by letter of the amount of additional tax to be assessed and the reasons for making such assessments.51 In the case of corporations amended returns are required, but the examining officers of the Government are required to give the officers of the corporation the fullest opportunity to make any investigation that may be desired prior to signing the amended returns, provided such investigation does not cover an unreasonable length of time.52

THREE-YEAR LIMITATION ON SUMMARY ASSESSMENT. The statute authorizes the Commissioner of Internal Revenue to make a summary assessment of the tax on undisclosed income, if the discovery is made within three years after the return in which such income should have been reported was due. It is not necessary that the assessment be made within three years, so long as the discovery is made within that time. In computing the three year period, March 1, the date on which the returns should have been filed or was filed in due course, should be excluded. The general rule in the interpretation of statutes, where time is to be computed from a particular day, is to exclude the day thus designated and to include the last day of the specified period.53 The three years limitation in this provision is not a limitation upon the right of the Government to sue for unpaid taxes, but at most is a limitation upon the right of the collecting officers to make assessment and enforce the payment by the summary statutory proceedings.54

51 Mimeograph letter No. 1232 to Collectors.

52 Letter from Treasury Department dated February 2, 1915; I. T. S. 1917, ¶ 1617.

53 Eliot National Bank v. Gill, 218 Fed. 600; 134 C. C. A. 358; National Bank of Commerce v. Allen, 223 Fed. 472; 139 C. C. A. 20. 54 U. S. v. Grand Rapids & Indiana Ry. Co., 239 Fed. 153.

WAIVING THE THREE-YEAR LIMITATION. While the Government is fully authorized to recover taxes by suit upon discovery of liability to original or additional tax after the three-year period, the Treasury Department prefers that the collection should be made in the ordinary statutory method, that is, as a result of a formal assessment. In order that this may be done taxpayers are requested to make amended returns and to execute waivers in such form as will waive the three-year statutory limitation. In executing such waiver, the taxpayers forfeit none of their rights and assume no liability to any penalty that might not be enforced against them in the absence of such waiver. If the taxpayer, against whom an additional tax liability is discovered, will formally accept the findings of the examining officer and agree voluntarily to pay the tax, this amounts to a waiver and neither amended returns nor waivers will be required.55 There seems to be no objection to a taxpayer signing a waiver where additional tax liability is discovered after the expiration of the three-year period, providing he does not question the legality of the assessment. The result of signing a waiver will be to compel him to pay the tax under protest and sue for its recovery, while if a waiver is not signed, the Government becomes the plaintiff in an action brought to collect such tax.

REFUND OF TAXES COLLECTED ON SECOND ASSESSMENT. Where a second assessment is made in case of a list, statement, or return, which in the opinion of the collector or deputy collector was false or fraudulent, or which contained any understatement or undervaluation, such assessment shall not be remitted, nor shall taxes collected 55 Mim. Letter No. 1192 to Collectors.

under such assessment be refunded or paid back, unless it is proved that said list, statement, or return was not false or fraudulent, and did not contain any understatement or undervaluation.56

Interest on Delinquent Taxes. Interest for the full time from the second due date will be collected on an assessment the abatement for which has been applied for and rejected; that is time consumed in considering the claim must be included.57 Where penalty has been added for delinquency, interest is reckoned upon the entire assessment including both the tax and the penalty.58 Interest is recoverable as interest and not as penalty.59

Suit for Collection of Taxes. Where net income has been incorrectly stated in a return and the tax based upon such return has been paid, an action of indebitatus assumpsit will lie to recover the balance of the tax, which should have been levied and paid, without any formal assessment of such tax. Neither the limitation of three years as to summary assessment, nor any other statute of limitation bars an action by the United States Government to recover the difference between the amount of the tax levied and paid and the amount which should have been levied and paid, if the return had correctly stated the net income.60 In the collection of the taxes imposed by statute the Government is not confined to the summary proceedings therein provided, but may resort to a plenary suit. Where a tax of a fixed percentage

56 R. S., § 3220.

57 Reg. No. 1, page 110.

58 T. D. 870, February 27, 1905.

59 U. S. v. Guest, 143 Fed. 456.

60 U. S. v. Minneapolis Threshing Machine Co., 229 Fed. 1019.

is imposed by the statute on a subject or object which is so definitely described in the statute that its amount or value, on which the fixed percentum is to be calculated, can be ascertained and determined, on evidence, by a court, a suit for the tax will lie without an assessment.61 Suits for the collection of taxes can be brought at any time whether the taxes have been assessed or not, or whether they are or are not assessable.62 Interest on taxes sued for runs from the time the taxes were due.63

Lien for Unpaid Taxes. If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount shall be a lien in favor of the United States from the time when the assessment-list was received by the collector, except when otherwise provided, until paid, with the interest, penalties, and costs that may accrue in addition thereto, upon all property and rights to property belonging to such person.64

NOTICE OF LIEN. The Government's lien for collection of taxes is not valid as against any mortgagee, purchaser or judgment-creditor, until notice of such lien has been filed by the collector in the office of the Clerk of the District Court of the District within which the property subject to such lien is situated, and is not valid in a state which by appropriate legislation authorizes the filing of such notice in the office of the registrar or recorder of deeds of the counties of that state, unless the notice is filed in the office of such registrar or

61 U. S. v. Grand Rapids & Indiana Ry. Co., 239 Fed. 153 and cases cited therein.

62 Dollar Savings Bank v. U. S., 19 Wall. 227; Kane v. U. S., 99 U. S. 229; U. S. v. Little Miami Co. et al., 1 Fed. 700.

63 U. S. v. Erie R. R., 106 U. S. 327.

64 R. S., § 3186.

F. I. Tax.-27

recorder of deeds of the county (or parish in the State of Louisiana) within which the property subject to the lien is situated.65 A lien for taxes is not similar to the lien of an ordinary incumbrance. It is not displaced by a sale under a pre-existing judgment or decree, unless otherwise directed by statute. It attaches to the res without regard to individual ownership, and when it is enforced by sale pursuant to the statute prescribing the mode of assessing and collecting taxes, the purchaser takes a valid and unimpeachable title.66 To create a lien, demand must be made for a specific amount; all steps required by law must be pursued strictly. The lien requires an assessment, a notice of the tax due, and a specific demand upon the individual taxpayer for payment.67 The Government is not compelled to resort to a sale of chattels and personal effects of a taxpayer, before instituting proceedings to enforce a lien on the taxpayer's real estate and leaseholds, and such lien may be enforced against the grantees of the taxpayer's real estate and leasehold interests subsequent to the filing of the list with the collector and demand upon the taxpayer, although the grantees had no notice of the lien.68

TIME WHEN LIEN ATTACHES. The statute expressly provides that a lien for unpaid taxes in favor of the United States shall attach from the time when the assessment-list was received by the collector, except when

65 See Act of March 4, 1913, amending § 3186 R. S. Prior to the Act of March 4, 1913, it was not necessary to file any notice in compliance with State laws to make a lien effective. (U. S. v. Snyder, 149 U. S. 210).

66 Osterberg v. Union Trust Co., 93 U. S. 424.

67 U. S. v. Pacific R. R., 1 Fed. 97.

68 U. S. v. Curry, 201 Fed. 371.