Stickley Bros. v. Commissioner

STICKLEY BROTHERS CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Stickley Bros. v. Commissioner

Docket No. 19925.

United States Board of Tax Appeals

9 B.T.A. 935; 1927 BTA LEXIS 2479;

December 28, 1927, Promulgated

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Collection of deficiencies for 1918 and 1919 held not barred.

Frank E. Seidman, C.P.A., and Jacob E. Seidman, Esq., for the petitioner.

John F. Greaney, Esq., for the respondent.

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SIEFKIN

This is a proceeding for the redetermination of deficiencies in income and profits taxes for the years 1918 and 1919 in the amounts of $4,412.39 and $31,351.19, respectively, being the rejected portions of claims for abatement. In accordance with a motion field by petitioner and agreement by respondent, the issue of the statute of limitations was presented in advance of other issues in the case. Evidence was introduced on that issue alone with the understanding of the parties that if the decision be that the collection of the deficiencies is not barred, the other issues may be tried in due course.

FINDINGS OF FACT.

1918 Deficiency.

Petitioner's income and profits-tax return for 1918 was filed June 9, 1919. On December 8, 1923, respondent made an assessment of additional taxes for that year under the jeopardy provisions of the Revenue Act of 1921. Under dates of January 2, 1924, and January 12, 1924, petitioner filed with the Commissioner of Internal Revenue the following instruments:

January 2, 1924/(Date)

INCOME AND PROFITS TAX WAIVER.

In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Stickley Brothers Company of Grand Rapids, Michigan, 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 for the years 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, irrespective of any period of limitations.

This waiver is limited to an extension of the Statute of Limitations for one year, thus expiring March 15, 1925.

[SEAL]

STICKLEY BROS. CO., Taxpayer.

By C. C. KUSTERER, Secy.

D. H. BLAIR,

Commissioner (L.D.H.)

January 12, 1924/(Date)

INCOME AND PROFITS TAX WAIVER

In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Stickley Brothers Company of Grand Rapids, Michigan, 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 Company for the years 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 years mentioned.

[SEAL]

STICKLEY BROTHERS COMPANY,

Taxpayer.

By C. C. KUSTERER, Secy.

D. H. BLAIR,

Commissioner.

1919 Deficiency.

Petitioner field its income and profits-tax return for the year 1919 on May 14, 1920. On December 8, 1923, the respondent made an additional assessment under the jeopardy clause, section 250(d) of the Revenue Act of 1921, in the amount of $257,584.16. No consent in writing was signed of filed by petitioner as to the year 1919.

OPINION.

SIEFKIN: As to the year 1919, it has been agreed by counsel that petitioner's return was filed May 14, 1920. Under section 250(d) of the Revenue Act of 1921, "no suit or proceeding for the collection of any such taxes * * * shall be begun, after the expiration of five years after the date when such return was filed."

Applying that section to these facts, collection of the 1919 deficiency was barred on May 14, 1925, unless the legal situation was changed by the enactment of the Revenue Act of 1924. Section 278 (d) of that Act allows six years after assessment for collection where assessment was made within the statutory time (as it was in this case, assessment having been made December 8, 1923) but section 278(e) provides:

(e) This section shall not (1) authorize the assessment of a tax or the collection thereof by distraint or by a proceeding in court if at the time of the enactment of this Act such assessment, distraint, or proceeding was barred by the period of limitation then in existence, or (2) affect any assessment made, or distraint or proceeding in court begun, before the enactment of this Act.

We have held that in enacting the latter clause in the above paragraph, Congress provided a further period for collection in cases where the period for collection had not expired. See . Under that view, collection of the 1919 dificiency is not barred.

The situation as to the deficiency for 1918 must rest upon the same reasons under which we hold that collection of the 1919 dificiency is not barred. The return was filed June 9, 1919. A jeopardy assessment was made December 8, 1923. Under section 250(d) of the Revenue Act of 1921, collection was barred on June 9, 1924, except as section 278(d) of the Revenue Act of 1924 extended the time. Prior to that date, petitioner executed two documents designated "waivers" after the assessment had been made.

Under the view we have taken in the case of Art Metal Works, cited above, it is unnecessary to consider the effect of the "waivers" as "consent to a later determination, assessment and collection" since, in conformity with our decision in that case we hold that, irrespective of such consent, the period for collection has not yet expired. When the Revenue Act of 1924 was passed, the statutory period for collection of the 1918 deficiency had not expired and we hold that the Commissioner of Internal Revenue, by virtue of section 278(d) of that Act, was given six years from December 8, 1923, the date of the assessment, within which he might collect the tax.

Reviewed by the Board.

The proceeding will be restored to the calendar for hearing upon the merits.

TRUSSELL, PHILLIPS, and MILLIKEN dissent.