SUBCHAPTER E-SUITS BY UNITED STATES

SEC. 3740. AUTHORIZATION TO COMMENCE SUIT.

No suit for the recovery of taxes, or of any fine, penalty, or forfeiture, shall be commenced unless the Commissioner authorizes or sanctions the proceedings and the Attorney General directs that the suit be commenced.

SEC. 3741. CONTINUANCE.

It shall be lawful for any court in which any suit or criminal proceeding arising under the internal revenue laws may be pending to continue the same at any stage thereof for good cause shown on motion by the district attorney.

SEC. 3742. DISCONTINUANCE OR NOLLE PROSEQUI.

For discontinuance or nolle prosequi of prosecutions against distillers for defrauding or attempting to defraud the United States of tax on distilled spirits, see section 2806 (f).

SEC. 3743. REGULATIONS.

It shall be the duty of the Commissioner, with the approval of the Secretary, to establish such regulations, not inconsistent with law, for the observance of revenue officers, respecting suits arising under the internal revenue laws in which the United States is a party, as may be deemed necessary for the just responsibility of those officers and the prompt collection of all revenues and debts due and accruing to the United States under such laws.

SEC. 3744. SUITS FOR TAXES.

Taxes may be sued for and recovered in the name of the United States in any proper form of action, before any district court of the United States, for the district within which the liability to such tax is incurred, or where the party from whom such tax is due resides at the time of the commencement of the said action.

SEC. 3745. SUITS FOR FINES, PENALTIES, AND FORFEITURES.

(a) COLLECTOR'S REPORT TO DISTRICT ATTORNEY.-It shall be the duty of every collector of internal revenue having knowledge of any willful violation of any law of the United States relating to the revenue, within 30 days after coming into possession of such knowledge, to file with the district attorney of the district in which any fine, penalty, or forfeiture may be incurred, a statement of all the facts and circumstances of the case within his knowledge, together with the names of the witnesses, setting forth the provisions of law believed to be so violated on which reliance may be had for condemnation or conviction.

(b) PROSECUTIONS BY DISTRICT ATTORNEY.

For the duty of every district attorney to whom the collector reports the cases in which such fines, penalties, or forfeitures have been incurred in the district of such attorney to cause proper proceedings to be commenced and prosecuted, when authorized or sanctioned by the Commissioner and directed by the Attorney General, see R. S. 838, as amended by February 27, 1877, c. 69, s. 1, 19 Stat. 241 (U. S. C., Title 28, § 486).1 1R. S. 838 has been superseded by section 507 of Title 28 of the United States Code (62 Stat. 910); see Appendix II.

(c) PLAINTIFF, PROCEEDINGS, AND VENUE.-All suits for fines, penalties, and forfeitures, where not otherwise provided for, shall be brought in the name of the United States, in any proper form of action, or by any appropriate form of proceeding, qui tam or otherwise, before any district court of the United States for the district within which said fine, penalty, or forfeiture may have been incurred, or before any other court of competent jurisdiction.

(d) COSTS.-In case of any suit for penalties or forfeitures brought upon information received from any person, other than a collector, deputy collector, revenue agent, or inspector, the United States shall not be subject to any costs of suit.

SEC. 3746. SUITS FOR RECOVERY OF ERRONEOUS REFUNDS.

(a) REFUNDS AFTER LIMITATION PERIOD.-Any portion of an internal revenue tax (or any interest, penalty, additional amount, or addition to such tax) refund of which is erroneously made, within the meaning of section 3774, may be recovered by suit brought in the name of the United States, but only if such suit is begun within two years after the making of such refund.

(b) REFUNDS OTHERWISE ERRONEOUS. Any portion of an internal revenue tax (or any interest, penalty, additional amount, or addition to such tax) which has been erroneously refunded (if such refund would not be considered as erroneous under section 3774) may be recovered by suit brought in the name of the United States, but only if such suit is begun before the expiration of two years after the making of such refund.

(c) REFUNDS BASED ON FRAUD OR MISREPRESENTATION.-Despite the provisions of subsections (a) and (b), such suit may be brought at any time within five years from the making of the refund if it appears that any part of the refund was induced by fraud or the misrepresentation of a material fact.

(d) INTEREST.-Erroneous refunds recoverable by suit under this section shall bear interest at the rate of 6 per centum per annum from the date of the payment of the refund.

[For postponements by reason of war, see section 3804.]

SEC. 3747. DISPOSITION OF JUDGMENTS AND MONEYS RECOVERED. All judgments and moneys recovered or received for taxes, costs, forfeitures, and penalties shall be paid to collectors as internal revenue taxes are required to be paid.

SEC. 3748. PERIODS OF LIMITATION.

(a) CRIMINAL PROSECUTIONS.-No person shall be prosecuted, tried, or punished for any of the various offenses arising under the internal revenue laws of the United States, unless the indictment is found or the information instituted within three years next after the commission of the offense, except that the period of limitation shall be six years

(1) for offenses involving the defrauding or attempting to defraud the United States or any agency thereof, whether by conspiracy or not, and in any manner,

(2) for the offense of willfully attempting in any manner to evade or defeat any tax or the payment thereof, and

(3) for the offense of willfully aiding or assisting in, or procuring, counseling, or advising, the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a false or fraudulent return, affidavit, claim, or document (whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document).

For offenses arising under section 37 of the Criminal Code, March 4, 1909, 35 Stat. 1096 (U. S. C., Title 18, § 88),1 where the object of the conspiracy is to attempt in any manner to evade or defeat any tax or the payment thereof, the period of limitation shall also be six years. The time during which the person committing any of the offenses above mentioned is absent from the district wherein the same is committed shall not be taken as any part of the time limited by law for the commencement of such proceedings. Where a complaint is instituted before a commissioner of the United States within the period above limited, the time shall be extended until the discharge of the grand jury at its next session within the district.

(c) CIVIL SUITS.

For period of limitation in respect of—

Suits for fines, penalties, and forfeitures, see section 1047 of the Revised Statutes (U. S. C., Title 28, § 791).2

Suits for erroneous refunds, see section 3746.

[For postponements by reason of war, see section 3804.

For suspension of running of statute until three years after termination of hostilities, see section 3287 of Title 18 of the United States Code (62 Stat. 828).]

SUBCHAPTER F-CLOSING AGREEMENTS AND

COMPROMISES

SEC. 3760. CLOSING AGREEMENTS.

(a) AUTHORIZATION.-The Commissioner (or any officer or employee of the Bureau of Internal Revenue, including the field service, authorized in writing by the Commissioner) is authorized to enter into an agreement in writing with any person relating to the liability of such person (or of the person or estate for whom he acts) in respect of any internal revenue tax for any taxable period.

(b) FINALITY. If such agreement is approved by the Secretary, the Under Secretary, or an Assistant Secretary, within such time as may be stated in such agreement, or later agreed to, such agreement shall be final and conclusive, and, except upon a showing of fraud or malfeasance, or misrepresentation of a material fact—

(1) The case shall not be reopened as to the matters agreed upon or the agreement modified by any officer, employee, or agent of the United States, and

1 Section 37 of the Criminal Code has been superseded by section 371 of Title 18 of the United States Code (62 Stat. 701); see Appendix II.

2

R. S. 1047 has been superseded by section 2462 of Title 28 of the United States Code (62 Stat. 974); see Appendix II.

(2) In any suit, action, or proceeding, such agreement, or any determination, assessment, collection, payment, abatement, refund, or credit made in accordance therewith, shall not be annulled, modified, set aside, or disregarded.

SEC. 3761. COMPROMISES.

(a) AUTHORIZATION.-The Commissioner, with the approval of the Secretary, or of the Under Secretary, or of an Assistant Secretary, may compromise any civil or criminal case arising under the internal revenue laws prior to reference to the Department of Justice for prosecution or defense; and the Attorney General may compromise any such case after reference to the Department of Justice for prosecution or defense.

(b) RECORDS.-Whenever a compromise is made by the Commissioner in any case, there shall be placed on file in the office of the Commissioner the opinion of the General Counsel for the Department of the Treasury, or of the officer acting as such, with his reasons therefor, with a statement of

(1) The amount of tax assessed.

(2) The amount of additional tax or penalty imposed by law in consequence of the neglect or deliquency of the person against whom the tax is assessed, and

(3) The amount actually paid in accordance with the terms of the compromise.

(c) CROSS REFERENCE.

For compromises after judgment, see R. S. 3469 (U. S. C., Title 31, § 194).

SEC. 3762. PENALTIES.

Any person who, in connection with any compromise under section 3761, or offer of such compromise, or in connection with any closing agreement under section 3760, or offer to enter into any such agreement, willfully

(a) CONCEALMENT OF PROPERTY.-Conceals from any officer or employee of the United States any property belonging to the estate of a taxpayer or other person liable in respect of the tax, or

(b) WITHHOLDING, FALSIFYING, AND DESTROYING RECORDS.Receives, destroys, mutilates, or falsifies any book, document, or record, or makes under oath any false statement, relating to the estate or financial condition of the taxpayer or other person liable in respect of the tax

shall, upon conviction thereof, be fined not more than $10,000 or imprisoned for not more than one year, or both.

The words "of the Treasury" are omitted.

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CHAPTER 37—ABATEMENTS, CREDITS, AND

REFUNDS

SEC. 3770. AUTHORITY TO MAKE ABATEMENTS, CREDITS, AND RE

FUNDS.

(a) TO TAXPAYERS.

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(1) ASSESSMENTS AND COLLECTIONS GENERALLY.-Except as otherwise provided by law in the case of the Commissioner, subject to regulations prescribed by the Secretary, is authorized to remit, refund, and pay back all taxes, erroneously or illegally assessed or collected, all penalties collected without authority, and all taxes that appear to be unjustly assessed or excessive in amount, or in any manner wrongfully collected.

(2) ASSESSMENTS AND COLLECTIONS AFTER LIMITATION PERIOD. Any tax (or any interest, penalty, additional amount, or addition to such tax) assessed or paid after the expiration of the period of limitation properly applicable thereto shall be considered an overpayment and shall be credited or refunded to the taxpayer if claim therefor is filed within the period of limitation for filing such claim.

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(3) DATE OF ALLOWANCE.Where the Commissioner has signed a schedule of overassessments in respect of any internal revenue tax imposed by this title, the date on which he first signed such schedule shall be considered as the date of allowance of refund or credit in respect of such tax.

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(4) DELEGATION OF AUTHORITY то COLLECTORS ΤΟ MAKE REFUNDS. The Commissioner is authorized to delegate, with the approval of the Secretary, to collectors any authority, duty, or function which the Commissioner is authorized or required to exercise or perform under paragraph (1), (2), or (3) of this subsection, where the amount involved (exclusive of interest, penalties, additions to the tax, and additional amounts) does not exceed $1,000.

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(5) CROSS REFERENCES.

For limitations on refunds and credits in case of

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Miscellaneous taxes, see section 3313.

[For restrictions on transfers and assignments of claims against the United States, see R. S. 3477 (31 U. S. C. 203).

For set-off of claims against amounts due the United States, see the act of March 3, 1875, as amended by section 13 of the act of March 3, 1933 (47 Stat. 1516; 31 U. S. C. 227).

For requirement of estimates of appropriations for refunds, see section 1317 of the Revenue Act of 1921 (31 U. S. C. 602).

For establishment of account designated "Refund of Moneys Erroneously Received and Covered," see section 18 of the Permanent Appropriations Repeal Act (48 Stat. 1231; 31 U. S. C. 725q).]