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ALLEGHENY HEATING CO. v. LEWELLYN

DISTRICT COURT, W.D. PENNSYLVANIA


May 15, 1936

ALLEGHENY HEATING CO.
v.
LEWELLYN, Former Collector of Internal Revenue

The opinion of the court was delivered by: SCHOONMAKER

SCHOONMAKER, District Judge.

This is an action to recover a portion of income and excess-profits taxes paid by the plaintiff for the years 1917 and 1918. The question presented is whether or not the recovery of admitted overpayments of income and excess-profits taxes for the years 1917 and 1918 are barred by the statute of limitations.

Briefly stated, the facts stipulated are as follows:

 "For the year 1917 plaintiff filed its return of income and excess profits tax on April 1, 1918, and the full amount of tax shown due, in the sum of $94,628.60, was duly assessed by the Commissioner of Internal Revenue and paid on June 15, 1918. A claim for refund of $73,791.07 of the original tax reported and paid was filed on February 28, 1923, exactly fifteen days prior to the running of the five-year statute of limitations for filing refund claims. The claim was predicated upon two specific grounds; namely, that the taxpayer was entitled to additional depreciation, and that it should be affiliated with certain other corporations. In addition to the above grounds, the reasons for which were set out in more than two pages of single-spaced typewritten sheets, the taxpayer reserved 'the right to submit additional information and evidence in support of its claim as may be deemed necessary.'

 "For the year 1918 taxpayer filed its return on April 11, 1919, and the full amount of tax shown due thereon was $182,965.59, which was duly assessed by the Commissioner and paid in four equal instalments. On March 15, 1924 -- the last day upon which a claim for refund could be filed under the applicable five-year limitation statute -- plaintiff filed a claim for $45,000 of the tax so paid. This claim was specific and alleged that plaintiff should have been affiliated. No other ground was alleged or set forth.

 "Subsequent to the filing of said returns and claims for refunds, as above set out, certain waivers were filed by the taxpayer which extended the period for assessment and/or collection of any tax for said years to and including December 31, 1927.

 "On November 9, 1925, the Commissioner of Internal Revenue mailed to the taxpayer a so-called thirty-day letter advising it of a redetermination of its taxliability for the years 1917 and 1918 and for the period ending February 21, 1919, of a deficiency in tax for these years in the respective amounts of $5,979.96, $461.40 and $37,630.89, total, $44,072.25. In said letter the Commissioner of Internal Revenue advised the plaintiff that its claims for refund theretofore filed had been given careful consideration, and, in effect, held that it was not entitled to further depreciation or affiliation for either year.

 "On November 25, 1925, plaintiff submitted a brief protesting 'the findings of the Income Tax Unit as set forth in its letter under date of November 9, 1925.' This brief was filed after the running of the five-year statute of limitations for filing claims for refund, and did not in any respect refer to the grounds set forth in the original claims. After stating the grounds of protest the plaintiff expressly reserved the right to file additional exceptions to the action of the Commissioner 'in increasing the taxpayer's income and profits taxes' for the period above mentioned. No mention was made of the claims for depreciation and affiliation originally filed.

 "On January 16, 1928, plaintiff filed another protest brief which stated as follows: "This is an application for the reconsideration of the findings of the Income Tax Unit as embodied in its letter dated November 9, 1925, showing the following: Year or Period Deficiency 1917 $ 5,979.96 1918 461.40 Period ending 2/21/19 37,630.89 Total $44,072.25"

19360515

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