Con P. Curran Printing Co. v. United States

GREEN, Judge. The plaintiff seeks to recover an alleged overassessment and overpayment of its income and excess profit taxes for the year 1920. One of the defenses made is that these taxes were levied and collected by a special assessment made by the Commissioner under sections 327 and 328 of the Revenue Act of 1918 (40 Stat. 1093), and it is insisted that the courts are without jurisdiction to review his action. Plaintiff made a return for the year 1920 and paid its tax accordingly. In 1925 an examination was made of plaintiff’s return by a revenue agent and an additional tax recommended of $145,905.88. December 10, 1925, plaintiff protested against this determination and asked that the profits tax for 1920 be computed under the provisions of section 328 of the Revenue Act of 1918 because of “exceptional hardship” arising from abnormal conditions affecting both income and invested capital. In 1926 and in 1927 plaintiff renewed its request for a special assessment. September 19, 1927, the Commissioner advised plaintiff that a deficiency of $126,082.34 had been determined for 1920. Thereupon plaintiff applied to the special advisory committee of the Commissioner’s office for further consideration of its case, which was granted, and the deficiency was determined to be $105,685.01. With reference to this decision, on November 8, 1927, plaintiff filed a waiver of the right to file a petition with the Board of Tax Appeals, and consented to the assessment and collection of a deficiency for the calendar year 1920 aggregating $105,685.01. This waiver, however, did not go very far, as it was subject to limitations which will be hereinafter noted. December 2, 1927, the advisory committee informed plaintiff that its application for special assessment under the provisions of section 328 of the Revenue Act of 1918 had been allowed, and that the result of the audit fixed the deficiency in tax at $105,683.01. This deficiency for 1920 was assessed in December, 1927, and the amount with interest was paid by plaintiff. March 31, 1928, plaintiff filed a claim for refund of $150,000 for 1920, assigning various grounds therefor, and stated that the Bureau had erroneously denied plaintiff’s application for a special assessment. This claim for refund was rejected, as was also a later claim for reopening and reconsideration thereof. This court held in Williamsport Wire Rope Co. v. United States, 63 Ct.Cl. 463, that it had no jurisdiction to review the assessment and collection of taxes made under what are commonly known as the special assessment provisions. Upon review [646] of this case by the Supreme Court (277 U.S. 551, 48 S.Ct. 587, 589, 72 L.Ed. 985), the decision of this court was affirmed and the Supreme Court said with reference to sections 327 and 328 that “the nature of the task which it [Congress] confided to the Commissioner, the methods of procedure prescribed, and the language employed to express the conditions under which the special assessment is required, all negative the right to a review of his determination by a court.” It was held, however, that such decisions might be reviewed by the Board of Tax Appeals. This conclusion has been followed in so many decisions that it would seem as if the question raised by plaintiff had been set at rest. Plaintiff, however, contends that, by reason of filing the waiver to which we have hereinabove referred, •the courts acquired jurisdiction- to review the Commissioner’s determination; in other words, that the waiver somehow conferred jurisdiction upon this court to review the Commissioner’s decision. The waiver was not a contract, but merely a “unilateral waiver of a defense by the taxpayer.” Stange v. United States, 282 U.S. 270, 276, 51 S.Ct. 145, 147, 75 L.Ed. 335. The plaintiff reserved in the waiver the right to sue, but the acceptance of the waiver by the Commissioner did not bind the defendant to permit suit to be brought in a manner not provided for by the statutes. It will be seen from the findings that, after the waiver was filed, the Commissioner reversed his original decision not to grant a special assessment and decided to make one. It would seem as if this left the whole, matter in the same condition as if the waiver had not been filed except as to the limitation of time for making the assessment. But, in any event, plaintiff could not create the right to sue where it did not exist by stating that its right was reserved; nor could it confer jurisdiction upon this court by a statement in the waiver, when under the statute the court had no authority to consider the case; nor was there any advantage taken of plaintiff, as counsel intimates. The waiver, in our opinion, had no effect in the way of conferring jurisdiction upon this or any other court to review the Commissioner’s decision under a special assessment, and, if the waiver did not confer upon the plaintiff the right to sue, it is clear that the courts have no jurisdiction to try the case presented. If we- now undertook to determine the amount of the proper assessment against plaintiff, necessarily we would have to review the action of the Commissioner and his computations made under the special assessment. As was said in Cleveland Automobile Co. v. United States (C.C.A.) 70 F. (2d) 365, 368: “To hold the special assessment reviewable on questions of value and income would tend to defeat the very purpose for which sections 327 and 328 were enacted. If considerations affecting net income are to remain open to review, the very basis upon which alone special assessment can be granted and made becomes a shifting one, and the assessment an idle gesture, binding the government possibly, but never- the taxpayer.” Plaintiff calls attention to the fact that it does not seek to change the rate of the tax as fixed by the Commissioner under the special assessment, and contends that, as it does not seek to alter the rate, it is not precluded from showing that the Commissioner made errors in his calculation of the amount of net income. Several cases are cited in support of- this contention of plaintiff. With one exception, the facts were quite different, and the courts did not have before them the question now involved. Some statements were made in McKeever v. Eaton (D.C.) 6 F.Supp. 697, that may seem to support this. contention, but they, do not accord with the rule laid down by the Supreme Court which has been followed by this court. In the case of Heiner v. Diamond Alkali Co., 288 U. S. 502, 506, 53 S.Ct. 413, 414, 77 L.Ed. 921, it was said that the allowance of a special assessment was a matter of administrative discretion and that “the Commissioner cannot make an administrative finding upon the question for decision under section 327(d) or that under 328 until he has determined the net income of the taxpayer.” And further the court said: “It is beyond the power of a court to usurp the Commissioner’s function of finding that special assessment should be accorded, and equally so to substitute its discretion for his as to the factors to be used in computing the tax. The courts below were in error in adopting the rate chosen by the Commissioner and applying it to a net income other than that which he used in making his comparisons and arriving at the rate.” [647] The plaintiff in this case is asking that the court reduce the amount of net income by making certain deductions the nature of which it is not necessary to set out. The net income is one of the “factors * * * used in computing the tax.” We think the Supreme Court clearly laid down the rule that in special assessment cases a court cannot adopt the rate chosen by the Commissioner and apply it “to a net income other than that which he used in making his comparisons and arriving at the rate.” The precise question here presented was passed upon by this court in Central Iron & Steel Co. v. United States, 4 F.Supp. 113, 6 F.Supp. 115, 79 Ct.Cl., 56, 88 (certiorari denied). This was a case in which a special assessment had been granted and the plaintiff sought to have the net income revised and a new computation made thereon. This court said: “When the taxpayer upon application obtains a determination of his tax under the special-assessment provisions he surrenders the right further to contest in court the correctness of the Commissioner’s determination with respect to any of the factors necessary to his discretionary findings and the computation of the tax.” Also that it was “without jurisdiction to decide the question presented and remand the case to the Commissioner for further exercise of his discretionary powers to determine whether or not the change in net income results in a greater or less profits tax.” As this court is without power to consider any questions as to whether the Commissioner should have made further deductions in the net income of plaintiff, it follows that plaintiff’s petition must be dismissed, and it is so ordered.