Corporations which had filed a consolidated return for a fiscal
year ending April 30, 1925, were subjected to an increased rate for
the four months following January 1, 1925, by the Revenue Act of
1926, operating retroactively. They filed an additional return
merely referring to the net income previously reported and applying
the new rate to the part of the income attributable to those four
months.
Held that the period of limitation against
deficiency assessments prescribed by § 277(a)(1) of the 1926 Act
began to run from the filing of the first return, and that the
second return was an amendment or supplement which did not toll the
statute.
Zellerbach Paper Co. v. Helvering, ante, p.
293 U. S. 172. P.
293 U.S. 185.
69 F.2d 857 reversed.
Certiorari, 292 U.S. 621, to review Judgments of the court below
affirming decisions of the Board of Tax Appeals, 26 B.T.A. 92,
sustaining deficiency assessments of income and profits taxes.
Page 293 U. S. 184
MR. JUSTICE CARDOZO delivered the opinion of the Court.
These cases present in slightly different circumstances a
question substantially the same as the one considered in Nos. 37 to
39,
Zellerbach Paper Co. v. Helvering, ante, p.
293 U. S. 172.
Here, on July 15, 1925, the Zellerbach Paper Company filed for
itself and its subsidiary, National Paper Products Company, a
consolidated return under the Revenue Act of 1924 (43 Stat. 253)
for the fiscal year ending April 30, 1925.
On February 26, 1926, the Revenue Act of 1926 (44 Stat. 9) was
enacted, effective retroactively in respect of income taxes (with
exceptions not now important) as of January 1, 1925. §§ 286,
1200.
The tax payable by the petitioners for the preceding fiscal year
was changed by the new act in one respect only. For the four months
of that year following January 1, 1925, the 12 1/2 percent tax
fixed by the Act of 1924 was increased to 13 percent, Section
230(a)(1), an amount ascertainable through a simple computation
when once the data had been supplied for separating income
attributable to 1925 from income attributable to an earlier time.
For other taxpayers differently situated, the changes might be
different or greater. So far as the new act affected the
petitioners, it changed the rate, and nothing else.
In accordance with Treasury Decision 3843* which
Page 293 U. S. 185
called for an additional return whenever there was an additional
tax, the Zellerbach Paper Company, for itself and its subsidiary,
filed a document which amounted to an "amended return," and was so
stamped by a representative of the Commissioner of Internal
Revenue. The new return did not repeat what had been stated in the
return of July, 1925, then upon the files. All that it did was to
refer to the net income as previously reported, and then apply the
new rate to that part of the income stated to be attributable to
1925.
On October 10, 1928, the Commissioner of Internal Revenue gave
notice of deficiency assessments against the two petitioners. The
period of limitation prescribed by the Act of 1926 is three years
after the filing of the return. § 277(a)(1). If the three years
began to run upon the filing of the original return in July, 1925,
the assessments were too late. If the term began to run when the
additional return was filed (May 14, 1926), the assessments were in
time.
The Court of Appeals for the Ninth Circuit affirmed the
determination of the Board of Tax Appeals, 26 B.T.A. 92, upholding
the action of the Commissioner, 69 F.2d 857, and again, as in Nos.
37 to 39, refused to adhere to a contrary ruling in courts of
coordinate jurisdiction.
Myles Salt Co., Ltd. v.
Commissioner, 49 F.2d 232;
Isaac Goldmann Co. v.
Commissioner, 60 App.D.C. 265, 51 F.2d 427;
Valentine-Clark Co. v. Commissioner, 52 F.2d 346. Writs of
certiorari followed.
Zellerbach Paper Co. v. Helvering,
292 U.S. 621.
The points of difference between these cases and Nos. 37 to 39
are these: here, the new statute was the Revenue Act of 1926,
superseding, as of January 1, 1925, the Act of 1924; there, the new
statute was the Act of 1921, superseding, as of January 1, 1921,
the Act of 1918. Here, the change applicable to the petitioners was
an increase of the rate; there the applicable change was the
disallowance
Page 293 U. S. 186
of a credit. Here, the taxpayers filed an additional return,
supplementing the original one by a statement of the additional
taxes due; there, the taxpayer stood upon the original return, and
omitted to file another.
The conclusion is unaffected by any of these points of
difference.
For reasons stated in our opinion in Nos. 37 to 39, the period
of limitation began to run on the filing of the first return, and a
return for additional taxes, even if filed afterwards, was an
amendment or supplement which did not toll the statute.
The decree should be
Reversed.
* Together with No. 36,
Zellerbach Paper Co. v. Helvering,
Commissioner of Internal Revenue, certiorari to the Circuit
Court of Appeals for the Ninth Circuit.
*
"Any corporation which has filed a return for a fiscal year
ending in 1925 and paid or become liable for a tax computed under
the Revenue Act of 1924, and is subject to additional tax for the
same period under the Revenue Act of 1926, must file a new return
covering such additional tax on or before May 15, 1926. Payment of
the additional tax may be made at the time the return is filed or,
if installment payments are desired, such installments must be paid
at the time they would be due if based upon a return for the fiscal
year ended February 28, 1926."