United States v. Dubuque Packing Company, 15348
| Decision Date | 27 April 1956 |
| Docket Number | 15349.,No. 15348,15348 |
| Parties | UNITED STATES of America, Appellant, v. DUBUQUE PACKING COMPANY, a corporation, Appellee. DUBUQUE PACKING COMPANY, a corporation, Appellant, v. UNITED STATES of America, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Benjamin Arac, Boston, Mass. (Matthew H. Czizek, Dubuque, Iowa, and Joseph Kruger, Boston, Mass., were with him on the brief), for Dubuque Packing Co.
Melva M. Graney, Atty., Dept. of Justice, Washington, D. C. (H. Brian Holland, Asst. Atty. Gen., Lee A. Jackson, Atty., Dept. of Justice, Washington, D. C., Francis E. Van Alstine, U. S. Atty., and Richard W. Beebe, Asst. U. S. Atty., Sioux City, Iowa, were with her on the brief), for the United States.
Before SANBORN, WOODROUGH and VAN OOSTERHOUT, Circuit Judges.
The taxpayer, Dubuque Packing Company, brought this action to recover refunds of 1941 and 1942 taxes to the extent of overpayments resulting from retroactive adjustments to its net income for those years occasioned by taxpayer's subsequent election in 1946, approved by the Commissioner in 1947, to modify its method of inventory valuation. Refunds of the claimed overpayments were made by the Commissioner to the extent of the amounts of 1941 and 1942 taxes which, in the Commissioner's opinion, taxpayer had paid within the two-year period preceding the filing of claims for refund of the overpayments and, hence, as to which refunds were not barred by the statute of limitations provided in Section 322(b) of the Internal Revenue Code of 1939, 26 U.S.C.A.1 Refunds of the remaining amounts of the overpayments were considered by the Commissioner to be barred by the statute of limitations provided in Section 322(b) in that, to the extent of those additional amounts, no taxes had been paid within the two-year period. The taxpayer contended (1) that Section 322(b) does not bar recovery of a portion of the unrefunded overpayments because its payment of certain proposed deficiencies in 1941 and 1942 taxes occurred on the date the deficiencies were assessed by the Commissioner rather than on the prior date when the amounts of the deficiencies, plus interest, were delivered by taxpayer to the Director of Internal Revenue, and (2) that refund of the remaining portion of the overpayments otherwise barred by Section 322(b) was saved from being barred by Section 3801 of the Code. The first issue, which involves the question of the time when payment of taxes is made with respect to Section 322(b) was decided by the District Court in taxpayer's favor. The second issue was decided against taxpayer. The result was a judgment that taxpayer is entitled to recover a portion of the overpayments, with interest as provided by law. Each party has appealed from the part of the judgment adverse to it.
The facts in the case are reflected in stipulations of fact, exhibits and testimony and are not in dispute. They relate principally to the question raised by the Government's appeal — whether the taxes were paid within the meaning of Section 322(b) of the Code (1) when taxpayer delivered the amounts of proposed deficiencies, plus interest, to the Collector, as the Government contends, or (2) as the District Court held, at the later date when the deficiency taxes were assessed by the Commissioner.
Although the District Court made complete and accurate findings of fact in its opinion reported at 126 F.Supp. 796 and they are not complained of, both of the parties appellant emphasize that in deciding the question when the taxes were paid for the purpose of starting the statute of limitations on the claims for refunds here involved, it is not necessary "to state one conclusive test applicable to all cases for determining when a tax is paid * * *." In order that all of the facts we have considered may be fully shown, we restate them here mainly as presented for the government in its brief.2
Taxpayer is an Iowa corporation which has its principal office in Dubuque, Iowa, and is engaged primarily in the business of slaughtering, processing and packing meat products. It kept its books and filed its tax returns on the accrual basis and on the basis of a fiscal year beginning November 1 and ending October 31.
For the fiscal year ended October 31, 1941 (hereinafter called the taxable year 1941) taxpayer filed timely income and excess profits tax returns and paid the taxes shown to be due thereon ($44,301.26 in income tax; $12,601.38 in excess profits tax) in quarterly installments in 1942. For the following fiscal year (hereinafter called the taxable year 1942) taxpayer filed a timely income tax return and paid the tax shown to be due thereon ($66,852.27) during the calendar year 1943.
On November 15, 1943, a revenue agent made an audit of taxpayer's 1941 and 1942 returns and on the basis of his findings proposed deficiencies for 1941 in income and excess profits taxes and for 1942 in excess profits tax.
The proposed deficiencies in income and excess profits taxes for 1941 resulted principally from increasing taxpayer's net income by reason of the disallowance of deductions, such as for losses claimed on property. Taxpayer indicated its agreement to all of the adjustments to its net income covering income tax for 1941 but did not agree to the excess profits tax deficiencies for 1941 and 1942 as it had filed an amended claim for relief from excess profits taxes under Section 722 of the 1939 Code. The 1941 income tax deficiency was in the amount of $2,927.11. On November 27, 1943, taxpayer transmitted that amount, plus accrued interest of $328.71, to the Director of Internal Revenue at Des Moines, Iowa. The $2,927.11 deficiency was repeated in a 30-day letter to taxpayer dated April 26, 1945, which in addition to listing the deficiency gave $2,927.11 as the "Amount Paid on Deficiency" with no "Balance Due." The proposed deficiency in 1941 excess profits tax, to which the taxpayer had not agreed because of its claim for Section 722 relief, was later proposed in the amount of $6,936.79 and taxpayer remitted that amount, together with accrued interest of $1,841.67 to the Director on June 18, 1946. On that same date taxpayer executed a waiver of restrictions on assessment and collection of the 1941 income and excess profits tax deficiencies and the deficiencies were assessed by the Commissioner of Internal Revenue on August 23, 1946.
For the taxable year 1942 taxpayer paid its reported income tax during the calendar year 1943, but paid no excess profits tax during 1943. On April 26, 1945, a 30-day letter was sent to taxpayer proposing an excess profits tax deficiency for 1942 in the amount of $51,056.12, less an over-assessment of income tax of $31,421.30. The report accompanying the 30-day letter showed that the deficiency resulted from adjustments in net income principally for unallowable deductions, such as for a bad debt and for capital items. Taxpayer accepted the adjustments and made the following remittances to the Director:
May 12, 1945 .............. $34,207.60
June 2, 1945 ............... 476.80
June 26, 1946 .............. 1,446.97
__________
$36,131.37
On June 18, 1946, taxpayer executed a waiver of restrictions on assessment and collection of the 1942 excess profits tax deficiency and on August 23, 1946, the deficiency of $51,056.12 in excess profits tax for 1942 was assessed by the Commissioner together with interest thereon of $8,219.82. The balance of taxpayer's excess profits tax indebtedness for 1942 was extinguished (1) by crediting the $19,634.82 overassessment in 1942 income tax against the unsatisfied portion of the excess profits tax assessment on September 10, 1946, and (2) by taxpayer's transfer to the Director of $819.04 on September 11, 1946, and (3) by a $2,690.71 current excess profits credit.
Thus the following table reflects the situation with respect to the payments by taxpayer of 1941 and 1942 taxes:
Amounts and dates
of remittances to Date of
Types of Taxes Director assessment
1941
Income tax $44,301.26 — 1942
2,927.11 — 11/27/43 8/23/46
Excess profits 12,601.38 — 1942
tax 6,936.79 — 6/18/46 8/23/46
1942
Income tax 66,852.27 — 1943
Excess profits
tax 51,056.12 — $34,207.60 — 5/12/45 — 8/23/46
476.80 — 6/ 2/45
1,446.97 — 6/26/46
19,634.82 — 9/10/46
(by credit of
overpayment in
1942 income
tax)
819.04 — 9/11/46
2,690.71 — Current excess
profits tax
credit
____________
$59,275.94 (includes
$8,219.82
interest)
With respect to taxpayer's remittances to the Director to cover the proposed deficiencies in taxes, Mr. Kisting, now secretary of and formerly an accountant for taxpayer, testified that, although assessments of the taxes had not cleared through the records, "we paid the amounts to stop the running of interest" and that "we * * * had no reason to consider the payments any different than income tax liability." "It was my understanding that the amounts remitted would be held in a suspense account."
The remittances received in the Director's office from taxpayer to cover the proposed deficiencies...
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