Before SCHNACKENBERG, PARKINSON and CASTLE, Circuit Judges.
This is an action upon a claim for refund of income tax overpayments. William Woods Plankinton, plaintiff-appellee, recovered judgment in the District Court against the United States of America in the amount of $3,447.73 for the year 1949 and $18,041.56 for the year 1950, plus interest, subject to a setoff of $305.14. The Government appealed. The parties will be referred to as taxpayer and Government.
The facts were stipulated. The taxpayer filed quarterly declarations of his estimated individual income tax, and remitted payments of the estimated tax for the year 1949 in March, June, and September of 1949, and in January, 1950. He was granted an extension and did not file his final return or make final payment of the tax until June, 1950. A claim for refund for the year 1949 was filed in May, 1953.
For the year 1950, taxpayer similarly filed quarterly declarations of his estimated tax and remitted estimated tax payments in March, June, and September of 1950, and in January, 1951. He was granted another extension for that year, and filed his final return and made final payment of the tax in September, 1951. A claim for refund for the year 1950 was filed in July, 1954.
For both years, the Governme n.3 [footnote omitted] allowed the claimed refunds in part. In each instance, the amount refunded was limited to the amount of the payment accompanying the final return, on the ground that a refund of the balance overpaid was barred by Section 322(b)(2)(A) of the 1939 Code, 26 U.S.C.A. § 322(b)(2)(A), because the earlier remittances had been made more than three years before the refund claim was filed. The Government allowed $8,104.67 of the amount claimed for the year 1949 and $10,236.95 of the amount claimed for the year 1950. Taxpayer brought suit to recover the claimed but disallowed balance of $3,447.73 for the year 1949 and $18,041.56 for 1950. A setoff of $305.14 for interest erroneously paid the taxpayer was conceded by him. The District Court found for the taxpayer. There is no dispute as to the amounts involved. The overpayments are admitted.
The Government contends that Sections 322(b)(2)(A) and (e) of the Internal Revenue Code of 1939 preclude recovery by the taxpayer and that the judgment of the District Court should be reversed with directions to dismiss the complaint and enter judgment for the Government on its counterclaim for $305.14.
The sole issue for determination is whether the provisions of the Internal Revenue Code of 1939, as amended, preclude a refund or recovery of amounts in excess of the payment remitted with the final return for each year, the remaining portion of the overpayment in each instance having been remitted as estimated tax more than three years before the filing of the respective claims for refund.
The quarterly remittances for each of the years in question were made pursuant to the requirements of Section 59 of the Internal Revenue Code which was added by the Current Tax Payment Act of 1943 (26 U.S.C.A. § 59). Section 59(d) contains the provision that:
"Payment of the estimated tax, or any installment thereof, shall be considered payment on account of the tax for the taxable year."
Section 322(b)(2)(A) of the Internal Revenue Code of 1939 (26 U.S.C.A. § 322) provides that the amount of refund of an overpayment:
"shall not exceed the portion of the tax paid * * * during the three years immediately preceding the filing of the claim", and Section 322(e) of said Code provides:
"* * * For the purposes of this section, any amount paid as estimated tax for any taxable year shall be deemed to have been paid not earlier than the fifteenth day of the third month following the close of such taxable year."
The Government concedes that generally remittances made prior to the time the taxpayer's liability is defined do not constitute "payment" of a tax for the purpose of commencing the limitation period on refund claims. It recognizes that such is the holding of Rosenman v. United States, 323 U.S. 658, 65 S. Ct. 536, 89 L. Ed. 535; Thomas v. Mercantile Nat. Bank, 5 Cir., 204 F.2d 943; United States v. Dubuque Packing Co., 8 Cir., 233 F.2d 453; Budd Co. v. United States, 3 Cir., 252 F.2d 456; Atlantic Mutual Insurance Co. v. McMahon, D.C. S.D.N.Y. 1957, 153 F. Supp. 48. The Government contends, however, that the rule established by these decisions has no application because Congress by the provisions of Section 322(e) of the Code has provided otherwise in the case of estimated tax remittances made in conformity with the ...