The opinion of the court was delivered by: KALODNER
This is a dispute concerning the proper calculation of interest on a federal estate tax refund, where there has been a five months delay in delivery of the refund check.
The Collector of Internal Revenue has filed a motion for an order directing entry of satisfaction of judgment. The Collector asserts that the judgment has now been paid in full with interest, and that the plaintiffs have refused to enter a satisfaction of the judgment. To this motion the plaintiffs filed an answer, setting forth the fact that while the principal amount of the judgment has been paid, the full amount of interest has not been paid. Interest was apparently computed to a date within thirty days of the date of the Government's refund check (in accordance with the provisions of Section 615 of the Revenue Act of 1928, as amended, 28 U.S.C.A. § 284), but there was a delay of approximately five months in the transmission of the check by the Collector to the plaintiffs. This delay was apparently due to the fact that the Collector's records indicated that there was some other outstanding claim against the plaintiffs which might be an offset. Later it appears it was found by the Collector that the said outstanding claim should have been cleared from the Collector's records. It is obvious, therefore, that the delay in the transmission of the refund check to the plaintiffs was not the result of wilful delay or neglect, but apparently was inadvertent, although it may be that the Collector might have been more diligent in investigating the matter and transmitting the check.
The Government's position is that there is no authority under the law for the computation an payment of interest beyond the date set forth in Section 615 of the Revenue Act of 1928, supra, and that since interest was paid up to a period within thirty days of the date of the refund check, no additional interest is due under the law.
The plaintiffs' position is that this Court should construe Section 615 so that the words "date of the refund check" would in effect be considered as the date of delivery of the refund check to the plaintiffs. However, counsel for the plaintiffs do not refer the Court to any specific legal authority for their position.
It is not a question of what would be fair to the plaintiff in the matter of allowance of interest, but rather a strict technical question as to what the statutes allow. The general rule is that interest is not to be allowed against the Government except in a case where the Government has either stipulated to pay interest, or where provision for payment of such interest is expressly made by an Act of Congress. United States v. North Carolina, 1889, 136 U.S. 211, 10 S. Ct. 920, 34 L. Ed. 336; Busser, Adm'r, v. United States, 3 Cir., 1942, 130 F.2d 537.
Section 615 of the Internal Revenue Act of 1928 provides as follows: "(b) In any judgment of any court rendered (whether against the United States, a collector or deputy collector of internal revenue, a former collector or deputy collector, or the personal representative in case of death) for any overpayment in respect of any internal-revenue tax, interest shall be allowed at the rate of 6 per centum per annum upon the amount of the overpayment, from the date of the payment or collection thereof to a date preceding the date of the refund check by not more than thirty days, such date to be determined by the Commissioner of Internal Revenue."
This Act was amended on June 22, 1936, § 808, by adding the following provision: "The Commissioner is hereby authorized to tender by check payment of any such judgment, with interest as herein provided, at any time after such judgment becomes final, whether or not a claim for such payment has been duty filed, and such tender shall stop the running of interest, whether or not such refund check is accepted by the judgment creditor."
Section 614 of the Internal Revenue Act of 1928, Title 26 U.S.C.A. Int.Rev.Code, § 3771, which deals with interest on refunds in general (as distinguished from interest in judgments against the United States), reads very much the same as Section 615. It provides (in part) as follows:
"(a) Rate. Interest shall be allowed and paid upon any overpayment in respect of any internal revenue tax at the rate of 6 per centum per annum.
"(b) Period. Such interest shall be allowed and paid as follows: * * *
"(2) Refunds.In the case of a refund, from the date of the overpayment to a date preceding the date of the refund check by not more than thirty days, such date to be determined by the Commissioner, whether or not such refund check is accepted by the taxpayer after tender of such check to the taxpayer. The acceptance of such check shall be without prejudice to any right of the taxpayer to claim any additional overpayment and interest thereon."
In the case of United States v. Wurts, 1938, 303 U.S. 414, 58 S. Ct. 637, 639, 82 L. Ed. 932, the Supreme Court, in discussing Section 614, quoted from House Report No. 2, 70th Congress, 1st Session, pages 34, 35, containing the Committee Report on the Revenue Act of 1928 as follows: "The principal change made in existing law is that in the case of a refund the interest period now terminates with the allowance of the refund, a date which often procedes the actual making of the refund * * *.