A-54676, APRIL 26, 1934, 13 COMP. GEN. 297

A-54676: Apr 26, 1934

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TAXES - DISTRICT OF COLUMBIA - REFUNDS THE AUTHORITY TO REFUND TAXES ERRONEOUSLY COLLECTED BY THE DISTRICT OF COLUMBIA IS BY LAW VESTED IN OFFICIALS OF THE GOVERNMENT OF THE DISTRICT OF COLUMBIA AND THEIR DETERMINATION AS TO WHETHER CERTAIN TAXES HAVE BEEN ERRONEOUSLY COLLECTED IS A MATTER NOT SUBJECT TO REVIEW BY THE GENERAL ACCOUNTING OFFICE. TAXES ASSESSED AND COLLECTED ACCORDING TO LAW ARE NOT ERRONEOUSLY COLLECTED AND THERE WOULD APPEAR TO BE NO AUTHORITY FOR REFUNDING TAXES SO COLLECTED IN CASE IT SHOULD BE DETERMINED LATER THAT REPORTS UPON WHICH THE ASSESSMENTS WERE BASED HAD BEEN FALSELY AND FRAUDULENTLY PREPARED BY THE TAXPAYER. IT BEING ALLEGED BY THE RECEIVER THAT THEY WERE ERRONEOUSLY PAID.

A-54676, APRIL 26, 1934, 13 COMP. GEN. 297

TAXES - DISTRICT OF COLUMBIA - REFUNDS THE AUTHORITY TO REFUND TAXES ERRONEOUSLY COLLECTED BY THE DISTRICT OF COLUMBIA IS BY LAW VESTED IN OFFICIALS OF THE GOVERNMENT OF THE DISTRICT OF COLUMBIA AND THEIR DETERMINATION AS TO WHETHER CERTAIN TAXES HAVE BEEN ERRONEOUSLY COLLECTED IS A MATTER NOT SUBJECT TO REVIEW BY THE GENERAL ACCOUNTING OFFICE. TAXES ASSESSED AND COLLECTED ACCORDING TO LAW ARE NOT ERRONEOUSLY COLLECTED AND THERE WOULD APPEAR TO BE NO AUTHORITY FOR REFUNDING TAXES SO COLLECTED IN CASE IT SHOULD BE DETERMINED LATER THAT REPORTS UPON WHICH THE ASSESSMENTS WERE BASED HAD BEEN FALSELY AND FRAUDULENTLY PREPARED BY THE TAXPAYER.

COMPTROLLER GENERAL MCCARL TO THE PRESIDENT OF THE BOARD OF COMMISSIONERS OF THE DISTRICT OF COLUMBIA, APRIL 26, 1934:

THERE HAS BEEN RECEIVED YOUR LETTER OF MARCH 30, 1934, IN WHICH YOU REQUEST TO BE ADVISED WHETHER TAXES ASSESSED, LEVIED, AND COLLECTED FROM THE PARK SAVINGS BANK, NOW IN RECEIVERSHIP, MAY BE LEGALLY REFUNDED, IT BEING ALLEGED BY THE RECEIVER THAT THEY WERE ERRONEOUSLY PAID.

THE QUESTION OF REFUNDING TAXES COLLECTED BY THE DISTRICT OF COLUMBIA HAS BEEN CONSIDERED BY THIS OFFICE HERETOFORE. IN A LETTER OF FEBRUARY 15, 1928, A-20296, RELATING TO REFUND OF TAXES PAID TO THE DISTRICT OF COLUMBIA BY THE AMERICAN SECURITY AND TRUST CO., IT WAS SAID THAT THE DUTIES OF ASSESSING AND COLLECTING TAXES IN THE DISTRICT OF COLUMBIA ARE IMPOSED BY LAW ON OFFICIALS OF THE GOVERNMENT OF THE DISTRICT OF COLUMBIA AND THEIR DETERMINATION AS TO WHETHER A TAX SHALL BE ASSESSED IN A GIVEN CASE OR AS TO THE AMOUNT THAT SHALL BE ASSESSED ARE MATTERS REGARDED AS NOT SUBJECT TO REVIEW BY THIS OFFICE, AND, ACCORDINGLY, IT WAS STATED THAT NO AUTHORITATIVE DECISION AS TO THE LEGALITY OF THE PROPOSED REFUND WOULD BE ATTEMPTED BUT, IN VIEW OF THE DIFFERENT OPINIONS APPEARING FROM THE RECORD TO EXIST, THE MATTER WOULD BE GIVEN CONSIDERATION BY THIS OFFICE ON THE BASIS OF AN ADVISORY OPINION ONLY. IN A LETTER OF MAY 26, 1932, A- 42025, 11 COMP. GEN. 449, THE LACK OF JURISDICTION WAS AGAIN SUGGESTED AND THE RULE OF THE FORMER CASE WAS FOLLOWED. WHAT WAS SAID IN THE TWO CASES THEN IS EQUALLY APPLICABLE TO THE QUESTION PRESENTED HERE AND, THEREFORE, THIS CASE WILL BE CONSIDERED ON THE SAME BASIS.

IT APPEARS FROM THE RECORD THAT FOR THE FISCAL YEAR ENDING JUNE 30, 1924, AND EACH OF THE EIGHT SUCCEEDING YEARS, THE PARK SAVINGS BANK, THROUGH ITS CASHIER, MADE REPORT UNDER OATH TO THE BOARD OF PERSONAL TAX APPRAISERS AS TO THE AMOUNT OF GROSS EARNINGS AND THE AMOUNT OF INTEREST PAID ITS DEPOSITORS FOR THE PRECEDING FISCAL YEAR; THAT BASED UPON SUCH REPORT, THE BOARD OF PERSONAL TAX APPRAISERS ASSESSED THE TAXES WHICH WERE PAID TO THE COLLECTOR OF TAXES FOR THE DISTRICT OF COLUMBIA, AND THAT SUBSEQUENTLY, ON JULY 13, 1933, THERE WAS APPOINTED FOR SAID BANK BY THE COMPTROLLER OF THE CURRENCY A RECEIVER, WHO HAS CAUSED AN AUDIT OF THE BOOKS OF THE BANK TO BE MADE, WHICH, IF CORRECT, WOULD SHOW THAT THE REPORT OF THE BANK FOR EACH OF THE YEARS IN QUESTION MADE TO THE BOARD OF PERSONAL TAX APPRAISERS, WAS INCORRECT AND FALSE AND REPRESENTED THE GROSS EARNINGS LESS INTEREST PAID TO DEPOSITORS AS BEING GREATER THAN THEY ACTUALLY WERE, AS A RESULT OF WHICH, THE TAXES ASSESSED AND COLLECTED WERE IN EXCESS OF WHAT WOULD HAVE BEEN DUE AND PAYABLE IN CASE THE REPORTS HAD BEEN CORRECTLY MADE.

SECTION 762, TITLE 20, DISTRICT OF COLUMBIA CODE, INSOFAR AS IS APPLICABLE HERE, PROVIDES:

INCORPORATED SAVINGS BANKS PAYING INTEREST TO THEIR DEPOSITORS SHALL, THROUGH THEIR PRESIDENT OR CASHIER, MAKE REPORT UNDER OATH TO THE BOARD OF PERSONAL TAX APPRAISERS ON OR BEFORE THE FIRST DAY OF AUGUST IN EACH YEAR AS TO THE AMOUNT OF THEIR GROSS EARNINGS, LESS THE AMOUNT PAID AS INTEREST TO THEIR DEPOSITORS FOR THE PRECEDING YEAR ENDING JUNE THIRTIETH, AND SHALL PAY THEREON TO THE COLLECTOR OF TAXES OF THE DISTRICT OF COLUMBIA FOUR PERCENTUM PER ANNUM. (JULY 1, 1902, 32 STAT. 619, C. 1352, SEC. 6, PAR. 7; APR. 28, 1904, 33 STAT. 564, C. 1815.)

SECTION 821, TITLE 20, DISTRICT OF COLUMBIA CODE, PROVIDES:

TAXES ERRONEOUSLY PAID TO BE REFUNDED.--- THE COMMISSIONERS ARE HEREBY AUTHORIZED AND INSTRUCTED TO CAUSE ALL TAXES ERRONEOUSLY PAID IN THE DISTRICT OF COLUMBIA TO BE REFUNDED BY THE PROPER ACCOUNTING AND DISBURSING OFFICERS OF SAID DISTRICT, UPON THE CERTIFICATE OF THE COLLECTOR OF SUCH ERRONEOUS PAYMENT, WHICH CERTIFICATE SHALL STATE THE NATURE OF THE ERROR, THE NAME OF THE PERSON OR PERSONS BY WHOM SUCH EXCESSIVE PAYMENT WAS MADE, AND SUCH OTHER PARTICULARS AS MAY BE NECESSARY TO SATISFY THE ACCOUNTING OFFICERS THAT SUCH CLAIM FOR REIMBURSEMENT IS JUST AND EQUITABLE; AND THE SAID ACCOUNTING AND DISBURSING OFFICERS SHALL PAY ALL MONEYS SO REFUNDED OUT OF, AND CHARGE THE SAME TO, THE FUND WHICH WAS CREDITED WITH THE ERRONEOUS PAYMENT. (LEG.ASSEM., JAN. 19, 1872, C. 31, SEC. 1, P. 52; JUNE 20, 1874, 18 STAT. 116, C. 337, SEC. 2.)

IT WILL BE NOTED THAT THE LAW PROVIDES FOR THE ASSESSMENT AND COLLECTION OF TAXES UPON SAVINGS BANKS BASED UPON A REPORT MADE BY THE BANK THROUGH ITS PRESIDENT OR CASHIER UNDER OATH AND FOR THE REFUNDING THEREOF ONLY WHEN ERRONEOUSLY PAID AND UPON THE CERTIFICATE OF THE COLLECTOR OF SUCH ERRONEOUS PAYMENT SETTING OUT THE NATURE OF THE ERROR AND SUCH OTHER PARTICULARS AS MAY BE NECESSARY TO SATISFY THE ACCOUNTING OFFICERS THAT THE CLAIM FOR REIMBURSEMENT IS JUST AND EQUITABLE. THE REPORT REQUIRED WAS MADE BY THE PROPER OFFICER OF THE BANK; THE BOARD OF PERSONAL TAX APPRAISERS MADE THE ASSESSMENT BASED UPON THE REPORT AND THE TAX WAS COLLECTED ACCORDINGLY. ALL THAT IS REQUIRED BY LAW IN SUCH CASES WAS DONE AND THE PROCEDURE FOLLOWED IN MAKING THE ASSESSMENT AND COLLECTING THE TAXES WAS STRICTLY ACCORDING TO LAW AND THERE WAS NO OTHER LEGAL PROCEDURE PROVIDED IN SUCH CASES.

IT IS CONTENDED BY COUNSEL FOR CLAIMANT THAT THE AUDIT MADE BY THE CERTIFIED PUBLIC ACCOUNTANT IS CORRECT AND THAT THE REPORTS OF THE BANK MADE UNDER OATH ARE INCORRECT AND, CONSEQUENTLY, THE TAX PAID WAS IN EXCESS OF THE AMOUNT THE DISTRICT OF COLUMBIA WAS ENTITLED TO RECEIVE AND SHOULD BE REFUNDED FOR THE BENEFIT OF THE DEPOSITORS. THE REPORTS TO THE BOARD OF PERSONAL TAX APPRAISERS WERE MADE BY THE PROPER OFFICIAL OF THE BANK AT THE CLOSE OF EACH YEAR; HE WAS THE PERSON HAVING CUSTODY OF THE RECORDS MADE BY HIM OR UNDER HIS SUPERVISION AND IF THEY WERE HONESTLY MADE, ARGUMENT THAT AN AUDIT MADE SEVERAL YEARS LATER WAS MORE ACCURATE, WOULD BE FUTILE. IF THE REPORTS WERE NOT MADE IN GOOD FAITH BUT WERE FALSE AND FRAUDULENT AND MADE FOR THE PURPOSE OF MISLEADING THE PUBLIC AS TO THE PROSPERITY OF THE BANK, IT IS ALTOGETHER PROBABLE THAT THE RECORDS WERE SO KEPT AND FALSIFIED THAT A CORRECT AUDIT, SEVERAL YEARS LATER OR AT ANY TIME, WOULD BE IMPOSSIBLE. THE ACCURACY OF THE AUDIT IS PRACTICALLY REFUTED BY THE AUDITOR FOR THE DISTRICT OF COLUMBIA IN HIS LETTER OF MARCH 13, 1934, IN WHICH HE POINTED OUT A NUMBER OF IRREGULARITIES AND DISCREPANCIES. THE ACTION OF THE BOARD OF COMMISSIONERS ON DECEMBER 12, 1933, IN REJECTING THE CLAIM, CLEARLY DISCLOSES THAT THE EVIDENCE FURNISHED WAS NOT CONCLUSIVE. EVEN THOUGH REIMBURSEMENT WAS AUTHORIZED BY LAW UNDER THE ALLEGED CIRCUMSTANCES, WHICH IS NOT THE CASE, FOR ALL PRACTICAL PURPOSES, APPARENTLY, IT WOULD BE IMPOSSIBLE UNDER THE CIRCUMSTANCES IN THIS CASE TO DETERMINE THE AMOUNT TO BE REFUNDED. THERE IS NO AUTHORITY OF LAW FOR ACCEPTING THE REPORT OF THE CERTIFIED PUBLIC ACCOUNTANT AS THE FACTS IN THE CASE BUT THE ACCOUNTING OFFICERS OF THE DISTRICT OF COLUMBIA MUST BE SATISFIED FROM PARTICULARS IN THE CASE THAT THE CLAIM IS EQUITABLE AND JUST.

FURTHERMORE, WAS THE TAX ERRONEOUSLY PAID? AN ERROR OF FACT PROCEEDS FROM IGNORANCE OF THAT WHICH REALLY EXISTS OR A MISTAKEN BELIEF IN THAT WHICH IN REALITY DOES NOT EXIST. ERRORS OF FACT ARE NOT ASSOCIATED WITH CIRCUMSTANCES FRAUDULENTLY SET UP. UNDER THE LAW, THE DUTY TO REFUND IS RESTRICTED TO INSTANCES IN WHICH TAXES HAVE BEEN "ERRONEOUSLY COLLECTED," AN EXPRESSION WHICH DENOTES SOME MISTAKE OR ERROR ON THE PART OF THE COLLECTING OFFICERS, WHEN THEY SHOULD NOT HAVE BEEN COLLECTED, AND NOT SOME FRAUD OR FALSE PRETENSE PRACTICED ON THEM WHEREBY THE TAXPAYER MAKES IT APPEAR THAT IT IS SUBJECT TO TAX WHEN IN TRUTH IT IS NOT. IF THE STATEMENT OF THE OFFICERS OF THE BANK, MADE ACCORDING TO LAW, HAD SHOWN THAT THE TAX WAS NOT DUE, YET IT WAS COLLECTED, IT WOULD HAVE BEEN ERRONEOUSLY PAID OR COLLECTED; OR IF THE STATEMENT OF THE OFFICERS OF THE BANK WAS INCORRECTLY MADE OWING TO A MISTAKEN BELIEF AS TO THE AMOUNT OF GROSS EARNINGS OR OF INTEREST PAID, THE AMOUNT COLLECTED IN EXCESS OF THE AMOUNT ACTUALLY DUE WOULD BE ERRONEOUSLY PAID. BUT, WHERE THE PROPERTY WAS TAXABLE AND THE PROOFS FURNISHED BY THE TAXPAYER ACCORDING TO LAW SHOWED THE TAX DUE AND COLLECTION WAS MADE ON THAT BASIS AND IT LATER DEVELOPS THAT THE PROOFS UPON WHICH PAYMENTS WERE BASED WERE FALSE AND FRAUDULENT, IT COULD NOT BE HELD THAT THE PAYMENT WAS ERRONEOUSLY MADE AND IN SUCH CASE A REFUND WOULD BE UNAUTHORIZED. SEE UNITED STATES V. COLORADO ANTHRACITE CO., 225 U.S. 219.

THE CONTENTION THAT ALL REFUNDS OBTAINED WILL BENEFIT DEPOSITORS, WHILE APPEALING TO THE SYMPATHY OF OFFICIALS CHARGED WITH DETERMINATION OF THE LEGALITY OF THE CLAIM, DOES NOT STRENGTHEN THE CASE. THE TAXES WERE ASSESSED AND COLLECTED ACCORDING TO LAW. IF THE DEPOSITORS HAVE SUFFERED LOSSES THROUGH THE FALSE AND FRAUDULENT ACTIONS OF THE OFFICERS OF THE BANK TO WHICH THEY HAD ENTRUSTED THEIR DEPOSITS AND THEREBY CONSTITUTED THEIR AGENT INSOFAR AS THEIR INTEREST APPEARS HEREIN, IT MUST BE CONSIDERED NOTHING MORE THAN ONE OF THE HAZARDS OF THE BANKING BUSINESS UNDER THE RULES, REGULATIONS, AND LAW IN EFFECT AT THAT TIME AND CANNOT BE ACCEPTED AS A LEGAL REASON FOR REFUNDING TAXES OTHERWISE LEGALLY PAID.

FOR THE REASONS HEREIN STATED, I HAVE TO ADVISE THAT THERE APPEARS NO LEGAL AUTHORITY FOR REFUNDING THE AMOUNT CLAIMED OR ANY PART THEREOF.