Earle v. Commissioner

ELLIS P. EARLE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
Earle v. Commissioner
Docket No. 13565.
United States Board of Tax Appeals
12 B.T.A. 96; 1928 BTA LEXIS 3603;
May 24, 1928, Promulgated

*3603 More than five years having elapsed between the date of filing by the petitioner of his income-tax return for 1917 and mailing by the Commissioner of notice of his final determination to the petitioner, and the petitioner and the Commissioner not having consented to a later determination, the return not being false or fraudulent with intent to evade the tax, and no suit or proceeding having been instituted for the collection of the tax, it is held that assessment and/or collection of any additional tax for the calendar year 1917 is barred by the statute of limitations.

Albert E. James, Esq., for the petitioner.
L. C. Mitchell, Esq., for the respondent.

LITTLETON

*96 The Commissioner determined a deficiency of $93,713.26 for the calendar year 1917, which amount was assessed March 28, 1923, and a credit of $5,322.25, representing an overpayment of 1916 income tax, was made against the deficiency for 1917 leaving the amount demanded of petitioner $88,391.01. January 12, 1926, the Commissioner made a final determination and notified the petitioner of his rejection of the claim for abatement of the jeopardy assessment.

FINDINGS OF FACT.

*3604 Petitioner is a resident of New York, N.Y. May 1, 1918, he filed his individual income-tax return for the calendar year 1917. March 28, 1923, the Commissioner made a jeopardy assessment of an additional tax of $93,713.26 for 1917 against the petitioner. Petitioner overpaid his 1916 income tax in the amount of $5,322.25 and this overpayment was, in March of July, 1923, credited against the deficiency assessment of $93,713.26 for 1917, leaving a tax in the amount of $88,391.01 now demanded by the petitioner. January 12, *97 1926, the Commissioner made a final determination upon petitioner's claim for the abatement of the jeopardy assessment and on that date notified petitioner of his determination. At no time did the petitioner and the Commissioner consent in writing within the meaning of the statute to a later determination and/or assessment and collection of any additional tax for the calendar year 1917, before the expiration of the statutory period for assessment and collection. Petitioner's return was not false or fraudulent with intent to evade the tax and no suit or proceeding has been instituted for the collection of any additional tax. The Commissioner requested*3605 the petitioner in writing to execute a written consent for a later determination, assessment, and collection of whatever tax might be finally determined to be due for the year 1917, which the petitioner expressly refused to do.

Considerable correspondence occurred between petitioner, his counsel, and the Commissioner of Internal Revenue before and after the date of the Commissioner's jeopardy assessment in March, 1923, relating to the matter of petitioner's liability for any additional tax and to the matter of hearings before the Bureau of Internal Revenue. None of this correspondence contains a consent to a later determination, assessment, and collection of any additional tax for the calendar year 1917.

Except for the credit of $5,322.25, overpayment of 1916 tax, made by the Commissioner against the deficiency assessment of $93,713.26, no portion of the deficiency assessed in March, 1923, has been paid.

OPINION.

LITTLETON: The claim of petitioner that the collection of the additional tax claimed by the Commissioner for the year 1917 is barred by the statute of limitations is well taken. Petitioner's return was filed May 1, 1918, and the Commissioner's notice of deficiency*3606 was mailed to the petitioner on January 12, 1926, more than five years after the filing of the return.

The Commissioner appears to rely upon various correspondence between him and the taxpayer as constituting a consent to a later determination and collection of the tax assessed in March, 1923, but the Board can find nothing in this correspondence indicating that either the petitioner or the Commissioner regarded it as such a consent within the meaning of the statute.

It appears that on December 19, 1922, the Commissioner mailed to the petitioner a 30-day notice and requested him to execute a consent for a determination, assessment, and collection of the proposed additional tax for 1917 beyond the five-year period provided in the Revenue Act of 1921; that the petitioner declined to execute such a *98 consent; that on January 20, 1923, the Commissioner again wrote to the petitioner sending him a written consent and requesting him to execute same and advising petitioner that unless the consent should be executed by him an immediate assessment of the additional tax proposed in the 30-day letter for 1917 would be made. Again, on January 25, 1923, the Commissioner advised petitioner*3607 that unless the consent theretofore requested should be executed by him within 10 days, the proposed additional tax for 1917, as set forth in the 30-day notice of December 19, 1922, would be assessed. January 26, 1923, petitioner answered the Commissioner by letter in which he expressly declined to execute the consent.

It is clear that the collection of any additional tax for the year 1917 is barred. .

Judgment of no deficiency will be entered.