1949 - Internal Revenue Service

54 REPORT OF COMMISSIONER OF INTERNAL REM=
under the Chief Counsel, furnishes technical advice and assistance
to the respective divisions, particularly in litigated cases, and to the
Department of Justice, in connection with cases involving engineering
and auditing problems, principally in the fields of accountancy, depreciation,
and valuation. During the year the section rendered
such assistance in 178 cases, acted on re-reference of 11 cases previously
reported, and supplied expert testimony in 6 cases.
ALCOHOL TAX DIVISION.—This division handles the legal work
arising in connection with the administration and enforcement of
the internal revenue liquor laws; the provisions (other than those
relating to taxes, licenses, and registration) of the internal revenue
laws and other statutes, including the Federal Firearms Act, and the
Act of August 9, 1939, relating to certain firearms; the Federal.
Alcohol Administration Act; the Federal Tort Claims Act insofar as
employees of the Bureau of Internal Revenue are involved (except
the final determination of claims for $500 or more or involving unusual
or novel questions of law), and sections 1261-1265 and 3615 of
title 18 of the United States Code. The work includes the preparation
of opinions and briefs relating to assessment, collection, abatement,
and refund of liquor taxes and penalties; compromise of civil
and criminal liabilities; the remission or mitigation of forfeitures; and
the settlement of claims. The division prepares citations to revoke
industrial and denatured alcohol permits, participates in permit
hearings and in the review of revocation records, and performs
similar work in connection with the issuance, suspension and revocation
of permits under the Federal Alcohol Administration Act. It
assists the Department of Justice in civil and criminal cases under the
laws in connection with which its legal work arises; gives legal advice
to the Deputy Commissioner of the Alcohol Tax Unit, district supervisors,
and other officials on questions involving interpretation or
construction of said laws; and reviews all correspondence prepared
in the Alcohol Tax Unit involving legal questions.
Work performed by this division, in Washington and in the field,
during the year included preparation of 3,859 memoranda, 151 briefs,
6,674 opinions, 372 libels, and 8 indictments. In connection with
alcohol and Federal Alcohol Administration permits, the division
prepared 29 denials of applications, 67 notices of contemplated denials
of applications, 80 citations for revocation and suspension, and
112 orders in suspension and revocation proceedings, and participated
in 71 formal and 16 informal hearings. Review work included
2,267 case reports and 4,158 compromise cases. In addition, 145
petitions for remission or mitigation of forfeitures and 42 tort claims
cases were examined and finally passed upon.
APPEALS DivisioN.—This division has charge of all cases involving
income, excess profits, unjust enrichment, estate, and gift taxes pending
before The Tax Court of the United States. Counsel assigned to
the various field offices, which were created under the decentralization
program of the Bureau of Internal Revenue, prepare answers to
petitions filed with the Tax Court and advise the various Staff divisions
upon legal questions arising in the determination of income,
profits, estate, and gift tax liability. All proposed settlements are
concurred in by counsel. Counsel also have exclusive authority to
IMPORT OF COMMISSIONER Or TWOBItcNAL REPENTER 5$
represent the Commissioner of Internal Revenue in the defense of all
cases set for hearing before the Tax Court.
This division also has a general supervision of the preparation of
the contents of the records on review in all cases wherein are filed
petitions for review by the United States'circuit courts of appeals of
final decisions of The Tax Court of the United States. In such proceedings
where the Commissioner of Internal Revenue is petitioner,
this duty is performed in the division, subject to approval by the
Department of Justice; in cases where a taxpayer is petitioner, the
division has sole charge of the preparation of the record.
Own DrinsioN.—The work of the Civil Division includes the
determination of the Bureau's legal position, and the preparation of
law and fact letters for the Department of Justice, in all actions
brought by taxpayers to recover taxes and for injunctions in the Federal
courts, and also in actions brought by the Government against
taxpayers, transferees, bonding companies, and others. The division
also assembles the evidence, obtains witnesses, and assists at the trial
of cases when requested by the Department of Justice. Stipulations
of fact for the use of the Department of Justice and for submission
to the courts in actions in the district courts and in the Court of Claims
are examined and approved, modified, disapproved, or new stipulations
prepared. The Bureau's legal position is determined also for
purposes of institution of suits, appeals from adverse decisions, petitions
for certiorari, and compromises of civil cases pending in the
courts. The division also acts in an advisory capacity to the administrative
officers in the collection of taxes generally.
It also handles all cases in which liens for taxes are involved in
mortgage foreclosure actions pending in Federal and State courts,
and considers all applications for the release of Federal tax liens and
the discharge of property from such liens which is permissible under
sections 3673 to 3677, inclusive, of the Internal Revenue Code.
CLAIMS Division.—The Claims Division is comprised of four
sections: Processing. Tax, Reorganization, Bankruptcy and Receivership,
and Compromise
The Processing Tax Section has jurisdiction over all matters
involving processing, floor stocks, compensating, and custom processing
taxes, as well as over unjust enrichment tax matters not within
the jurisdiction of any decentralized office.
The Reorganization Section is charged with the duty of protecting
the interests and claims of the United States in proceedings instituted
under sections 77 and 77B, Chapters X and XV, of the National
Bankruptcy Act, as amended, and arrangement proceedings under
Chapters XI, XII, and XIII of the Act. In the 596 corporate
reorganization and arrangement cases closed during the year, claims
in the amount of $11,373,412 were filed. Of the afore-mentioned 596
cases, 298 cases which involved the amount of $5,971,258 were arrangement
proceedings of taxpayers who subsequently went into bankruptcy.
The remaining . 298 corporate reorganization and arrangement
proceedings involved $5,402,154, of which the amount of
$4,648,465 was collected.
The Bankruptcy and Receivership Section handles all legal work
incident to the protection of the interests and claims of the United
States in bankruptcy and receivership proceedings. The 2,177 cases