Welch v. Schweitzer, 9122.

• Decision Date: 14 October 1939
• Docket Number: No. 9122.,9122.
• Citation: 106 F.2d 885
• Parties: WELCH, Collector of Revenue, v. SCHWEITZER.
• Court: U.S. Court of Appeals — Ninth Circuit

106 F.2d 885 (1939)

WELCH, Collector of Revenue, v. SCHWEITZER.

No. 9122.

Circuit Court of Appeals, Ninth Circuit.

October 14, 1939.

James W. Morris, Asst. Atty. Gen., Sewall Key, Arthur A. Armstrong, and John A. Gage, Sp. Assts. to Atty. Gen., and Ben Harrison, U. S. Atty., E. H. Mitchell, Asst. U. S. Atty., and Eugene Harpole, Sp. Atty., Bureau of Internal Revenue, all of Los Angeles, Cal., for appellant.

Johnson & Johnston, of Los Angeles, Cal., for appellee.

Before WILBUR and DENMAN, Circuit Judges.

DENMAN, Circuit Judge.

This is an appeal from a judgment of the district court entered October 24, 1938, ordering refund to appellee, the taxpayer, of certain sums because of overpayments of income taxes for the calendar years 1920 and 1921.

The taxpayer filed his income tax returns for the calendar years 1920 and 1921 on or before the 15th day of March, 1921, and the 15th day of March, 1922, respectively. On the returns he showed his residence address as 3011 South Hoover Street, Los Angeles, California. On or about September 11, 1922, he changed his residence address to 1635½ Edgecliff Drive, Los Angeles, and on or about March 10, 1923, he again changed his residence to 1535 Murray Circle, Los Angeles, at which latter address he has continued to reside.

The taxpayer for the calendar years 1923-1927, inclusive, filed his personal federal income tax returns with the Collector of Internal Revenue at Los Angeles, in each of which he reported his residence address as 1535 Murray Circle, Los Angeles, and did not fill out the line upon which his business address might have been reported.

When the taxpayer filed his 1920 and 1921 federal income tax returns his place of business was 830 South Olive Street, Los Angeles. Prior to December 19, 1925, he changed his place of business to 1235 West Pico Street, Los Angeles, California, which was thereafter his place of business until 1929. Prior to December 19, 1925, an Internal Revenue agent called upon the taxpayer at 1235 West Pico Street, made an audit of the taxpayer's income tax returns for the years 1920 and 1921 and duly reported the result of the audit to the supervising Internal Revenue agent at San Francisco, reporting therein that the taxpayer's business address was no longer 830 South Olive Street and that his business address at the time of the investigation was 1235 West Pico Street, Los Angeles, California. On October 14, 1925, a revenue agent obtained from the taxpayer a waiver which provided that the taxpayer and the Commissioner of Internal Revenue waived the time prescribed by law for making any assessment of the amount of income, excess profits or war profits taxes due under any return made by taxpayer for the years 1920 and 1921 under the existing Revenue Acts or prior Revenue Acts, but expressly provided that such waiver of the time for making any assessment should remain in effect until December 31, 1926, and should then expire, except that if a notice of a deficiency in tax were sent to taxpayer by registered mail before December 31, 1926, and no appeal was filed therefrom with the United States Board of Tax Appeals, then the date should be extended sixty days, or if an appeal was filed with the Board, then the date should be extended by the number of days between the date of mailing of the notice of deficiency and the date of final decision by the Board. An internal revenue agent called upon the taxpayer at 1235 West Pico Street prior to July 20, 1926, and made a further audit of the taxpayer's income tax returns for the years 1920 and 1921, and made a supplemental report dated July 20, 1926, to the supervising Internal Revenue agent at San Francisco, in which report the taxpayer's address was given as 1235 West Pico Street, Los Angeles, California. On September 3, 1926, the supervising Internal Revenue agent at San Francisco sent the waiver and the reports of the Internal Revenue agent to the Commissioner of Internal Revenue at Washington, D. C. These reports were in the files of the Commissioner of Internal Revenue at Washington, D. C. prior to December 17, 1926.

On the 17th day of December, 1926, the Commissioner sent a deficiency notice for the years 1920 and 1921, by registered mail, to Mr. E. J. Schweitzer, 3011 South Hoover Street, Los Angeles, California. The notice was returned to the Commissioner at Washington, D. C., and was not delivered by the postal authorities because the taxpayer was no longer at 3011 South Hoover Street, Los Angeles, California. Thereafter the Commissioner erased the date of December 17, 1926, on the notice and redated it January 8, 1927, substituted 1235 West Pico Street for the former address, and remailed the notice on the 8th day of January, 1927. The notice was delivered in due course of the mails and received by the taxpayer on or about the 13th day of January, 1927. The deficiency notice notified the taxpayer that the Commissioner had determined deficiencies against the taxpayer for the years 1920 and 1921 totaling $4,378.11.

The taxpayer did not file any petition with the United States Board of Tax Appeals against the deficiency notice for either of the years 1920, 1921. The Commissioner of Internal Revenue assessed the deficiencies on the 19th day of March, 1927, and after the regular formal notice and the issuance of a distraint warrant against the taxpayer, the tax was paid under protest on September 24, 1927. Immediately following the payment of the taxes the taxpayer filed claims for refund of the entire amount paid. On May 11, 1928, the Commissioner notified the taxpayer of the rejection of his claims for refund in their entirety. Thereafter on May 10, 1930, the taxpayer filed his complaint herein.

Under the applicable provisions of Section 277 of the Revenue Act of 1926, 44 Stat. 58, the time for making the deficiency assessments would have expired in the early part of 1926. However, by virtue of Section 278(c) of the Act¹ and the waiver executed by the Commissioner and the taxpayer, the period of time for making the assessment was extended.

The waiver provided that the assessment might be made until December 31, 1926, and that if prior to that time a notice of deficiency in tax was sent to the taxpayer by registered mail and no appeal was filed therefrom...