1. Assuming that the deficiency assessment and collection of the
federal income tax in this case were without legal authority, the
taxpayer's payment of that illegal assessment was an "overpayment"
within the meaning of § 322(b)(1) of the Internal Revenue Code, and
(the return having been filed more than three years previously) a
claim for refund was barred by limitations where not filed within
two years of the date of that payment.
Jones v. Liberty Glass
Co., ante, p.
332 U. S. 524. Pp.
332 U. S.
536-538.
2. It is for Congress, not the courts, to provide remedies for
inequities resulting from the application of limitations on refunds
of federal taxes. P.
332 U. S. 539.
160 F.2d 104 reversed.
The District Court gave judgment for the respondent in a suit
upon a claim for refund of federal income tax.
66 F. Supp.
258. The Circuit Court of Appeals affirmed. 160 F.2d 104. This
Court granted certiorari. 331 U.S. 800.
Reversed, p.
332 U. S. 539.
Page 332 U. S. 536
MR. JUSTICE MURPHY delivered the opinion of the Court.
This case is a companion to
Jones v. Liberty Glass Co.,
ante, p.
332 U. S. 524.
The stipulated facts show that, on March 16, 1936, the
respondent taxpayer filed with the Collector of Internal Revenue a
joint individual income tax return for himself and his wife for the
calendar year 1935. This disclosed a tax liability of $8,017.01,
which was duly paid. In the return, the losses and gains from sales
of capital assets by the taxpayer and his wife were reported
together, the losses of the wife being deducted from the gains of
the husband, resulting in a net loss in excess of $2,000. This
amount (the allowable limit of loss) was deducted on the
return.
On June 7, 1937, the taxpayer was advised at a conference with
revenue agents that there was additional income tax due for the
year 1935, aggregating $421.80. The taxpayer's check, which was
tendered for that amount, was later returned to him. Then, by a
letter dated June 11, 1937, a revenue agent notified the taxpayer
that, instead of a deficiency of $421.80 on the 1935 income tax
return, there was a deficiency of $19,973.93, and the taxpayer was
furnished a computation showing the basis for such determination.
The agent relied upon Article 117-5, Regulations 86, later declared
void by this Court in
Helvering v. Janney, 311 U.
S. 189. After protest and further conference, the
taxpayer gave
Page 332 U. S. 537
the agent a check for $21,527.70, covering the then proposed
deficiency assessment of $19,973.93, plus interest of $1,553.77.
This check was remitted to the United States Treasury, after having
been received by the Collector on July 21, 1937.
On July 14, 1937, the taxpayer and his wife executed an
agreement waiving certain statutory restrictions in their favor and
consenting to the immediate assessment and collection against them
of 1935 income tax in the principal sum of $19,973.93, plus
deficiency interest of $1,553.77, which the Commissioner thereafter
assessed. The agreement specified in a footnote that it was not a
final closing agreement under § 606 of the Revenue Act of 1928, and
that it did not therefore preclude the assertion of a further
deficiency if one should be determined, nor did it extend the
statutory period of limitation for refund, assessment, or
collection of the tax.
On January 28, 1941, the taxpayer and his wife filed a claim for
refund of $21,105.90, plus interest, on the ground that there had
been an illegal assessment and collection, since the revenue agents
had "refused to allow the losses of one spouse against the gains of
the other spouse in the joint return of husband and wife."
Reference was made to § 3313 of the Internal Revenue Code,
specifying a four-year period of limitations. The Commissioner of
Internal Revenue rejected this claim in reliance upon § 322(b)(1)
of the Revenue Act of 1934 (the same as § 322(b)(1) of the Code),
establishing a two-year period of limitations; it was pointed out
that § 3313 specifically excludes income taxes from those for which
a claim may be filed within four years after payment.
On July 12, 1941, the taxpayer filed his individual claim for
refund of $21,527.70 paid with respect to the year 1935. The claim
was on the same grounds as the claim previously filed by the
taxpayer and his wife. This claim was returned with the request
that the wife join
Page 332 U. S. 538
in the execution of the claim; this request was refused, and the
claim was returned to the Collector; once again, the claim was
returned to the taxpayer.
The taxpayer then brought this suit against the Collector to
recover the amount alleged to be due in the refund claim. The
District Court held that the decision of the Sixth Circuit Court of
Appeals in
United States v. Lederer Terminal Warehouse
Co., 139 F.2d 679, controlled the case and made it clear that
the four-year period of § 3313 was applicable. Summary judgment was
therefore entered for the taxpayer.
66 F. Supp.
258. The Sixth Circuit Court of Appeals affirmed per curiam,
160 F.2d 104, citing its previous decision in the
Lederer
Terminal case.
For reasons which we have set forth in
Jones v. Liberty
Glass Co., ante, p.
332 U. S. 524, the
decision below cannot stand. The two-year period provided by §
322(b)(1), rather than the four-year period of § 3313, governs
income tax refund claims. The overpayment which brings § 322(b)(1)
into operation occurs whenever the taxpayer has paid an amount over
and above his true liability. Hence, if we assume that the
deficiency assessment and collection in this case were without
legal authority, the taxpayer's payment of that illegal assessment
was an overpayment within the meaning of § 322(b)(1). And he had
two years from the date of that payment within which to file a
claim for refund. Since he did not file his claim until three and a
half years after payment, the claim was out of time.
It may well be that the taxpayer's refund claim was prompted by
this Court's decision in
Helvering v. Janney, supra, which
set aside the Treasury regulation upon which the deficiency
assessment was based. That decision was rendered on December 9,
1940, and the taxpayer filed his first refund claim on January 28,
1941. But, assuming that the
Janney decision makes clear
that the taxpayer
Page 332 U. S. 539
here made an overpayment, the loss which he now suffers from an
application of § 322(b)(1) is a loss which is inherent in the
application of any period of limitations. Such periods are
established to cut off rights, justifiable or not, that might
otherwise be asserted, and they must be strictly adhered to by the
judiciary.
Rosenman v. United States, 323 U.
S. 658,
323 U. S. 661.
Remedies for resulting inequities are to be provided by Congress,
not the courts.
Moreover, it is not our province to speculate as to why Congress
established a shorter period of limitations relative to the income
tax than is the case of those taxes governed by § 3313. It is
enough that § 322(b)(1) creates a two-year period applicable to all
income tax refund claims, and that the claim in this case is of
that type.
Reversed.
MR. JUSTICE DOUGLAS dissents.