Panther Rubber Mfg. Co. v. Commissioner , 17 B.T.A. 310 ( 1929 )

PANTHER RUBBER MANUFACTURING CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

PANCO RUBBER CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Panther Rubber Mfg. Co. v. Commissioner

Docket Nos. 19431, 19432.

United States Board of Tax Appeals

17 B.T.A. 310; 1929 BTA LEXIS 2320;

September 18, 1929, Promulgated

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Written consents entered into between the petitioner, by its president, and the Commissioner after the expiration of the statute of limitation, but before the Revenue Act of 1926, held valid.

Frank J. Albus, Esq., for the petitioners.

L. C. Mitchell, Esq., for the respondent.

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LITTLETON

These proceedings, which were duly consolidated for hearing and decision, involve deficiencies in income and profits tax for the fiscal year ended June 30, 1919. The Commissioner determined a deficiency of $13,221.42 as to the Panther Rubber Manufacturing Co. and a deficiency of $2,718.83 as to the Panco Rubber Co. The petitioners allege that these deficiencies are barred by the statute of limitation because certain consents entered into were void.

FINDINGS OF FACTS.

The petitioners are Massachusetts corporations. The principal place of business of the Panther Rubber Manufacturing Co. is at Stoughton and that of the Panco Rubber is at Chelsea. The petitioners are affiliated and Frank Berenstein and Hector J. Lucier are president and comptroller, respectively, of both corporations. The Panther Rubber Manufacturing Co. began doing business in about 1917, and the Panco Rubber Co. in about 1919. Each of the petitioners filed its income-tax returns on a fiscal yaer basis ending June 30, and each filed its return for the fiscal year ended June 30, 1919, on September 16, 1919.

On October 31, 1924, a revenue agent commenced an examination of the books of each of the petitioners for the fiscal year ended June 30, 1919. This examination was completed on November 22, 1914. Early in December, 1924, each of the petitioners received notice that additional taxes were due from each of them for the fiscal year ended June 30, 1919. At the time this notice was received the books of each of the petitioners were in a Massachusetts court in connection with litigation involving the Panther Rubber Manufacturing Co. Nothing was done by the petitioners with respect to the revenue agent's report and the collector's notice until December 26, 1924, when Berenstein and Lucier went to the office of petitioners' tax counsel to confer about the matter. He was not in and they went to the office of the collector where they were told that they should see the internal revenue agent in charge. Berenstein waited outside the building in an automobile while Lucier went in to see the agent. Lucier talked with a man in the agent's office about the additional tax and in the conversation was told that if the petitioners should not execute a consent to a later determination, assessment and collection, the tax would be assessed. Lucier asked for an extension of time, which was refused. The man procured two consent forms, one for each of the petitioners, relating to the fiscal year ended June 30, 1919, and handed them to Lucier, and asked if he had authority to sign. Lucier advised him that he had not, and was then asked, "Who has?" To which Lucier replied, "The president, who is out in the car."

Lucier took the written consent to Berenstein, told him of the statements made by the man in the agent's office, and advised him that unless he signed them the deficiencies would be assessed immediately. Berenstein thereupon signed the papers and returned them to the office of the revenue agent in charge. At no time during his, Lucier's, conversation with the man in the agent's office was anything said by either about the statutory limitation having run or that the assessment and collection of the deficiencies in question were barred unless the petitioners and the respondent consented to a later assessment and collection. Shortly after the papers were signed Berenstein and Lucier left for Chicago on business of the petitioners. Upon their return to Boston they conferred with their counsel and were informed that the statute of limitation had run prior to the time the consents were signed. Thereafter a protest was filed with the respondent, protesting the validity of the consents. The respondent assessed the deficiencies in question in December, 1925. No consents were entered into by either of the petitioners for the fiscal year ended June 30, 1919, other than the papers which were signed by Berenstein on December 26, 1924. The consent of the Panther Rubber Manufacturing Co. follows:

Dec. 26, 1924.

INCOME AND PROFITS TAX WAIVER

In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Panther Rubber Mfg. Co., of Stoughton, Mass., and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of the said Panther Rubber Mfg. Co. for the years (Fiscal) June 30, 1919 under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes," approved August 5, 1909, irrespective of any period of limitations.

PANTHER RUBBER MFG. CO.,

Taxpayer.

By FRANK BERENSTEIN, Pres.

D. H. BLAIR, Commissioner.

The consent of the Panco Rubber Co. is identical with the foregoing with the exception that "Panco Rubber Co." is appropriately substituted for "Panther Rubber Mfg. Co." and "Chelsea, Mass." for "Stoughton, Mass."

The board of directors of neither corporation nor the by-laws of either expressly authorized Berenstein to consent to an extension of time within which the respondent could make an assessment of tax. Section 11 of the by-laws of the Panther Rubber Manufacturing Co., among other things, provides that the president "shall have the general management of the affairs of the corporation and perform all the duties incidental to his office.

OPINION.

LITTLETON: The only question in these proceedings is whether the documents executed by petitioners by Berenstein, their president, on December 26, 1924, constitute valid consents to a later determination, assessment, and collection of income and profits taxes for the fiscal year ended June 30, 1919. The amount of the deficiencies is not otherwise in dispute.

Counsel for the petitioners attack the validity of the consents on the following grounds:

(1) That they were signed after the statute of limitations had run.

(2) That the person who signed them did not have express or implied authority to sign a waiver on behalf of either of the petitioners.

(3) That neither Berenstein nor Lucier knew at the time they were signed that the statute of limitations had run in favor of the petitioners.

(4) That they were signed under duress.

(5) That neither bore the impression of the corporate seal.

The evidence relative to the first contention of petitioners shows that the statutory period of limitation with respect to the fiscal year ended June 30, 1919, expired on September 16, 1924, and that the consents were executed December 26, 1924. We held in , which involved a fiscal year ended July 31, 1919, that a consent executed in December, 1924, subsequent to the expiration of the statutory period, was valid. In that case we said:

In this situation the Commissioner and the petitioner entered into a consent in writing that the tax might be assessed and collected at a later date. The execution of such a consent is expressly authorized by statute as a method of extending the period within which taxes may be determined, assessed and collected. Reaching the conclusion which we do with respect to the character and effect of the statutory limitation and considering that the consents in question are not waivers of the statute but were entered into pursuant to its express forms for the purpose of extending the time within which taxes might be assessed and collected, we have no doubt that they were effective for that purpose.

Consequently, in these proceedings, the fact that the papers were signed after the expiration of the statutory period does not render them ineffectual. ; ; ; ; ; . Cf. ; .

The insistence of petitioners that their president, who signed the waivers, had neither express nor implied authority to consent, is not well taken. .

It is urged that neither Berenstein nor Lucier knew at the time the consents were signed that the statute of limitations had run and that the consents are, therefore, void. The evidence rather indicates that the gentleman in the revenue agent's office with whom they were dealing did not himself know that such was the fact, in view of what he stated about making an immediate assessment unless consents were signed. The presumption would seem to be that he did not know it and that it was desired and intended to assess the tax before the statute of limitation had run. The consents that were signed expressly provided that they were made "irrespective of any period of limitations." This indicates that it was intended that the running of the statute of limitation was not to affect the situation; that if the time had not expired its running would not prevent the assessment and collection of the tax. If it had run, such expiration was ineffective.

It has not been established that the consents were signed under such duress as would render them void on that account. No misrepresentation of fact was made to petitioner about the statute of limitation. Berenstein was not forced to consent; he certainly knew the purport of the document that he signed. If Berenstein did not know at the time that the statute had run, this was because he did not inquire into the facts about the matter. His failure to do so did not render the consents void. The advice that the tax would be assessed if the consents should not be given is not such duress as would render the consents void. ; .

The fact that the consents did not bear the corporate seal of petitioners does not render them invalid. ; .

Reviewed by the Board.

Judgment will be entered for the respondent.

SMITH and LOVE dissent.