of the Bureau or in the way of statements to the taxpayer in letters from the Department can be nothing more than preliminary to the actual making or allowance of the credit by the Commissioner. This is true where credits are considered and passed upon formally by the Commissioner. Where, however, the collector because of the provisions of the statute and regulations made pursuant thereto makes the credit without specific instructions from the Commissioner, the credit is actually made or allowed when the collector so records it, and in such a case subsequent action by the Commissioner in the way of a review of the collector's action would not operate to fix the time when the credit was made or allowed, since in such a case the collector had before him the account of the taxpayer and is charged by law and the regulations to enter the credit. It is held that where the allowance of a credit as provided in section 252 of the Revenue Act of 1918 is being considered by the Commissioner, the credit is made or allowed only when the Commissioner signs and forwards to the collector a formal statement or direction or assessment list showing the amount of the tax to be collected over and above the amount of the credit. CARL A. MAPES, Solicitor of Internal Revenue. SECTION 252, ARTICLE 1036: Claims for refund of taxes erroneously collected. 14-21-1555 O. D. 867 Where additional tax liability is discovered on the audit of a taxpayer's return for one year and a refund is found to be due him for a subsequent year, the procedure to be followed is to make an office. adjustment to take care of the additional tax and advise the taxpayer to file a claim for refund of the net overpayment, noting on the returns of the two years involved that additional tax is due for one year which has been satisfied by an equal amount overpaid for a later year, also to note on the later return that an overpayment has been made, part of which has been applied against the additional tax due for the prior year and the balance has been refunded or credited or is available for refund or credit. Where additional tax has already been placed on assessment list, taxpayer will be required to file claim for credit in order to apply against additional tax a corresponding portion of the refund due him. SECTION 252, ARTICLE 1036: Claims for refund of taxes erroneously collected. (See 18-21-1615; sec. 326, art. 840.) Claim for refund as the result of adjustment of surplus account. SECTION 252, ARTICLE 1036: Claims for refund of taxes erroneously collected. 21-21-1654 O. D. 927 Claims for refund should in all cases be filed with the collector of internal revenue to whom the tax was paid or with the deputy col lector of the division of such district in which the claimant resides. Warrants in payment of such claims will be made to the order of the claimants as provided in section 6, Department Circular 230 (C. B. 4, p. 408). The Bureau will recognize a general power of attorney as sufficient authority for the filing of more than one claim for refund on behalf of the grantor of such power. It should be noted, however, that under the provisions of section 6 of the above-mentioned circular special powers are required in certain cases. In cases where a number of claims are to be filed under a general power of attorney the original power should be attached to the first claim filed on behalf of the claimant granting the power, and a copy thereof should be annexed to each succeeding claim, special reference being made in each copy to the claim to which the original instrument was attached. The Bureau does not require that a power of attorney to file a claim for refund be in any special form. It is merely necessary that the instrument meet the legal requirements of powers of attorney in general. A power of attorney given by a corporation should be signed by the officers who are duly authorized to execute such instrument. SECTION 252, ARTICLE 1037: Suits for recovery of taxes erroneously collected. 1-21-1380 Ct. D. 2 SUPREME COURT OF THE UNITED STATES. OCTOBER TERM, 1920. Rock Island, Arkansas and Louisiana Railroad Company, appellant, v. The United States. Appeal from the Court of Claims. [November 22, 1920.] Mr. Justice Holmes delivered the opinion of the court: This is a claim for a sum paid as an internal revenue tax under the Act of August 5, 1909, ch. 6, sec. 38. 36 Stat. 11, 112. It is alleged that the claimant was not engaged in or doing business in the year for which the tax was collected, and that, therefore, it was not due. The Court of Claims dismissed the petition on the ground that the claimant had not complied with the conditions imposed by statute, and the claimant appealed to this court. The facts are simple. After the tax was assessed a claim for an abatement was sent to the Commissioner of Internal Revenue in July, 1913. On December 18 of the same year the Commissioner rejected the application, whereupon on December 26 the claimant paid the tax with interest and a penalty. So far as appears there was no protest at the time of payment, and it is found that after it nothing was done to secure repayment of the tax. By Rev. Sts., sec. 3226, amended by Act of February 27, 1877, ch. 69, sec. 1, 19 Stat.. 248, no suit shall be maintained in any court for the recovery of any tax alleged to have been illegally assessed "until appeal shall have been duly made to the Commissioner of Internal Revenue according to the provisions of law in that regard, and the regulations of the Secretary of the Treasury established in pursuance thereof, and a decision of the Commissioner has been had thereon, provided," etc. Regulations of the Secretary established a procedure and a form to be used in applications for abatement and distinct ones for claims for refunding them. The claimant took the first step, but not the last. 66 By Rev. Sts., sec. 3220, the Commissioner of Internal Revenue is authorized, on appeal to him made, to remit. refund, and pay back" taxes illegally assessed. It is urged that the "appeal" to him to remit made a second appeal to him to refund an idle act and satisfied the requirements of sec. 3226. Decisions to that effect in suits against a collector are cited, the latest being Loomis v. Wattles, 266 Fed. Rep., 876. But the words "on appeal to him made" mean, of course, on appeal in respect of the relief sought on appealto refund if refunding is what he is asked to do. The words of sec. 3226 also must be taken to mean an appeal after payment, especially in view of sec. 3228 requiring claims of this sort to be presented to the Commissioner within two years after the cause of action accrued. So that the question is of reading an implied exception into the rule as expressed, when substantially the same objection to the assessment has been urged at an earlier stage. Men must turn square corners when they deal with the Government. If it attaches even purely formal conditions to its consent to be sued, these conditions must be complied with. Lex non praecipit inutilia (Co. Lit. 127b) expresses rather an ideal than an accomplished fact. But in this case we can not pronounce the second appeal a mere form. On appeal a judge sometimes concurs in a reversal of his decision below. It is possible, as suggested by the Court of Claims, that the second appeal may be heard by a different person. At all events the words are there in the statute and the regulations, and the court is of opinion that they mark the conditions of the claimant's right. See King's County Savings Institution v. Blair, 116 U. S., 200. It is unnecessary to consider other objections that the claimant would have to meet before it could recover upon this claim. Judgment aflirmed. SECTION 252, ARTICLE 1037: Suits for recovery of taxes erroneously collected. TRUSTEES IN LIQUIDATION-DECISION OF COURT. 1. TRUSTEES AS OFFICERS Of Court. 23-21-1679 T. D. 3166 Trustees liquidating a dissolving corporation, under direction of the court as provided by sections 3447 and 3448 of the General Statutes of Connecticut, are not officers of such court. 2. LEGALITY OF ASSESSMENT. RESTRAINING ORDER. The court, under the circumstances above, has no jurisdiction to pass on the legality of the assessment of Internal Revenue taxes or to issue an order restraining the assessment or collection thereof. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, In two recent cases before the Supreme Court of Errors for the State of Connecticut the trustees in liquidation of the affairs of the Derby Manufacturing Co., of Derby, Conn., raised the contention that under the provisions of the Connecticut law providing for the voluntary dissolution of corporations they were properly to be considered officers of the court because they were subject to certain orders of the court in the final winding up of the affairs of the company. This matter is of general interest to the Internal Revenue Service, and for that reason the facts involved, together with the material portions of the opinions handed down by the court, are set forth below. On February 27, 1919, Joseph Willmann et al., trustees in liquidation, petitioned the court for the issuance of an order limiting a period within which all claims against the corporation should be presented and for such additional orders from time to time relative to the winding up of the affairs of the corporation as might be proper and necessary in accordance with the statutes of the State of Con necticut. On the same day the Superior Court for New Haven County, Conn., issued an order providing that all claims against the Derby Manufacturing Co. should be presented to said trustees within four months from February 27, 1919. Among the claims presented pursuant to this order was one of the United States, presented by James J. Walsh, Collector of Internal Revenue for the District of Connecticut, for additional income, excess-profits, and war-profits taxes for the years 1916, 1917, and 1918; and also for taxes not then determined for that portion of 1919 up to the date of the cessation of business by such corporation. On June 1, 1920, the trustees reported the claims of the United States wherein they disallowed the major portion thereof. The court entered an order approving the report and providing that written notice should be given to the United States, through the Commissioner of Internal Revenue, and to James J. Walsh, collector, that unless the disallowed portion of the claim was made the subject of application to the court for allowance within two weeks, the same should be barred. Thereafter, the United States Attorney for the District of Connecticut filed a petition on behalf of the United States for the allowance of the entire claim. On June 29, 1920, the trustees in liquidation filed with the court an application for a restraining order against the collector, asking that the collector be restrained from interfering with their possession of the company's property, notwithstanding the fact that there was pending in this office a claim in abatement covering the taxes in question, during the pendency of which no distraint proceedings would have have been carried out by the collector. It was alleged that the trustees were officers of the court and that an interference by the collector with their possession would be a contempt of the court. Upon the hearing of this application, the Superior Court of New Haven County refused to grant the restraining order. Thereafter, on September 20, 1920, the trustees filed another application for a restraining order and for instructions from the court as to the duty of the trustees in relation to such claims of the United States, and for a hearing by the court to determine what taxes, if any, were due the United States. This application was made upon the theory that the trustees in liquidation were officers of the court, in view of the fact that in winding up the affairs of the corporation they were subject to the orders of the court, and that, in order that proper instructions might be issued to them in connection with the Government's claim for taxes, the court should hear and determine the proper amount due and that the collector should be restrained from taking any steps to distrain upon the company's property in the satisfaction of any sum in excess of the amount the court should allow. On October 15, 1920, upon hearing such application, the Superior Court was of the opinion that it had no jurisdiction to hear and determine the claim of the United States for taxes and that the assessment of the Commissioner of Internal Revenue was conclusive upon it. The court directed the trustees to pay the Government's claim for taxes, authorizing them to take steps to protect the estate of the corporation by way of claim for refund and suit to recover back the taxes paid. Judgment was therefore entered in favor of the United States. From this order and judgment, and from the order denying the application of the trustees dated June 29, 1920, an appeal was taken to the Supreme Court of Errors for the State of Connecticut as above indicated. Under the Connecticut laws of 1918 (sections 3446 and 3447), upon voluntary dissolution of a corporation, upon vote of the stockholders, the directors are made trustees in the liquidation of the affairs of the corporation. Such trustees may apply (section 3448) to the Superior Court for the county in which such corporation is located for the limitation of a period for the presentation of claims against the corporation. Upon the limitation of such a period by the court, it is provided that such trustees shall proceed to wind up the affairs of the corporation under the direction of the court in the same manner as if they were receivers. It is provided (section 3449) that any claim not presented within the time limited shall be barred, unless the owner thereof shall commence an action to enforce the same within four months after notice from the trustees of rejection. The matter was made the subject of two decisions of the court (1) Joseph Willmann, et al, trustees in liquidation v. James J. Walsh, collector, wherein it considered whether such trustees were properly to be considered officers of the court, and (2) in re application of Joseph Willmann, et al, trustees in liquidation, wherein the court considered whether the lower court had jurisdiction to hear and determine the legality of the assessment made by the Commissioner of Internal Revenue, and whether or not a restraining order should be issued. The court said in the first case: The plaintiffs were trustees in liquidation of the company with such relation to the property as proceedings under the General Statutes, sections 3447 and 3448, created. The plaintiffs claim that by such proceedings they became receivers of the court in relation to the property of the corporation, and hence that the property came into the custody of the law. The directors of a corporation acting as trustees in liquidation under General Statutes, section 3447 only, are obviously not receivers or officers of the court. If such trustees, in the exercise of their discretion, make application to the Superior Court under section 3448 they do not thereby change their relation to the property of the corporation; they are still merely trustees in liquidation and not officers of the court holding the property in the custody of the law. There are provisions in the statutes and an absence of provisions relative to the winding-up proceedings by trustees under sections 3447 and 3448 which clearly indicate that it was not the legislative intent to make them receivers by the enactment of section 3448 of the General Statutes. Under sections 3448, 3449, and 3450 the trustees may, in their discretion, secure an order of court limiting a time for presentation of claims. But if a claim so presented is disallowed, the creditor, without the necessity of securing the permission of the court, must begin an action to enforce the claim within four months after disallowance. This course of proceeding differs radically from that pursued upon the disallowance of a claim in a receivership. Section 3448 of the General Statutes provides that if trustees in liquidation under section 3447 bring an application to the Superior Court for the limitation of time within which claims must be presented, they shall still proceed to wind up the affairs of the corporation in accordance with the provisions of section 3447. The provision of General Statutes, section 3450, permitting a creditor, pending the windingup proceedings of trustees in liquidation, to secure the appointment of receivers of the corporation in liquidation would be a useless provision if the trustees were already receivers and subject to the ordinary power of the court to remove its receivers for good cause shown. There is no provision in the statutes relating to trustees in liquidation providing that they shall furnish bonds as is required of receivers by General Statutes, section 6082. That the trustees under this section are not, by their application to the court to limit a time for the presentation of claims, made by that act receivers of the corporation. They are still to wind up the corporation in accord with section 3447, but they may secure direction from the court in the same manner as if they were receivers. Furthermore, it is hardly conceivable that it was the legislative intent by the enactment of section 3448 to permit the directors |
