Balkan Nat. Ins. v. Commissioner

CHASE, Circuit Judge

(dissenting).

My brothers have treated what may be a good excuse for the taxpayer’s failure to file on time its income and profits tax return for the year 1918 as the equivalent, as a condition precedent to the putting in operation of the statute of limitations upon the assessment and collection of taxes due, of the actual filing of a return. With all deference, I cannot follow the facts that far to reach such a legal result.

We are not dealing with any penalty for failure to file a return but simply with the applicability of a statute of limitations and that depends upon what restriction the United States has itself imposed on its freedom of action. Congress need not have provided for any limitation upon the time within which such taxes could be assessed and collected. It did, however, provide for a limitation in the event that a return was filed but only in that event. In so many words it left the government free to act at any time whenever a return was required and not filed.

A return in behalf of this taxpayer was clearly required. It has never filed one and that filed by the Alien. Property Custodian was neither required nor, since it was not signed and verified by oath, could it serve to start the running of the statute. Lucas v. Pilliod Lumber Co., 281 U.S. 245 -249, 50 S.Ct. 297 , 74 L.Ed. 829 , 67 A.L.R. 1350 . So the situation of this taxpayer is that of one who has never filed any return, not even a tentative one. Though it does appear that it was refused access to its books of account after they were seized, there is no proof that the taxpayer ever requested any information expressly to enable it to file a return and, without that, it is hardly in a position to assert that it was prevented from filing one.

But however that may be, it was not prevented by any wrongful act of the government. In so far as there was any prevention that was but a result of the circumstance that its property and books of account were subject to seizure; coupled with the fact that they were seized and held in a way to make the seizure effective. That in no way violated any rights of the taxpayer or added to or detracted from its actual liability for the payment of taxes due for a period before the seizure. If it made it difficult, or even impossible, for it to file a return that would start the statute of limitations running upon the assessment and collection of those taxes, that was but a lawful consequence of the lawful seizure. Its effect had to be borne by the taxpayer just like that of any other interference with its own business resulting from the seizure and for which no redress was provided by law.

Because of this, the taxpayer is not entitled to be treated now any differently from any other who filed no return and did not create a starting point for the statute of limitations. Such a statute only applies when the conditions prescribed by Congress have been fulfilled. Lucas v. Pilliod Lumber Co., supra, Compare, Florsheim Bros. Drygoods Co. v. United States, 280 U.S. 453 , 50 S.Ct. 215 , 74 L.Ed. 542 .

As the government owed the taxpayer no duty to so act or refrain from acting with reference to the seizure that the statute of limitations might be set in operation for the benefit of the taxpayer, so now it ought not to be deprived, on some theory that it was responsible for the taxpayer’s failure to file a return, of its right to have its claim for taxes considered on the merits. Moreover, it ought not to be taken for granted that the taxpayer would have filed a return for 1918 even if there had been no seizure.

I would affirm the decision of the Board of Tax Appeals.