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.)

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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. . 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 recov ered, with interest, from the collector of internal revenue. (Old Colony R. Co. e. Gill, 257 F. 220. 1919. Same v. Malley.)

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. (Philadelphia, II. & P. R. Co. v. Lederer, collector, etc., 242 Fed. 492, C. C. A., 1917; also Roberts v. Lowe, 236 Fed. 604.)

* 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., e. 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

the officer making the assessment. Anderson, 257 Fed. 576, 1919.)

(New York Life Ins. Co. v.

A suit to recover taxes alleged to have been illegally assessed and collected under the corporation tax law may be brought directly against the United States in the United States district court under the act of March 3, 1887, known as the Tucker Act, now incorporated in section 24 of the Judicial Code of March 3, 1911. Remedy by suit against the collector is not made exclusive by the provisions of subdivision 8 that all laws relating to 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. 1915.)

A statement made by a corporation's auditor to an internal revenue agent that the corporation had no paid-up capital stock is admissible in proceedings to recover taxes under section 38 of the act of August 5, 1909. (Associated Pipe Line Co. v. United States, 258 Fed. 800, 1919.)

INCOME TAX.

ACT OF OCTOBER 3, 1913, SECTION II.

Repealed by act of September 8, 1916, section 24. Provision for refund of taxes collected, act of March 4, 1915, and act of September 8, 1916, section 14 (a).

Jurisdiction-Judicial Code, section 24 (1).

DECISIONS UNDER ACT OF OCTOBER 3, 1913-SECTION II, INCOME TAX.

GENERAL PROVISIONS.

Constitutionality.

The income-tax provisions of the tariff act of 1913 are not unconstitutional by reason of retroactive operation, the period covered not extending prior to the time when the sixteenth amendment was operated; nor are those provisions unconstitutional under the due process provision of the fifth amendment; nor do they deny due process of law by reason of the classifications therein of things or persons subject to the tax. The provisions for collecting income at the source do not deny due process of law by reason of duties imposed upon corporations without compensation in connection with the withholding and collection of tax at source.

When there are differences between the subjects taxed, Congress does not transcend the limit of its taxing power by taxing them differently.

A want of due process of law does not arise from want of wisdom in Congress in levying taxes and thus give the courts power to overrule the action of Congress by declaring it to be unconstitutional.

Arguments as to the expediency of levying a tax which is within the power of Congress to levy are beyond judicial cognizance. (Brushaber v. Union Pacific Ry. Co., 240 U. S. 1, 1915. Followed in Dodge v. Osborn, 240 U. S. 118, 1916.)

There is no authority for taking taxation of mining corporations out of the rule established by the sixteenth amendment; nor is there any basis for the contention that, owing to inadequacy of the allowance for depreciation of ore body, the income tax of 1913 is equivalent to one on the gross product of mines, and as such a direct tax on the property itself, and therefore beyond the purview of that amendment and void for want of apportionment.

Brushaber case followed as to constitutionality of the act. (Stanton v. Baltic Mining Company, 240 U. S. 103, 1916.)

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