PROTEST ALONE NOT SUFFICIENT. The protest is used to give effect to other attending circumstances. A protest accompanying a voluntary payment is not sufficient. There must be coercion and duress. The protest gives notice that the payment is not to be considered as admitting the right to make the demand, but if payment of the tax is made under protest, without any coercion by actual or threatened exercise of power by the party exacting or receiving the payment, over the person or property of the party making the payment, from which the latter has no other means of immediate relief than such payment, the payment is voluntary and cannot be recovered.37 "Where a party pays an illegal demand, with full knowledge of all the facts which render such demand illegal, without an immediate and urgent necessity therefor, or unless to release his person or property from detention, or to prevent an immediate seizure of his person or property, such payment must be deemed voluntary. "'38 The duress and coercion must come from the Government or its agents,39 not from a third party and the protest must be made to a duly authorized agent of the Government having authority to collect the tax.40 Duress. To recover the tax, payment must be made under duress and accompanied by a protest. As indicated in the preceding paragraph the duress must come from the Government and be such as to create an immediate and urgent necessity for paying the tax, in order to protect the person or property of the taxpayer. The cases contain a wide discussion of what constitutes duress 37 Chesebrough v. U. S., 192 U. S. 253. 38 Railroad Co. v. Commissioners, 98 U. S. 541; Little v. Bowers, 134 U. S. 547. 39 Chesebrough v. U. S., 192 U. S. 253. 40 U. S. v. New York & Cuba Mail S. S. Co., 200 U. S. 488. under various circumstances and particular statutes. A discussion of the general question would not be of particular value in this work. Clearly a payment made upon receipt of the notice of assessment would not be a payment under duress, since that notice does not demand the tax and does not contain any threat of penalties. It seems reasonably certain that payment after receipt of the notice and demand for tax would be payment under duress, although the present form of such notice,41 does not contain a specific threat to collect the penalties but merely a statement that the penalties will accrue if the payment is not made on or before a certain date. The form of notice and demand in use prior to 1917 contained a direct threat that the collector would collect the tax with penalty and interest if payment was not made within the ten day limit. In a case where a notice very similar in form and containing such a threat had been served on a taxpayer under the War Revenue Act of June 13, 1898, the court said in part: "Every demand by one clothed with official legal authority to make the demand, imposes a certain compulsion on the one upon whom the demand is made. Such a demand is always exigent and places the recusant in a position of disadvantage. Especially is this so in regard to payment of taxes, state or national. The proper administration of the fiscal affairs of the Government, require that the payment of taxes should not be delayed by disputes as to their legality, but that the taxes should first be paid and all questions in regard to them be determined in suits brought for their refunding. It is a wise policy, therefore, that encourages the payment under protest of disputed taxes. Though there is some conflict in the 41 Form 1-17. Compare this notice with Form 17 in use prior to 1916. dicta of the Supreme Court, we think that the true determination is that, when taxes are paid under protest that they are being illegally exacted, or with notice that the payor contends that they are illegal and intends to institute suit to compel their repayment, a sufficient foundation for such a suit has been established. In the case at bar, however, there was more than the simple payment of the tax under protest as to its illegality, as it was paid upon the demand of the Collector, coupled with a threat that unless promptly paid, the same would be collected with a penalty and interest at 1% per month. Payment upon such a demand from a government official, acting within the scope of his authority, constituted such a duress as clearly made such payment involuntary." 42 It seems that the present form of notice and demand although not containing an express threat to collect the 5% penalty and interest, but containing a statement that such penalty and interest will accrue, is sufficient duress to compel involuntary payment by the taxpayer in order to protect himself from the penalty and interest. However, there can be no doubt that payment upon receiving the second notice and demand is clearly payment under duress, since that notice threatens the seizure and sale of the taxpayer's property to satisfy the tax, penalty, interest and costs.43 If the taxpayer delays payment until the receipt of such notice, in order that it may be shown that payment was clearly made under duress, penalty and interest must also be paid, and the protest should be not only against payment 42 Herold v. Kahn, 159 Fed. 608; 86 C. C. A. 598; citing Chesebrough v. U. S., 192 U. S. 253; 24 Sup. Ct. 262, 42 L. Ed. 432, and City of Philadelphia v. Collector, 5 Wall. 720, 18 L. Ed. 614. 43 See Form 1-21A or 1-21B. of the tax but against payment of such penalty and interest as well. Form of Receipt for Payment of Tax. The only official receipt for taxes that collectors may sign under the law is the form prescribed by the Department. However, there is not objection, on the part of the Department, to collectors signing commercial receipts or voucher checks, but they should in signing such receipts or vouchers write or stamp across the face thereof "not an official receipt." The official receipt must also be furnished, and an unofficial receipt is not in any manner binding on the Government and will not be received by it as evidence of payment of the tax.44 Deputy collectors may give taxpayers, at the time of the payment, a personal receipt stating that the amount of payment has been received to be forwarded to the collector.45 Abatement and Refund. The taxpayer may file a claim for abatement of an assessment which he thinks is erroneous after the assessment has been made and before the tax is paid, or may file a claim for refund of a tax which he thinks has been erroneously assessed after the tax is paid. A further discussion of this subject is contained in the chapter on abatement and refund.46 Additional Assessment. The law provides that in cases of refusal or neglect to make a return and in cases of erroneous, false, or fraudulent returns, the Commissioner of Internal Revenue shall, upon the discovery thereof, at any time within three years after the return 44 T. D. 2226. 45 T. D. 2341. is due, or has been made, make a return upon information obtained as provided for in the law, or require the necessary corrections to be made, and in such cases the assessment made by the Commissioner of Internal Revenue thereon shall be paid by the taxpayer immediately upon notification of the amount of such assessment. The usual ten day period of grace, however, applies to such assessments as well as to the regular assessments.47 Although the Commissioner of Internal Revenue has power summarily to assess the tax upon discovery of income which has not been reported, yet if such discovery is made prior to the day on which the tax is due (June 15th or in the case of the corporations filing for their fiscal year 165 days after the closing of the fiscal year) the tax cannot be summarily assessed, but may be paid at any time before the regular due date with an additional period of ten days of grace.48 Where a summary assessment is made after the regular due date, the tax is due immediately upon notice and demand given by the collector.49 Additional assessment may be made where the erroneous return is due to an honest mistake, and where the mistake is not discovered until after the tax is assessed and has been paid in the regular course.50 AMENDED RETURNS. Where an individual or a fiduciary or a withholding agent has been found subject to a further tax as a result of the audit of his return, or an investigation made by a revenue agent, it is not necessary to file an amended return, but the taxpayer is advised 47 Act of September 8, 1916, § 9 (a) and § 14 (a). 48 T. D. 2003. 49 Reg. 33, Arts. 177 and 184. 50 Eliot National Bank v. Gill, 218 Fed. 600; 134 C. C. A. 358. |