Clyde L. And Effie M. Patton v. United States

305 F.2d 655

• Court: Court of Appeals for the Sixth Circuit
• Decided: July 13, 1962
• Docket: 14656_1
• Status: Published

Opinions

WEICK, Circuit Judge.

This case involves solely a question of law whether the statute of limitations under the Internal Revenue Code of 1954 or the period of limitation provided by the Internal Revenue Code of 1939 applies to a refund claim involving a net operating loss suffered in 1955, and carried back to 1953.

Taxpayers had timely filed their income tax return for 1953 and paid the tax thereon amounting to $17,787.20. In 1955, they sustained a net operating loss, which, under the 1954 Code, they were entitled to carry back to 1953, and was sufficient in amount to wipe out the net income which they had reported for 1953. They filed their claim for refund of 1953 taxes on April 13, 1959 which was rejected by the District Director on the ground that it had not been filed by March 15, 1959 as provided by Section 322(b) (6) of the Internal Revenue Code of 1939. 26 U.S.C. 1952 ed. § 322 (b) (6). Suit for refund was then filed in the District Court resulting in a judgment in their favor against the Government.

It is the taxpayers’ position that the time for filing their claim for refund was fixed by Section 6511(d) (2) (A) of the Internal Revenue Code of 1954, 26 U.S.C. 1958 ed. § 6511(d) (2) (A), as amended by the Technical Amendments Act of 1958 (Section 82(d)), made retroactive to January 1, 1954, under which they had forty months which ended on April 15, 1959 and consequently their claim for refund filed on April 13, 1959 was timely filed.

No case involving the precise point has been cited to us.

The 1939 Code provided a loss carry-back for only one year. The authority for the two-year carryback in question was derived solely from the 1954 Code. The amount of the carryback was computed under the 1954 Code. When the carry-back was made the taxes were then to be recomputed under the 1939 Code. Kent v. Commissioner, 35 T.C. 30 (1960); Reo Motors v. Commissioner, 338 U.S. 442, 70 S.Ct. 283, 94 L.Ed. 245 (1950).

Since the right to the claim was created under the 1954 law, we think the remedy provided for under that law should be applied. We do not believe that Congress intended different periods of limitation for refund claims under the two tax laws which would do nothing but create confusion. It seems to us, rather, that Congress intended to extend the applicable time one month with respect to both the filing of returns and the limitation for refunds and that the same limitation should apply under either code.

The Government contended that Section 6511(d) (2) (A) applied only to taxes imposed by the 1954 Code. It will be noted, however, that Section 7851(a) (6) (B) of the 1954 Code contains the following language:

“On and after January 1, 1955, the provisions of subchapter A of * * chapter 65 [relating to abatements, credits and refunds] of this title shall be applicable to all internal revenue taxes (whether imposed by this title or by the Internal Revenue Code of 1989) * * (emphasis added)

By these provisions, the 1954 Code was to govern refunds whether the taxes were imposed under either code.

It follows that the District Court was correct in rendering judgment in favor of the taxpayers which is hereby affirmed.