Aiken v. Burnet

Background

Aiken, a taxpayer, filed his 1917 income and excess-profits tax return on March 30, 1918. The Commissioner made a jeopardy assessment (an emergency assessment when the government feared the tax might be lost) on March 12, 1925. The tax office had two written waivers: one the taxpayer signed February 5, 1921 (filed February 7, 1921) and a second waiver executed before the first expired. The waiver situation led to appeals through the Board of Tax Appeals and the Eighth Circuit, and the Supreme Court agreed to decide questions limited to the validity and effect of those waivers.

Reasoning

The central question was whether a waiver signed by the taxpayer before the 1921 law was valid to extend assessment and collection deadlines that were later spelled out by statute. The Court held the earlier waiver was valid. It explained the Commissioner could accept such waivers before the 1921 Act and that the later statutory provision did not invalidate earlier consents. The Court also found the waiver covered both income and war-profits (excess-profits) taxes and included steps necessary for collection. Because the March 12, 1925 assessment fell within the period extended by the two waivers, collection was allowed under later statutes that give six years from assessment for collection.

Real world impact

The ruling lets the government rely on properly executed waivers, even those signed before a later statute, to extend assessment and collection deadlines for older returns. Taxpayers with older audits or waivers should note those waivers can permit assessments and later collections beyond original filing deadlines. The decision affirms the lower courts’ judgments and resolves the waiver questions in favor of the Government.