Baur v. Commissioner , 14 B.T.A. 933 ( 1928 )

ALBERTINA BAUR, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Baur v. Commissioner

Docket No. 11921.

United States Board of Tax Appeals

14 B.T.A. 933; 1928 BTA LEXIS 2887;

December 26, 1928, Promulgated

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STATUTE OF LIMITATIONS. - The assessment of the deficiency in taxes for fiscal year ended January 31, 1919, is not barred by the statute of limitations.

Frank Hormuth, Esq., for the petitioner.

J. A. O'Callaghan, Esq., for the respondent.

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TRUSSELL

The deficiency in income and surtaxes in controversy in this proceeding is in the amount of $1,050.71 for the fiscal year ended January 31, 1919, the assessment of which, petitioner alleges, is barred by the statute of limitations.

FINDINGS OF FACT.

Petitioner is a resident of Milwaukee, Wis., and on March 15, 1919, she filed her income-tax return for the calendar year 1918. The following waiver was duly executed:

FEBRUARY 20, 1924.

IT:PA-3

MP:302-App

INCOME AND PROFITS TAX WAIVER

In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Mrs. Albertina Baur, of Milwaukee, Wisconsin, 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 taxpayer for the year 1918 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. This waiver is in effect from the date it is signed by the taxpayer and will remain in effect for a period of one year after the expiration of the statutory period of limitation, or the statutory period of limitation as extended by any waivers already on file with the Bureau, within which assessments of taxes may be made for the year or years mentioned.

(Signed) ALBERTINA BAUR,

Taxpayer.

By D. H. BLAIR,

Commissioner of Internal Revenue.

At the petitioner's request, the respondent adjusted her 1918 calendar year return to the basis of a fiscal year ended January 31, 1919, because petitioner was a member of a partnership which kept its accounts and made its returns on the basis of its fiscal year ending January 31st. The adjustments made as to the preceding and succeeding taxable periods are not in controversy in this proceeding.

Under date of February 9, 1925, and while petitioner's tax liability for the fiscal year ended January 31, 1919, was still in controversy, the respondent addressed an original letter to petitioner requesting that a waiver be filed as to that year and stating that if no waiver be filed the taxes for 1918 and 1919 would be recomputed upon the calendar year basis, which resulted in a greater deficiency than if computed upon the fiscal year basis. That letter was received by petitioner. On the same date respondent addressed a letter to petitioner's attorney, stating that, "There is enclosed a carbon copy of a letter of this date addressed to the taxpayer." The enclosure was a carbon copy of a letter dated February 9, 1925, and addressed to petitioner, but it was not a copy of the original letter above referred to, dated February 9, 1925, and received by petitioner. The said original letter and said carbon contained practically the same information except that the carbon copy received by the attorney stated that an immediate assessment of $1,668.99 additional tax would be made on an adjustment on the calendar year basis if the waiver was not executed. Relying upon the carbon as a copy of the original letter received by petitioner and desiring to avoid the immediate assessment of the additional tax, petitioner's attorney advised her to execute the following waiver, as requested by respondent:

FEBRUARY 13, 1925.

IT:PA-3

EPR-301

INCOME AND PROFITS TAX WAIVER

(For taxable years ended prior to March 1, 1921)

In pursuance of the provisions of existing Internal Revenue laws Mrs. Albertina Baur, a taxpayer of 385 Layton Blvd., Milwaukee, Wisconsin, 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 fiscal year ended January 31, 1919, 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) ALBERTINA BAUR,

Taxpayer.

By D. H. BLAIR,

Commissioner of Internal Revenue.

At the time petitioner signed the above waiver she acted under the advice of legal counsel and understood both her rights and remedies in respect to the assessment and collection of income taxes, whether for the calendar year 1918 or the fiscal year ended January 31, 1919.

On December 17, 1925, the respondent mailed to petitioner a notice (the so-called 60-day letter) of his final determination as to the year in controversy, from which this proceeding was initiated.

OPINION.

TRUSSELL: Petitioner claims that the waiver dated February 13, 1925, was executed under duress, in that her attorney was misled by the carbon copy of a letter addressed to her, but the original of which was not received by her. The carbon dated February 9, 1925, received by petitioner's attorney was not a copy of the original letter dated February 9, 1925, received by petitioner from respondent, but both contained practically the same information and request for a waiver for the fiscal year ended January 31, 1919. The variance between the said original letter and said carbon, is not of such a character as to produce a mental attitude of acting under compulsion or duress. Petitioner executed the waiver dated February 13, 1925, because she "thought it was the right thing to do" and we can see no evidence of compulsion or duress influencing her action. Cf. .

Counsel for petitioner has argued in his brief that the so-called waiver dated February 13, 1925, is ineffective as a consent or an agreement for the reason that it is not supported by a consideration. We can not accept this view. Under this and similar waivers taxpayers consent to an extension of time within which assessments and collections of taxes may be made and the respondent, acting under the statute, postpones the time when he might make such assessments and enforce collections, thus covering the amount of the collection into the Treasury. The consideration which petitioner received is just the consideration which the statute authorized and which she desired.

Counsel for petitioner has also argued that section 250(d) of the Revenue Act of 1918 provides for a period of limitation of five years from the date the return was filed or was due, that there is no provision in the 1918 Act for the extension of that period and that, accordingly, the waiver was executed without authority and is of no effect. However, section 250(d) of the Revenue Act of 1921 provides that the 5-year period of limitation for the assessment and collection of taxes for years prior to 1921 may be extended if both the Commissioner and the taxpayer consent thereto in writing.

Petitioner's return was duly filed on March 15, 1919, and the 5-year period expired on March 15, 1924. Prior to the latter date a waiver was duly executed extending the period for one year after the expiration of the statutory period of limitation. A second waiver was duly executed on February 13, 1925, extending the period of limitation for assessment by the Commissioner until December 31, 1925. On December 17, 1925, 14 days prior to the expiration of the second waiver, the respondent mailed the 60-day deficiency letter to petitioner. The filing of an appeal to this Board further extended the period within which the Commissioner may assess the taxes in controversy, from the date of the mailing of the deficiency notice until the date the Board's decision becomes final and for 60 days thereafter. See section 504 of the Revenue Act of 1928.

The assessment of the deficiency in taxes for the fiscal year ended January 31, 1919, is not barred by the statute of limitations.

Judgment will be entered for the respondent.