Walter F. Freeman v. United States

Asserting that the United States Navy had erroneously withheld taxes from his retirement pay, plaintiff instituted this suit for a refund. The action was brought under 28 U.S.C.A. § 1346 (a) (1) and the amount sought to be recovered was $22.10. The United States answered with a general denial and a counterclaim to recover $256.90 for unpaid taxes. Judgment was entered for the government and plaintiff appeals.

Two questions are presented for our consideration. The first is whether appellant can maintain such a refund suit, having failed to allege that he had paid all of the claimed tax for the year in question. The second is whether, under the facts of this case, the retirement pay upon which the tax was computed was exempt from taxation as pay received for sickness resulting from active service in the armed forces, within the meaning of § 22(b) (5) of the Internal Revenue Code of 1939, 26 U.S.C.A. § 22 (b) (5).

The facts necessary to be considered in determining these questions are not in dispute. Appellant, Walter F. Freeman, was an enlisted man in the United States Navy from May 6, 1918, to June 26, 1939, He was then released from active duty and transferred to the Fleet…