The opinion of the court was delivered by: LEVET
The plaintiff-taxpayer, P. Lorillard Company, seeks by this tax refund action to recover $ 1,932.20 assessed by the Commissioner as interest on an income tax deficiency of the taxpayer for the calendar year 1958. Lorillard paid all the interest assessed and preserved its right to recover the amount by the timely filing of a claim for refund. Both the plaintiff and defendant move for summary judgment.
The facts are not in dispute. Lorillard's income tax return for the calendar year 1958 was due March 16, 1959. On that date plaintiff filed an 'Application for Automatic Extension of Time to File U.S. Corporation Income Tax Return' on Treasury Form 7004, thereby seeking to obtain an extension of three months in order to file its final income tax return and electing to pay its taxes for the calendar year 1958 in installments.
Form 7004 disclosed:
Tentative amount of tax for the taxable year- $ 29,233,000.00
Payment made on Declaration of Estimated Tax- 5,110,000.00
Balance Due 24,123,000.00
Amount of Remittance- $ 15,450,000.00
On June 15, 1959, Lorillard filed its final income tax return for the year 1958, disclosing a correct tax liability of $ 29,361,813.02, or $ 128,813.02 in excess of the amount of tax liability shown on Form 7004. A remittance of $ 8,801,803 accompanied the final return which, when added to the prior remittance, fully paid Lorillard's tax liability for the year 1958.
The District Director assessed interest at the rate of 6% On the $ 128,813.02 difference from the original due date of the return, March 16, 1959, to the date of payment, June 15, 1959. That amount, $ 1,932.20, is the subject of this refund action.
In order to intelligently frame the issue in this case, it is necessary to sketch, briefly and in very general terms, the statutory requirements for the filing and paying of corporate income tax. In 1958, the year here in question, Section 6072
required a corporation, such as Lorillard, paying tax on the calendar year basis, to file its return by March 15, 1959.
However, Section 6081(b) provided an automatic extension of three months to any corporation if:
'* * * in such manner and at such time as the Secretary or his delegate may be regulations prescribe, there is filed on behalf of such corporation the form prescribed by the Secretary or his delegate, and if such corporation pays, on or before the date prescribed for payment of the tax, the amount properly estimated as its tax or the first installment thereof required under section 6152; * * *'
Form 7004 was the form prescribed byTreas.Reg. § 1.6081-3(a) (1959) and upon its timely filing, the three-month extension was automatically granted.
In addition, a corporation was granted the privilege by Section 6152(a)(1)(B) of electing to pay its tax in 'two equal installments.' By subsection (b)(2), 'the first installment shall be paid on the date prescribed for the payment of the tax, and the second installment shall be paid on or before 3 months after such date.' By Treas.Reg. § 1.6152-1(2)(ii) a corporation was deemed to have made an election to pay its tax in installments if:
'It files an application on Form 7004 for an automatic extension of time to file its income tax return, as provided in 1.6081-3, and pays 50 percent of the unpaid amount of the tax at such time.'
Section 6601, relating to the assessment of interest, as well as Treas.Reg. § 301.6601-1(c)(2)(ii) provide that when tax is elected to be paid in installments, interest will run on 'any tax not shown on the return from the last date prescribed for payment of the first installment.'
Both Treas.Reg. § 1.6081-3 and § 1.6152-1 as well as Form 7004 expressly provided that the installment privilege is limited to the amount of tax shown on the Form 7004. Form 7004 went on to provide:
'Therefore, any portion of the tax not shown on this form will bear interest at the rate of 6 percent per annum from the original due date of the corporate return to the date of payment.'
It is the imposition of interest under these provisions that is ...