A-15879, OCTOBER 28, 1926, 6 COMP. GEN. 299

A-15879: Oct 28, 1926

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INTERNAL REVENUE TAX REFUNDS - INTEREST WHEN REDUCED TO JUDGMENT WHEN A REFUND OF INTERNAL REVENUE TAXES IS MADE PURSUANT TO SUIT AND JUDGMENT THEREON. THE CLAIMANT'S RIGHT TO INTEREST IS LIMITED TO THAT DECREED IN THE JUDGMENT AND IS NOT FOR COMPUTATION UNDER SECTION 1019 OF THE REVENUE ACT OF 1924. WHICH IS APPLICABLE ONLY TO REFUNDS AUTHORIZED BY THE COMMISSIONER OF INTERNAL REVENUE. OCTOBER 28 1926: THERE IS FOR CONSIDERATION BY THIS OFFICE CLAIM OF ALBERT F. THE JUDGMENT IN QUESTION PROVIDED THAT THE PLAINTIFF WAS ENTITLED TO RECOVER SAID PRINCIPAL SUM. IT WAS ORDERED. 296.65 WAS MADE TO CLAIMANT. IT IS NOW CONTENDED ON BEHALF OF THE CLAIMANT THAT HE IS ENTITLED TO INTEREST UPON THE AMOUNT OF $1.

A-15879, OCTOBER 28, 1926, 6 COMP. GEN. 299

INTERNAL REVENUE TAX REFUNDS - INTEREST WHEN REDUCED TO JUDGMENT WHEN A REFUND OF INTERNAL REVENUE TAXES IS MADE PURSUANT TO SUIT AND JUDGMENT THEREON, THE CLAIMANT'S RIGHT TO INTEREST IS LIMITED TO THAT DECREED IN THE JUDGMENT AND IS NOT FOR COMPUTATION UNDER SECTION 1019 OF THE REVENUE ACT OF 1924, 43 STAT. 346, WHICH IS APPLICABLE ONLY TO REFUNDS AUTHORIZED BY THE COMMISSIONER OF INTERNAL REVENUE.

DECISION BY COMPTROLLER GENERAL MCCARL, OCTOBER 28 1926:

THERE IS FOR CONSIDERATION BY THIS OFFICE CLAIM OF ALBERT F. DANIELSON FOR INTEREST UPON A JUDGMENT RENDERED IN HIS FAVOR AGAINST THE UNITED STATES BY THE UNITED STATES DISTRICT COURT, DISTRICT OF NEBRASKA, OMAHA DIVISION, UNDER DATE OF MAY 29, 1925, IN A SUIT BROUGHT BY CLAIMANT FOR THE RECOVERY OF THE SUM OF $916.67 SPECIAL LIQUOR TAX PAID UNDER PROTEST TO THE INTERNAL-REVENUE COLLECTOR, DISTRICT OF NEBRASKA, UNDER DATE OF SEPTEMBER 30, 1919.

THE JUDGMENT IN QUESTION PROVIDED THAT THE PLAINTIFF WAS ENTITLED TO RECOVER SAID PRINCIPAL SUM, PLUS INTEREST THEREON, AMOUNTING TO $363.53, OR A TOTAL OF $1,280.20, AND IT WAS ORDERED, ADJUDGED, AND DECREED BY THE COURT THAT THE PLAINTIFF SHOULD RECOVER FROM THE UNITED STATES THE SUM OF$1,280.20 AND COSTS OF THE ACTION, ASSESSED, AS CERTIFIED BY THE CLERK OF THE COURT, AT $16.45.

THE COMMISSIONER OF INTERNAL REVENUE, UNDER DATE OF DECEMBER 1, 1925, FORWARDED THE JUDGMENT TO THIS OFFICE FOR PAYMENT PURSUANT TO THE PROVISIONS OF THE ACT OF FEBRUARY 18, 1904, 33 STAT. 41, AND BY CERTIFICATE OF SETTLEMENT NO. 0106976, DATED JANUARY 21, 1926, PAYMENT THEREFOR IN THE SUM OF $1,296.65 WAS MADE TO CLAIMANT, FOR WHICH HE HAS APPARENTLY ACCEPTED CHECK DRAWN BY THE TREASURER OF THE UNITED STATES THEREFOR.

IT IS NOW CONTENDED ON BEHALF OF THE CLAIMANT THAT HE IS ENTITLED TO INTEREST UPON THE AMOUNT OF $1,296.65 FROM DATE OF FINAL JUDGMENT, MAY 29, 1925,"TO THE DATE ON WHICH THE COMMISSIONER SIGNED THE AUTHORIZATION TO THE DISBURSING CLERK OF THE TREASURY DIRECTING THE SAID DISBURSING CLERK TO PAY THE REFUND," BASING SUCH CLAIM ON THE PROVISIONS OF SECTION 1019, REVENUE ACT OF 1924, 43 STAT. 346. THE SECTION IN QUESTION PROVIDES:

UPON THE ALLOWANCE OF A CREDIT OR REFUND OF ANY INTERNAL-REVENUE TAX ERRONEOUSLY OR ILLEGALLY ASSESSED OR COLLECTED, OR OF ANY PENALTY COLLECTED WITHOUT AUTHORITY, OR OF ANY SUM WHICH WAS EXCESSIVE OR IN ANY MANNER WRONGFULLY COLLECTED, INTEREST SHALL BE ALLOWED AND PAID ON THE AMOUNT OF SUCH CREDIT OR REFUND AT THE RATE OF 6 PERCENTUM PER ANNUM FROM THE DATE SUCH TAX, PENALTY, OR SUM WAS PAID TO THE DATE OF THE ALLOWANCE OF THE REFUND, OR IN CASE OF A CREDIT TO THE DUE DATE OF THE AMOUNT AGAINST WHICH THE CREDIT IS TAKEN, BUT IF THE AMOUNT AGAINST WHICH THE CREDIT IS TAKEN IS AN ADDITIONAL ASSESSMENT, THEN TO THE DATE OF THE ASSESSMENT OF THAT AMOUNT. THE TERM ,ADDITIONAL ASSESSMENT" AS USED IN THIS SECTION MEANS A FURTHER ASSESSMENT FOR A TAX OF THE SAME CHARACTER PREVIOUSLY PAID IN PART.

THAT THE SECTION JUST QUOTED WAS NOT INTENDED TO APPLY IN CASES WHERE THE REFUND OF TAXES ILLEGALLY ASSESSED OR COLLECTED WAS OBTAINED BY VIRTUE OF A JUDGMENT IN A UNITED STATES COURT IS SHOWN BY THE NEXT SECTION OF THE REVENUE ACT OF 1924, IN WHICH SECTION 177 OF THE JUDICIAL CODE, AS AMENDED, IS REENACTED WITHOUT CHANGE AS FOLLOWS:

NO INTEREST SHALL BE ALLOWED ON ANY CLAIM UP TO THE TIME OF THE RENDITION OF JUDGMENT BY THE COURT OF CLAIMS, UNLESS UPON A CONTRACT EXPRESSLY STIPULATING FOR THE PAYMENT OF INTEREST, EXCEPT THAT INTEREST MAY BE ALLOWED IN ANY JUDGMENT OF ANY COURT RENDERED AFTER THE PASSAGE OF THE REVENUE ACT OF 1921 AGAINST THE UNITED STATES FOR ANY INTERNAL-REVENUE TAX ERRONEOUSLY OR ILLEGALLY ASSESSED OR COLLECTED, OR FOR ANY PENALTY COLLECTED WITHOUT AUTHORITY OR ANY SUM WHICH WAS EXCESSIVE OR IN ANY MANNER WRONGFULLY COLLECTED UNDER THE INTERNAL REVENUE LAWS.

THE APPROPRIATIONS MADE FOR THE REFUND OF TAXES ILLEGALLY ASSESSED AND COLLECTED PROVIDE A LUMP SUM "FOR REFUNDING TAXES ILLEGALLY COLLECTED UNDER THE PROVISIONS OF SECTION 3320 AND 3689, REVISED STATUTES, AS AMENDED BY THE ACT OF FEBRUARY 24, 1919 * * *," 41 STAT. 654; ID. 1274; 42 STAT. 376; ID. 1098; 43 STAT. 49; ID. 757; 44 STAT. 180.

THE AMENDMENT OF 1919, 40 STAT. 1145, REFERRED TO ABOVE, PROVIDED THAT BEGINNING WITH THE FISCAL YEAR 1921 AND ANNUALLY THEREAFTER, THE SECRETARY OF THE TREASURY WAS REQUIRED TO SUBMIT---

* * * AN ESTIMATE OF APPROPRIATIONS TO REFUND AND PAY BACK DUTIES OR TAXES ERRONEOUSLY OR ILLEGALLY ASSESSED OR COLLECTED UNDER THE INTERNAL REVENUE LAWS, AND TO PAY JUDGMENTS, INCLUDING INTEREST AND COSTS,RENDERED FOR TAXES OR PENALTIES ERRONEOUSLY OR ILLEGALLY ASSESSED OR COLLECTED UNDER THE INTERNAL REVENUE LAWS.

SECTION 1019, REVENUE ACT OF 1924, DEALS EXCLUSIVELY WITH THE ALLOWANCE OF INTEREST IN CASES WHERE THE COMMISSIONER OF INTERNAL REVENUE DETERMINES THAT AN OVERASSESSMENT WAS MADE IN A PARTICULAR CASE AND THAT TAXES WERE ILLEGALLY COLLECTED. IN SUCH CASES THE REGULATIONS HAVE PROVIDED AND THE COURTS HAVE HELD THAT INTEREST OF 6 PERCENT IS DUE THE TAXPAYER FROM DATE OF PAYMENT TO DATE OF ALLOWANCE, WHICH LATTER DATE HAS BEEN CONSTRUED AND UNDERSTOOD AS MEANING THE DATE UPON WHICH THE COMMISSIONER AUTHORIZED THE DISBURSING CLERK OF THE TREASURY DEPARTMENT TO MAKE THE REFUND. IN A CASE SUCH AS IS HERE INVOLVED, WHERE A JUDGMENT HAS BEEN OBTAINED IN A UNITED STATES COURT, THE CLAIM FOR THE PAYMENT THEREOF IS NOT ONE, STRICTLY SPEAKING, FOR REFUND OF TAXES ILLEGALLY COLLECTED, BUT ONE BASED UPON THE JUDGMENT, AND, THEREFORE, A JUDGMENT CLAIM. IN SUCH CASES SECTION 1019 AND THE REGULATIONS MADE PURSUANT THERETO HAVE NO APPLICATION AND THE THEORY THAT INTEREST IS DUE TO THE DATE THE COMMISSIONER CERTIFIES THE CLAIM FOR PAYMENT FAILS FOR THE REASON THAT THE ALLOWANCE OF THE REFUND WAS MADE, NOT BY THE COMMISSIONER, BUT BY THE COURT. AND, UPON THE SAME THEORY THAT INTEREST IS DUE AND PAYABLE TO DATE OF ALLOWANCE, THE COURT ALLOWED INTEREST UP TO THE DATE OF FINAL JUDGMENT, WHICH DATE, FOR THE PURPOSE OF COMPUTING INTEREST ON THE AMOUNT OF TAXES ILLEGALLY COLLECTED WHEN THE CASE IS FOR ADJUDICATION BY A UNITED STATES COURT, MUST BE CONSIDERED AS THE DATE OF ALLOWANCE.

THE TWO CASES CITED IN SUPPORT OF THE PRESENT CLAIM, NAMELY, GIRARD TRUST COMPANY V. UNITED STATES, 270 U.S. 163, AND BLAIR V. UNITED STATES, 6 FED.REP. (2D) 679, BOTH INVOLVED ALLOWANCES OF REFUNDS BY THE COMMISSIONER OF INTERNAL REVENUE AND CAN HAVE NO BEARING UPON THE PRESENT CASE IN WHICH THE REFUND WAS MADE PURSUANT TO A JUDGMENT OF A UNITED STATES COURT.

INTEREST BETWEEN DATE OF FINAL JUDGMENT AND ACTUAL PAYMENT, OR DATE OF CERTIFICATION BY THE COMMISSIONER OF INTERNAL REVENUE, AS HERE CLAIMED, CAN NOT BE PAID AS A GENERAL RULE IN THE ABSENCE OF A LAW SPECIFICALLY AUTHORIZING THE PAYMENT OF SUCH INTEREST. NO SUCH LAW EXISTS IN MATTERS INVOLVING SUITS FOR REFUND OF INTERNAL REVENUE TAXES ILLEGALLY ASSESSED OR COLLECTED. SEE IN THIS CONNECTION UNITED STATES V. SHERMAN, 98 U.S. 567; ANGARICA V. BAYARD, 127 U.S. 251; UNITED STATES V. NORTH CAROLINA, 136 U.S. 211.

IT APPEARING THAT CLAIMANT HAS BEEN PAID IN FULL UNDER CERTIFICATE OF SETTLEMENT NO. 0106976 FOR THE AMOUNTS ALLOWED BY THE JUDGMENT OF MAY 29, 1925, CLAIM FOR ADDITIONAL INTEREST UPON THE SUM ALLOWED BY SUCH JUDGMENT MUST BE AND IS DISALLOWED.