Proceeding by the Commissioner of Internal Revenue opposed by the United States Refractories Corporation, to review an order of the United States Board of Tax Appeals.
Before BUFFINGTON, WOOLLEY, and THOMPSON, Circuit Judges.
The question is whether the statute of limitations, as provided by section 250 of the Revenue Acts of 1918 and 1921 (40 Stat. 1082; 42 Stat. 264) and section 278 of the Revenue Act of 1926 (26 USCA § 1058 et seq.), has barred the collection of taxes assessed on a return for the calendar year 1920.
On March 15, 1921, United States Refractories Corporation, respondent in this case, filed its income and profits tax return for the year 1920 (the only year now in question) showing a tax due thereon in the sum of $30,953.68. A few days later the Commissioner of Internal Revenue made an assessment in that amount.
The respondent did not pay its 1920 tax when it made its return (or at any other time) but, accompanying the return, it filed with the collector claims for credit against its tax liability for 1920 of overpayments of taxes for 1917 and 1918.
Subsequently the Commissioner determined against the respondent a tax deficiency for 1920 in the sum of $62,494.18, or $31,540.50 in excess of the tax liability shown by its return.
In December, 1927, he mailed to the respondent a notice of a deficiency in that amount.
In February, 1928, the respondent, contesting the deficiency, filed a petition of redetermination with the United States Board of Tax Appeals.
In October, 1928, the Commissioner applied a part of the overpayments for 1917 and 1918 against the 1920 taxes remaining unpaid.
It is conceded that on these facts alone the original tax for 1920 was outlawed and its collection barred under section 250(d) of the Revenue Acts of 1918 and 1921 which limits collection or credits of taxes to five years and under section 278(d) of the Revenue Act of 1926 (26 USCA § 1061 and note) which extends the period to six years.
Within the span of these dates -- 1921 to 1928 -- things happened which, the government claims, removed the case from under the bar of the statute of limitations. They were as follows:
On February 26, 1926, shortly before the expiration of the five-years period of collection prescribed by the Revenue Act of 1921, the Revenue Act of 1926 was passed by the Congress giving the Commissioner an additional year, or six years from the date of assessment, within which to collect a tax. This extension when applied to the tax in this case ended on March 15, 1927.
On February 16, 1927, within a month of the six-years limitation, the respondent executed an instrument purporting to be a waiver extending the time within which collection might be made to December 31, 1927. This document ...