Smith v. Commissioner

OPINION.

Arundell

: This case was submitted on petition and answer, with the exception of the joint return filed by D. Sydney Smith on March 8, 1918, which return was offered as an exhibit by the Commissioner. The Commissioner contends that the statute of limitations fixing the time within which the tax may be assessed against petitioner began *387to run from the date she filed her separate amended return, viz, May 2, 1921, and not from the date the joint return was filed by her husband.

It appears to have become the settled practice in the Treasury Department to accept separate individual income-tax returns by husband and wife in which the so-called community income may be equally divided between the two and the income tax computed upon such basis. This course was followed by the Treasury Department after the rendition by the Attorney General of an opinion holding, in effect, that community income could be separately reported by the husband and wife. It was by reason of the opinion of the Attorney General and the regulations of the Department that petitioner and her husband filed separate amended returns on May 2, 1921, in which they sought to report on the community property basis. It is not necessary in this opinion to determine whether the income in question is community income or, if it is community income, the right of petitioner and her husband to report the same in the manner attempted by them. The question for our determination is whether or not the statute of limitations began to run from the date of filing the original joint return or from the date petitioner filed her so-called separate amended return. A similar question was before the Board in the case of the Appeal of Belle R. Weaver, 4 B. T. A. 15, wherein it was held that the separate returns filed by husband and wife were merely amendments of the original joint return and related back to and became a part of the original joint return. The Board in that opinion stated that amended returns, not being returns required by law, do not furnish a starting point for the running of the statute of limitations, and “ we are, therefore, brought to the conclusion that in each of the present cases the five-year statute of limitations provided for in section 277(a) (2) of the Revenue Act of 1924 began to run on the 16th day of March, 1919, and that on the 12th day of March, 1925, the Commissioner was without authority of law to make assessments of any income tax for the year 1918 against either of the petitioners herein.”

Section 277(a) (3) of the Revenue Act of 1926, in so far as is here material, uses the identical language found in section 277(a) (2) of the Revenue Act of 1924.

We are satisfied, both on the plain wording of the statute and on the authority of the Appeal of Belle R. Weaver, supra, that the statute of limitations has run in this case and that the Commissioner is without authority to assess the proposed deficiency.

Judgment for the petitioner.