12

full statement of the facts, and it would have been a useless form again, after the tax was paid, to appeal to the Commissioner and obtain the same judgment. The reason for the appeal did not exist, and hence the appeal after the tax was paid was not necessary.' This seems to be the general rule, but it has also been held to the contrary that under a claim for abatement the Commissioner can only determine whether or not the assessment should be abated. Any further action would be in violation of the regulations and beyond his jurisdiction, and where the abatement was rejected, but no application was made for refund after paying the tax, it was held that a suit could not be maintained.13

PROCEDURE FOR CLAIMING ABATEMENT. Claim for abatement of taxes or penalties erroneously or illegally assessed, or which are abatable under remedial acts, etc., must be made out on the form prescribed by the Government 14 and must be sustained by the affidavits of the parties against whom the taxes were assessed, or of other parties cognizant of the facts.15 The practice is to obtain the official form from the local collector, prepare it according to instructions and file it with the local collector. The claim for abatement can only be made between the time the tax is assessed and the date it is due. If the claim has not been acted upon within ten days after notice and demand for the tax, interest will accrue from the due date, but the 5%

12 Weaver v. Ewers, 195 Fed. 247.

13 Hastings v. Herold, 184 Fed. 759. The weight of authority seems to be contrary to the rule in this case.

14 The form prescribed by the Government is known as Form 47. 15 Reg. No. 14, Rev. October 15, 1911.

penalty for failure to pay the tax will not accrue if the tax is paid within ten days after the claim for abatement is rejected.16

Refund. Where the Commissioner of Internal Revenue, in a case within the scope of his authority and jurisdiction, has ordered a refund, a court cannot inquire as to the sufficiency of the evidence before him,17 and neither the Comptroller of the Treasury nor any accounting officer has authority to review the Commissioner's decision.18 Decisions by the Commissioner of Internal Revenue, in cases where a refund is directed, are binding and, in the absence of fraud, or mistake of calculation, not subject to revision.19 The Commissioner's decision is conclusive as to the questions of fact,20 but apparently not as to questions of law.21 His decisions are in the nature of awards made by arbitrators, and generally speaking bind both the claimant and the Government. A refund may be impeached for fraud, want of jurisdiction, mistake apparent in the certificate, or for such irregularities as would avoid an award.22 The Commissioner of Internal Revenue may reconsider and revoke an allowance for refund at any time before the allowance is paid, but whether a commissioner has power to revoke an allowance made by his predecessor is not clear.23 Where one Commis

16 See Chapter 36.

17 Woolner v. U. S., 13 Ct. Cls. 355.

18 Bank of Greencastle v. U. S., 15 Ct. Cls. 225.

19 Dugan v. U. S., 34 Ct. Cls. 458.

20 U. S. v. Wright, 11 Wall. 648.

21 6 Camp. Dec. 259.

22 Dugan v. U. S, 34 Ct. Cls. 458; Cumming v. U. S., 22 Ct. Cls. 344,

23 Ridgway v. U. S., 18 Ct. Cls. 707.

sioner recommended the allowance of the claim and referred the matter to the Secretary of the Treasury for advisement, a succeeding Commissioner to whom the matter was referred back could reject the claim.24 The Commissioner is not precluded from allowing a claim for refund because a former Commissioner rejected a claim for abatement, and he is authorized to reconsider and allow a claim which he had, through error of law, previously rejected. An application for the refund of taxes, though informal or defective, may be regarded as a claim, so far at least as to permit a formal amendment to be filed after the statute of limitations has run.25 The Commissioner of Internal Revenue has no authority to remit the 50% penalty unless it is illegally collected. The words "wrongfully collected" are construed as synonymous with the words "illegally collected." No equity powers are conferred on the Commissioner, and the Commissioner is authorized, not obliged, to refund.26

STATUTE OF LIMITATIONS. All claims for refund must be presented to the Commissioner of Internal Revenue within two years next after the cause of action accrued.27 Presentation to the collector is equivalent to presentation to the Commissioner.28 Where a protest was held by the Commissioner to be an informal appeal, and a formal application for refund was thereafter acted upon, although made after the expiration of two years, his decision was held to be conclusive and could not

24 Stotesbury v. U. S., 23 Ct. Cls. 285.

25 14 Op. Atty. Gen. 615.

26 16 Op. Atty. Gen. 667; 13 Op. Atty. Gen. 439.

27 R. S., § 3228.

28 Real Estate Savings Bank v. U. S., 16 Ct. Cls. 335;

104 U. S.

be set aside by the court.29 Failure to make a claim for refund within two years after paying the tax is a bar to a suit thereon.30

WHEN STATUTE OF LIMITATION IS EXTENDED. Although generally the provisions of Section 3228 limit all claims for refund to a period of two years after the tax has been paid, an extension of this time is granted in cases where, upon examination of any return of income made pursuant to the 1916 Law, the 1913 Law cr the 1909 Law, it appears that amounts of tax have been paid in excess of those properly due. In such cases the taxpayer is permitted to present a claim. for refund, notwithstanding the provisions of Section 3228.31 This provision was inserted as a remedy in cases where an agent of the Treasury Department makes an examination of a taxpayer's books within three years after a return has been filed and discovers undisclosed income. An examination may also disclose an overpayment, as well as undisclosed income, in which case the result of the examination may operate to the benefit of the taxpayer as well as to the benefit of the Government, regardless of the statute of limitations. Claims once rejected by the Commissioner, because of the statute of limitation in existence at that time, may be reopened under this provision, if the adjustment necessitates an examination of the return, but not otherwise.32

PROCEDURE. The provisions for claiming refund must be strictly complied with.33 Claim for the refunding

29 First Nat. Bank of Greencastle v. U. S., 15 Ct. Cls. 225. 30 Kings County Savings Institution v. Blair, 116 U. S. 200: 31 Act of September 8, 1916, § 14.

32 T. D. 2396.

33 Public Service Railway Co. v. Herold, 219 Fed. 301; Public Service Gas Co. v. Herold, 277 Fed. 496.

of assessed taxes and penalties must be made out upon the form prescribed by the Government. The burden of proof rests upon the claimant. All the facts relied upon in support of the claim must be clearly set forth, under oath.34 The practice is to obtain a copy of the form from the local collector, prepare it according to instructions thereon, and file it with the local collector for further action. The collectors of internal revenue and revenue officers are forbidden to prepare affidavits for persons claiming remission of taxes or penalties under the internal revenue law.35 An appeal for abatement or refund is imperfect if it does not have endorsed thereon the affidavit of the deputy collector and certificate of the collector required by the regulations,36 but this is a matter of action within the Department.

Suits to Recover Taxes. If a claim is rejected by the Commissioner, a judicial remedy is given the taxpayer by an action against the collector or the United States. If the claim is allowed by the Commissioner and payment refused by the accounting officers, a suit may be brought directly against the Government in the Court of Claims.37 The allowance of the claim by the Commissioner may be used as the basis of an action against the United States in the Court of Claims, when payment is not made by reason of the refusal of any of the officers of the Department to pass or to pay the claim, and it will be prima facie evidence of the amount that is due, and puts on the Government the burden

34 Reg. 14 Rev. The form to be used in claiming refund is officially known as Form 46.

35 T. D. 2443.

36 Hastings v. Herold, 184 Fed. 759.

37 Edison Electric Illuminating Co. v. U. S., 38 Ct. Cls. 208.