1. The evidence in this case was insufficient to establish that
the Commissioner of Internal Revenue, by investigating the merits
of a claim for refund of processing taxes paid under the
Agricultural Adjustment Act of 1933, had waived compliance with
requirements of Treasury Regulations as to the form of the claim,
and the claim was therefore properly rejected. P.
325 U. S.
297.
2. The requirements of Treasury Regulation as to the information
which shall be contained in the claim for refund were not satisfied
even though the claim of the taxpayer, together with that of
another, might have furnished the required data. P.
325 U. S.
299.
144 F.2d 469 affirmed.
Certiorari, 323 U.S. 703, to review the affirmance of a decision
of the Tax Court, 1 T.C. 1031, dismissing a proceeding for refund
of a processing tax paid under the Agricultural Adjustment Act.
MR. JUSTICE FRANKFURTER delivered the opinion of the Court.
This is a suit under Title VII of the Revenue Act of 1936, 49
Stat. 1648, 1747, 7 U.S.C. § 644
et seq., for a refund of
processing taxes paid under the Agricultural Adjustment Act of
1933. The problem of the case derives from the procedural
requirements of a claim for such a refund.
Page 325 U. S. 294
The petitioner, Angelus Milling Company, known until June, 1933,
as the Middleport Flour Mills, Inc., was a processor of wheat, with
its principal office in Niagara Falls, New York. During the years
for which the refund is claimed -- 1933 to 1936 -- its processing
operations were closely connected with those of the Niagara Falls
Milling Company. The two companies had the same officers,
employees, and majority stockholder, and a joint bank account. They
also had a common set of books, but the respective transactions of
the two companies -- purchases, costs of manufacture, sales -- were
entered in their separate accounts on the books. Between July 9,
1933, and January 31, 1935, the companies filed joint processing
tax returns. Between February 1, 1935, and November 31, 1935,
Niagara filed returns in its name on behalf of itself and
petitioner.
After
United States v. Butler, 297 U. S.
1, invalidated the processing tax, three claims were
filed with the Commissioner on June 22, 1936, all stating the name
of the taxpayer and claimant as "Niagara Falls Milling Co., Inc.,
and/or Middleport Flour Mills, Inc." Each of these claims is for
only part of the period during which the tax was paid, and their
total is $434,045.27. Admittedly, the form of these claims did not
satisfy the requirements of the statute [
Footnote 1] or the authorized Treasury Regulations.
[
Footnote 2] They
Page 325 U. S. 295
were filed on an old Form 843, and not on the required Form P.T.
79. While these claims were still undetermined, Niagara, on June
30, 1937, filed a claim in the sum of $436,231.73. This claim was
in due form, but was filed by Niagara on its own behalf alone.
Thereafter, on August 15, 1938, petitioner filed a claim,
designated "Amendment to Claim," for itself alone for the refund of
$145,839.12. While this claim was submitted on Form P.T. 79, it
failed to give the information required by the form and the
regulations, containing merely an apportionment between Angelus and
Niagara of the three earlier claims. An attached affidavit stated
that this claim "was originally filed on the 22nd day of June 1936
in the name of the Niagara Falls Milling Company and/or Middleport
Flour Mills, Inc." The Commissioner, on May 23, 1941, denied this
claim.
To review this disallowance, petitioner brought proceedings in
the United States Processing Tax Board of Review. A motion to
dismiss because of a fatal defect in the claim was denied by the
Board, but the Commissioner, in his answer, stood on his ground
that the Board was without jurisdiction to entertain the
proceedings. At this stage in the litigation, Congress abolished
the Processing Tax Board of Review and transferred its jurisdiction
to the present Tax Court. That Court granted the Commissioner's
renewed motion to dismiss, 1 T.C. 1031, and the Circuit Court of
Appeals for the Second Circuit affirmed. 144 F.2d 469. We brought
the case here, 323 U.S. 703, because conflict was urged with the
decision in
United States v. Memphis Cotton Oil Co.,
288 U. S. 62.
[
Footnote 3]
Petitioner's claim for recovering processing taxes paid by it
was properly rejected by the Commissioner if it did
Page 325 U. S. 296
not satisfy the conditions which Congress directly and through
the rulemaking power given to the Treasury laid down as a
prerequisite for such refund. Insofar as Congress has made explicit
statutory requirements, they must be observed, and are beyond the
dispensing power of Treasury officials.
Tucker v.
Alexander, 275 U. S. 228,
275 U. S.
231-232;
United States v. Memphis Cotton Oil
Co., 288 U. S. 62,
288 U. S. 71;
United States v. Garbutt Oil Co., 302 U.
S. 528,
302 U. S. 533.
Without needless elaboration, we conclude that there is nothing in
what Congress has explicitly commanded to bar the claim. The
effective administration of these modern complicated revenue
measures inescapably leads Congress to authorize detailed
administrative regulations by the Commissioner of Internal Revenue.
He may insist upon full compliance with his regulations.
See
United States v. Memphis Cotton Oil Co., supra, at
288 U. S. 71;
Commissioner v. Lane-Wells Co., 321 U.
S. 219,
321 U. S.
223-224. It is hardly contended that the confusing
series of petitioner's claims which we have summarized, whether
singly or in conjunction, obeyed the regulations. For such default,
the Commissioner could have rejected the claims out of hand. He did
not do that, and, by what he did do, he has given rise to the
contention that he waived the requirement of his regulations. The
basis of this claim of waiver is that the Commissioner, through his
agents, dispensed with the formal requirements of a claim by
investigating its merits.
Candor does not permit one to say that the power of the
Commissioner to waive defects in claims for refund is a subject
made crystal clear by the authorities. The question has been
somewhat complicated by cases involving amendments of claim. Thus,
in
United States v. Memphis Cotton Oil Co., supra, a
claimant's amendment was allowed because filed before his original
claim was rejected on formal grounds. According to what was there
said, there can be no amendment after a rejection though
Page 325 U. S. 297
the Commissioner had examined the claimant's books and
tentatively found an overpayment.
See Edwards v. Malley,
109 F.2d 640; 10 Mertens, Law of Federal Income Taxation (1942) §
58.19. It smacks too much of the strangling niceties of common law
pleading to find no existing claim to which a curative amendment
may be attached, although there has been an examination of the
merits, simply because of the prior rejection of a formally
defective claim, and yet find waiver of a formal defect merely
because an examination of the merits by the Commissioner manifests
consideration of the claim.
Treasury Regulations are calculated to avoid dilatory, careless,
and wasteful fiscal administration by barring incomplete or
confusing claims.
Tucker v. Alexander, supra, at
275 U. S. 231;
Commissioner v. Lane-Wells Co., supra, at
321 U. S.
223-224. But Congress has given the Treasury this
rulemaking power for self-protection, and not for
self-imprisonment. If the Commissioner chooses not to stand on his
own formal or detailed requirements, it would be making an empty
abstraction, and not a practical safeguard, of a regulation to
allow the Commissioner to invoke technical objections after he has
investigated the merits of a claim and taken action upon it. Even
tax administration does not, as a matter of principle, preclude
considerations of fairness.
Since, however, the tight net which the Treasury Regulations
fashion is for the protection of the revenue, courts should not
unduly help disobedient refund claimants to slip through it. The
showing should be unmistakable that the Commissioner has, in fact,
been fit to dispense with his formal requirements, and to examine
the merits of the claim. It is not enough that, in some roundabout
way, the facts supporting the claim may have reached him. The
Commissioner's attention should have been focused on the merits of
the particular dispute. The evidence should be clear that the
Commissioner understood the specific claim
Page 325 U. S. 298
that was made, even though there was a departure from form in
its submission. We do not think that the petitioner has made out
such a case here.
The evidence of waiver largely rests upon a letter from a
General Deputy Collector requesting an examination of certain
books, and upon affidavits of two accountants, one an officer of
the company, to the effect that the Commissioner examined
petitioner's books in order to consider the claim. We agree with
the Tax Court that the evidence is insufficient to establish
waiver. The letter from the General Deputy Collector requesting
petitioner's president to allow examination of the "records of the
Middleport Flour Mills, Inc., and Angelus Flour Mills, Inc." was in
connection with the claim which had been filed by the Niagara
Milling Company. In view of the confusing identity of interest of
the two companies, it is not unreasonable to attribute this
inquiry, as did the Tax Court, to Niagara's claim, and not to
petitioner's. For similar reasons, the affidavits regarding the
purpose of the Commissioner's representatives bear interpretation
of a like significance.
In the
Memphis Cotton Oil case, where an amendment was
allowed out of time, the Deputy Commissioner, after an audit of the
taxpayer's books, notified the taxpayer in writing that its refund
claims had been considered and that its taxes had been readjusted
in accordance with a proven overassessment. Similar evidence of
preoccupation by the Commissioner with the particular claim and
controversy has been offered in cases where waiver was recognized.
See, e.g., United States v. Elgin Watch Co., 66 F.2d 344;
United States v. Humble Oil & Refining Co., 69 F.2d
214;
Weihman v. United States, 4 F. Supp. 155. To be sure,
it is not essential for the establishment of a waiver that the
Commissioner communicate his ruling on the merits to the taxpayer.
But, in the absence of such explicitness, the implication that
formal requirements were dispensed with should not be tenuously
argumentative.
Page 325 U. S. 299
No more than that can be squeezed out of the materials in this
record. Thus, it is claimed that the Commissioner offered a refund,
subject to offsets, to the Niagara Falls Milling Company. But this
rather confirms the indication the Commissioner was bent on
Niagara's claim. The Commissioner may have acquired knowledge of
petitioner's affairs, but only by the way, incidentally, to his
investigation of Niagara's claims. Petitioner has failed to sustain
his burden of showing that the Commissioner, by examining the facts
of petitioner's claim in order to determine the merits, dispensed
with the exactions of the regulations.
An additional argument of the petitioner need not detain us
long. It urges that, taking the claims filed by Niagara and
petitioner together, they furnish all the date required by the
regulations. But it is not enough that somewhere under the
Commissioner's roof is the information which might enable him to
pass on a claim for refund. The protection of the revenue
authorizes the Commissioner to demand information in a particular
form, and he is entitled to insist that the form be observed so as
to advise him expeditiously and accurately of the true nature of
the claim.
Affirmed.
MR. JUSTICE DOUGLAS dissents.
[
Footnote 1]
Section 903 of Title VII of the 1936 Revenue Act, 49 Stat. 1648,
1747, requires that no refund be made or allowed
"unless . . . a claim for refund has been filed . . . in
accordance with regulations prescribed by the Commissioner with the
approval of the Secretary. All evidence relied upon in support of
such claim shall be clearly set forth under oath."
[
Footnote 2]
The applicable regulations provide for the making of claims on
prescribed forms, presentation of the grounds urged, and submission
of evidence, etc. Treas.Reg. 96, Arts. 201, 202, 601, 603, 605,
606. The only information furnished in these claims is the name and
address of the joint claimants and a statement of the dates and
amounts of the tax payments made by the Niagara Milling
Company.
[
Footnote 3]
After we granted certiorari in this case, the same question of
timeliness as to filing of the petition emerged as is raised in
Commissioner v. Estate of Bedford, ante, p.
325 U. S. 283. The
decision in the
Bedford case governs this.