The opinion of the court was delivered by: BYERS
These are cross-motions for (1) a temporary injunction sought by plaintiffs, and (2) for dismissal of the suit by defendants for lack of jurisdiction, and failure to state a claim, etc.
There is no material issue of fact to be tried, since the sole controversy concerns the validity of an assessment made on December 23, 1954 against each plaintiff. If it was valid, the defendants' motion should be granted; if not, it should be denied.
One opinion will suffice for both motions.
It appears without dispute that taxes for the year 1947 alone are involved; and that each taxpayer filed a return in due season (March 15, 1948) in which his 1947 taxable income was correctly stated, i.e. $ 43,135.22 as to Nathan; $ 43,146 as to Isidor.
However in his computation of the balance payable, each claimed a payment on account during the preceding twelve months of $ 35,000, leaving a balance payable on March 15, 1948 of $ 8,135.22 as to Nathan, and $ 8,146.00 as to Isidor.
It is also undisputed that the item of $ 35,000 so claimed to have been paid on account was false and untrue, in that: as to Nathan the actual payments on account had been in the sum of $ 12,031.74, a difference of $ 22,968.26; and as to Isidor, the actual payments on account had been $ 11,575.02, a difference of $ 23,424.98.
Amended returns filed in 1949 did not refer to the foregoing, and have no present bearing.
It is also undisputed that on December 23, 1954 a new assessment was, made against Nathan for the said sum of $ 22,968.26 and against Isidor for $ 23,424.59 (probably $ 23,424.98 would have been the correct amount) and it is the validity of that action which is the question now requiring decision.
Obviously the deficiencies in payment resulted from the respective taxpayers' incorrect assertions as to the balance actually payable on March 15, 1948 and the Government has sustained a loss because of that affirmative misrepresentation. It is equally obvious that the ballance is owing and should be paid, unless there is an infirmity in the law itself which can be successfully asserted to defeat that just result.
The argument for the taxpayers is that the assessment of December 23, 1954 was void as having been made more than three years after the return was filed (Int.Rev.Code 1939, § 275(a), 26 U.S.C.A. § 275(a)).
That since the period of limitation is six years (id. 276(c), 26 U.S.C.A. § 276(c)), the action of the defendants about to be stated, is without warrant in law, and should be enjoined.
That action is the issuance on November 15, 1957 of a summons by the District Director and others named, directed to each taxpayer as part of the purpose to collect 1947 income tax (i.e., the amounts above referred to).
The summons calls for appearance before a collection officer on November 29, 1957 and the production of (1) copies of 1956, 1955 and 1954 Federal Income Tax Returns, (2) proof of payments 'of above cancelled checks or money orders,' and (3) complete financial statement, 'Form 433 AD attached.'
These requirements are not understood by the court, and have not been discussed in the defendants' brief. The present decision is confined solely to the question of the power of the District Director to undertake collection of the unpaid portion of the 1947 tax of Nathan and Isidor Goldsmith, ...