Athens Roller Mills, Inc. v. Commissioner , 46 B.T.A. 1012 ( 1942 )

ATHENS ROLLER MILLS, INC., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Athens Roller Mills, Inc. v. Commissioner

Docket Nos. 99055, 104071.

United States Board of Tax Appeals

46 B.T.A. 1012; 1942 BTA LEXIS 784;

April 28, 1942, Promulgated

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Waiver of statute of limitations for year 1934 signed by its secretary-treasurer on behalf of petitioner corporation which had no seal, held valid, although not accompanied by certified copy of the resolution of petitioner's board of directors authorizing the signing of the consent.

George E. H. Goodner, Esq., for the petitioner.

Wm. V. Crosswhite, Esq., for the respondent.

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OPPER

By this proceeding petitioner challenges deficiencies asserted by respondent in its income and excess profits taxes for the year 1934 in the sums of $1,313.52 and $446.39, respectively, and for 1935 in the sums of $889.98 and $305.80, respectively. Respondent has requested increased deficiencies so that the deficiencies asserted for 1934 in income and excess profits taxes are $2,003.34 and $697.23, respectively, and for 1935 are $1,865.23 and $660.44, respectively.

A depreciation issue having been conceded by respondent, and several others having now been eliminated, there remain for decision:

(1) Whether a "Consent" dated February 8, 1938, extending the period of limitation is valid.

(2) Whether petitioner is entitled to a deduction in 1934 of processing taxes in the amount of $2,023.40 accrued in 1933 and paid in 1934; and whether it is entitled to a deduction for 1935 of processing taxes in the amount of $1,983.05 accrued in 1934 and paid in 1935.

(3) Whether petitioner is entitled to a deduction in 1935 of processing taxes in the amount of $7,092.70, which were accrued but never paid.

FINDINGS OF FACT.

Petitioner is a corporation organized in December 1932 under the laws of the State of Tennessee and is engaged in a milling business. It kept its books and filed its returns for the years in question on the accrual basis with the collector for the district of Tennessee.

Petitioner filed its income tax return for the year 1934 on March 14, 1935. The notice of deficiency for 1934 was mailed on May 10, 1940.

Treasury Form 872, "Consent fixing period of limitation upon assessment of income and profits tax", bearing date of February 8, 1938, was signed:

"ATHENS ROLLER MILLS, INC.

By HENRY RAMAY,

Sec. & Treas."

On the form appeared the following footnote:

2 If this consent is executed on behalf of a corporation, it shall be signed with the corporate name, followed by the signature and title of such officer or officers of the corporation as are empowered under the laws of the State in which the corporation is located to sign for the corporation, in addition to which the seal of the corporation must be affixed. Where the corporation has no seal, the consent must be accompanied by a certified copy of the resolution passed by the board of directors, giving the officer authority to sign the consent.

The consent was not accompanied by a certified copy of a resolution authorizing Ramay to sign it.

Ramay was secretary and treasurer of the company during the times in question and had been with it since January 15, 1933. As secretary-treasurer he was in charge of accounting matters and had charge of the office and of handling most of petitioner's correspondence. He signed petitioner's 1935 tax return. He was given no specific instructions to sign the February 8, 1938, consent. Petitioner does not always have a directors' meeting whenever Ramay signs a document of this nature.

Ramay also executed a "Consent" form dated April 6, 1936, for the year 1934, which was filed, accompanied by a certified copy of the authorizing resolution.

Petitioner does not have a corporate seal.

Petitioner accrued on its books in 1934 processing taxes for that year in the total amount of $13,975. Petitioner paid processing taxes in the year 1934 in the total amount of $14,090.16, composed of processing taxes for the year 1933 in the amount of $2,023.40, processing taxes for the year 1934 in the amount of $11,991.95 and penalties and interest for the year 1934 in the amount of $74.81.

Petitioner made payments of processing tax in the year 1935 in the total amount of $6,844.63, composed of processing taxes for the year 1934 in the amount of $1,983.05, processing taxes for the year 1935 in the amount of $4,857.61 and penalties for the year 1935 of $3.97. Of the processing taxes accrued by petitioner for the year 1935 in the amount of $11,954.28, the amount of $7,092.70 was not paid at any time by petitioner.

OPINION.

OPPER: That processing taxes accrued in one year and paid in the next are proper deductions in the year of accrual is now concurred in by the parties. .

It is also clear that taxes accrued but never paid because of a subsequently determined invalidity are not to be treated as deductible items if the year of accrual remains open for adjustment. ; ; . Respondent's determination in this respect was proper and is approved.

The final question is whether a waiver of the statute of limitations applicable to the year 1934 and signed on behalf of petitioner by its secretary and treasurer is invalid because lacking the corporate seal or an annexed certification of action by the board of directors. This requirement appears neither in statute nor regulations but only as a footnote on the form itself. There is no showing that the action was unauthorized nor that the officer was acting outside the scope of his duties, but, on the contrary, it appears that he had previously signed petitioner's income tax return for 1935 and that a subsequent waiver also for 1934, which he executed, was authorized by the board of directors. Nor does it appear that such action on behalf of a corporate officer would have been ineffectual to bind the corporation under state law. Cf. . Absent any evidence that this action was opposed or forbidden by the board of directors or others authorized to act on petitioner's behalf, the failure to annex an authorizing resolution, like the omission of the corporate seal for which it is merely a substitute, can not be anything more than an inconclusive formality. ; ; (reversed other grounds, ). We conclude that the waiver was valid and that the 1934 deficiency is not barred by the statute of limitations.

Decision will be entered under Rule 50.