Excise taxes under act of August 5, 1909, are specific taxes, differing from State ad valorem taxes, as to which no tax is imposed until the officers act, and no suit for any tax will lie until after such action. (Id.)

Limitations.

The three-year clause of section 38 is not a limitation upon the right of the Government to sue for unpaid taxes but a limitation upon the right of the collecting officers to make assessment and to enforce payment by the summary statutory proceedings. (United States v. Grand Rapids & Indiana Ry. Co., 239 Fed. 153, 1915.)

Neither the limitation contained in this paragraph nor any other statute of limitation bars an action by the United States to recover the difference between the amount of the tax levied and paid and amount which should have been levied and paid, if the corporation's return had correctly stated its income. (United States v. Minneapolis Threshing Machine Co., 229 Fed. 1019, 1915.)

In view of Revised Statutes, section 3213, Held that, under act of August 5, 1909, section 38, subdivisions 5, 8, United States may maintain action against corporations for excise taxes based on income omitted, though Commissioner of Internal Revenue made no reassessment, etc., within time prescribed. (U. S. v. Nashville, C. & St. L. Ry., 249 Fed. 678.)

The corrected assessment on an incorrect return is not required to be made within the three years. (Eliot National Bank v. Gill, 210 Fed. 933, 1913, and affirmed in 218 Fed. 600, 1914.)

Returns, false. (See "False" returns.)

SUBDIVISION VIII, SECTION 38.

Eighth. If any of the corporations, joint stock companies or associations, or insurance companies aforesaid shall refuse or neglect to make a return at the time or times herein before specified in each year, or shall render a false or fraudulent return, such corporation, joint stock company or association, or insurance company shall be liable to a penalty of not less than one thousand dollars and not exceeding ten thousand dollars.

Any person authorized by law to make, render, sign, or verify any return, who makes any false or fraudulent return, or statement, with intent to defeat or evade the assessment required by this section to be made, shall be guilty of a misdemeanor, and shall be fined not exceeding one thousand dollars or be imprisoned not exceeding one year, or both, at the discretion of the court, with the costs of prosecution.

All laws relating to the collection, remission, and refund of internal-revenue taxes, so far as applicable to and not inconsistent with the provisions of this section, are hereby extended and made applicable to the tax imposed by this section.

Jurisdiction is hereby conferred upon the circuit and district courts of the United States for the district within which any person summoned under this section to appear to testify or to produce books as aforesaid shall reside, to compel such attendance, production of books, and testimony by appropriate process.

Collection of Tax by Government.

Where a corporation's return incorrectly stated its net income and the tax based upon such return had been paid, an action of indebitatus assumpsit would lie to recover the balance of the tax, which should have been levied and paid, without formal assessment of such additional tax. (United States v. Minneapolis Threshing Machine Co., 229 Fed. 1019, 1915.)

Evidence sustaining allegations of incorrectness in returns by a corporation subject to excise tax need not be set out in the declaration in a suit to recover such tax. (United States v. Nashville, Chattanooga & St. Louis Ry., 249 Fed. 678, C. C. A. (Reversing the district court decision; T. D. 2697.)

A common-law action of debt lies in favor of the Government whenever by accident, mistake, or fraud, taxes have not been paid; thus the Government may recover a personal judgment for a tax whenever there exists a duty to pay, provided another remedy has not been made exclusive by clear and specific declaration. (Id.)

The remedy by suit against the collector where internal revenue taxes have been wrongfully collected under the Federal corporation tax law of August 5, 1909, section 38, is not made exclusive by the provision of that section that all laws relating to the collection, remission, and refund of internal revenue taxes, so far as applicable, are extended to this tax. (United States v. Emery, Bird, Thayer Realty Co., 237 U. S. 28.)

The provision in the act of October 3, 1913, that the repeal of existing laws or modifications thereof embraced in the act should not affect any act done or right accruing, or any suit or proceeding had or commenced, in any civil case before such repeal or modification, but all rights and liabilities under such laws should continue and might be enforced in the same manner as if such repeal or modification had not been made was held to be intended to relate only to rights and liabilities in respect to taxes which had accrued under the act of 1909, and not intended to cover excise taxes upon corporations for the months of January and February, 1913, which were imposed by the income tax act, as the constitutional amendment of March 1, 1913, designed to permit taxation of incomes without apportionment was not adopted until March 1; this being apparent from the provision in the act that excise taxes for two months shall be ascertained in accordance with the provisions of section 2 G. Consequently exemptions in the corporation tax act are not applicable to taxes imposed for those two months. (Butterick Co. v. United States and Federal Publishing Co. v. Same, 240 Fed. 539, 1917; dismissed on motion of United States, 248 U. S. 587.)

No assessment by Commissioner is necessary for collection of Federal taxes, at least in a direct action by United States. (N. Y. Life Ins. Co. v. Anderson, 257 Fed. 576.)

INJUNCTION AGAINST PAYMENT.

An action by a director or stockholder against a corporation and its treasurer to enjoin payment of the special excise tax to the Collector of Internal Revenue can not be maintained. The prohibition against enjoining the collection of taxes rests on grounds of public policy and a stockholder can not do indirectly what he can not do directly. The complainant has an adequate remedy at law and application for preliminary injunction is denied. (Straus v. Abrast Realty Co., 200 Fed. 327, 1912.) T. D. 1788.

PENALTY.

United States District Court, Western District of Washington, held that the penalty of $1,000 to $10,000 for failure to make return, as prescribed by section 38, act of August 5, 1909, is constitutional. (U. S. of America v. Surprise Five, Ten, and Nineteen Cent Store. T. D. 1864.)

The acceptance of a return by the Commissioner of Internal Revenue is not a waiver of the penalty.

(Id.)

Penalties for delay are a necessary incident to procuring revenue and should receive an impartial, if not a sympathetic, interpretation. (Id.)

Where a civil action is brought to recover a penalty against delinquent corporations, the jury's verdict must fix the amount of such penalty not less than the minimum, after which the only remedy for the corporations (other than appeal) is an application to the Commissioner of Internal Revenue or the Secretary of the Treasury for a compromise authorized by Revised Statutes, sections 3229, 3469. (United States v. Acorn Roofing Co., 204 Fed. 157, 1912.) Where a corporation in its return deducts taxes paid, not by it, but in its behalf, by other corporations on stock owned by it in such other corporations and such deduction is not allowed, as there was no refusal or neglect to make a return within the meaning of the act, no penalty will be allowed. (United States v. Aetna Life Ins. Co., 260 Fed. 333, 1919.)

RECOVERY OF TAXES PAID.

On recovery of a judgment against a collector of internal revenue for the amount of an internal-revenue tax illegally collected, the plaintiff is entitled to have the judgment state that it is with interest. (New York Mail & Newspaper Trans. Co. v. Anderson, 234 Fed. 590, 1916.)

149707-19-PT II---4

The limitation for action to recover an illegally collected excise tax on a corporation as doing business is two years from its payment. (Public Service Elec. Co. et al. v. Herold, 219 Fed. 301 and 227 Fed. 491, 1915. This point affirmed by Public Service Ry. Co. v. Herold, 229 Fed. 902, 1916, C. C. A.)

Revised Statutes, section 3225, applies to corporation tax act. (Camp Bird, Ltd., v. Howbert, 249 Fed. 27, 1918.) Affirming the decision of the district court (T. D. 2366). Reversed by Supreme

Court in 248 U. S. 590.

Under Revised Statutes, section 3225 (Comp. St., 1916, sec., 5948), brought into corporation tax act, omission by Mutual Life Co. of item from income side of tax return, through treating it as suspense item, Held not to bar company's right of action to recover excessive taxes. (Northwestern Mutual Life Insurance Co. v. Fink, 248 Fed. 568, 1917.) Corporation taxes assessed against a railroad,. which had leased its properties and was not engaged in business during the years in question were illegal and, having been paid under protest, may be recovered, with interest, from the collector of internal revenue. Colony R. Co. v. Gill, 257 F. 220. 1919. Same v. Malley.)

(Old

In action to recover revenue taxes, such as excise taxes on corporations, rule which denies use of any but statutory remedy has no application to General Government, unless specifically and clearly so stated. (United States v. Nashville, C. & St. L. Ry., 249 Fed. 678.) An action can not be brought against a collector of internal revenue to recover back taxes paid to his predecessor in office. H. & P. R. Co. v. Lederer, collector, etc., 242 Fed. 492, C. C. A., 1917; also Roberts v. Lowe, 236 Fed. 604.)

(Philadelphia,

*

providing

Act of February 8, 1899, c. 121, 30 Stat., 822, * * that no suit, action, or other proceeding by or against any officer of the United States shall abate by reason of his death, or the expiration of his term of office, but that the court may allow it to be maintained by or against his successor in office, does not authorize an action against a collector of internal revenue to recover back taxes paid to his predecessor in office where no suit, action, or proceeding was pending against such predecessor, and a mere claim for refund of the taxes was not a suit or proceedings against the collector. (Id.)

Part of excise tax illegally exacted and paid under protest to collector of internal revenue may be recovered of his successor in office. (Lumber Mut. Fire Ins. Co. v. Malley, 256 Fed. 380.)

3225, Revised Statutes, in its application to taxes collected under corporation tax act does not authorize the recovery of sums paid on a second assessment, where the return was false, but not fraudulent. (Camp Bird. Ltd., v. Howbert, 249 F. 27, 1918.) Affirming the decision of the district court (T. D. 2366). Reversed and remanded by Supreme Court in 248 U. S. 590.

The plaintiff having understated in its original return the amount for which it was subject to tax is not entitled to recover any part of a second assessment paid, although the original return was made in good faith and without any intention to escape lawful tax. (Camp Bird, Ltd., v. Howbert, 249 Fed. 27, 1918.) Affirming the decision of the district court (T. D. 2366). Reversed by Supreme Court in 248 U. S. 590.

Section 3225 considered. back excessive taxes paid. Fink, 248 Fed. 568, 1917.)

Company can maintain action to recover (Northwestern Mutual Life Ins. Co. v.

Section 3225, Revised Statutes, is not invalid in its applicability to the corporation tax act, for it does not destroy uniformity of taxation, applying to all portions of the country alike.

(Id.)

The amendment to Revised Statutes, 3225 (sec. 14, act of Sept. 8, 1916), providing that it shall not apply to statements or returns made or to be made in good faith regarding annual depreciation of oil or gas wells and mines, not retroactive in its operation. (Camp Bird, Ltd., v. Howbert, 249 Fed. 27, 1918.) Affirming the decision of the district court (T. D. 2366). Reversed and remanded by Supreme Court in 248 U. S. 590.

Where a corporation was assessed for corporation taxes under corporation tax act and the same not having been paid, a writ of distraint was issued by the collector, and, the corporation having been notified that the tax would be collected by levy, the deputy collector took from a representative of the corporation the amount of the tax, against the verbal protest of the corporate officer at the time, and a written notice of protest then served, in which the corporation denied that it was liable to tax, the protest was held sufficient to entitle the corporation to recover the amount from the collector, on its being determined that the corporation was not within the law. (Abrast Realty Co. v. Maxwell, 206 Fed. 333, 1913.) Appealed on another point, 218 Fed. 457.

Where railroads, seeking to recover from collectors of internal revenue taxes illegally assessed, delayed in pressing their claims on account of an understanding with the collectors that the claims should await the decision of other pending cases, but it became apparent that the question of interest could not be adjusted, and would have to be submitted to the court, the railroads' conduct did not disentitle them to interest for any lack of diligence in prosecution. (Boston & P. R. Corp'n et al. v. Gill, 257 Fed. 221, 1916.)

In an action against a collector to recover internal revenue taxes erroneously assessed and paid, errors in the assessment in plaintiff's favor may also be corrected; the United States, which is the real defendent, not being affected by any estoppel which might affect