Humphrey & Sons Co. v. Commissioner

HUMPHREY & SONS CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Humphrey & Sons Co. v. Commissioner Docket Nos. 4149, 22511. United States Board of Tax Appeals 11 B.T.A. 889; 1928 BTA LEXIS 3695; April 30, 1928, Promulgated *3695 A waiver executed subsequent to the expiration of statutory period of limitation is effectual in preventing a bar to the assessment and/or collection of taxes. Joy Floral Co.,7 B.T.A. 800, followed. Joseph R. Gibson, Esq., for the petitioner. Thomas P. Dudley, Jr., Esq., for the respondent. LOVE *890 These proceedings are for the redetermination of deficiencies in income taxes as follows: Docket No. 4149: — 1917 — $5,453.33 — 1918 — 3,311.84 — 1919 — 679.97 Docket No. 22511: — 1920 — 4,225.58 — 1921 — 250.33 By agreement the two appeals were consolidated for hearing and determination. There was no evidence submitted and the correct deficiencies for the several years were stipulated subject to the decision of the Board on the plea of limitation pleaded by petitioner for the years 1917 and 1918. Omitting the exhibits, which are later given only in substance, the stipulations are as follows: It is hereby stipulated and agreed by and between the parties to the above appeal, by their respective counsel, that the following facts are true for the purposes of this appeal: 1. A corporation income and profits tax*3696 return for the year 1917 was filed by the petitioner with the Collector of Internal Revenue on March 30, 1918, on which a tax of $4,945.28 was shown. The tax shown on the return was paid on June 15, 1918. 2. In March, 1920, the respondent assessed additional income and profits taxes of the petitioner for the year 1917 in the amount of $2,914.33. The amount of this assessment was paid by the petitioner on December 9, 1920. 3. The respondent in April, 1923, assessed further additional taxes for the year 1917 in the amount of $10,963.47. A claim for abatement of this assessment was filed by the petitioner on May 3, 1923. 4. On July 12, 1924, the respondent mailed to the petitioner a letter notifying the petitioner that the claim for abatement mentioned in the last paragraph was rejected in full, and that the case was being closed. Subsequently, protests against the rejection of said claim in abatement were filed by the petitioner with the respondent, and reconsideration of the case was given by the respondent. On September 8, 1924, the respondent mailed a letter to the petitioner advising the petitioner that said claim of abatement would be allowed in the amount of $4,603.74, *3697 and rejected for $6,359.73, and further advised the petitioner that it was granted thirty days from the date thereof to protest against the respondent's proposed action on said claim. The petitioner in accordance with said letter protested to the respondent against the said proposed action on said claim. 5. On February 10, 1925, the respondent mailed to the petitioner a letter, a true copy of which is hereto attached, marked "Exhibit A," which copy may be received in evidence and considered with the same force and effect as the original. 6. On March 13, 1925, the respondent mailed to the petitioner a letter, a true copy of which is attached to the petition filed in Docket No. 4149. *891 7. The petitioner and respondent entered into an agreement in writing bearing date of February 13, 1923, a copy of which is hereto attached, marked "Exhibit B." 8. The petitioner and respondent entered into an agreement in writing bearing date of June 22, 1925, a copy of which is hereto attached, marked "Exhibit C." 9. The petitioner and respondent entered into an agreement in writing bearing date of December 11, 1925, a copy of which is hereto attached, marked "Exhibit D. *3698 " 10. A corporation income and profits tax return for the year 1918 was filed by the petitioner with the Collector of Internal Revenue on June 19, 1919, upon which a tax of $1,572.36 was shown. The respondent has not assessed any additional taxes against the petitioner for the year 1918. 11. The petitioner and respondent under date of January 19, 1924, entered into an agreement in writing, a true copy of which is hereto attached, marked "Exhibit E." 12. The petitioner and respondent under date of January 15, 1925, entered into an agreement in writing, a true copy of which is hereto attached, marked "Exhibit F." 13. The petitioner and respondent under date of September 27, 1926, entered into an agreement in writing, a true copy of which is hereto attached marked "Exhibit G." 14. The petition in the appeal purporting to relate to the years 1917 and 1918, was filed by the petitioner with the Board on May 11, 1925, and was docketed as No. 4149. It is stipulated and agreed that the copies of the various papers and documents referred to in the foregoing paragraphs and attached as exhibits hereto may be received in evidence and considered with the same force and effect*3699 as if the original of said papers and documents had been duly identified and received in evidence. It is further stipulated and agreed that, subject to the decision of the Board as to whether the assessment and/or collection of the additional taxes for the years 1917 and/or 1918 is barred by limitations, the tax liability of the petitioner for the years 1917 to 1921, both inclusive, may be redetermined as follows: 1917: Correct tax $13,312.94 Tax assessed 18,823.08 Tax paid 7,859.61 ,1918: Deficiency 2,414.93 1919: Deficiency 226.88 1920: Deficiency 3,286.50 1921: Deficiency 168.96 Exhibit A is a communication from the Commissioner to the petitioner, dated February 10, 1925, containing a computation of tax for 1917, showing a total tax liability for the year of $13,578.05 and an overassessment of $5,245.03. Exhibit B is a waiver dated February 13, 1923, and is for the year 1917, and is not limited as to date of expiration. Exhibit C is a waiver dated June 22, 1925, and is for the years 1917 to 1921, inclusive, and was to remain in effect until December 31, 1926. *892 Exhibit D is a waiver dated December 11, 1925, and is for the years*3700 1917 to 1921, inclusive, and was to remain in effect until December 31, 1926. Exhibit E is a waiver dated January 9, 1924, and is for 1918, and was to remain in effect until one year after expiration of the statutory period of limitation. Exhibit F is a waiver dated January 15, 1925, and is for 1918 and 1919 and was to remain in effect to December 31, 1925. Exhibit G is a waiver dated September 27, 1926, and is for 1918, and was to remain in effect until December 31, 1927. Exhibits C, D, F, and G, contain the usual provision in the event a deficiency notice is mailed, and appeal is taken to the Board. OPINION. LOVE: The only question for consideration and determination in this case is that of limitation for the years 1917 and 1918, as all other questions have been settled by stipulations. For the year 1917 the return was filed March 30, 1918. The five-year period of limitation provided for in section 250(d) of each of the Revenue Acts of 1918 and 1921, expired on March 30, 1923. On February 13, 1923, petitioner executed a waiver as provided by statute extending the time within which the tax for 1917 might be assessed and/or collected, with no limitation as*3701 to time of duration of such waiver. It has been held that such an agreement of extension is valid and binding for a reasonable time. See . Another waiver that included 1917 was executed on December 11, 1925, and was to expire December 31, 1926. If the waiver of February 13, 1923, was the only one executed, a question might arise as to the reasonableness of the time taken by the Commissioner to make the collection (an assessment having been made in April, 1923). However, another waiver dated December 11, 1925, was executed by petitioner, and although the five-year period of limitation had then expired, the Board has held that such a waiver is effectual and will authorize the assessment and/or collection of the tax. . The return for 1918 was filed on June 19, 1919. The five-year statutory period of limitation expired on June 19, 1924. A waiver was executed for 1918 on June 22, 1925. This fixes the status of the collection of the deficiency for 1918 the same as for 1917, and it is also governed by the Joy Floral Co. case, supra. The collection of the deficiencies*3702 for 1917 and 1918 is not barred by limitation. The deficiencies are redetermined as follows: 1917, $5,453.33; 1918, $2,414.93; 1919, $226.88; 1920, $3,286.50; 1921, $168.96. Order will be entered accordingly.