Opinion · United States Court of Claims
Second Nat. Bank of Saginaw v. United States
Second Nat. Bank of Saginaw v. United States, 39 F.2d 759 (Ct. Cl. 1930)
- Type
- Opinion
- Court
- United States Court of Claims
- Jurisdiction
- Federal
- Date
- 1930-04-07
- Topic
- general
How later courts describe this case
- “The day on which the collector receives the check will be considered the date of payment so far as the taxpayer is concerned, unless the check is returned dishonored”
Citator
UpLaw has not yet analyzed Second Nat. Bank of Saginaw v. United States. The absence of a flag is not a finding that it is good law.
- Cited by
- 4 opinions
SECOND NAT. BANK v. UNITED STATES,39 F.2d 759(Ct.Cl. 1930)
SECOND NAT. BANK OF SAGINAW v. UNITED STATES.
No. K-38.
Court of Claims.
April 7, 1930.
Petition dismissed.
This case having been heard by the Court of Claims, the court, pursuant to the stipulation of the parties, makes the following special findings of fact:
The plaintiff is a corporation and during the period involved in this suit was the executor and trustee of the estate of one Wellington R. Burt, and on March 15, 1923, the plaintiff, as trustee of said estate, made a return of income tax for the calendar year 1922 to the Commissioner of Internal Revenue, showing a tax due in the sum of $19,355.36.
Four installment checks for the amount of the tax so reported in said return were delivered by plaintiff to the collector of internal revenue on the following dates and in the amounts stated: March 15, 1923, $4,838.84; June 15, 1923, $4,838.84; September 17, 1923, $4,838.84; and December 13, 1923, $4,838.84. The last-named check was drawn on the Second National Bank of Saginaw, Mich., and was paid by that bank on the 15th day of December, 1923.
During the year 1922, the plaintiff had distributed and paid to the beneficiaries of the trust, income of the trust estate in the sum of $37,500, but in making its income tax return failed to claim or take said sum as a deduction from the gross income of the trust estate for the year 1922.
Thereafter the Commissioner of Internal Revenue audited and reviewed the return so filed by the plaintiff but failed to allow any deduction from the gross income of said trust estate for the year 1922 of said sum of $37,500 paid to the beneficiaries as aforesaid because no claim was made therefor in said return. As a result, however, of said audit and review, the Commissioner of Internal Revenue found due and assessed an additional tax in the sum of $109.44, which said sum, together with interest thereon in the amount of $18.06, a total of $127.50, was paid to said collector of internal revenue on May 4, 1926.
On December 15, 1927, plaintiff filed with the collector of internal revenue at Detroit, Mich., a claim for refund in the sum of $4,838.84, alleging therein the following grounds: "The will of Wellington R. Burt directed payments to thirty annuitants payable out of income. Such annuity payments are allowable as deductions from income, but in making return, no deduction was claimed. The return for 1922 showed tax $19,355.36, and that amount was paid. A corrected return, with additional allowable deductions would have shown tax due to be $4,896.58; therefore there was overpayment of $14,015.16. Because of limitations of time for refunds, claim is made for the rebate of payment of $4,838.84 on December 14, 1923, only."
On November 7, 1928, the Commissioner of Internal Revenue, in rejecting said claim for refund, found that the total income tax assessed against the trustee as aforesaid for the year 1922 was the sum of $19,464.80; that the correct tax assessable was $4,943.26; that there was therefore an overassessment in the sum of $14,521.54, but that claim for refund of said overassessment to the extent of $14,412.10 was barred by the statute of limitations; and that the only overassessment allowable was the sum of $109.44. The latter sum with the interest thereon has been refunded to this plaintiff.Page 760
Joseph H. Sheppard, of Washington, D.C., and Charles B. Rugg, Asst. Atty. Gen. (Charles F. Kincheloe, of Washington, D.C., on the brief), for the United States.
Before BOOTH, Chief Justice, and GRAHAM, GREEN, LITTLETON, and WILLIAMS, Judges, concur.
There is no dispute about the facts. The particular payment in controversy was made by a check which was delivered to the collector of internal revenue on the 13th day of December, 1923. The check was drawn upon the Second National Bank of Saginaw and was paid by that bank on the 15th day of December, 1923, and on December 15, 1927, the plaintiff filed its claim for refund in the amount of $4,838.84, being the amount of the check. Under the statute in force at that time, the claim for refund was required to be filed within four years from the time of the payment of the tax.
The plaintiff relies on the well-known rule which ordinarily applies — that receipt of a check does not operate as a payment until the check is cashed — and therefore contends that the statute of limitations did not begin to run in this case on the date the check was delivered to the commissioner, but on the date it was paid by the bank.
In this connection the defendant calls attention to the fact that the statute authorizing the collector to receive checks in payment of taxes provides that in case a check so received is not paid by the bank on which it is drawn, the person who has tendered such check shall remain liable for the tax. This provision, it is said, shows that payment was not made when the check was delivered, and, taken in connection with the other language of the statute, shows that the receipt of checks was merely permissive, and while it operated for the convenience of the taxpayer the receipt of the check did not extinguish his liability.
When these provisions are considered in the light of other provisions of the law and Treasury Regulations made thereunder, we think there is no doubt about the matter. Article 1733 of Treasury Regulations headed"Payment of tax by uncertifiedchecks"provides, among other things, as follows: "The day on which the collector receives the check will be considered the date of payment so far as the taxpayer is concerned, unless the check is returned dishonored."
This regulation fixed the date of payment, and if the Treasury authorities had the right to make such a regulation it is controlling in the case, for the taxpayer was bound to take notice thereof.
We think that authority to make this regulation was given by the statute which authorized the collector to receive checks in payment of taxes to which reference has previously been made and which is as follows: "Sec. 1325. That collectors may receive, * * * uncertified checks in payment of income, war-profits and excess-profits taxes and any other taxes payable other than by stamp, during such time and under such regulations as the Commissioner, with the approval of the Secretary, shall prescribe; but if a check so received is not paid by the bank on which it is drawn the person by whom such check has been tendered shall remain liable for the payment of the tax and for all legal penalties and additions the same as if such check had not been tendered."42 Stat. 316.
It will be observed that this section authorizes these checks to be received "under such regulations as the Commissioner, with the approval of the Secretary, shall prescribe." If the regulation in question was a reasonable one, the Treasury had the right to prescribe it. We think it was reasonable, as it was manifestly for the best interests of both the government and the taxpayer that it should be known whether the date when the check was received by the commissioner was to be taken as the date of payment. In many cases such knowledge would be important to one party or the other. If not definitely known or understood, it would be often difficult to determine when further action should be taken if such action became necessary.
As we find that the regulation was authorized and binding upon the plaintiff, it follows that a claim for refund was filed too late and plaintiff's petition must be dismissed. It is so ordered.Page 974