Haight v. United States

NETERER, District Judge

(after stating the facts as above). It is axiomatic that the government may not1 be sued unless upon the authority of Congress. Immunity from suit is an inherent right of self-protection (Cary v. Curtis, 44 U. S. [3 How.] 236, 11 L. Ed. 576; Cheatham v. U. S., 92 U. S. 85, 23 L. Ed. 561; R. I. A. & L. R. Co. v. U. S., 254 U. S. 141, 41 S. Ct. 55, 65 L. Ed. 188), and if the right to sue is withheld by section 1210, or its provisions are-applicable, or conditions named are absent, the action must be dismissed.

“Sec. 1210. Any individual who has paid a tax (in accordance with section 218 of the Revenue Act of 1918 or section 218 of the Revenue Act of 1921) as a stockholder of a personal service corporation shall be entitled to a credit or refund, in the manner provided in section 284, if (a) such corporation has been finally determined not to be a personal service corporation, and (b) such corporation has paid the tax imposed by title II of the Revenue Act of 1918 or title II of the Revenue Act of 1921, as the ease may be, and (e) claim therefor is filed within one year after the enactment of this act, or before the expiration of the period of limita-' tions upon the filing of such claim, whichever is the later.” 0

This section, and section 218, Act 1918, and 218, Act 1921 (section 6336%i, Comp. St.) must be construed together. Section 6336%i, supra, provides in substance that personal .service corporations shall not be subject to taxation, but the individual stockholders thereof shall be taxed in the same manner as members of partnerships. A member of a partnership under this section is liable for income tax in his individual capacity; in computing the net income, each partner to include his distributive share, whether distributed or not.

Section 218, Act 1918, is repealed by section 1400 of the Act of 1921 (section 6371%m, Comp. St.). The act, however, remained in force for the assessment and collection of all taxes which have accrued under the Revenue Act of 1918. The provision of this section with relation to personal service corporations, and return and payment by the stockholder, is as section 218, Act 1921 (section 6336%i, Comp. St.), supra. It is therefore apparent that the provisions of section 1210, supra, have relation to the right to refund of Hall and wife, if any, pursu-' ant to the return and tax payment. The Halls, as stockholders, made returns in harmony 'with section 218, supra (section 6336%i, Comp. St.), and upon the determination of the Commissioner of Internal Revenue that the Hall corporation was not a personal service corporation, and the assessment of additional taxes against the corporation, which had not been paid, the Halls became entitled to refund only if such corporation had paid the tax, and, this not having been done, it is obvious that the plaintiff has no claim with relation to the personal service corporation feature.

There does appear, however, an overassessment on items other than those arising from the personal service corporation provision. These have not been discussed, but may be determined upon entry of decree.