Jackson, Atty., Dept. of Justice, on the brief), for appellant.
Claude L. Rice, Kansas City, Kan. (James L. Baska and Clarence H. Wood, Kansas City, Kan., on the brief), for appellee.
Before PHILLIPS, HILL and HICKEY, Circuit Judges.
This is a tax refund claim made pursuant to 28 U.S.C. § 1346(a) (1). Taxpayer's claim was allowed by the trial court and the government filed this appeal. The issue presented in the appeal is whether the trial court erred in determining that 26 U.S.C. § 6532(b), having barred the government from proceeding against the taxpayer under 26 U.S.C. § 7405, prohibited the government from proceeding in any other manner to collect the tax deficiency?
The claimant, C & R Investments, Inc., is a successor corporation to Sherold Crystals, Inc. which was a wholly owned subsidiary of Standard Coil Products Co., a Chicago based corporation. We will hereinafter refer to claimant as taxpayer.
Sherold Crystals, Inc. filed an estimate of its 1953 taxes with the Wichita director. This estimate was accompanied by an $18,000 partial payment. Later a consolidated return was filed by the parent corporation in Chicago. Notice of the Wichita payment was given to the Chicago director and claim made for the deposit. The Wichita director erroneously failed to make a timely transfer and maintained the $18,000 in his suspense account.
Subsequently Mr. and Mrs. C. R. Rice purchased all the stock of the taxpayer corporation. C. R. Rice learned of the suspense account credit in an oral communication from the Wichita director. When he filed taxpayer's return for 1954 in Wichita he claimed and was allowed to credit the $18,000 against the tax reported due for 1954. Some years later, but before the period of limitations for collection of delinquent taxes had expired, the duplicate $18,000 credit was discovered whereupon the Wichita office proceeded to collect the tax as a delinquent payment. Taxpayer paid the $18,000 plus interest and instigated this action for a refund. The trial court ordered the refund. More than two years had expired between the date of the 1954 credit to taxpayer's account and the discovery of the Wichita director's error. The trial court relied upon 26 U.S.C. § 6532(b) which in effect provides the government must proceed within two years to recover an erroneous refund.
The argument is made that the government is estopped from proceeding to collect the tax because of the limitations prescribed in 26 U.S.C. § 6532(b). "The doctrine of equitable estoppel is not a bar to the correction by the Commissioner of a mistake of law."1
The Ninth Circuit in considering the procedures relied upon by taxpayer and the government in this case, i. e. (1) recovery pursuant to 26 U.S.C. § 7405 and (2) recovery by deficiency collection, has said: ...
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