[370]*370OPINION.
Van Fossan:
The instant question is that of tax accrual. The statute allows, with certain exceptions, deductions of tax paid or accrued within the taxable year. The petitioner concedes that, if and when a lien attaches to property for the taxes assessed thereon, the date of such lien is the date of the accrual of the taxes, but contends that in the present case, since no such lien accrued on the property in question and since it made its return according to scientific accounting principles and pursuant to the requirement of the Public Service Commission of West Virginia by charging against income earned during the taxable period the expense incurred in producing such income, the deduction was accordingly proper.
The respondent’s position is that the taxes in question accrued on January 1, 1933, because the ownership of property on that date is the event upon which tax liability depends and because, so he contends, a lien for such taxes attached on that date.
The question whether or not a lien for the taxes attached to the property will be discussed first. The statute under which this prop[371]*371erty was assessed is chapter 11, article 6, section 1, ox the Code of West Virginia, 1931.1 Section 5 2 of the same article and chapter [372]*372relates to pipe line companies. Section 18 3 thereof governs the payment of the assessment. Section 23 4 provides for the collection of taxes by suit, and section 245 distinguishes real estate used for purposes connected with the property from that not so used. Minor amendments, having no bearing on the issue, were enacted later.
Article 6 applies to the assessment of public service corporations. In that article there is no provision which imposes a lien on the petitioner’s property for the taxes assessed thereunder. However, the respondent relies on the general provisions of chapter 11, article 10, section 1, which states in part:
There shall be a lien on all real estate for the taxes assessed thereon, from the day fixed by law for the commencement of the assessment of such taxes, in each year, and the interest upon such taxes, at the rate and for the period provided by law. After the expiration of two years from the last named day, the auditor may institute a suit in equity, in the name of the State, to enforce the lien before mentioned, for any taxes unpaid, or for which no sale for taxes has been made. Such suit shall he brought and prosecuted in the circuit court of [373]*373the county in which the real estate, or the greater part thereof, is situated, or in which it has been theretofore assessed for taxes, and in such suit the land on which the taxes were assessed may be sold, and all taxes thereon, to the day of sale, with the interest accrued thereon, paid from the proceeds of sale. * * *
Chapter 11, article 10, section 1, is the immediate successor of similar provisions in prior acts of the West Virginia Legislature, extending back to the Code of 1868. Chapter 31, section 1 of that code recites that “there shall be a lien on all real estate from April 1 * * *55 -*-5
In State v. Baltimore <& Ohio Railroad Go., 41 W. Va. 81; 23 S. E. 677, decided in 1895, the Supreme Court of West Virginia had before it the same question as applied to railroad companies. There the court said:
* * * It is believed, however, that neither the statute cited, nor any other statute, gives a lien on any real estate owned by a railroad company, for the taxes assessed thereon, except only such as is used or occupied by the company for purposes not immediately connected with its road, or is rented or occupied for any purpose to or by individuals. Code, c. 29, § 67. * * *
The petitioner points out that all of its property was assessed as an entirety and not by the statutory methods controlling the assessment of property as ordinarily held by its owner. There is no specific segregation of kind or amount. Section 24 makes the distinction clear. All real estate against which a lien might be imposed to insure the collection of tax, would be subject to that lien only on the condition that it was not used in connection with the petitioner’s property normally devoted to public service purposes.
We are of the opinion that no lien upon the petitioner’s property assessed under chapter 11, article 6, was imposed by the statutes of West Virginia. This conclusion is inferentially substantiated by the fact that chapter 21 of the Acts of 19376 specifically created the very lien which the respondent claims already existed. If his theory were correct such legislation would have been wholly superfluous.
Inasmuch as no lien attached to the petitioner’s property, we must examine the sequence of tax events to determine when the liability for the tax first was imposed upon it. We find that it was not [374]*374until October 11,1932, that the petitioner was notified of an estimated tax liability of $32,000, by the letter of the state auditor. It may be doubtful that such an informal notice constituted an “assessment and charge” as contemplated by chapter 11, article 6, section 16, but the petitioner seems to have accepted it as such and acted accordingly. On February 6, 1933, it received its statutory notice of the correct amount of tax, mailed by the auditor on February 3, 1933. In any event, the dates October 11, 1932, and February 3, 1933, are both within the petitioner’s fiscal year.
We find in none of the successive statutory steps taken by the taxing authorities of West Virginia, prior to the notice of October 11, 1932, any definite action of the tax officials which fixes and determines the petitioner’s liability to pay the taxes for the year 1932. All events prior to October 11, 1932, were but incidents precedent to establishing that liability and were only parts of a process which accomplished that end. The date of assessment is not automatically the date of accrual. Minnie M. Coward, 39 B. T. A. 1158.
The statute requires that the auditors must assess and charge the petitioner’s property, not only with the whole amount of its taxes for state and school purposes, if any are levied, but also their whole amount for county purposes, for road and other district purposes other than free school and building purposes (in each magisterial district) and in each municipal corporation for all proper municipal purposes. It is obvious that no such assessment and charge was made before October 11, 1932, and probably not until much later in the petitioner’s fiscal year. See New Orleans Cold Storage & Warehouse Co., Ltd., 40 B. T. A. 121. Until that official duty was performed the petitioner could not be charged with the responsibility of paying a tax which up to that time was uncertain, indefinite, and problematic.
In United States v. Anderson, 269 U. S. 422
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[370]*370OPINION.
Van Fossan:
The instant question is that of tax accrual. The statute allows, with certain exceptions, deductions of tax paid or accrued within the taxable year. The petitioner concedes that, if and when a lien attaches to property for the taxes assessed thereon, the date of such lien is the date of the accrual of the taxes, but contends that in the present case, since no such lien accrued on the property in question and since it made its return according to scientific accounting principles and pursuant to the requirement of the Public Service Commission of West Virginia by charging against income earned during the taxable period the expense incurred in producing such income, the deduction was accordingly proper.
The respondent’s position is that the taxes in question accrued on January 1, 1933, because the ownership of property on that date is the event upon which tax liability depends and because, so he contends, a lien for such taxes attached on that date.
The question whether or not a lien for the taxes attached to the property will be discussed first. The statute under which this prop[371]*371erty was assessed is chapter 11, article 6, section 1, ox the Code of West Virginia, 1931.1 Section 5 2 of the same article and chapter [372]*372relates to pipe line companies. Section 18 3 thereof governs the payment of the assessment. Section 23 4 provides for the collection of taxes by suit, and section 245 distinguishes real estate used for purposes connected with the property from that not so used. Minor amendments, having no bearing on the issue, were enacted later.
Article 6 applies to the assessment of public service corporations. In that article there is no provision which imposes a lien on the petitioner’s property for the taxes assessed thereunder. However, the respondent relies on the general provisions of chapter 11, article 10, section 1, which states in part:
There shall be a lien on all real estate for the taxes assessed thereon, from the day fixed by law for the commencement of the assessment of such taxes, in each year, and the interest upon such taxes, at the rate and for the period provided by law. After the expiration of two years from the last named day, the auditor may institute a suit in equity, in the name of the State, to enforce the lien before mentioned, for any taxes unpaid, or for which no sale for taxes has been made. Such suit shall he brought and prosecuted in the circuit court of [373]*373the county in which the real estate, or the greater part thereof, is situated, or in which it has been theretofore assessed for taxes, and in such suit the land on which the taxes were assessed may be sold, and all taxes thereon, to the day of sale, with the interest accrued thereon, paid from the proceeds of sale. * * *
Chapter 11, article 10, section 1, is the immediate successor of similar provisions in prior acts of the West Virginia Legislature, extending back to the Code of 1868. Chapter 31, section 1 of that code recites that “there shall be a lien on all real estate from April 1 * * *55 -*-5
In State v. Baltimore <& Ohio Railroad Go., 41 W. Va. 81; 23 S. E. 677, decided in 1895, the Supreme Court of West Virginia had before it the same question as applied to railroad companies. There the court said:
* * * It is believed, however, that neither the statute cited, nor any other statute, gives a lien on any real estate owned by a railroad company, for the taxes assessed thereon, except only such as is used or occupied by the company for purposes not immediately connected with its road, or is rented or occupied for any purpose to or by individuals. Code, c. 29, § 67. * * *
The petitioner points out that all of its property was assessed as an entirety and not by the statutory methods controlling the assessment of property as ordinarily held by its owner. There is no specific segregation of kind or amount. Section 24 makes the distinction clear. All real estate against which a lien might be imposed to insure the collection of tax, would be subject to that lien only on the condition that it was not used in connection with the petitioner’s property normally devoted to public service purposes.
We are of the opinion that no lien upon the petitioner’s property assessed under chapter 11, article 6, was imposed by the statutes of West Virginia. This conclusion is inferentially substantiated by the fact that chapter 21 of the Acts of 19376 specifically created the very lien which the respondent claims already existed. If his theory were correct such legislation would have been wholly superfluous.
Inasmuch as no lien attached to the petitioner’s property, we must examine the sequence of tax events to determine when the liability for the tax first was imposed upon it. We find that it was not [374]*374until October 11,1932, that the petitioner was notified of an estimated tax liability of $32,000, by the letter of the state auditor. It may be doubtful that such an informal notice constituted an “assessment and charge” as contemplated by chapter 11, article 6, section 16, but the petitioner seems to have accepted it as such and acted accordingly. On February 6, 1933, it received its statutory notice of the correct amount of tax, mailed by the auditor on February 3, 1933. In any event, the dates October 11, 1932, and February 3, 1933, are both within the petitioner’s fiscal year.
We find in none of the successive statutory steps taken by the taxing authorities of West Virginia, prior to the notice of October 11, 1932, any definite action of the tax officials which fixes and determines the petitioner’s liability to pay the taxes for the year 1932. All events prior to October 11, 1932, were but incidents precedent to establishing that liability and were only parts of a process which accomplished that end. The date of assessment is not automatically the date of accrual. Minnie M. Coward, 39 B. T. A. 1158.
The statute requires that the auditors must assess and charge the petitioner’s property, not only with the whole amount of its taxes for state and school purposes, if any are levied, but also their whole amount for county purposes, for road and other district purposes other than free school and building purposes (in each magisterial district) and in each municipal corporation for all proper municipal purposes. It is obvious that no such assessment and charge was made before October 11, 1932, and probably not until much later in the petitioner’s fiscal year. See New Orleans Cold Storage & Warehouse Co., Ltd., 40 B. T. A. 121. Until that official duty was performed the petitioner could not be charged with the responsibility of paying a tax which up to that time was uncertain, indefinite, and problematic.
In United States v. Anderson, 269 U. S. 422, the Supreme Court said that the departmental regulation authorizing the use of the accrual method of accounting was in order to enable “taxpayers to keep their books and make their returns according to scientific accounting principles, by charging against income earned during the taxable period, the expenses incurred in and properly attributable to the process of earning income during that period.” See Patrick Cudahy Family Co., 36 B. T. A. 1147; affd., 102 Fed. (2d) 930.
The Public Service Commission of West Virginia compelled the petitioner to keep its books of account in accordance with the uniform classification of accounts for natural gas utilities as prescribed by the commission. That classification required the petitioner to credit its account “Taxes Accrued” during each accounting period of one month with taxes accrued during such period. The petitioner complied with the Public Service Commission’s order by so accruing the [375]*375taxes in question. Petitioner’s position here squares with the requirements of the Public Service Commission and with its own books.
In New Orleans Gold Storage & Warehouse Co., Ltd., supra, we stated: ‘‘The pertinent question here is whether the method of bookkeeping employed by the petitioner correctly reflected the income of the petitioner for 1936 and prior years.” In that case we found that the respondent had not questioned the petitioner’s method of accounting for prior years and that the taxes accrued on its books correctly reflected its income. So here, for all years since October 1, 1922, the petitioner has made its accruals and its income tax returns exactly as it did for the year before us. We consider its treatment of tax accruals to be good accounting practice, in accord with the regulations and orders of the Public Service Commission of West Virginia and the principles set forth in United States v. Anderson, supra. We hold that petitioner’s books correctly reflected its income for its fiscal year ended September 30,1933.
Decision will he entered v/nder Bule BO.