Moore v. Commissioner , 17 B.T.A. 314 ( 1929 )

EVERETT B. MOORE, ADMINISTRATOR, ESTATE OF WALTER B. MOORE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Moore v. Commissioner

Docket No. 17067.

United States Board of Tax Appeals

17 B.T.A. 314; 1929 BTA LEXIS 2339;

September 1, 1929, Promulgated

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A consent executed by an administrator in 1925, more than five years after the filing by the decedent of his income-tax return for 1918, held valid and served to extend the period for assessment and collection of the tax for that year.

Donald Horne, Esq., for the petitioner.

John D. Foley, Esq., for the respondent.

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LITTLETON

The Commissioner determined a deficiency of $5,008.03 income tax for 1918. One of the errors assigned is that assessment and collection of the deficiency are barred by the statute of limitations. Upon motion of petitioner the hearing in the first instance was limited to this issue.

FINDINGS OF FACT.

Everett B. Moore, a resident of Lowell, Mass., is the administrator of the estate of Walter B. Moore. The decedent filed his income-tax return for 1918 on April 5, 1919. He died April 24, 1919. January 23, 1925, the administrator executed and filed with the Commissioner the following written consent:

In pursuance of the provisions of existing Internal Revenue Laws Mr. Walter B. Moore, a taxpayer of Boston, Mass., c/o Chadbourne and Moore, and the Commissioner of Internal Revenue hereby waive 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 or on behalf of said taxpayer for the year(s) 1919 and 1918 under existing revenue acts, or under prior revenue acts. This waiver of the time for making any assessment as aforesaid shall remain in effect until December 31, 1925, and shall then expire except that if a notice of a deficiency in tax is sent to said taxpayer by registered mail before said date and (1) no appeal is filed therefrom with the United States Board of Tax Appeals, then said date shall be extended sixty days, or (2) if an appeal is filed with said Board then said date shall be extended by the number of days between the date of mailing of said notice of deficiency and the date of final decision by said Board.

(Signed) WALTER B. MOORE,

Taxpayer.

By EVERETT B. MOORE,

Administrator for the Estate of Walter B. Moore,

19 Summit Ave., Lynn, Massachusetts.

Commissioner.

This consent was not signed by the Commissioner.

December 11, 1925, the executor executed and filed another written consent which was duly signed by the Commissioner. This consent follows:

December 11, 1925.

In pursuance of the provisions of existing Internal Revenue Laws Mr. Walter B. Moore, (deceased), a taxpayer of 19 Summit Avenue, Lynn, Massachusetts, and the Commissioner of Internal Revenue hereby waive 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 or on behalf of said taxpayer for the year (or years) 1917 and 1918 under existing revenue acts, or under prior revenue acts.

This waiver of the time for making any assessment as aforesaid shall remain in effect until December 31, 1926, and shall then expire except that if a notice of a deficiency in tax is sent to said taxpayer by registered mail before said date and (1) no appeal is filed therefrom with the United States Board of Tax Appeals then said date shall be extended sixty days, or (2) if an appeal is filed with said Board then said date shall be extended by the number of days between the date of mailing of said notice of deficiency and the date of final decision by said Board.

This waiver is executed without prejudice to taxpayer's contention that time for assessment cannot legally be extended and that a waiver executed after the passage of the Revenue Act of 1924 is invalid.

(Signed) By EVERETT B. MOORE,

Administrator of the Estate of Walter B. Moore, deceased.

D. H. BLAIR,

Commissioner.

The deficiency notice was mailed April 13, 1926.

OPINION.

LITTLETON: Petitioner contends that the first consent, not having been signed by the Commissioner, was no consent under the statute and that the consent of December 11, 1925, is of no effect because entered into beyond the five-year period of limitation relating to assessment and collection of the deficiency under the decedent's 1918 return. Since the first consent executed by the administrator was not signed by the Commissioner, it can not be considered by having any effect on the statute of limitations. . The consent of December 11 was entered into by the parties with full knowledge of the circumstances relating to the statute of limitations and the issue here is governed by the determination of the Board in , in which the Board said:

* * * It may be observed that the first waiver covering the liability of the Illinois Company for the year 1917 was executed more than five years after the return was filed, and that the second waiver was not made until after the expiration of the first waiver. In the case of the Maine Company, the first waiver for 1917 was executed within the five-year period, but the second waiver was not executed until subsequent to the expiration of the first. In other words, there was as to both companies, a time when the statute of limitations had run against the 1917 taxes. But we find that on December 4, 1925, which was prior to the enactment of the Revenue Act of 1926, both companies and the respondent entered into written waivers or consents for the year in question. In , the principle was laid down that waivers or consents filed subsequent to the expiration of the statutory period for assessment and collection, but prior to the Revenue Act of 1926, were valid and operated to extend the period within which assessment and collection of the tax might be made. On appeal to the Court of Appeals of the District of Columbia this decision was reversed, , apparently upon the ground that the statute did not contemplate a consent after the statutory period had expired. Since the statute related to the remedy and did not attempt to extinguish the liability as did the Revenue Act of 1926, we find no reason to limit the right of the respective parties to consent to a later determination, assessment and collection of the tax to a period prior to the expiration of the period limited by the statute. There is nothing in the evidence herein which indicates that the consents were not freely and fairly made with full knowledge of all the facts, and while we are of opinion that the question of consideration is immaterial, in view of the express authority granted by Congress, if it is material it is to be found in the antecedent liability. We believe this to be in conformity with the rules applied generally to statutes of limitation relating to the remedy as well as to the rule that such statutes are to be construed in favor of the Government. . In our opinion, the waivers or consents relating to the year 1917 were valid and served to extend the period for assessment and collection of the tax for that year.

See, also, ; ; ; . In the latter case the court said:

* * * But I feel certain that the executors here, without regard to the decisions in Maine as to their authority to waive the statute in Maine, have a right to take advantage of the statutory right granted them by Congress, and that they cannot be interfered with if in their judgment it seems proper and for the best interest of the estate in their charge to waive the statute for the purpose of collecting the money due the estate. The reasoning in the case recently decided by the Court of Claims, referred to in the defendant's brief, of Aldridge, Executrix, vs. United States, appears to me to be conclusive as well whether the waiver was before or after the statute of limitations had operated.

The petitioner's plea of the statute of limitation is not well taken the is accordingly denied.

The proceeding will be restored to the calendar for hearing on the merits of other issues in due course.

Reviewed by the Board.

SMITH dissents.

LOVE

LOVE, dissenting: I dissent from the opinion and decision in this case, and the grounds upon which I dissent are stated as briefly as possible, as follows:

(1) Limitation statutes in tax liability matters may not be construed in the same way that such statutes are applied with reference to contract liabilities.

(2) A tax liability is not a debt.

(3) A tax liability can be created only by statute; it can not be created by contract.

(4) When the bar of limitation falls, and bars the remedy which Congress provided for the enforcement of the liability, the liability ceases - that is, it is dead.

(5) A dead tax liability can no more be revitalized by contract than it could originally have been created by contract.