Zellerbach Paper Co. v. Helvering, 293 U.S. 172 (1934)
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U.S. Supreme Court ZELLERBACH PAPER CO. v. HELVERING, 293 U.S. 172 (1934)
[Page 293 U.S. 172, 176]
the return on file was a nullity, and hence that the statute of limitations had never been set running. 26 B.T.A. 96. The Court of Appeals for the Ninth Circuit affirmed. 69 F.(2d) 852. In so doing, it refused to follow decisions directly to the contrary by courts of co-ordinate jurisdiction. Myles Salt Co., Ltd., v. Commissioner (C.C.A.5) 49 F.(2d) 232; Isaac Goldmann Co. v. Burnet, Commissioner, 60 App.D.C. 265, 51 F.(2d) 427; Valentine-Clark Co. v. Commissioner (C.C.A.8) 52 F.(2d) 346. Because of that conflict, writs of certiorari were granted by this Court. 292 U.S. 621, 54 S.Ct. 866, 867.
The opinion of the court below rests heavily upon the argument that what is required by the statute is a return under the act, and that this excludes by implication a return by the taxpayer before the act became a law. Various sections are cited as enforcing that conclusion. See, e.g., sections 205(a), 239(a), 250(d), which so far as material are quoted in the margin. [Footnote 2] But the Act of 1921 was retro-
[Page 293 U.S. 172, 179]
however, does not begin at that point. It goes back to earlier statutes presenting a like problem. In the transit from the Revenue Act of 1917 (40 Stat. 300) to the Act of 1918 (40 Stat. 1057), there was the same gap to be filled, the same necessity for determining the standing of returns made on a fiscal year basis before the new act became law. Treasury Decision 2797, issued by the Commissioner March 11, 1919, was designed to guide the taxpayer in that predicament. It is quoted in the margin. [Footnote 3] It calls for an additional return when an additional tax is due, but not at other times. It treats the whole tax, computed under both returns, as made up of separate parts, one the part due under what is styled 'the original return,' and the other the additional part due 'under the amended return.' This regulation was in substance readopted in the regulations already referred to under the Act of 1921. There are verbal variations, but not of such a nature as to suggest a change of meaning. The like is true of a Treasury Decision issued under the Revenue Act of 1926 (44 Stat. 9; T.D. 3843). All these regulations have had the tacit assent and confirmation of the lawmakers. Successive revenue statutes have been enacted without substantial change in the applicable sections. Congress seemingly has been satisfied with the Decisions of the
[Page 293 U.S. 172, 182]
the limitation shall run from the original return when there is nothing on the face of that return to indicate that the liability reported is less than is owing. [Footnote 5] The statute supplies no basis for such a principle of division. An examiner needs more time for an audit when errors are latent, to be discovered only by digging into books and vouchers, than when errors are apparent upon a bare inspection of the record. It would be a strange rule of limitation that would vary his opportunity inversely to his needs.
One other contention of the government is stated merely to exclude it from the scope of our decision. The government makes the point that the petitioners' return, even if filed at the proper time, must be held to be a nullity for the reason that it commingles the income of the affiliated companies, parent and subsidiary, with that of another company, the A. S. Hopkins Company, previously dissolved. No such point was considered by the court below, nor was it suggested either in the petition for certiorari or in any response thereto. Review by this Court will be limited accordingly. Johnson v. Manhattan R. Co., 289 U.S. 479, 494, 53 S.Ct. 721; Charles Warner Co. v. Independent Pier Co., 278 U.S. 85, 91, 49 S.Ct. 45.
The decree should be reversed and the cause remanded for further proceedings in accordance with this opinion.
It is so ordered. Footnotes
Footnote 1 The text of the amended decision is as follows:'If any taxpayer has, before November 23, 1921, filed a return for a fiscal year ending in 1921, and paid or become liable for a tax computed under the Revenue Act of 1918, and is subject to additional tax for the same period under the Revenue Act of 1921, a return covering such additional tax shall be filed at the same time as the returns of persons making returns for the fiscal year ending February 28, 1922, are due under the laws and regulations, and payment of such additional tax will be due in the same installments and at the same times as in the case of payments based on returns for the fiscal year ending February 28, 1922. ...'
Footnote 2 Section 205(a): 'That if a taxpayer makes return for a fiscal year beginning in 1920 and ending in 1921, his tax under this title for the taxable year 1921 shall be the sum of: (1) the same proportion of a tax for the entire period computed under Title II of the Revenue Act of 1918 at the rates for the calendar year 1920 which the portion of such period falling within the calendar year 1920 is of the entire period, and (2) the same proportion of a tax for the entire period computed under this title at the rates for the calendar year 1921, which the portion of such period falling within the calendar year 1921 is of the entire period.'
Section 239(a): 'That every corporation subject to taxation under this title and every personal service corporation shall make a return, stating specifically the items of its gross income and the deductions and credits allowed by this title.'
Section 250(d): 'The amount of income, excess-profits, or war-profits taxes due under any return made under this Act for the taxable year 1921 or succeeding taxable years shall be determined and assessed by the Commissioner within four years after the return was filed. ...'
Footnote 3 'If a corporation has before February 25, 1919, filed a return for a fiscal year ending in 1918 and paid or become liable for a tax computed under the revenue act of 1917, and is subject to additional tax for the same period under the revenue act of 1918, the return covering such additional tax shall be filed at the same time as returns of persons making returns for the calendar year 1918 are due under existing rulings, and payment of such additional tax is due in the same installments and at the same times as in the case of payments based on returns for the calendar year 1918. If no part of the tax for such fiscal year was due until after February 24, 1919, the whole amount of tax due, including tax due under the original return and additional tax due under the amended return, will be payable in the same installments and at the same times as in the case of payments based on returns for the calendar year 1918.'
Footnote 4 See, e.g., Isaac Goldmann Co. v. Burnet, Commissioner, 17 B.T.A. 1103, reversed 60 App.D.C. 265, 51 F.(2d) 427; Myles Salt Co., Ltd., v. Commissioner, 18 B.T.A. 742, 744, reversed (C.C.A.) 49 F.(2d) 232; G. Corrado Coal & Coke Interests, Inc., v. Commissioner, 19 B.T.A. 691; E. J. Lorie v. Commissioner, 21 B.T.A. 612.
Footnote 5 See, e.g., Fred T. Ley & Co. v. Commissioner, 9 B.T.A. 749, 751; Palmetto Coal Co. v. Commissioner, 11 B.T.A. 154; Denholm & McKay Co. v. Commissioner, 15 B.T.A. 225.
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