The opinion of the court was delivered by: DAWSON
This is an action by the executors of an estate (hereafter referred to as 'the taxpayer') for the refund of that part of an estate tax that was imposed, under § 811(c) of the Internal Revenue Code of 1939, 26 U.S.C.A. § 811(c), due to the inclusion in the taxable estate of certain inter vivos transfers. The tax was paid in 1941, but § 7 of the Technical Changes Act of 1949, 63 Stat. 891 (hereafter referred to as the 'T.C.A.'), amended § 811(c) retroactively and lifted the bar of the statute of limitations on resulting refund claims. This case turns upon the effect to be given to that Act.
Both parties have conceded or stipulated all of the material facts and moved for summary judgment pursuant to Rule 56, 28 U.S.C.A.
The jurisdiction of this Court is claimed under 28 U.S.C.A. § 1340 (1950). See 28 U.S.C.A. § 1346(a)(1) (1950) as amended by 68 Stat. 589 (1954).
The following facts exist without substantial controversy:
Mrs. Robbins, the decedent, died on March 9, 1939, at the age of 77. She had established two trusts in May, 1930, and two in August, 1935. Nothing was included by the taxpayer in the estate tax return on account of the trusts, but the Commissioner included the value of the entire corpus, less the interest of the life tenant, in the case of one of the 1930 trusts and in each of the 1935 trusts. This was done by the Commissioner on the ground that:
'The transfer was intended to take effect in possession or enjoyment at decedent's death and comes within the provisions of Section 302(c) of the Revenue Act of 1926, as amended.' (Thirty-Day Letter, dated July 22, 1941, at page 3.)
The Commissioner should have referred to § 811(c) of the 1939 Code (see 26 U.S.C.A. § 800 (1948)), but there is no material difference.
In 1941, the taxpayer paid the deficiency tax which amounted to $ 42,035.02, before being reduced by certain credits which arose during the audit. Interest was also paid in the amount of $ 2,653.89. No closing statement or compromise was made or filed pursuant to 26 U.S.C.A. §§ 3760, 3761 (1940).
The three-year statute of limitations, 26 U.S.C.A. §§ 910, 937 (1948), on refund claims ran out in September or November of 1944.
After the T.C.A. (also known as Public Law 378) became law on October 25, 1949,
the taxpayer filed a claim for the refund of the amounts stated above. The date of the claim was October 24, 1950.
Two years later, the Commissioner denied the claim, giving the reason that:
'Prior to the enactment of Public Law 378, a transfer under the terms of which the beneficiaries need not survive the decedent in order to obtain possession or enjoyment of the transferred property was not considered to be one intended to take effect in possession or enjoyment at or after the decedent's death, within the meaning of section 811(c) of the Code. Public Law 378 made no change in that respect. In the instant case, possession or enjoyment of the transferred property could have been obtained by beneficiaries during the lifetime of the decedent. Accordingly, the transfers were not intended to take effect in possession or enjoyment at or after the decedent's death, and the relief provided by section 7 is not applicable in this case.'
The Commissioner's contention was, therefore, that no tax was due under § 811(c) of the Code; that the Revenue Agent's determination that such tax was due was erroneous and could have been contested by the taxpayer at the time; that since the tax was not properly imposed under § 811(c), the lifting of the ban of the statute of limitations contained in § 7 of the T.C.A. is ...