Parrish v. United States

       U. S. DISTRICT COURT, WEST. DIST. MO., WEST. DIV.

Do you concede that if a taxpayer does establish the mailing of a remittance in payment of a tax obligation and there was negligence on the part of the government in the handling of the check, so that it was not credited to the taxpayer's account, that that would relieve him of the liability for interest on the payment so made and handled by a collector?

MR. RIDPATH: I would think the government would honestly have to concede that, Your Honor.

THE COURT: That is all I need; if that is the concession of the government. Let the findings be such as are stated in the pre-trial order. Let me restate that.

Let the record show the Court finds the facts to be as stipulated and set forth in the pre-trial order herein, and the various exhibits that have been marked and referred to in the evidence in this case.

In addition thereto, the Court finds the fact to be that the plaintiff, Mr. Parrish, on January 15, 1948, prepared form 1040-ES, carrying an estimated income tax liability to the government estimated in the sum of $19,200, on which there had been paid on account the sum of $6,200, leaving a balance due as of that date amounting to $13,000; that in the due course and scope of his business of operating the Parrish Chevrolet Company, check in the sum of $13,000, payable to the Collector of Internal Revenue, was duly prepared, signed and attached to said 1040-ES return, and deposited in the United States mails by Mr. Parrish in the post office at Liberty, Missouri, in an envelope addressed to the Collector of Internal Revenue at Kansas City, Missouri, with due postage thereon; that said mail matter, with the documents above mentioned enclosed therein, was received at the office of said Collector of Internal Revenue, but through inadverthence on the part of the Collector, acting through his duly authorized agents and employees, was misplaced or lost.

The Court finds the facts to be that the records of the office of the Collector of Internal Revenue at Kansas City, Missouri, show that all taxes due and owing by Mr. Parrish were paid in full as of August 9, 1948, for the calendar year 1947; that no additional or deficiency assessment was ever recorded or made in respect to any tax liability of the plaintiff, Mr. Parrish, to the government for the year 1947 until May 28, 1954--that last date is April 29, 1954--when an assessment was then recorded against Mr. Parrish in the amount of $2,860 and the interest upon that sum amounting to $483.60.

The amount of deficiency tax so assessed against the plaintiff, Mr. Parrish, as of April 29, 1954, was paid to the Collector of Internal Revenue under protest on November 20, 1956.

The Court finds the facts to be that the records of the District Director of Internal Revenue at Kansas City, Missouri, did not reflect that there was any income tax unpaid by the plaintiff in this case for the year 1947, until after the completion of an audit examination made of the books and records of the plaintiff by Deputy Collectors Liddy, Boswell and Bolton in the latter part of 1950 and the early part of 1951.

At that time plaintiff was informed by said deputies that the records of the Collector of Internal Revenue did not reflect that a check had been received by theCollector of Internal Revenue on January 15, 1948, as reflected in plaintiff's books, and no such check was being held in that office. Thereafter plaintiff, on November 10, 1951, caused a check in the sum of$13,000 to be drawn payable to the "Collector of Internal Revenue" to replace such lost check, and said payment was then credited to plaintiff's account on the records of the Collector of Internal Revenue.

Thereafter, on November 20, 1956, the Collector of Internal Revenue made a deficiency assessment against plaintiff for interest due on the $13,000 tax payment so made by plaintiff in the sum of $2860 and interest on interest in the sum of $438.63, or a total of $3,298.63.

There is no evidence adduced before the Court as to the manner mail matter is processed in the office of the Collector of Internal Revenue, nor explanation made as to why the records in that office reflected that plaintiff's income tax for the year 1947 was recorded as being paid in full, until November 10, 1951.

The Court declares the law to be that, absent testimony in this case with respect to the manner in which mail matter if received and processed by the District Director of Internal Revenue in Kansas City, Missouri, and the manner in which 1040-ES forms are processed in that office, the presumption of receipt of a check by the District Director of Internal Revenue on January 15, 1948, is conclusive and that the only inference to be adduced from the evidence before the Court is that the District Director of Internal Revenue at Kansas City, Missouri, was negligent in the processing of the return and payment mailed by Mr. Parrish to the District Director on January 15, 1948, here found, and that plaintiff is entitled to recover in this case the interest paid by him on tax assessed against the plaintiff for the year 1947 in the sum of $3,298.63.