Brief for the Respondents in Opposition — United States v. John Barth Co.

INDEX

rele FRO Se POT PB CR re,

Page

Kestatement of case 1

Petition for Writ of Certiorarn should be denied because it does

not come under any provision of Rule $$ (5) (hb r

(a) The question involved is not an important quetion ted

eral law which should be settied by thas court

(b) The decision in question is not rn conflict with decisions of

other circeit courts of appeal or district: courts §

Conc! usien 10

Granting the writ bere will result only in a decision of this

particular case 1!

Appendia 13

Sectvon 234 (a) (a a) Revenue Act of 1918 1%

Scetion 286 (d) Revenue Act of 1918 13

Section 280 (4d) Revenue Act of 1921 4

Section 277 (a 2) of Revenue Act of 1924 8

Secon 278 (di Revenue Act of 1924 1s

Secon 278 6e@) Revenue Act of 1924 1s

Section 277 s $) Revenue Act of 1926 Ve

Section 278 6d) Revenue Act of 192¢ i"

Sertion 278 t Kev enue Act of 1926 !

Sortrot: 1106 a Revenue Act of 1926 1

CITATIONS

Cane

MiCaugha oe Phdatephia Rarer ¢ 27 T td) O28 t

tested Statics © Good Sprrmes to * Ce. and Fidelity A

Lie poet ( heat reported mo ¢. & Od. Catia

t wsted States ©1) Maryiand Camaty ¢ \ $89) October

ler 1¥5

t macd State: @s COnbew Bros Co tn 23 3 2d) %67

L@ated States + Renmmeids 27 1 Md) 90? ¢

“Matutes

Revenue Act of 918 Act of Peh 24 1s 18 40 Seat t

Sex ‘a s 4 a t 4 jt

Sec. 2M id 18

Revenue Act af 192), Act of Nev 24, 192) i%¢, 42 Stat

Sex 2M d 14

Revenue Act of 1924, Act of June 2, 1924 © 244, 4% Stat 2

. 1!

14

14

of 1026 Act of Fer 26. 1926. « 27, 44 Seat Y

‘ le

1"

17

2 1°

LET OEE IL TIL, EA AT HE

In the Supreme Court of the United States

OcTOBER TERM, 1928.

UNITED STATES OF AMERICA, PETITIONER,

vR.

Tur Joun Bartu Company aNp UwNrrep STATES

FIDELITY AND GUARANTY COMPANY

BRIEF OF RESPONDENTS IN OPPOSITION TO PETITION FOR 4

WRIT OF CERTIORARI TO THE UNITED STATES CIRCUIT

COURT OF APPEALS FOR THE SEVENTH CIRCUIT.

RESTATEMENT OF THE CASE

The statement on page 2 of petitioner's brief as to

the issue involved in this case ix as follows:

“The question presented in this case ix whether

an action on a bond given to stay the collection of a

tax pending consideration of a claim in abatement

is barred after expiration of the period of limita-

tion prescribed by law on suits or proceedings for

the collection of taxes.”

It is respectfully submitted that thix statement of

the ixwue is incorrect and misleading and that a proper

statement of the issue would be as follows:

May an action on a bond given under Section

234 (a), 14 (a) of the Revenue Act of 1918,

‘conditioned for the payment of any part of such

tar found by the Commissioner to be due’ be main-

tained when the Commissioner made no determina-

tion and found no tax to be due until after the run-

Sat Su

ning of the statutory period of limitation of the

Revenue Acts? (Italics ours)

The issue may also be fairly stated as follows:

Can the Commissioner of Internal Revenue in a

case in which a bond has been given conditioned

for the payment of any tax found by him to be due

make a valid tax determination and thereby create

a cause of action on the bond after the statutory

period of limitation has expired, espectally in view

of Section 1106 (a) of the Revenue Act of 1926,

which provides that the running of the statute of

limitations shall not only bar the remedies for the

collection of the tax, but will extinguish all tax

liability?

The materia] portions of the Revenue Acts ane set

forth in the appendix to the brief

The distinguishing feature of this case, whieh must

not be last sight of, is that the Commussioner of Internal

Revenue made no determination of any tax nor found

any tax to be due until after the period of Hratation

provide for in the Revenue Acts had clapset The Ci

euit Court of Appeals for the Seventh Crroutt beld. and

we submit property, that the statute of limitations was

net suspended by the filing of the bead and that after

the statutory perio? had elapeed. all tay hatality was

extinguished as much sy as if it had om fact been panel

Conerquently a subsequent determination of a tax by

the Commissioner of Internal Revenne could not revive

any tax hability hener the obligation of the bond t

pay a tat never attached and there has therefore never

heen a breach of the condition of the bond The tasn

before this Court is not, therefore, what statutory pertod

of limitation applies to actions upen such a bond as ts

here involved, but whether or not there has ever been a

3

breach of the bond when no tax was determined or found

to be due prior to the time when all tax liability became

extinguished.

The Government in its petition for a writ of certio-

rari admits on page 3 thereof that if no claim for abate

ment had been filed and the suit had been one to recover

taxes, it would have been barred by the statute of limi.

tations, It appears from the record in this case and the

petition of the Government that the determination of

the Commissioner of Internal Revenue relied upon as

the basis for this action wax made after the statutory

period of limitation had elapsed, to-wit, on March 25

1926. Tt is respectfully submitted, therefore, that the

restatement of the issue here involved is necessary to

the proper consideration as to whether or not the writ

of certiorari should be granted

REASONS WHY PETITION FOR WRIT OF CERTIORARI

SHOULD BE DENIED

THE PETITION POR WRIT OF CFRTIORARI IN THIS CASI

SHOULD BE DENIED FOR THF REASON THAT IT DOFS

NOT COMP WITHIN ANY OF THE PROVISIONS OF

RULF 86 64) b OF THIS COURT

ial dm thea case the Circuit Court af {ppe ale for the

N

Reventh Crvcuct haa not “decided an re portant quertion

of Federal law which has not heen, but whould he _aettled

he thin Court.”

The question invelved in this case ix of singularly

narrow compass The bond upon which the action was

brought was given. ax stated in the bond, pursuant to

Section 234 ¢(a:. 14 (a) of the Revenue Act of 1918

This section of the Revenue Act of 1918 existed as the

law of the United States only from Pebruary 14, 1919

4

to November 3, 1921, and by its terms applied only to

taxable incomes received for the year 1918 or the cor-

responding fiscal year. The purpose of this provision

was to permit sales and other information obtained in

the year 1919 to be used in re-adjusting the value of 1918

inventories which suffered unusual fluctuations in value

because of the termination of the World War and th:

change from war to peace time conditions in industry

No provision similar to Section 234 (a), 14 (at of

the Revenue Act of 1918 has been incorporated in any

subsequent statute In order to take advantage of this

unique provision a bond given pursuant to that section

would have to be filed before payment of the tax dis

cloaed by the 1918 return, that is, before payment of the

last quarteriy installment. A claim for abatement fled

under Bection 284 (a) 14) cas and a bond given in

conjunction therewith, are clearly tntended to be part of

the original return of the taxpayer and subject to all of

the administrative rules and regulations and the limita

then provisions for the determination of taxes shown on

an original return, Such bonds are clearly different

from bonds given to stay the collection of additional

asseeainents made by the Commissoner for taxes

claimed by him to be due in excess of those shown by the

original return, In net one of the cases cited by the

petitioner is such a bend in ixene Moreever, respon!

ent is not aware of anv similar case pending, nor has

petitioner pointed out or even euggested that any other

case is pending involving such a bond, as we have here,

given under the terms of this unique statute Tt is re

apertfully enbmitted, therefory, that a decision in an

action brought upen a bond given pursuant to Bection

234 fai, 14 (a) of the Revenue Act of 1918 would not be

final on the question of actions on abatement bonds in

general because of the narrow scope and peculiar condi-

tions giving rise to that unique provision of the Revenue

Act of 1918 and bonds given pursuant thereto.

(b) In this case the Circuit Court of A ppeals for the

Seventh Circuit has not rendered a decision in direct

conflict with decisions of the Circuit Courts of Appeals

or of the District Courts of the United States.

In the petition of the Government on page 5 thereof

it is admitted that there is as vet no conflict of decision

between the United States Circuit Courts of Appeals on

the question here involved. However, the Government

cites the following cases in the District Courts which it

contends are in conflict with the decision in this cane:

€ nited States ca, Onken Bros, Company, Inc..

23 Fed. (2d), ( Wyo.) 367;

McCaughn ox, Philadelphia Barge Co., 27 Fed.

(2d), (BE. 1) of Pa), G2x;

C nited States va. Rennolda, 27 Fed. (2d), (8

D. of N. Y.), 902.

In the cause of United Staten cx, Onken Bros. Com

pany, Inc, 23 Ped. (2d), (Wyo) 867, it appears that a

claim for abatement and a bond were filed with respect

to an additwnal asscasment of income tax for the vear

WIS The Comnussioner of Internal Revenue rejected

the claim for abatement in June, 1923. Inaxmuch as the

return for the year 1918 would normally be filed on or

before March 15, 1919 it clearly appears that the

determination by the Commissioner was made before the

Svear statutory period of limitations had elapsed, and

thus the Onken case vitally differs from the instant

case, in which the Commissioner purported to determine

PETE KR RRA

6

a tax after all tax liability had been extinguished by the

running of the period of limitation prescribed by the

Revenue Acts

In the case of MeCaughn ca, Philadelphia Barge Co

YT Fedo (2d, (ROD of Pali G28, the Commissioner of

Internal Revenue in Oetober, 1920, made an additional

asersement against the taxpaver on account of ite 191s

income. The taxpayer filed a claim for abatement and

the bond on which suit was brought. Tt appears that on

May 14, 1923, the Commissioner of Internal Revent

rejected the defendant's claim for abatement and found

the adblitional tax to he correat Here again we find that

the Commissioner of Internal Revenue tide bis de

termination of the tax due within the statutory perod

prescribed by the Revenue Acts, thus learly distinguish

tng the case from the instant ofe

In the case of United States ca Rennolds, 27 Fod

Pads. oS D of NOY.) 902, tt appears Chat Che incon

tax teturn in question was filed on March 31, 1918, and

that a claim for abatement and a bond were filed tp

April, 1922. On Niwetber S, 1823, the Comimnisstone:

of Internal Revenne rejpevtesl the claim for abatement

and demanded payment of the tax. It appears that in

this one came alone do we have the situation In whieh

the Commissioner purperted to determine a tax to Yee

dge after the clapee of the statutory period of Limitation

preserites) by the Revenue Acts In the Renmolds cam

however, the defendant daw not appear to have raise

the point that the Conmissioner wae withaut paswer ¢

make a valid determinatoon of a tar after all tax halal

ity had teen extingtished and that consequentiv ne ha

bility eoul!d artes on the bomd beeauee the condition

7

could not then be breached. The Rennolds case would

appear to decide only that the statutory period of limi.

tation prescribed by the Revenue Acts for existence of

tax liability and the remedies for collection of taxex do

net apply to an action upou a bond. Moreover, there

are two additional distinctions between the Rennolds

case and the instant case. First, the bond given in the

Kennolds case was to stay the collection of an addition!

assessment and was filed long after the original return

wis filed. It was not a bond such as we have here filed

under Rection 234 cai (14) (a) in conjunction with

the original return Second, in the Reunolds case the

determination by the Commissioner of the claim in

abatement and hence the amount due under the bond

was had on November § 192%. This was more than two

years before the passage of Section 1106 (a) of the 1926

Revenue Act, which act extinguishes all tax liability

upon the running of the statute of limitation. Henee, in

the Rennolds case it might fairly be argued that though

the retuedy for the collection of the tax was barred, the

tax lability was not extinguished at the time of the

determination, In the instant case the determination

was made after the ensetment of Section L106 (as and

henee clearly after the tax had been extinguished ben

statute as effectually as if it had been paid,

It is respectfully submitted, therefore, that the deci

won of the Uuited States Cireuit Court of Appeals for

the Seventh Circuit in the instant case is clearly not in

eonfliet with the case of UC nifed States vs. Rennolds

The examination of these cases discloses that there

te no wach conflict between the decision by the Cirenit

Court of Appeals for the Seventh Cireuit in the instant

case and the decisions of the District Courts of the

0 Ria IN

United States as to warrant the granting of a petition

for writ of certiorari in this case.

(c) The cases cited by the Government as being in

accord with the decision in this case are likewise distin.

guishable and a decision by this court tn United States

cs. Maryland Caaualty Company, No. 399, October Term,

1928, will decide the conflict in all of the cases cited by

the Government and will not be affected by denial of the

petition in this case.

On page 5 of its petition the Government states that

substantially the same question as is presented in the

instant case has been certified to the Court by the United

Btates Cireuit Court of Appeals for the Ninth Circuit

in the case of LU mifed States cs, Maryland Casually

Company, No, 399, October Term, 1928 With this con

tention respondent respectfully disagrees

An examination of the certificate in that case di»

closes that the Commissioner in October, 1920, made an

additional manufacturer's excise tay assessment for the

period from March 1, 1919 to June $0, 1920. A claim

for abatement was filed, together with a bond upon

which the action was suleequently brought. The Com

missioner of Internal Revenue considered the claim for

abatement and rejected it on August 14, 1929 The

determination of the tax due from the taxpayer was

therefore made within the statutory period of limitation

prescribed by the Revenue Acts, to wit, five years

It is respectfully submitted, therefore, that the ques

tion raised in the instant case is not the same question

nor substantially the same question presented in the

certified case of United States ve Marviand Crsualts

Company There the Commissioner of Internal Revenue

made a determination of existence of a tax hability with

PME RES eM eb HES SIS PIAS IEEE RS AOS a iyi 4 * re

in the period prescribed by the Revenue Act. Here, as

stated before, the Commissioner attempted to make a

determination of a tax after all tax liability had been

extinguished by the running of the period of limitation

prescribed by the Revenue Act.

In the case of United States vs. Good Springs Anchor

Company and Fidelity & Deposit Company of Maryland

(District Court for the Southern District of California,

unreported}, an examination of the complaint obtained

by the respondent discloses the following situation to

have been alleged by the Government: The Collector

of Internal Revenue made an additional assessment

against the defendant on account of its 1917 income.

The taxpayer filed a claim for abatement on April 25,

1921. The claim wax considered and rejected by the

Commissioner of Internal Revenue on July 11, 1922, and

due demand for payment therefor was made. There-

after the taxpayer filed a bond, to-wit, on December 1,

1922, apparently to stay collection pending the reopen.

ing of the determination. It therefore appears that the

bond was given to pay a fixed sum already determined

by the Commissioner to be due, while in the instant case

the bond Was to pay such tax ax might be determined by

the Commissioner in the future. The determination by

the Commissioner in the Good Springs Anchor Company

came was within the statutory period prescribed by the

Revenue Act and of course there can be no dispute as to

his right or power to make such determination. In the

instant case the purported determination was made by

the Commissioner after the running of the period of

limitation which extinguished all of the tax liability.

In the Maryland Casualty Company case certified to

this Court, and also in the Good Springs Anchor Com.

pany case the decision was favorable to the taxpayer.

However, the cases for the reasons given above are

clearly distinguishable from the instant case and, there-

fore, although the taxpayer was successful in the last

two cases discussed, it is respectfully submitted that they

are not properly classed as being in accord with the

instant case. In fact, if this Court takes juriadiction of

the certified case of United States ve. Maryland Casualty

Company, No. 399, October Term, 1928, the decision in

that case will terminate the conflict in all of the cases

cited by the Government. This decision, however, by

reason of the fact that in those cases, with the exception

of the Rennolds case, supra, the determination by the

Commissioner was made prior to the lapse of the statu

tory period of limitation, will not decide the issue in

this case, and the denial of a writ of certiorari: in the

instant case will in no way affect the rights of the

Government or the taxpayers in the case certified to this

Court.

It is respectfully submitted, therefore, that there is no

such conflict in the decisions of the Federal Courts a»

to require the granting of a writ of certiorari to th:

Government in this case, nor will the denial of such a

writ affect the rights of the Government in the other

litigation cited by it in its petition.

CONCLUSION

An examination of the facts and decisions by the Cir

cuit Court of Appeals for the Seventh Circuit in the cane

of United States ve John Barth Company, on the orig

inal hearing (R26) and upon rehearing (R40), shows

that that case does not involve ap important question of

pions “aN PE EONAR EINES NEES FEN A EOE FEN BRINE NS St Re

ll

general Federal law. The decision, it is respectfully sub-

mitted, is correct as to the legal principles applied and

arises in a case under a section of the Revenue Act of

1918 affecting only income received during the fiscal or

calendar year for 1918. Furthermore, the action is

brought upon a bond given pursuant to Section 234 (a),

14 (a) of the Revenue Act of 1918, which was enacted by

Congress to meet a particular situation arising by reason

of the termination of the World War on November 11,

1918, and a similar provision does not appear to have

been incorporated in Revenue Acts prior or subsequent

to the Revenue Act of 1918,

An examination of the cases cited by the Government

in its petition clearly discloses that they do not conflict

with the decision in this case. Furthermore, the denial

of a writ of certiorari in this case will not affect: the

rights of the Government in the certified case of United

States ve Maryland Casualty Company, No. 299, Oc

tober Term, 1928 It therefore appears that the peti

fon, which is predicated upon the alleged Similarity of

insues in certain cases pending and decided in the vari

ous district courts of the United States, is entirely in

correct in its matjor premise. The only thing that would

be accomplished by granting the petition for writ of

certiorari here is a decision of this particular case and

of this particular tax. Such decision would affect no

other cases and no other tax. Moreover, there is no like

howd of a future conflict in decisions, since no other

“milar case appears to be now pending in any of the

district courts, and in addition, presumably none will

arise at this late date on bonds under Section 224 (a)

(14) (a) of the Revenue Act of 1918

— Aenean a eee ee at ee + Yeas ES TR PO RA Ser yeti AEN

RPA Soho RRA Ye 0, ser SAE € so) yee ea A i ec kk

No attempt has been made to consider the merits of

this case ax we conceive that the argument and discus-

sion thereon are proper only when and if this court takes

jurisdiction by certiorari and not otherwise.

WHEREFORE, the respondents respectfully pray

that the petition for a writ of certiorari should be

denied.

Respectfully submitted,

LOUIS QUARLES

MALCOLM K. WHYTE

8 SIDNEY STEIN

RICHARD &. DOYLE

Attorneys for Reapondents

APPENDIX

Bec. 234. (a) (14) (a) of Revenue Act of 1918. Act

of Feb. 24, 1919. (40 Btat. L. 1057-96, C. 18.)

“At the time of filing return for the taxable year

1918 a taxpayer may file a claim in abatement based

on the fact that he has sustained a substantial loes

(whether or not actually realized by sale or other

disposition) resulting from any material reduction

(not due to temporary fluctuation) of the value of

the inventory for such taxable year, Or from the

actual payment after the close of such taxable year

Of rebates in pursuance of contracts entered into

during such year upon sales made during such year.

In such case payment of the amount of the tax cov-

ered by such claim shall not be required until the

claim is decitled, but the taxpayer shall accompany

his claim with a bond in double the amount of the

tax covered by the claim, with sureties satisfactory

to the Commissioner, conditioned for the payment

of any part of such tax found to be due, with inter.

ext. If any part of such claim is disallowed then

the remainder of the tax due shall on notice and

demand by the collector be paid by the taxpayer

with interest at the rate of 1 per centum per month

from the time the tax would have been due had no

such claim been filed. If it is shown to the aatix-

faction of the Commissioner that such substantial

loms has been sustained, then in computing the taxes

imposed by this title and by Title IIT the amount of

such loss shall be deducted from the net income.”

See 250 1d) of Revenue Act of 1918 Act of Feb 24.

1919 (40 Stat L 1087 96, C. TR)

“Except in the case of false or fraudulent returns

with intent to evade the tax, the amount of tax due

under any return shall be determined and ARKeRRE

by the Commissioner within five years after the re-

14

turn was due or was made, and no suit or proceed

ing for the collection of any tax shall be begun after

the expiration of five years after the date when the

return was due or was made. In the case of such

falxe or fraudulent returns, the amount of tax due

may be determined at any time after the return is

filed, and the tax may be collected at any time afte:

it becomes due.”

Bec. 250 (di of Revenue Act of 1921. Act of Nov 25

192l. (42 Stat. Lo 227, ©. 136.)

“The amount of income, excess profits, or war

profits taxes due under any return made under this

Act for the taxable vear 1921 or sueceeding taxable

years shall be determined and assessed by the Com

missioner within four vears after the return was

filed, and the amount of any such taxes due under

any return made under this Act for prior taxable

years or under prior income, excess profits, or wat

profits tax Acts, or under section 38 of the Act en

titled ‘An Act to provide revenuc, equalize duties,

and encourage the industries of the United States,

and for other purposes,” approved August 5, 190%,

shall be determined and asseaxsed within five vears

after the return was filed, unless both the Commis

sioner and the taxpayer consent in writing to a later

determination, assessment, and collection of the

tax: and ne anit or proceeding for the collection of

any such taxes due under this Act or under prior

income, excess profits, or war profits tax Acts, or

of any taxes due under section 28 of such Act of

Angust 5, 1909, shall be begun, after the expiration

of five vears after the date when such return wus

filed, but this shall not affect suits or proceedings

begun at the time of the passage of this Act Pre

vided. That in the case of income received during

the lifetime of a decedent, all taxes duc thereon

shall be determined and assessed by the Commis

sioner within one vear after written request there

15

for by the executor, administrator, or other fidu-

clary representing the estate of such decedent.”

Sec. 277 (a) (2) of Revenue Act. of 1924. Act of

June 2, 1924. (43 Stat. L. 253, C. 234)

“The amount of income, excess-profits, and war-

profits taxes imposed by the Act entitled ‘An Act to

provide revenue, equalize duties, and encourage the

industries of the United States, and for other pur-

poses,” approved August 5, 1909, the Act entitled

‘An Act to reduce tariff duties and to provide rey-

enue for the Government, and for other purposes,’

approved October 3, 1913, the Revenue Act of 1916,

the Revenue Act of 1917, the Revenue Act of 1918,

and by any such Act as amended, shall be HaseRKed

within five years after the return was filed, and no

proceeding in court for the collection of such taxes

shall be begun after the expiration of such period.”

Sec, 278 (di of Revenue Act of 1924.) Act of June 2.

124. (43 Stat. L. 253, ¢. 234.)

“Where the assessment of the tax is made within

the period preseribed in section 277 or in thix wee

tion, such tax may be collected by distraint or by a

proceeding in court, begun within xix years after

the assessment of the tax Nothing in this Act shall

be construed as preventing the beginning, without

assesment, of a proceeding in court for the collec

tion of the tax at any time before the expiration of

the period within which an assessment may be

made.”

Sec, 278 (e¢) of Revenue Act of 1924.) Act of June 2.

1924. (423 Stat. L. 243, C. 234.)

“This section shall not (1) authorize the assess

ment of a tax or the collection thereof by distraint

or by a proceeding in court if at the time of the en.

actment of this Act such assessment, distraint, or

ne |

16

proceeding was barred by the period of limitation

then in existence, or (2) affect any assessment

made, or distraint or proceeding in court begun, be

fore the enactment of this Act.”

Rec. 277 (a) U3) of Revenue Act of 1926. Act of Feb

26, 1926. (44 Btat. L. 9, ©. 27.)

“The amount of income, excess. profits, and war

profits taxes imposed by the Act entitled ‘An Act to

provide revenue, equalize duties, and encourage the

industries of the United States, and for other pur

poses,” approved August 5. 100, the Act entitle:

‘An Act to reduce tariff duties and to provide res

enue for the Government, and for other purposes,

approved October 3, 1915, the Revenue Act of 1916,

the Revenue Act of 1917, the Revenue Act of 1918,

and by any such Act as amended, shall be Ammen!

within five years after the return was filed, and ne

proceeding in court without assexement for the col

lection of such taxes shall be begun after the expir

tion of such period”

Ree. 278 1d) of Revenue Act of 1926. Act of Feb. 26.

1926 (44 Stat L 8 ©. 27)

“Where the assessment of any income, exces

profits, or war profits tax impos! by this title or

by prior Act of Congress has been made (whether

before or after the enactment of this Act) within

the statutory period of limitation properly applica

able thereto, such tax may be collected by distrarnt

or by a proceeding tn court i begun before or after

the enactment of this Act), but only if begun (1!

within six years after the assesment of the tax,

or (2) prior to the expiration of any period for col

lection agreed upon in writing by the Commissioner

and the taxpayer”

17

Sec, 278 (¢) of Revenue Act of 1926. Act of Feb. 26,

1926. (44 Stat. L. 9, ©. 27).

“This section shall not bar a distraint or pro-

ceeding in court begun before the enactment of the

Revenue Act of 1924; nor shall it authorize the

assesment of u tax or the collection thereof by dis-

traint or by proceeding in court (1) if at the time

of the enactment of this Act such assessment, dis-

(raint or proceeding was barred by the statutory

period of limitation properly applicable thereto,

unless prior to the enactment of this Act the Com.

missioner and the {taxpayer agreed in writing there-

fo, or (2) contrary to the provisions of subdivision

(#) of section 274 of this Act.”

Sec. 1106 (a) of Revenue Act of 1926. Act of Feb.

26, 1926. (44 Btat, Lo 9 ©. 27)

“The bar of the statute of limitations against the

United States in respect of any internal-revenne tax

shall not only operate to bar the remedy but shall

extinguish the linbility: but no credit or refund in

respect of such tax shall be allowed unless the tar

payer has overpaid the tax. The bar of the statute

of limitations against the faxpaver in respect of any

internal revenue tax shall not only operate to bar

the remedy but shall extinguish the liability: but no

collection in respect of such tax shall be made unless

the taxpayer has underpaid the tax.”