Dodge v. United States

WHALEY, Judge.

This is a suit to recover $13,578.17 with interest, a part of an. overpayment of $23,-335.56 for 1920 which was applied as a credit on a deficiency of that amount for 1917, tbe collection of which was barred by the statute of limitations at tbe time of the application. Tbe deficiency of $13,578.17 for 1917 was timely assessed March 24, 1923, but the statutory period for its collection bad expired when tbe Commissioner applied a part of an overpayment for 1920 as a credit in satisfaction thereof as hereinafter shown. November 28, 1925, plaintiff’s decedent filed a timely claim for tbe refund of $23,335.56, a part of tbe original tax paid for 1920. Upon consideration of tbe claim for refund, tbe Commissioner determined an overassessment of that amount, and on March 3, 1926, signed a schedule of overassessments which be forwarded to tbe Collector, showing an overassessment in favor of decedent of $23,-335.56. Consistent with tbe instructions received, tbe Collector examined tbe decedent’s accounts and found that tbe entire amount constituted an overpayment for 1920, but that a deficiency of $13,578.17 was outstanding for 1917. Tbe Collector accordingly entered tbe overpayment of $23,335.56 for 1920 on a schedule of refunds and credits, and showed $13,578.17 of that amount as a credit against tbe outstanding deficiency for 1917 and tbe balance, $9,757.39, as refundable. *608The schedule of refunds and credits was approved by the Commissioner April 13, 1926, and a cheek for $9,757.39, together with a certificate of overassessment, was forwarded to the decedent May 26, 1926. The certificate of overassessment was in the usual form and showed that a credit of a part of the overpayment for 1920 had been applied as a credit to the deficiency for 1917 as indicated above and that the balance for which the cheek was inclosed was refundable.

No objection was made by plaintiff to the foregoing action until April 7, 1932, when this suit was brought seeking the recovery of $13,578.17 of the overpayment for 1920 which had been applied against the deficiency of that amount for 1917, and assigning as a basis therefor that the credit of that amount against the deficiency for 1917 was illegal and void for the reason that at the date of such application the collection of the deficiency for 1917 was barred by the statute of limitations. The situation, on principle, is identical with that presented in Pratt & Whitney Company v. United States, 6 F. Supp. 574, decided by this court April 9, 1934, wherein we held, on the basis of R. H. Stearns Co. v. United States, 291 U. S. 54, 54 S. Ct. 325, 78 L. Ed. 647, that an account settled arose on account of the entire transaction and that recovery could not be had of the entire determined overpayment for one of the years without considering a charge against such overpayment of the deficiency for the other year. That is the situation in the ease at bar. The fact that the deficiency for 1917 was barred is immaterial. The certificate of overassessment showed an overassessment in favor of plaintiff for 1920, but it also showed an outstanding assessment against plaintiff for 1917, and that only the excess of the overassessment was refundable. Plaintiff accepted the excess amount, and after almost six years brought this suit to recover on the favorable item set out in the account, disregarding the unfavorable item. For reasons fully stated in the eases referred to, this cannot be done. It accordingly follows that the petition must be dismissed. It is so ordered.