
    GEORGEINE S. LASHER v. THE UNITED STATES
    [No. F-57.
    Decided April 2, 1928]
    
      On the Proofs
    
    
      Interest on taw refund; form of claim for refund. — Where a claim for refund of taxes, not on the printed form provided for by the Bureau of Internal Revenue, contains all the essential information required to be set out in said form, and was considered and allowed by the Commissioner of Internal Revenue, it sufficiently complies with the requirements of a claim as contemplated by statute and the taxpayer is entitled to the interest provided by section 1324 (a) of the revenue act of 1921.
    
      The Reporter's statement of the case:
    
      Mr. John, W: Townsend for the plaintiff. Mr. James Graig Peacock was on the briefs.
    
      Mr. Fred K. Dyar, with whom was Mr. Assistant Attorney General Merman J. Galloway, for the defendant. Mr. J. K. Sheppard was on the brief.
    
      The court made special findings of fact, as follows:
    I. On March 15, 1919, plaintiff filed her Federal income-tax return, Form 1040, for the year 1918, with the collector of internal revenue at Philadelphia, Pennsylvania. The taxable income shown by this return was $38,629.37, and the tax thereon was $7,430.10, which tax on March 15, 1919, was duly paid to the collector. Such tax was not paid under protest.
    II. Thereafter the Commissioner of Internal Revenue (hereinafter referred to as the commissioner) determined plaintiff’s taxable net income should be "increased to $87,-924.70 and assessed an additional income tax against the plaintiff for the year 1918 in the amount of $11,308.48, which tax was duly paid in full on April 15, 1921, to the collector of internal revenue at Philadelphia, Pennsylvania.
    III. Thereafter the commissioner, by letter dated June 22, 1922, proposed to assess against the plaintiff a second additional income tax for 1918 in the amount of $14,895.13, and notified plaintiff that she would be allowed twenty days within which to present any exception to the proposed assessment. On July 10, 1922, plaintiff duly filed exceptions to the proposed assessment, which were overruled by the Income Tax Unit in letter to her dated August 19,1922. Thereupon, in accordance with the provisions of section 250 (d) of the revenue act of 1921 and article 1006 of Regulations 62, the plaintiff on August 26, 1922, duly filed an appeal to the commissioner. One ground of appeal, set forth in said appeal of August 26, 1922, was as follows:
    “ Referring to the last sentence of the third paragraph of letter dated August 19th, 1922, which states that no information has been submitted to show that the adjustments made in respect to income of the estate of George F. Lasher are in error, it is submitted that under proper application of the law and regulations the income of the estate of George F. Lasher could have no effect upon the tax liability of Georgeine S. Lasher for 1917-1918 and 1919 and any information which might have been submitted would not have been relevant to the question at issue, viz, the tax liability of Georgeine S. Lasher.
    “ But there may be pointed out the following errors in the computation of tax liability of the estate of George F. Lasher gathered from a reading of the report.
    
      
      1918
    
    “ Disallowance of depreciation (T. B. M. 56), inclusion of income from real estate, and personal estate in a single return. Failure to allow as a "deduction from gross income Federal estate taxes accrued during the year. (Art. 134, Keg. 62.) * * *”
    Attached to and as a part of said appeal was the following affidavit by the duly authorized agent of the plaintiff:
    “ G. H. Shryock, being first duly sworn, deposes and says as follows:
    “ That he is the same person named in a certain power of attorney executed by Georgeine S. Lasher on the 10th day of July, 1922, and filed with the Commissioner of Internal Kevenue in accordance with regulations governing the practice of agents and attorneys before the Bureau of Internal Revenue.
    “ That the facts referred to as such in the foregoing appeal to the Commissioner of Internal Kevenue are true to the best of his knowledge and belief.
    “ That the said appeal is not taken for the purpose of delaying the collection of the tax.
    “ That it is his belief and he so avers that Georgeine S. Lasher, the taxpayer on whose behalf this appeal is made, has paid an aggregate amount of income and surtaxes for 1917-1918 and 1919 which exceeds the aggregate amount of her actual tax liability for those years.
    “ Further this deponent saith not.”
    IV. Under date of May 29, 1923, the plaintiff, through her agent, wrote a letter to the commissioner, which was duly received by the latter, stating, so far as is here material:
    “ Reference is made to bureau letter dated June 22, 1922, addressed to Mrs. Georgeine S. Lasher, Rydal, Pa., advising that a reaudit of her income-tax returns filed for 1918 and 1919 disclosed a further tax of $14,895.13 and overpayment of $7,402.57, respectively; to letter dated July 10, 1922, protesting the assessment of the proposed additional tax for the two years; to bureau letter dated August 19, 1922, overruling the protest of July 10th, and to a further protest and appeal dated August 26, 1922; to a conference held October 20th, 1922, and bureau letter dated November 11, 1922, advising that office letter dated August 19, 1922, was rescinded and to an informal discussion of the question of the tax liability of Mrs. Lasher for 1917, 1918, and 1919 bad on May 16th, 1923, with Mr. A. Lewis, chief of field review section, and Mr. Blum, as a result of which it was agreed that the correct tax liability for the several years should be determined as follows:
    :{? ‡
    
      1918
    
    “ For this year the report of the revenue agent dated August 21, 1920, as supplemented by report dated May 11, 1921, was accepted as the basis of the tax, except the item of income from fiduciary, which item is to be corrected by deducting therefrom the amount of the Federal estate tax paid. The revenue agent states income from fiduciary as $88,470.94 ($78,931.73, report Aug. 21, 1920, plus $9,539.21 additional, report May 11, 1921), the estate tax paid was $65,753.50 as per photostatic copies of receipt and letter attached.
    “Accordingly, the item of income from fiduciary, stated as $78,931.73 in report dated August 21, 1920, should be corrected to state $22,717.44 ($88,470.94 less $65,753.50), which correction indicates taxable income of $31,710.41 and tax liability as follows:
    Net income-$31, 710. 41
    Exemption_ 1,000. 00
    Balance_ 30, 710.41
    Taxable at 6%_ 4, 000. 00
    Taxable at 12%_ 26,710.41
    Tax at 6%_ $240.00
    Tax at 12%_ 3,205.25
    Surtax_ 2,040.46
    Total_ 5, 494.71
    At source_ 8. 60
    Balance_ 5, 486.11
    Paid:
    Original $7, 430.10
    Add i-tionaL 11,308.48
    - 18, 738.5S
    Overpayment_ 13, 252.47
    ❖ ❖ Jj! ❖ . ❖
    “Accordingly, there is refundable to Mrs. Lasher over-payments as follows:
    1917-,_$1,794.22
    1918_ 13,252.47
    1919_ 9,428.44
    Total_ 24,475.13 ”
    Said letter was not under oath.
    Y. Thereafter plaintiff received a letter- from the commissioner’s office, dated July 9, 1923, stating so.far as is here material:
    
      “A reaudit of your individual income tax returns for the years 1918 and 1919 discloses the overassessments of $13,252.41 for the year 1918 and $1,448.05 for the year 1919, instead of an additional tax of $14,895.13 and an overassessment of $1,402.51 for the years 1918 and 1919, respectively, as per office letter of June 6, 1922, which is hereby superseded.
    “ The difference in the tax liability shown above is due to the following changes:
    
      1918
    
    “ The allowance as a deduction to the estate of George F. Lasher of $65,153.50, Federal estate tax, results in the net income to you from the above-named estate of $22,111.44 instead of $88,410.94.
    sH # ❖ ‡
    “ The overassessment shown herein will be made the subject of certificates of overassessments which will reach you in due course through the office of the collector of internal revenue for your district * *
    YI. On or about November 24, 1923, the plaintiff received certificate of overassessment No. 603515, showing the allowance of $13,252.41, which was the amount theretofore claimed as refundable by the plaintiff in her letter of May 29, 1923.
    Forwarded with said certificate was the Greek of the Treasury Department for $13,252.41. The date of the commissioner’s allowance of said refund was October 29, 1923.
    VII. On November 21, 1923, plaintiff, through her agent, directed to the commissioner the folloAving letter, which the commissioner in due course received:
    
      “ Eeceipt is acknowledged of check for $20,100.52, covering certificates of overassessment No. 603515 for $13,252.41 and No. 603516 for $1,448.05 for 1918 and 1919, respectively, in the case of the above-named taxpayer.
    “ In this connection your attention is called to the fact that of the $13,252.41 refunded for 1918, $11,308.48 was paid on April 15, 1921, pursuant to an additional assessment and under the provisions of section 1324 (a) (2) interest at one-half of one per centum per month is allowable from the date of payment, April 15th, 1921, to the date of the allowance of the claim.
    “Will you kindly forward warrant to cover interest for the period mentioned?”
    
      VIII. Said claim for interest was denied by the commissioner January 31, 1924, on the ground that—
    “ the refunds were made as the result of an office audit and not upon the allowance of a claim or claims for refund or credit.”
    An appeal to the commissioner from such decision was taken by plaintiff on Februrary 7,1924, and with said appeal was transmitted a claim on Form 843 of the Bureau of Internal Revenue for the refund of $13,252.47. This claim was duly sworn to by the plaintiff on February 8, 1924, and the ground for same was stated therein as follows:
    “ Deponent verily believes that this application should be allowed for the following reasons:
    “ The amount indicated above as an overpayment was refunded under certificate of overassessment #603515, dated November 23, 1923, and this claim is filed to technically comply with the provisions of section 1324 of the revenue act of 1921 in respect to the payment of interest on refunds and refers and relates back to an informal claim filed under date of May 29,1923, and technically completes this informal claim for a like amount.”
    IX. Said appeal was denied and claim for refund rejected by the commissioner in letter, dated April 28, 1925, which reads in part as follows:
    “ Reference is made to the claim dated February 8, 1924, for the refund of $13,252.47, * * * and in which it was stated that the claim was filed for the purpose of technically completing, and relates back to the informal claim presented under date of May 29, 1923. In connection with said claim, it was further held that it is a prerequisite to the allowance of interest that the refund or credit must be made pursuant to a claim for refund filed by the taxpayer, and that consequently interest is not payable under the provisions of section 1324 — a of the revenue act of 1921 on the basis of a claim for refund filed subsequent to the allowance of the over assessment. ”
    X. The commissioner has abided by his decision contained in said letter of April 28, 1925, and has not allowed or paid any interest to plaintiff upon said refund of $13,252.47.
    XI. The said G. H. Shryock was at all times material to' this case the duly appointed and acting agent and attorney in fact of the plaintiff, Georgeine S. Lasher. •
    
      The court decided that plaintiff was entitled to recover interest at the rate of one-half of 1 per centum per month on $11,308.48 from April 15, 1921, to October 29, 1923, amounting to $1,722.66, and on $1,943.99 from February 26, 1923, to October 29, 1923, amounting to $78.73, the two items of interest aggregating the sum of $1,801.39.
   Moss, Judge,

delivered the opinion of the court:

This suit is brought for the recovery of $2,309.72, claimed by plaintiff as interest on a refund to plaintiff on account of an overpayment of income tax for the year 1918. The refund was for $13,252.47, $11,308.48 of which represented an additional tax paid April 15, 1921, and $1,943.99 of which was a part of the original tax paid at the time plaintiff’s tax return was filed, March 15, 1919. The refund was allowed October 29, 1923, and was paid in November, 1923, without interest.' Plaintiff immediately claimed interest under tj^e provisions of section 132^ (a) (2) of the revenue act of 1921, which claim was rejected.

In the original petition filed February 4, 1926, plaintiff based her claim for the recovery of interest on the provisions of section 1324 (a) of the revenue act of 1921, 42 Stat. 316. Under this statute provision was made for the payment of interest on refunds made “ upon the allowance of a claim for refund.” The Government denied plaintiff’s claim for interest on the ground that no claim for refund was ever filed. While this case was pending this court, on February 14, 1927, decided the case of Magnolia Petroleum Company, 63 C. Cls. 173, and plaintiff believing that the principal question involved in the decision in that case was applicable to the facts in the instant case filed an amended petition asserting her alternate right to recover interest under the act of 1924, 43 Stat. 346, which allows a recovery of interest on a refund without the filing of a claim. However, on February 20, 1928, the United States Supreme Court reversed the decision of the Court of Claims in the Magnolia Petroleum Company case, holding on this point that “ statutes are not to be given retroactive effect, or construed to change the status of claims fixed in accordance with earlier provisions unless the legislative purpose so to do plainly appears.” Plaintiff’s right to recover, therefore, is confined to the sole question of whether or not plaintiff complied with the provisions of section 1324 (a) of the act of 1921 by presenting a claim for refund. The act provides “ that upon the allowance of a claim for the refund of * * * internal-revenue taxes paid, interest shall be allowed and paid * * *.” No formal claim for refund was filed in this case. The necessity for a claim for refund, as a condition for the allowance of interest, is not denied. It is plaintiff’s contention, however, that certain letters addressed to the Commissioner of Internal Revenue, which will later be discussed, were sufficient to meet the requirements of the statute. The facts briefly stated are as follows: In March, 1919, plaintiff filed her income-tax return, and paid the tax shown to be due thereon. Thereafter the Commissioner of Internal Revenue assessed against plaintiff an additional tax in the amount of $11,308.48, which was paid on April 15, 1921. By letter dated June 22, 1922, the commissioner proposed to assess against plaintiff a further additional income tax in the amount of $14,895.13, and notified plaintiff that she would be allowed twenty days within which to present any protest or objection to the proposed assessment.

■ Plaintiff immediately filed objections to the proposed assessment, which were overruled by the income-tax unit, whereupon plaintiff filed an appeal to the commissioner under the provisions of section 205 (d) of the revenue act of 1921. This appeal was in the form of a letter, dated August 26, 1922, in which plaintiff made the contention that the estate of her husband, George F. Lasher, of which she was the sole beneficiary, was entitled to the allowance of a deduction from gross income of estate taxes accrued during the year 1918. The error of the commissioner,'claimed by plaintiff, in the computation of the tax liability of the estate of George F. Lasher, and the contentions of both plaintiff and the representatives of the Internal Revenue Bureau with respect to the particular question presented by plaintiff, were discussed at length and in minute detail. Appended to this letter was a sworn affidavit of G. H. Shryock, the duly authorized agent and attorney in fact of plaintiff, in which it was stated, “ That it is his belief, and he so avers, that Georgeine S. Lasher, the taxpayer on whose behalf this appeal is made, has paid an aggregate amount of income and surtaxes for 1917, 1918, and 1919 which exceeds the aggregate amount of her actual tax liability for those years.” Thereafter negotiations continued by correspondence and by personal conferences between representatives of plaintiff and of the Government, and on July 9, 1923, the commissioner advised plaintiff by letter that a reaudit of her 1918 tax return disclosed an overassessment of $13,252.47, instead of an additional tax as theretofore proposed, stating that the “ allowance as a deduction from the estate of George F. Lasher of $65,753.50, Federal estate tax, results in the net income due you from the above-named estate of $22,717.44 instead of $88,470.94.”

This determination was in strict accord with plaintiff’s contention in the letter of August 26, 1922, except only that plaintiff did not make, and in the nature of the transaction could not at that time have made, a demand for a specific sum. The amount due plaintiff as found by the commissioner was paid on November 23, 1923, without interest. Interest was denied on the ground that the refund was made as a result of an office audit and not on the allowance of a claim for refund. It should be noted, however, that the office audit, which resulted in the establishment of the exact amount due plaintiff, followed the adoption by the commissioner of the contention relied upon by plaintiff in said letter. The initiative in presenting the error of the commissioner, complained of by plaintiff, was taken by the taxpayer and not by the commissioner, and the allowance of the refund was directly due to the action by plaintiff in presenting the question to the commissioner in the letter of August 26, 1922.

Section 1324 of the act of 1921 is a remedial statute, and as such should be liberally construed so as to effectuate its purpose. Official forms for a claim for refund have been provided for use by taxpayers, but the Commissioner of Internal Revenue has not in all instances insisted on the filing- of a claim for refund on the official forms. See Law Opinion 1116, Internal Revenue Bulletin 111-1, pp. 350-353, wherein the Solicitor of Internal Revenue held that “a claim prepared in any manner, whether on a printed form or not, so long as it was sworn to and met the other essential requirements of Form 46 and the regulations, would therefore be accepted and considered by the commissioner.”

By the letter of August 26, 1922, which contained all the essential information required to be set out in the official forms, plaintiff stated the specific ground upon which she claimed that her taxes for 1918 had been overpaid. Regardless of the form, it was the assertion of a right intelligibly expressed, and it was considered and allowed by the commissioner.

While plaintiff relies in support of her claim for recovery herein on certain other communications subsequent in date to August 26, 1922, it is not deemed necessary to discuss same, as the question involved depends primarily on the proper construction of said letter of August 26, 1922.

It is the opinion of the court that the plaintiff is entitled to recover, and it is so ordered.

Gkaham, Judge; Booth, Judge; and Campbell, Chief Justice, concur.  