Irvona Coal & Coke Co. v. Commissioner

IRVONA COAL & COKE CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Irvona Coal & Coke Co. v. Commissioner

Docket No. 23184.

United States Board of Tax Appeals

18 B.T.A. 298; 1929 BTA LEXIS 2084;

November 20, 1929, Promulgated

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Collection of deficiency held to be barred by statute.

Lee I. Park, Esq., for the petitioner.

Harold Allen, Esq., for the respondent.

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PHILLIPS

FINDINGS OF FACT.

On April 1, 1918, the petitioner duly filed with the collector of internal revenue at Pittsburgh, Pa., its corporation income-tax return and its corporation excess-profits-tax return for the calendar year 1917, said returns disclosing a total income and excess-profits tax due from the petitioner for 1917 of $50,499.13.

On January 7, 1921, petitioner filed with the Commissioner of Internal Revenue a document of which the following is a copy:

WAIVER.

Irvona Coal & Coke Company, a corporation organized under the laws of the State of Penna, in consideration of the assurance given it by officials of the Income Tax Unit of the Bureau of Internal Revenue that its 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 its net income received from all sources in said year, shall not be determined except after deliberate, intensive and thorough consideration, hereby waives any and all statutory limitations as to the time within which assessments based upon such liability may be entered. It is understood, however, that the above corporation does not, by the execution of this waiver, admit in advance the correctness of any assessment which may be made against it for said year by the officials of the Income Tax Unit.

Executed this 5 day of Feby. 1921.

(Signed) IRVONA COAL AND COKE CO., CORPORATION.

By THOMAS V. KELLY,

(Title) Sec.

Per G.H.T.

[Corporate Seal.]

Attest:

THOMAS V. KELLY,

Secretary.

APPROVED: Dec. 11, 1922.

D. H. BLAIR,

Commissioner of Internal Revenue.

On February 18, 1924, the Commissioner of Internal Revenue made an assessment against the petitioner of additional tax for the calendar year 1917 in the amount of $15,837.24. The taxes shown on petitioner's return in the amount of $50,499.13 and $1,837.24 of the aforesaid additional assessment were paid as follows:

June 15, 1918 (original return)	$50,499.13
March 21, 1925 (1919 refund credit)	1,085.28
May 23, 1925 (voluntary payment of part of jeopardy assessment)	751.96
	52,336.37

No part of the amount so paid has ever been refunded to petitioner or credited to additional taxes due from petitioner for any other year. The petitioner protested against said assessment of February 18, 1924, which protest was denied by the Commissioner, who thereupon sustained said assessment of additional tax and notified petitioner thereof. The petitioner duly instituted this proceeding for a redetermination of its liability.

In April, 1925, the collector of internal revenue demanded payment of said additional assessment made February 18, 1924, and threatened collection by distraint, but no proceedings to distrain property were taken. In the month of August, 1925, an instrument, duly executed by the parties thereto, was filed by petitioner with the collector of internal revenue at Pittsburgh, Pa., reading as follows:

KNOW ALL MEN BY THESE PRESENTS, That we IRVONA COAL & COKE CO., of Coalport, Penna., as Principal, and INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, a corporation of the State of Pennsylvania, as Surety are held and firmly bound unto DANIEL B. HEINER, COLLECTOR, TWENTY-THIRD DISTRICT, PENNSYLVANIA, as Obligee, in the sum of TWENTY-ONE THOUSAND DOLLARS ($21,000.00), lawful money of the United States of America, for the payment whereof we bind ourselves, our heirs, executors, administrators, successors, and assigns, jointly and severally firmly by these presents.

THE CONDITIONS OF THE ABOVE OBLIGATION ARE SUCH, that WHEREAS, the said IRVONA COAL & COKE CO. has been assessed a tax by the COMMISSIONER OF INTERNAL REVENUE in the principal sum of FOURTEEN THOUSAND DOLLARS ($14,000.00); and WHEREAS, the said IRVONA COAL & COKE CO. has filed its claim in abatement against said tax.

NOW, THEREFORE, the condition of the foregoing obligation is such that if the Principal shall on notice and demand by the Collector duly pay any part of such tax found by the Commissioner to be due, with interest at the rate of six per cent per annum from the time such tax would have been due had no such claim been filed, and shall otherwise well and truly perform and observe all the provisions of law and the regulations, then the obligation is to be void, but otherwise to remain in full force and virtue.

WITNESS our hands and seals this 25th day of July, A.D. 1925.

No suit or proceeding for the collection from the petitioner of the alleged taxes or any part thereof has ever been begun by the said collector of internal revenue or by the Commissioner of Internal Revenue or by the United States; and no waivers other than described above have ever been filed by the petitioner.

OPINION.

PHILLIPS: The petitioner defends against the collection of the deficiency in tax asserted against it by the Commissioner and assessed in 1924, but not yet collected, on the ground that collection thereof is barred by statute. In will be noted that the so-called waiver relates to assessment, that by reason of the action of the Commissioner it expired on April 1, 1924 (), and that the assessment here in question was made prior to the passage of the Revenue Act of 1924. The position of the petitioner is well taken. ; ; ; .

Collection of the additional assessment is barred by the statute of limitations and an order to that effect, pursuant to section 906(e) of the Revenue Act of 1924, as amended by section 1000 of the Revenue Act of 1926, will be entered.

Review by the Board.