Bonwit Teller & Co. v. United States

Background

A retail corporation filed its 1919 income tax return in 1919 and later paid additional assessed tax after a jeopardy assessment. The Commissioner’s audit letters in 1924 showed the Commissioner had found an overpayment and identified $10,866.43 as refundable, but the refund was withheld because of time-limit rules. The company signed and returned a waiver in May 1925 after the law was amended and later submitted a formal refund form in February 1927. The Commissioner issued a certificate of overassessment and sent a check in May 1927, after a collector had applied part of the refund against an older tax the Government later acknowledged was barred.

Reasoning

The core question was whether the waiver and earlier audit letters with the company’s return amounted to a timely claim under the amended refund law. The Court found the Commissioner had already determined the overpayment and that the waiver, the audit schedule, and the company’s communications reasonably informed the Commissioner of the grounds for refund. Because the Commissioner was not misled and had approved the allowance within the statutory period, the Court held the informal filings substantially satisfied the statutory claim requirement. The Court also explained that a suit to recover an internal-revenue refund arises when the Commissioner issues and delivers the refund certificate.

Real world impact

The decision lets the company pursue the refund despite delays and stops the Government from using an older, barred assessment to keep the money. It gives weight to informal claim materials and confirms that delivery of the Commissioner’s certificate creates a cause of action to sue for the refund.