Commissioner's determination is final.—

LAW. Section 1007. In the absence of fraud or mistake in mathematical calculation, the findings of facts in and the decision of the Commissioner upon (or in case the Secretary is authorized to approve the same, then after such approval) the merits of any claim presented under or authorized by the internal-revenue laws shall not, except as provided in section 900, be subject to review by any other administrative or accounting officer, employee, or agent of the United States.

This section prevents an appeal to the financial or legal departments of the government, which might otherwise attempt to assume jurisdiction. In other words, the Commissioner's determination cannot be reviewed by any other department of the government.

When may the government reopen a case?-The following decision 42 is of interest in connection with cases which have been closed under laws prior to the 1924 law. It will also be of interest in connection with sections 1006 and 1007. The courts will no doubt insist upon a strict application of these sections.

DECISION. . . . . No authority has been vested in a Commissioner to overrule and reverse the action of his predecessor in office. Commissioner Osborne, acting under his authority, heard and determined a question of fact necessary to enable him to act intelligently in ascertaining and determining the amount of plaintiff's net income on which he would be required to make the levy and assessment, and his finding on that issue not having been impeached by the answer should, under every principle and rule of law, be regarded here as final. . . . . In Bank v. U. S., 15 Ct. Cl. 225, it is said:

"There is no doubt that an allowance by the Commissioner may be impeached anywhere for fraud, for that avoids all contracts into which it enters as against the party defrauded; or for want of jurisdiction; or for a mistake apparent upon the certificate of allowance; or generally for such other irregularities in the proceedings as would avoid an award made by arbitrators so far as the proceedings are similar; but not for what might seem to others to be a mere mistake of judgment in the weighing and giving force and effect to evidence."

The Treasury contends, however, that:

43

RULING. Returns may be reexamined and the tax redetermined and additional assessments made as often as the Commissioner deems advisable, within the prescribed time for assessments, unless an agreement in writing is made closing the case under section 1312 of the Revenue Act of 1921. Treasury Decision 3240 (C. B. 5, 313) does not prohibit such procedure. (C. B. III-1, page 336; I. T. 1968.)

42 Penrose v. Skinner, 278 Fed. 284.

43 See also C. B. II-1, page 174; A. R. R. 2394.

Procedure to reopen a case.-The following ruling applies to cases which have been finally settled by the Treasury. It does not apply to cases closed under sections 1312 and 1313 of the 1921 law, and 1006 and 1007 of the 1924 law.

RULING. Where any case in the Bureau of Internal Revenue has been finally closed after the taxpayer, or other party thereto, has had a hearing or has been afforded by written notice an opportunity to present oral or written arguments or statements of fact in support of his contentions, the case will not be reopened except (1) where a showing is made of new and material facts, accompanied by an explanation, satisfactory to the Commissioner of Internal Revenue, of the failure to produce such facts prior to the closing of the case, or (2) where the case is materially affected by the change of regulations or by the final decision of another case either by the Commissioner of Internal Revenue or by a court of competent jurisdiction. The application for reopening a case should be addressed to the Commissioner of Internal Revenue, should state succinctly the facts and circumstances upon which the application is based, and must be supported by the affidavit of a person having knowledge of the facts.

This decision is not to be construed as modifying the regulations relating to the filing of claims in abatement or claims for refund, nor as denying the right of a taxpayer to a hearing or to an appeal at any stage of his case until the case has been finally closed. After the taxpayer has exhausted his remedies within the Bureau, however, and the case has been finally closed, it will be reopened only under the conditions stated in the decision. (C. B. 5, page 313; T. D. 3240.)“

Claims procedure. The procedure of the Treasury should provide for an orderly appeal to the Commissioner in cases where the Unit has ruled adversely on a claim for abatement, refund or credit. Heretofore in the case of claims for abatement and credit, taxpayers have not known that their claims were denied by the Unit until collectors demanded payment. All decisions of the Unit should be sent to taxpayers and their right to dissent and appeal within the bureau made clear. No appeals on claims for refund or credit can be taken to the Board of Tax Appeals.45

A rule should be made that taxpayers be notified by letter that the Unit has rejected their claims and that they have, say, thirty days, to give notice of appeal to the Commissioner. If notice of appeal is not filed, collectors may reasonably demand payment in case of rejected claims for abatement or credit.

Until such a rule is promulgated, taxpayers should notify the Treasury when claims are filed that if the decision of the Unit is

"For general procedure before Bureau, see page 297 et seq.

See page 244.

adverse, the right of appeal to the Commissioner is requested before the claims are formally rejected.

Summary proceedings in case of contemplated evasion.

LAW. Section 282. (a) If the Commissioner finds that a taxpayer designs quickly to depart from the United States or to remove his property therefrom, or to conceal himself or his property therein, or to do any other act tending to prejudice or to render wholly or partly ineffectual proceedings to collect the tax for the taxable year then last past or the taxable year then current unless such proceedings be brought without delay, the Commissioner shall declare the taxable period for such taxpayer immediately terminated and shall cause notice of such finding and declaration to be given the taxpayer, together with a demand for immediate payment of the tax for the taxable period so declared terminated and of the tax for the preceding taxable year or so much of such tax as is unpaid, whether or not the time otherwise allowed by law for filing return and paying the tax has expired; and such taxes shall thereupon become immediately due and payable. In any proceeding in court brought to enforce payment of taxes made due and payable by virtue of the provisions of this section the finding of the Commissioner, made as herein provided, whether made after notice to the taxpayer or not, shall be for all purposes presumptive evidence of the taxpayer's design.

(b) A taxpayer who is not in default in making any return or paying income, war-profits, or excess-profits tax under any Act of Congress may furnish to the United States, under regulations to be prescribed by the Commissioner, with the approval of the Secretary, security approved by the Commissioner that he will duly make the return next thereafter required to be filed and pay the tax next thereafter required to be paid. The Commissioner may approve and accept in like manner security for return and payment of taxes made due and payable by virtue of the provisions of this section, provided the taxpayer has paid in full all other income, war-profits, or excess-profits taxes due from him under any Act of Congress.

(c) If security is approved and accepted pursuant to the provisions of this section and such further or other security with respect to the tax or taxes covered thereby is given as the Commissioner shall from time to time find necessary and require, payment of such taxes shall not be enforced by any proceedings under the provisions of this section prior to the expiration of the time otherwise allowed for paying such respective taxes.

(d)" In the case of a citizen of the United States about to depart from the United States the Commissioner may, at his discretion, waive any or all of the requirements placed on the taxpayer by this section.

(e) No alien shall depart from the United States unless he first procures from the collector or agent in charge a certificate that he has complied with all the obligations imposed upon him by the income, war-profits, and excess-profits tax laws.

40 The portion of this section beginning at this point was added to the corresponding section [250 (g)] of the 1918 law by both the 1921 and 1924 laws.

(f) If a taxpayer violates or attempts to violate this section there shall, in addition to all other penalties, be added as part of the tax 25 per centum of the total amount of the tax or deficiency in the tax, together with interest at the rate of 1 per centum a month from the time the tax became due.

Congress wisely empowered the Commissioner, in cases of intent to evade, to declare all taxes to be due and payable.

PERSONS GOING ABROAD NEED NOT IN ALL CASES PRESENT CER

TIFICATES OF COMPLIANCE.

RULING. In order to obtain income tax clearance, American citizens planning to leave the United States are required to present their certificates of compliance or receipts showing payment of income tax, at the office of the internal revenue agent in charge at the port of embarkation, rather than to the internal revenue agent at the pier. (C. B. 3, page 301; O. D. 666.)

This ruling was issued under the 1918 law. The present law gives the Commissioner power to waive this requirement as to citizens of the United States and by article 1311 it is waived. It has been held that the waiver also applies to a citizen of Porto Rico who is a resident of the United States.47

Aliens departing from the United States must present evidence that they have satisfied their income tax obligations. Detailed procedure is set forth in Chapter XLVI. "Non-Resident Aliens." Many aliens when leaving the United States are classed as non-residents.

"C. B. III-1, page 342; I. T. 1969.

After determination of the amount due-originally by the taxpayer, and, as to additional assessments, by the Commissioner-the next step is to pay the tax to the proper person, at the proper place, and at the proper time or times. As the latter point is the most important it will be first discussed.

Payment may be made in installments.-The law permits the taxpayer either to divide his tax into four installments, payable quarterly,1 or to pay it in a lump sum at the time of filing the return.2

LAW. Section 270. (a) Except as provided in subdivisions (b), (c), and (d) of this section the total amount of tax imposed by this title shall be paid

(1) In the case of a taxpayer, other than a nonresident alien individual, and other than a foreign corporation not having an office or place of business in the United States, on or before the fifteenth day

1 [Former Procedure] Under the 1909 and 1913 laws the entire amount of the tax was due June 30; under the 1916 and 1917 laws the tax was due on June 15. Tax under fiscal year returns under the 1913 law was due 180 days, and under the 1916 and 1917 laws, 165 days, after the closing date of the fiscal year. The provisions of the 1918 and 1921 laws are somewhat similar to those in the present law. For detailed discussion see Income Tax Procedure, 1924, pages 273 et seq.

2

[Former Procedure] Section 250 (f) of the 1921 law permitted the Commissioner, under certain conditions, to extend the date of payment of additional assessments. The extension was limited to eighteen months after November 23, 1921. For comments on the law and procedure, see Income Tax Procedure, 1923, pages 249-252.