Pan American Van Lines v. United States

The United States of America appeals from a judgment entered in favor of plaintiff-appellee Pan American Van Lines, Inc. (“taxpayer”), in a suit for refund of the interest paid by taxpayer with respect to its 1965 tax liability. The district court made findings of fact and conclusions of law and entered judgment for taxpayer. 1 We agree with that result.

The facts were stipulated below and are not challenged on appeal. Taxpayer, a California corporation, filed its 1965 calendar year corporate income tax return on September 15, 1966, rather than March 15, 1966, 3 having been granted an extension of time for filing the return. Although taxpayer reported $416,406.00 of taxable income for its 1965 tax year, net operating loss carryforwards arising from net operating losses in 1962, 1963, and 1964 eliminated taxpayer’s 1965 tax liability. Subsequently, the Internal Revenue Service (“IRS”) proposed adjustments to taxpayer’s 1963 and 1964 tax returns that eliminated the net operating loss carryforward previously available to offset 1965 income.

This change, combined with other adjustments to taxpayer’s 1965 return, resulted in taxable income for 1965 in the amount of $158,052.15.…

I agree with the majority that taxpayer’s debt for taxes became “legally due and owing” on the March 15 return date, not the date the return was filed. I also agree that interest due and owing because of a failure to pay taxes when due and owing should be treated as taxes for purposes of section 17(a) of the Bankruptcy Act, 11 U.S.C. § 35 (a). I disagree, however, with the conclusion that all interest on unpaid taxes becomes due and owing on the same day as did the taxes. Section 6601(e) of the Internal Revenue Code does not require that conclusion.

Had taxpayer filed a proper 1965 return, it would have shown taxable income of $158,052.15 on which it would have owed a tax. The United States would not have been obligated to return that tax prior to December 31, 1967. Thus, the United States was entitled to the tax from March 15, 1966 to December 31, 1967. It is to compensate the United States for the loss of the use of this money, which taxpayer should have paid, that justifies the interest the taxpayer did in fact pay on December 1, 1971.

The majority holds that this interest, in its entirety, was due and owing on March 15, 1966. This is not so. Interest is measured by the time…

607 F.2d 1299 79-2 USTC P 9700 PAN AMERICAN VAN LINES, Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant. No. 77-2873. United States Court of Appeals, Ninth Circuit. Nov. 9, 1979. 1 David English Carmack, Tax Div., Dept. of Justice, Washington, D. C., for defendant-appellant. 2 Robert Joe Hull, argued, Sheppard, Mullin, Richter & Hampton, Los Angeles, Cal., M. Carr Ferguson, Asst. Atty. Gen., Washington, D. C., for plaintiff-appellee. 3 Appeal from the United States District Court for the Central District of California. 4 Before HUFSTEDLER and SNEED, Circuit Judges, and RENFREW, * District Judge. RENFREW, District Judge: 5 The United States of America appeals from a judgment entered in favor of plaintiff-appellee Pan American Van Lines, Inc. ("taxpayer"), in a suit for refund of the interest paid by taxpayer with respect to its 1965 tax liability. The district court made findings of fact and conclusions of law and entered judgment for taxpayer. 1 We agree with that result. 2 6 The facts were stipulated below and are not challenged on appeal. Taxpayer, a California corporation, filed its 1965 calendar year corporate income tax return on September 15, 1966,…