Clampitt v. Commissioner

MARGARET M. CLAMPITT, EXECUTRIX, ESTATE OF EDWARD A. CLAMPITT, DECEASED, MARGARET M. CLAMPITT, LEAH CLAMPITT, AND BARBARA CLAMPITT, TRANSFEREES, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Clampitt v. Commissioner

Docket No. 26059.

United States Board of Tax Appeals

22 B.T.A. 230; 1931 BTA LEXIS 2148;

February 19, 1931, Promulgated

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">*2148 Collection of estate taxes due September 25, 1920, and assessed against the executrix October 9, 1922, is barred as against the distributees of the estate on February 25, 1927.

John W. Carrigan, Esq., for the petitioners.

Frank T. Horner, Esq., for the respondent.

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LANSDON

">*230 This proceeding is for the redetermination of a deficiency in Federal estate tax of $27,024.77 asserted by the respondent against the estate of Edward A. Clampitt, deceased, and its proposed assessment against the other named petitioners as transferees of the assets of such estate. A number of assignments of error were alleged in the petition as grounds for this appeal, but all have been abandoned except (1) the claim that the original assessment against the estate was abated in 1925; and (2) that the statute of limitations now bars the proposed assessment or its collection from the distributees.

FINDINGS OF FACT.

Edward A. Clampitt, a resident of Los Angeles County, California, died September 26, 1919, leaving a surviving widow, Margaret M. Clampitt, and two children, Leah Clampitt and Barbara Clampitt, who are original appellants in this proceeding.

On September 25, 1920, Margaret">*2149 M. Clampitt, as executrix of the estate of Edward A. Clampitt, filed the Federal estate tax return showing $2,349.63 in taxes due, which she paid. On July 5, 1922, the Commissioner of Internal Revenue wrote Margaret M. Clampitt, as executrix, that his audit of the return filed showed a total estate tax liability of $41,638.21. This letter was received by the executrix on July 20, 1922, and on the day following she paid to the Collector of Internal Revenue at Los Angeles, the sum of $14,613.44 upon said tax, leaving a balance of $27,024.77 in dispute. Simultaneously with this payment, the executrix filed with the Collector her claim for abatement of the sum of $27,024.77 in taxes. This amount was entered as an assessment upon the assessment rolls of the Collector at Los Angeles, Calif., on October 9, 1922. On October 30, 1925, the Commissioner of Internal Revenue, by letter, advised Margaret M. Clampitt, executrix, that her claim for abatement had been allowed in full; also, that she had overpaid the correct amount due ">*231 in such estate tax by $3,941.11, for which excess she was requested to apply for refund on Form 843, which was inclosed with the letter. A copy of this">*2150 letter, in accordance with the rules of the Treasury Department, was mailed to the Collector of Internal Revenue at Los Angeles. No action was taken by the Commissioner of Internal Revenue upon the application of Margaret M. Clampitt for refund, but on February 25, 1927, he again wrote advising her that owing to a recent construction of the community estate laws of California by the Supreme Court of the United States, her claim for abatement had been denied in its entirety. On the same date, February 25, 1927, the Commissioner of Internal Revenue addressed and mailed letters to each of these petitioners, advising them of the additional estate tax against the estate of Edward A. Clampitt, deceased, and of his proposal to assess against each of them the sum of $27,024.77, on account of their respective liabilities as transferees of the assets of that estate, under section 316 of the Revenue Act of 1926. In the distribution of the assets of the estate of Edward A. Clampitt, deceased, each of these petitioners received as their respective distributive share, money and property of a greater value than the tax involved.

OPINION.

LANSDON: This proceeding was brought under section">*2151 316 of the Revenue Act of 1926, which in so far as is material here, provides as follows:

(a) The amounts of the following liabilities shall, except as hereinafter in this section provided, be assessed, collected, and paid in the same manner and subject to the same provisions and limitations as in the case of a deficiency in tax imposed by this title * * *.

(b) The period of limitation for assessment of any such liability of a transferee * * * shall be as follows:

(1) Within one year after the expiration of the period of limitations for assessment against the taxpayer; or

(2) If the period of limitation for assessment against the executor expired before the enactment of this Act but assessment against the taxpayer was made within such period, then within six years after the making of such assessment against the executor, but in no case later than one year after the enactment of this Act.

The assessment against the executrix in this case was made on October 9, 1922, which was before the enactment of the Act of 1926, and the respondent contends that under the provisions of subdivision (b)(2) above quoted, he had six years thereafter, or until October 9, 1928, in which to">*2152 collect the tax from the estate. If this be true the statute of limitations for assessment of the tax against these petitioners had not expired on February 25, 1927, when he mailed to them the deficiency letters and no error was committed by him in so ">*232 doing. Whether or not the respondent is correct in this contention depends upon the construction of prior acts in effect at the time of the enactment of the 1926 Act.

At the time of the making of the assessment against the executrix of the decedent's estate, these provisions governing collection of internal revenue taxes were in effect:

(Act of 1921, section 1320.) * * * No suit or proceeding for the collection of any internal revenue tax shall be begun after the expiration of five years from the time such tax was due, except in the case of fraud with intent to evade tax, or wilful attempt in any manner to defeat or evade tax. This section shall not apply to suits or proceedings for the collection of taxes under section 250 of this Act, nor to suits or proceedings begun at the time of the passage of this Act.

(Estate tax under Part I, Title III, Revenue Act of 1924, effective June 2, 1924.)

SEC. 310. (a) Except">*2153 as provided in section 311 and in subdivision (b) of section 308 and in subdivision (b) of section 312, the amount of the estate taxes imposed by Part I of this title shall be assessed within four years after the return was filed, and no proceeding in court for the collection of such taxes shall be begun after the expiration of five years after the return was filed.

In this case the estate tax was due one year after the death of Clampitt, or September 26, 1920. The return was filed September 25, 1920; and under the provisions of section 310(a), supra, the respondent had five years from said date, or until September 25, 1925, in which to collect the tax. Under section 1320, supra, he had similar powers which expired on September 26, 1925, or one day later, the assessment having been made prior to the effective date of the 1924 Act, the period for collection was not extended by the provisions of that act. ; .

In applying the Act of 1926 to similar situations we have held that the provisions of subdivision (b)(2) of section 316, supra, are not retroactive">*2154 in their operations so as to revive this administrative function which had lapsed prior to the effective date of the 1926 Act. ; . Upon authority of these holdings our decision must be that the proposed assessment and collection of the taxes in question against and from these petitioners is without authority in law.

Since we must sustain the contention of the petitioners upon the issue of the statute of limitations, it is unnecessary to consider their further contention that the tax was extinguished through abatement prior to the issuance of the deficiency notice to them.

Decision will be entered for the petitioners.