B-107331, FEB. 27, 1958

B-107331: Feb 27, 1958

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THE CHECK WAS THE SUBJECT OF DECISION B-107331. THE RECORD SHOWS THAT THE TAX REFUND COVERED BY THE CHECK WAS DETERMINED TO BE ERRONEOUS AND THE AMOUNT THEREOF INCLUDED IN THE TAXPAYER'S UNPAID 1943 TAX ACCOUNT BY THE INTERNAL REVENUE SERVICE. THE TAXPAYER RESISTED COLLECTION ON THE GROUND THAT THE CHECK WAS NEVER RECEIVED BY HIM. THE RECORD FURTHER SHOWS THAT ALL OF THE TAX FOR WHICH REFUND WAS ISSUED HAD BEEN PAID BY MR. WAS ATTEMPTED. THE BANK RESISTED ON THE BASIS OF ALLEGED LACHES OF THE GOVERNMENT WHICH WAS. THE GOVERNMENT TOOK THE POSITION THAT THE AMOUNT OF THE CHECK WAS CHARGEABLE AGAINST THE TAXPAYER'S ACCOUNT BECAUSE RECEIPT THEREOF BY THE TAXPAYER'S WIFE WAS RECEIPT BY THE TAXPAYER AND THE ADJUSTED TAX ACCOUNT RESULTING FROM STIPULATIONS IN THE PROCEEDINGS IN THE TAX COURT INCLUDED THE AMOUNT OF THE CHECK.

B-107331, FEB. 27, 1958

TO MRS. IVY BAKER PRIEST:

LETTER OF JUNE 7, 1957, FROM THE SPECIAL ASSISTANT TREASURER, ASKS WHETHER, IN VIEW OF TAX ABATEMENT ACTION TAKEN BY THE INTERNAL REVENUE SERVICE RELATIVE TO THE 1943 TAX ACCOUNT OF JOSEPH L. AND JULIA MCCORRY, RECLAMATION PROCEEDINGS MAY NOW BE ABANDONED IN CONNECTION WITH TREASURY CHECK NO. 8,716,878, DATED APRIL 13, 1945, FOR $1,067.20, DRAWN BY G. F. ALLEN TO THE ORDER OF THE NAMED TAXPAYERS, REPRESENTING A 1943 TAX REFUND AND INTEREST THEREON. THE CHECK WAS THE SUBJECT OF DECISION B-107331, DATED JUNE 16, 1952, TO YOUR OFFICE, IN WHICH WE ADVISED THAT RECLAMATION PROCEEDINGS SHOULD NOT BE ABANDONED AND THAT FURTHER EFFORT SHOULD BE MADE TO COLLECT THE AMOUNT OF THE CHECK.

THE RECORD SHOWS THAT THE TAX REFUND COVERED BY THE CHECK WAS DETERMINED TO BE ERRONEOUS AND THE AMOUNT THEREOF INCLUDED IN THE TAXPAYER'S UNPAID 1943 TAX ACCOUNT BY THE INTERNAL REVENUE SERVICE. THE TAXPAYER RESISTED COLLECTION ON THE GROUND THAT THE CHECK WAS NEVER RECEIVED BY HIM, HAVING BEEN NEGOTIATED BY HIS WIFE JULIA MCCORRY, JOINT PAYEE, WITHOUT HIS ENDORSEMENT. THE RECORD FURTHER SHOWS THAT ALL OF THE TAX FOR WHICH REFUND WAS ISSUED HAD BEEN PAID BY MR. MCCORRY. FOR THESE REASONS COLLECTION FROM THE FIRST BLAIR COUNTY NATIONAL BANK OF TYRONE, PENNSYLVANIA, WAS ATTEMPTED. THE BANK RESISTED ON THE BASIS OF ALLEGED LACHES OF THE GOVERNMENT WHICH WAS, IN OUR VIEW, AN UNTENABLE POSITION IN THE FACTS AND CIRCUMSTANCES SURROUNDING THE NEGOTIATION OF THE CHECK AND NOTIFICATION BY THE GOVERNMENT. IN THE TAX COURT PROCEEDING OF FEBRUARY 1948, AGAINST THIS TAXPAYER, HOWEVER, THE GOVERNMENT TOOK THE POSITION THAT THE AMOUNT OF THE CHECK WAS CHARGEABLE AGAINST THE TAXPAYER'S ACCOUNT BECAUSE RECEIPT THEREOF BY THE TAXPAYER'S WIFE WAS RECEIPT BY THE TAXPAYER AND THE ADJUSTED TAX ACCOUNT RESULTING FROM STIPULATIONS IN THE PROCEEDINGS IN THE TAX COURT INCLUDED THE AMOUNT OF THE CHECK.

EXAMINATION OF CERTIFICATE OF ASSESSMENTS AND PAYMENTS, INTERNAL REVENUE SERVICE FORM 899, DATED AUGUST 20, 1956, REVEALS THAT THE TAXPAYER'S ACCOUNT STATUS AS OF THAT DATE, FOR THE 1943 TAX YEAR, WAS PAID, ABATED OR CREDITED IN FULL. THE STATUS REPORT INDICATES THAT THE AMOUNT OF THE CHECK WAS INCLUDED IN THE AMOUNT ABATED. THIS ACTION, PRESUMABLY TAKEN UNDER AUTHORITY OF 26 U.S.C. 6404, BY THE INTERNAL REVENUE SERVICE, WHILE NOT RELIEVING TAXPAYER OF HIS OBLIGATION TO PAY THE AMOUNT OF THE ASSESSMENT, SEE CARLIN V. UNITED STATES, 1951, 100 F.SUPP. 451, 121 C.CLS. 643, SHOWS A DETERMINATION BY THE SECRETARY OR HIS DELEGATE THAT FURTHER COLLECTION ACTION ON THE TAX WOULD NOT BE PURSUED BY THE GOVERNMENT.

SUCCESSFUL LITIGATION AGAINST THE BANK--- THE BANK'S PRIOR RESISTANCE TO COLLECTION INDICATING THAT THE MATTER WOULD HAVE TO BE LITIGATED--- WOULD APPEAR EXTREMELY DOUBTFUL SINCE THE GOVERNMENT HAS TAKEN A POSITION IN THE TAX COURT CONTRARY TO THAT ON WHICH COLLECTION ACTION AGAINST THE BANK MUST BE BROUGHT.

THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTANCES APPEARING IN THIS CASE, FROM THE POSITION TAKEN BY THE GOVERNMENT IN THE TAX COURT AND PARTICULARLY THE TAX ABATEMENT ACTION BY THE INTERNAL REVENUE SERVICE, RECLAMATION PROCEEDINGS AGAINST THE FIRST BLAIR COUNTY NATIONAL BANK MAY BE ABANDONED.