Veto of Bill for the Relief of Eber Brothers Wine and Liquor Corporation.

To the House of Representatives:

I return herewith, without my approval, H.R. 2717, "For the relief of Eber Brothers Wine and Liquor Corporation."

The bill would permit income tax refund claims for this corporation's taxable years 1947 and 1948 to be presently determined even though applicable statutes of limitations have long since expired.

This special relief should be granted, it is said, because a January 1951, decision of the Tax Court--holding that a certain form of income should be treated as a capital gain rather than as ordinary income-came at a time when the statutory three year period for claiming a refund had only six months to run on this taxpayer's 1948 return and only revert months to run on its 1947 return. Despite the remaining time it did have in each case, this taxpayer failed to file for a refund on this new basis until July 14, 1952--a year and a half after the Tax Court decision. Nor did the taxpayer take any other timely action to protect its position. The 1947 and 1948 claims were disallowed because not presented in time.

A judicial decision modifying or overturning a previously held view of the law is not an unusual circumstance in the development of our tax law. Taxpayers and their counsel often must take action or otherwise adjust because of such changes.

The effect of the Tax Court decision here involved was to change the tax treatment of a certain kind of income. This, as always, meant different things to different taxpayers according to their individual circumstances, but the point is that as of the date of the decision everybody's rights--no matter how they may have varied--were fixed. This bill now seeks to alter those rights for one taxpayer.

The record on this bill discloses no valid reason for such special relief. The taxpayer simply failed to protect his position within the time allowed him by law. The very purpose of the statute of limitations is to achieve finality in tax administration. Special relief in this case would undermine this purpose, would discriminate against other taxpayers, and would create an undesirable precedent.

For these reasons I am unable to approve this bill.

DWIGHT D. EISENHOWER