The pertinent facts, which are not disputed, may be briefly summarized. The plaintiff, upon being informed of the proposed deficiency (Paragraph III), agreed to the inclusion in the gross estate of the property transferred in contemplation of death, and protested only the valuation assigned to this property. (Paragraph IV.) The plaintiff in its letter of November 24, 1937 (Exhibit 2, Paragraph IV), proposed as a basis for 'settlement' an adjustment in this valuation and agreed to a valuation of $ 318,722.85. This proposed adjustment, together with other adjustments to which the plaintiff agreed, was adopted by the Commissioner of Internal Revenue and subsequently embodied in the statement of account (Exhibit 3), which was submitted to the plaintiff on December 27, 1937. The net deficiency tax as computed and therein stated, was paid by the plaintiff without protest and accepted by the Commissioner of Internal Revenue. It is our opinion that the essentials of an account stated and settled were present. R. H. Stearns Co. v. United States, 291 U.S. 54, 65, 66, 54 S. Ct. 395, 75 L. Ed. 1018. This opinion is fortified, we think, by the fact that the plaintiff consented to the assessment and collection of a deficiency tax determined on the basis proposed by it and did not attempt to repudiate the account stated and settled until after the only remedy available to the Commissioner of Internal Revenue was barred by statute.
The Internal Revenue Code, 26 U.S.C.A.Int.Rev.Code, § 870 et seq., authorizes the Commissioner of Internal Revenue to assess an additional tax upon his determination of a deficiency. Such an assessment, however, must be made within three years after the return is filed and may not be made thereafter, 26 U.S.C.A.Int.Rev.Code, § 874. The authority of the Commissioner of Internal Revenue to assess a deficiency tax terminated in the instant case on December 18, 1939. It would seem unconscionable to permit the taxpayer to repudiate an account stated and settled after the expiration of this statutory period especially where, as here, the deficiency tax was computed and assessed on the basis proposed by the taxpayer and adopted by the Commissioner of Internal Revenue. R. H. Stearns Co. v. United States, supra, 291 U.S.at page 61, 54 S. Ct.at page 328; Wheelock v. Commissioner of Internal Revenue, 5 Cir., 77 F.2d 474; Backus v. United States, 59 F.2d 242, 70 Ct.Cl. 69; Ralston Purina Co. v. United States, 58 F.2d 1065, 75 Ct.Cl. 525; Stevens Mfg. Co. v. United States, 8 F.Supp. 720, 80 Ct.Cl. 183; Naunkeag Steam Cotton Co. v. United States, 2 F.Supp. 126, 76 Ct.Cl. 687. The accepted principles of equity preclude the repudiation of an account stated and settled under such circumstances. Ibid.
The reservation by the plaintiff of his right to file 'a claim for refund of any portion of the tax,' contained in the waiver (Form 890, Exhibit 5), was not inconsistent with the account stated and settled, which embraced only the items then in dispute. Any items not embraced within the account stated and settled were preserved and could have been made the basis of a claim for refund and a subsequent suit founded thereon, unless barred by the statute of limitations. See United States v. A. S. Kreider Co., 313 U.S. 443, 61 S. Ct. 1007, 85 L. Ed. 1447. The present suit, however, as well as the claim for refund which preceded it, is predicated solely upon the items embraced within the account stated and settled. This may not be true of the items identified in the complaint as 'Item 2' and 'Item 8'; these items were not so identified in the account stated and settled, and may not have been embraced within it. Any claim for refund based upon the latter items appears to be barred by statute, Revenue Act of 1926, Sec. 319(b), 26 U.S.C.A.Int.Rev.Code, § 910, which limits the amount of the refund to 'the portion of the tax paid during the three years immediately preceding the filing of the claim.' The only payment here made by the plaintiff was that in settlement of the account stated.
There are other questions raised in the brief but we think it unnecessary to decide them. We have considered the questions and we believe that their determination would be inconsistent with the opinion we have herein expressed.
Conclusion of Law
It is our conclusion that the principles of equity prohibit the plaintiff's repudiation of the account stated and settled, and the plaintiff is therefore estopped to maintain this action. The action will be dismissed upon the entry of a proper order of dismissal.
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