21. Necessity For Filing Within Sixty Days From Deficiency Notice

46

22. Where Determination of Deficiency Requires Consideration of Taxes of Other Years

47

23. Deficiencies Arising Under Prior Revenue Acts 24. Assessment Made Prior to June 2, 1924

.....

25. Summary, Jeopardy or Non-Compliance Assessments Prior to June 2, 1924

....

26. Jeopardy Assessments Under Revenue Act of 1924..

Assessment Subsequent to Notice of Deter-
mination

27. Special Assessment Cases

28. Fraud Cases

29. Appeal From Decision As to Exempt Status

30. Appeals Based on Statute of Limitations

31. Appeal Filed on Behalf of Another

32. Claims for Refund or Credit

33. Claims for Abatement

34. Jurisdiction to Issue Subpoenas, Order Depositions,

and Administer Oaths

Section 14. Introductory. The Treasury Department has been diligent in raising questions of authority of the Board of Tax Appeals to determine on appeal proposed deficiencies arising under specific circumstances. This watchfulness upon the part of the Treasury Department has had the fortunate result of securing during the early life of the Board numerous decisions which have served to a considerable extent to define the Board's jurisdiction. This chapter is devoted to a consideration of such decisions.

Section 15. Definition of Jurisdiction. The word "jurisdiction" as used herein cannot be employed in the same sense as where applied to a strictly judicial body. As the Board, however, exercises quasi-judicial functions it is believed appropriate to refer to its authority as its jurisdiction, which is "the power to hear and determine a cause. 991

Section 900 of the Revenue Act of 1924 contains the provision that "the Board shall be an independent agency in the executive branch of the Government."'2

Except in relation to the personnel of its assistants the Board is entirely disconnected from any other administrative department of the Government. It functions as a tribunal before which facts must be proved and the law reasoned and before which the Commissioner of Internal Revenue and the taxpayer are alike ordinary litigants. The Board, however, is

1 United States v. Arredondo, 6 Pet. 709.

2 See Appeal of Gutterman Strauss Co., 1 B. T. A. 243, Dec. No. 97, Docket No. 234.

clearly not vested with duties of an administrative nature, and has no legislative powers.3

Section 16. Limited Nature of Jurisdiction. The jurisdiction of the Board is purely statutory and its authority must be found, either expressly or by necessary implication, in the specific language of the Act of Congress creating it; nor can its statutory powers be enlarged in any sense by consent of the parties to a cause before it.5

As its jurisdiction is to be found in that act, there is no presumption that the Board has jurisdiction, but such must affirmatively appear from the allegations in the petition and from the record." The Board's jurisdiction is also in no way affected by the amount in controversy.

Section 17. Territorial Limits of Jurisdiction. The geographical limit of the jurisdiction of the Board is that prescribed in the Revenue Acts of 1916, 1917, 1918, 1921, and 1924, namely, to cases arising with respect to taxpayers who are citizens of the United

3 See address of Chas. D. Hamel, former Chairman, before the National Tax Association at St. Louis, Mo., Bulletin of the National Tax Association, Vol. 10, No. 2.

4 Secs. 900, 274, 279, 280, 308, 312, 316, and 324 of the Rev. Act of 1924. These sections cover, directly and by reference, income and profits' taxes, estate taxes and gift taxes. No jurisdiction is vested in the Board to hear appeals from determinations of any other taxes. It may not, therefore, consider appeals from determination of a deficiency imposed by Title VIII of the Revenue Act of 1921 and Title V of the Revenue Act of 1924; see Appeal of the Aldine Club, 1 B. T. A. 710, Dec. No. 264, Docket No. 862.

5 Appeal of David B. Mills, 1 B. T. A. 199, Dec. No. 81, Docket No. 364. It is stated therein in effect that the voluntary action of the Commissioner in sending out a 60-day letter will not confer jurisdiction on the Board. See also Appeal of Rateau, Battu, Smoot Company, 1 B. T. A. 354, Dec. No. 136, Docket No. 343.

6 Brown on Jurisdiction, Sec. 22. The Board will determine whether it has jurisdiction irrespective of whether objection is raised by the Commissioner to its assuming such jurisdiction. See Appeal of A. H. Stange, 1 B. T. A. 810, Dec. No. 298, Docket No. 553; see also Appeal of Frost Superior Fence Co., 1 B. T. A. 1096, Dec. No. 417, Docket No. 2162.

States, including Alaska, Hawaii and the District of Columbia, or relating to income derived from sources therein.

Section 18. Jurisdiction-Original, Not Appellate. The jurisdiction of the Board is not appellate in a technical sense, but is original. A taxpayer bringing his case before the Board proceeds by trial de novo. The Board is not created for the purpose of reviewing rulings made by the Commissioner but to determine the correctness of deficiencies in tax found by the Commissioner and to adjust assessments and payments of such alleged deficiencies.8

Accordingly the record of the case as made in the Bureau of Internal Revenue is not before the Board except so far as it may be properly placed in evidence by the taxpayer or by the Commissioner. The Board decides each case upon the record made at the hearing before it. This makes it essential to permit the taxpayer to fully present any questions relating to his tax liability which may be necessary to a correct determination of the deficiency.

The Board has jurisdiction to consider an appeal presenting questions affecting the correct tax liability of the petitioner which were not presented to the Commissioner before his determination thereof."

7 Appeal of E. J. Barry, 1 B. T. A. 156, Dec. No. 68, Docket No. 99. 8 Appeal of Robert P. Hyams Coal Co., 1 B. T. A. 217, Dec. No. 89, Docket No. 219 (A); Appeal of Gutterman Strauss Co., 1 B. T. A. 243, Dec. No. 97, Docket No. 234. The amount previously collected must be subtracted from the amount of the tax imposed by the statute in order to arrive at the statutory deficiency. The amount cannot at the same time be both the deficiency and also one of the factors in determining the deficiency. See Appeal of Everett Knitting Works, 1 B. T. A. 5, Dec. No. 2, Docket No. 2.

9 Appeal of Mary Clark Kling, 1 B. T. A. 1048, Dec. No. 396, Docket No. 1495; Appeal of Gutterman Strauss Co., 1 B. T. A. 243, Dec. No. 97, Docket No. 234; Appeal of E. J. Barry, 1 B. T. A. 156, Dec. No. 68, Docket No. 99.

Where it appears from the record that the deficiency determined by the Commissioner is incorrect, although the taxpayer's contention is denied, the Board will, where possible, find the correct deficiency, whether greater or less than that determined by the Commissioner.10

Section 19. Necessity of Determination by Commissioner and Notice Thereof. It is provided in the law that where a deficiency has been determined, the taxpayer shall be notified of such deficiency by registered mail. The taxpayer may appeal to the Board of Tax Appeals within 60 days after the mailing of such notice. While the Treasury Department has adopted the so-called "60-Day Letter" for the purpose of such notification it would seem that a determination of deficiency might be indicated by a notice containing no reference to the sixty days. While the jurisdiction of the Board is founded upon the fact that there has been a final determination, appeal may not be taken to the Board until notice of such determination has been sent by the Commissioner. Any appeal taken prior thereto is considered premature.11

It has been stated that it is a question of fact

10 Appeal of Hotel de France Co., 1 B. T. A. 28, Dec. No. 22, Docket No. 58; Appeal of E. A. Armstrong, 1 B. T. A. 296, Dec. No. 118, Docket No. 232; Appeal of Chamberlain Medicine Co., 1 B. T. A. 612, Dec. No. 230, Docket No. 181.

11 See Appeal of Franklin H. Moyer, 1 B. T. A. 75, Dec. No. 42, Docket No. 250. In that case the taxpayer had merely received a letter from the Collector of Internal Revenue for his district advising that additional tax appeared due. See also Appeal of Joseph Garneau Company, Inc., 1 B. T. A. 75, Dec. No. 43, Docket No 40 (D); Appeal of Elmer S. B. Sutton, 1 B. T. A. 101, Dec. No. 52, Docket No. 306; Appeal of Patrick C. Heafey Estate, 1 B. T. A. 267, Dec. No. 106, Docket No. 71; Appeal of R. A. Musser, 1 B. T. A. 278, Dec. No. 114, Docket No. 441; Appeal of Frost Superior Fence Co., 1 B. T. A. 1096, Dec. No. 417, Docket No. 2162. See, however, Appeal of Fidelity Insurance Agency, 1 B. T. A. 86, Dec. No. 46, Docket No. 254.