Hample v. Commissioner , 12 B.T.A. 342 ( 1928 )

J. E. HAMPLE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Hample v. Commissioner

Docket No. 9188.

United States Board of Tax Appeals

12 B.T.A. 342; 1928 BTA LEXIS 3560;

June 4, 1928, Promulgated

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1. The assessment and/or collection of a deficiency in income tax for the year 1917, determined in September, 1925, is not, under the circumstances, barred by the statute of limitations.

2. The collection of an additional tax for the year 1917, assessed in November, 1919, is not, under the circumstances herein, barred by the statute of limitations.

R. L. Thomas, Esq., for the petitioner.

John E. Marshall, Esq., for the respondent.

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LOVE

The Commissioner determined a deficiency of $13,509.75 in income tax for the calendar year 1917, and also rejected a claim in abatement in the amount of $2,653.19 for additional taxes for the year 1917, assessed in November, 1919. Upon the allegations of the petition, the admissions of the answer, and the joint exhibits filed by the parties hereto, petitioner moves for judgment that the Commissioner is barred by the statute of limitations from assessing and/or collecting either the alleged deficiency for the year 1917, or the additional tax for 1917, assessed in November, 1919.

FINDINGS OF FACT.

Petitioner is a resident of Butte, Mont.

On April 1, 1918, petitioner filed a return for the calendar year 1917 and paid the tax of $951.38 indicated thereon.

In November, 1919, the Commissioner determined and assessed an additional tax for the year 1917 in the amount of $2,653.19. Against this assessment the petitioner filed a claim in abatement together with protests relative thereto.

On September 26, 1925, the Commissioner, by the usual notice, advised the petitioner of his determination of a deficiency of $13,509.75 for the year 1917, and he further advised the petitioner the claim in abatement of the amount of $2,653.19 had been rejected.

On November 3, 1922, petitioner signed and the Commissioner on December 6, 1922, approved an instrument in words and figures, as follows:

WAIVER

I, J. E. HAMPLE, residing at 13 East Broadway St., Butte, Montana, in consideration of the assurance given me by officials of the Income Tax Unit of the Bureau of Internal Revenue that my liability for all Federal taxes imposed by the Act of Congress, approved September 8, 1916, as amended by the Act of Congress, approved October 3, 1917, for the year ended December 31, 1917, on my net income received from all sources in said year, shall not be determined except after deliberate, intensive and thorough consideration, hereby waive any and all statutory limitations as to the time within which assessments based upon such liability may be entered. It is understood, however, that I do not, by the execution of this waiver, admit in advance the correctness of any assessment which may be made against me for said year by the officials of the Income Tax Unit.

(Signed) J. E. HAMPLE.

Approved Dec. 6, 1922. Date.

(Signed) D. H. BLAIR,

Commissioner of Internal Revenue.

BUTTE, MONTANA, Nov. 3, 1922.

Signed in the Presence of

J. P. COLLINS.

On December 31, 1923, petitioner signed and the Commissioner, on February 6, 1924, approved an instrument in words and figures, as follows:

INCOME AND PROFITS TAX WAIVER

In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, J. E. Hample of Butte, Mont., 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 years 1917 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.

This waiver expires March 15, 1925.

(Signed) J. E. HAMPLE,

Taxpayer.

Approved: Feb. 6, 1924.

By (Signed) D. H. BLAIR,

Commissioner of Internal Revenue.

On December 22, 1924, there was recorded in the Service Division, Income Tax Unit, a power of attorney executed by petitioner on October 15, 1924, which provided as follows:

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS: That J. E. Hample of Butte, Silver Bow County, Montana, has made, constituted and appointed and by these presents does make, constitute and appoint H. J. Fennimore, C.P.A., and John M. Hample, both of Butte, Silver Bow County, Montana, his true and lawful attorneys, for him and in his name, place and stead and for his use and benefit, to fully and completely represent him in the matter of his income tax returns for the year 1917, and now pending before the Commissioner of Internal Revenue or the various units under his jurisdiction, and in that behalf to appear for, prosecute and defend his claim and position before said Bureau of Internal Revenue, or its various officers or units; to receive and acknowledge all notices, make all stipulations, take all proceedings and assent to all arrangements in respect to said matter; giving and granting unto his said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about premises, as fully to all intents and purposes as the said J. E. Hample might or could do in said matter directly, with full power of substitution or revocation, hereby ratifying (sic) and confirming all that my said attorneys, their substitute or substitutes shall lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, the said J. E. Hample has hereunto set his hand and seal this 15th day of October 1924.

(Signed) J. E. HAMPLE.

The following letter was addressed to the petitioner on January 3, 1925:

IT:PA:3

EPR:301

Mr. J. E. HAMPLE,

c/o Mr. H. J. Fennimore, Butte, Montana.

SIR:

Further reference is made to your protest concerning the adjustment of your income tax return for the year 1917.

You are advised that the Bureau desires to proceed in the regular manner to the consideration of the information submitted by you. However, the period within which the Commissioner may assess additional taxes for the year 1917, as extended by the waiver already on file, will expire, in the near future, and in order to avoid the necessity of making an immediate assessment prior to such consideration, it is requested that you sign and return to this office the enclosed form of waiver within fifteen days from the date of this letter.

It is important that, in your reply, reference be made to the symbols

IT:PA:3:EPR:301.

Respectfully,

J. G. BRIGHT,

Deputy Commissioner.

By:

Chief of Section.

Enclosure:

Waiver.

SHP:SRB:3.

To this letter John M. Hample addressed a reply to the Commissioner under date of January 14, 1925. The first and last paragraphs, being the material parts, of his reply are as follows:

In view of the fact that my father, the claimant, by whom I have been given power of attorney, is not in a condition to entertain business matters at this time, and inasmuch as he seems to harbor a misconception as to the advisability of granting further waiver, as requested in your letter of the 3rd, I find it necessary to hesitate as to your request, sincerely without any intent to offend or incite your office to adverse action, with a view of laying before you circumstances for your consideration, praying herein that you find justification to immediately dispatch this case for hearing.

* * *

At the present time he is not in a condition to give your request that he sign further waiver any clear thought. Such predominance of presumption that has arisen in this case has had the effect to cause him now to believe that he is powerless to overcome it except through court procedure; that sooner or later that must be the outcome. This is my father's attitude. I have kept myself from believing this, although I had felt that once this entire matter, as presented in our showing of March and April, had reached consideration before your immediate office, that there would be an end to it. It is evident that time has not been available for proper consideration. I therefore, kindly request that if it will be impossible for you to act favorably upon our appeal before the expiration of the period of limitation, giving every possible consideration to the circumstances, could I not, as attorney-in-fact in this matter, in the event that I am unable to obtain my father's signature without jeopardizing his condition, give endorsement to this waiver upon my own responsibility?

The Commissioner on January 26, 1925, responded to John M. Hample's letter of January 14, 1925, and stated as follows:

IT:PA:3

EPR-301.

Mr. JOHN M. HAMPLE,

Butte, Montana.

SIR:

Reference is made to your letter dated January 14, 1925, relative to the income tax liability of your father Mr. J. E. Hample, for the year 1917, and the signing of a waiver extending the time limit within which assessment of additional tax may be made.

In this connection, you are advised, that the Department can not accept a waiver signed by you, unless the Power of Attorney held by you from your father, specifically states that you are empowered to sign such a waiver.

You are further advised that unless the enclosed waiver form, properly signed, is received in this office within twenty days from the date of this letter, the additional tax as set forth in office letter dated September 24, 1924, i.e. $26,360.61 will be immediately assessed.

Respectfully,

J. G. BRIGHT,

Deputy Commissioner.

By (Signed) A. LEWIS

Head of division.

Inclosure:

Waiver.

JBB:egc-1

Thereafter, on February 14, 1925, the Commissioner approved the following instrument signed by John M. Hample:

INCOME AND PROFITS TAX WAIVER

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

In pursuance of the provisions of existing Internal Revenue Laws Mr. John E. Hample, a taxpayer of Butte, Montana, 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) 1917, 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) JOHN M. HAMPLE,

Taxpayer.

By: APPROVED: Feb. 14, 1925.

Date.

(Signed) D. H. BLAIR,

Commissioner of Internal Revenue.

On March 20, 1925, an instrument wherein it was stated that "This is a supplement to brief dated March 10, 1925, submitted by taxpayer," was addressed to the Commissioner. This instrument was signed "J. E. Hample by John M. Hample, Attorney in Fact."

OPINION.

LOVE: By agreement of the parties hereto, this proceeding was submitted for consideration of the questions raised by petitioner's motion for judgment that, on the allegations of the petition, the admissions of the answer, and the joint exhibits filed at the hearing, (1) the assessment and/or collection of the deficiency of $13,509.75 for the year 1917, determined on September 26, 1925, is barred by the statute of limitations, and (2) the collection of the additional tax of $2,653.19 for 1917, assessed in November, 1919, is also barred by the statute of limitations.

With respect to the first question, the petitioner contends that the consent signed by John M. Hample and approved by the Commissioner on February 14, 1925, was of no force and effect inasmuch as it was not signed by him and that the last valid consent expired by its own limitation on March 15, 1925, after which date the Commissioner was without power or authority to assess and/or collect a deficiency for 1917. The Commissioner, on the other hand, takes the position that, relying in good faith upon the genuineness of the consent signed by John M. Hample which he approved on February 14, 1925, he withheld making the assessment of the tax referred to in the letter of January 26, 1925.

The record discloses, and there is no question raised in regard thereto, that the last consent signed by the petitioner expired on March 15, 1925. The decision of the question under consideration depends, therefore, solely upon the validity of the consent signed by John M. Hample and approved by the Commissioner on February 14, 1925. If this consent, so executed and approved, is valid and binding on petitioner, then the assessment and collection of the deficiency herein is not barred by limitation; otherwise, it is barred.

It is clearly shown that John M. Hample was one of the persons named in a power of attorney on file with the Commissioner; that in response to a letter from the Commissioner he inquired if he could, on behalf of his father, execute a consent; that he was advised by the Commissioner that he could not do so unless specifically empowered so to do; and that, notwithstanding his inquiry and the Commissioner's response, he signed a consent which was on February 14, 1925, approved by the Commissioner and which was to extend the period of limitations until December 31, 1925. Obviously, if John M. Hample, irrespective of the Commissioner's statement relative thereto, had the power and authority to sign the consent on behalf of the petitioner, that consent is valid and binding on petitioner. We pass, therefore, to the question as to the power and authority conferred on him by the power of attorney executed by petitioner on October 15, 1924.

The first question in this respect is whether John M. Hample was authorized to act alone in the matter of petitioner's tax liability for 1917.

Prior to the execution of the consent in question, he inquired of the Commissioner if he could "as attorney in fact give endorsement to this waiver" upon his own responsibility, and, subsequent to signing the consent, he, as attorney in fact, protested the petitioner's tax liability for 1917. It is clear, therefore, that he intended to act and did act as attorney in fact when he signed the consent in question. Nowhere in the record is it indicated that Fennimore ever joined in any action taken in regard to petitioner's tax liability which was in dispute. Under these circumstances, we are of the opinion that John M. Hample had the authority under the power of attorney to act alone as petitioner's attorney in fact since "one of several persons who are appointed attorneys in fact by a power of attorney may act for the principal when the power contains no provision requiring more than one to join in its execution." 21 R.C.L. 880.

Having the authority to act alone, could he, prior to the expiration of the last consent executed by the petitioner, execute, under the power granted to him, a valid consent on behalf of petitioner? We think that he could.

It will be noted that petitioner specifically empowered his attorneys to act for him in his name, place and stead, and for his use and benefit, to "receive and acknowledge all notices, make all stipulations, take all proceedings and assent to all arrangements in respect to said matter, * * * as fully to all intents and purposes as the said J. E. Hample might or could do in said matters directly * * *." This was a general and not a limited power of attorney in respect of any matter concerning petitioner's tax liability and we are clearly to the opinion, therefore, that, irrespective of the statement of the Commissioner to the contrary, John M. Hample had the power and authority to execute, as attorney in fact, the consent in question. The consent which he executed having extended the statute until December 31, 1925, the assessment and/or collection of the deficiency for 1917, determined on September 26, 1925, are not barred by limitations. See .

The petitioner's second contention is that the collection of the additional tax of $2,653.19 for 1917, assessed in November, 1919, is barred by limitation. We are unable to agree with this contention.

Petitioner had by consents, with respect to the validity of which there is no question raised, extended the statutory period within which the Commissioner might collect the tax until March 15, 1925. Under section 278(d) of the Revenue Act of 1924, the Commissioner was given six years from the date of a timely assessment within which to collect the tax. Obviously, the assessment of the additional tax having been made in November, 1919, the right to collect would not be extinguished until November, 1925. .

It having been alleged and admitted that the deficiency notice of September 26, 1925, constituted a rejection of petitioner's claim in abatement of the additional tax for 1917, and the petitioner having appealed therefrom, it is clear that the collection thereof is not barred by limitation.

The motion for judgment that both the assessment and/or collection of the deficiency for 1917 and the collection of the additional tax for 1917, assessed in November, 1919, are barred by the statute of limitations, is denied. The proceeding will be restored to the calendar for hearing in due course upon the merits.

Reviewed by the Board.

SIEFKIN dissents.