Bank of Commerce v. Rose, 26 F.2d 365 (N.D. Ga. 1928)

*366 Bradley Hogg, of Americus, Ga., for plaintiff.

C. P. Goree, Asst. U. S. Atty., of Atlanta, Ga., for defendant.

SIBLEY, District Judge.

The suit is to recover money paid under compulsion on September 16, 1925, as income taxes assessed for the calendar year 1918, upon the ground that the claim therefor was barred by limitation. The tax return was sworn to before a Sumpter county notary public, 200 miles from the collector's office, on April 19, 1919, and receipt of the accompanying taxes was acknowledged thereon by the collector on April 23, 1919; the latter date being probably the actual date of filing with the collector. On February 23, 1924, pursuant to the provisions of section 250(d) of the Revenue Act of 1921, Comp. St. § 6336 1/8tt(d), then of force, the taxpayer consented in writing "to a determination assessment and collection of the amount" of taxes due, notwithstanding the impending limitation of five years after the date that the return was filed, fixed by the other section. The consent provided: "This waiver is to be 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." On June 2, 1924, the Revenue Act of 1924 (43 Stat. 253) became of force, section 277(2), Comp. St. § 6336 1/6zz(4) (2), of which changed the applicable law so that assessment only was required to be within five years after the return was filed; an additional period being allowed by subsection (d) to enforce an assessment made in time. These provisions were retroactive and expressly applied to taxes due under the Revenue Act of 1918 (40 Stat. 1057), if not already barred. United States v. Russell (C. C. A.) 22 F.(2d) 249; In re McClure Co. (D. C.) 21 F.(2d) 538. An assessment was made April 18, 1925, of which notice was mailed the taxpayer on April 22, 1925. The question is whether the tax claimed was barred on September 16, 1925, when the collection was enforced.

The notice of assessment required by section 274(a) of the Revenue Act of 1924, Comp. St. § 6336 1/6zz(1) (a), affects the time within which the taxpayer must pursue his remedies, but is not a part of the assessment itself. So far as limitation against the government is concerned, the assessment made within the limit of time is sufficient, though the notice thereof be (not unreasonably) delayed. The assessment on April 18, 1925, was therefore in time, though the return be considered as filed on April 19, 1919, the date of its execution in Sumpter county.

The Revenue Act of 1924 became of force before the assessment was made, and its enforcement was covered by that law. Such was the holding in United States v. Crook et al. (C. C. A.) 18 F.(2d) 449. But it is now urged that the written consent executed before the passage of the Revenue Act of 1924 was a sort of contractual limitation affecting both the assessment and collection of the tax and limiting both to one year after April 19, 1924. Such a construction cannot be given to the paper. No authority has been vested by law in the Commissioner or Collector of Internal Revenue to bind the government as to limitations, but only an authority to accept the consent or waiver on the part of the taxpayer respecting the limitations that Congress had fixed. On the expiration of the consent, action of the tax officers, if barred, would be barred by virtue of the law and not by force of the contract of waiver. Notwithstanding the waiver, Congress had full power to modify the limitation laws or to repeal them altogether. The taxpayer has no vested right not to pay his taxes because of limitations. The acts of limitation are of grace only. I see nothing in the waiver agreement to prevent application of the act of 1924. The collection was therefore lawfully made.

Judgment may be entered for the defendant.