Memorandum of Disapproval of Bill for the Relief of Toley's Charter Boats, Inc., Toley Engebretsen, and Harvey Homlar.

I AM WITHHOLDING my approval from H. R. 3193, entitled, "For the relief of Toley's Charter Boats, Incorporated, Toley Engebretsen, and Harvey Homlar."

The bill would direct the Secretary of the Treasury to pay the sum of $37.65 to Toley's Charter Boats, Incorporated, of Salerno, Florida, and the sum of $3,227.10 to Toley Engebretsen and Harvey Homlar, of Salerno, Florida, in full settlement of all claims of the named persons for a refund of taxes paid pursuant to section 3469 of the Internal Revenue Code of 1939, relating to tax on the transportation of persons.

The records of the Treasury Department show that the amounts which this bill would refund to the claimants were paid as transportation taxes with respect to fees charged for the charter of fishing boats by the claimants at various times between January 1945 and November 1951. On March 31, 1953, the District Court for the Northern District of Florida held that the transportation tax was not applicable to amounts paid for fishing parties in situations similar to the one involved in this bill. On the date of this decision, the claimants could have filed timely claims for refund of taxes paid after March 1949. However, the claimants did not file claims for refund until November 15, 1955, which date was more than two and one-half years after the District Court's decision. These claims for refund were rejected because they were filed after the expiration of the four-year period of limitations prescribed by law for filing such claims.

It is true that, at the time the District Court reversed the Internal Revenue Service's interpretation of the statute, refund of taxes paid for a large portion of the period here involved was barred by the statute of limitations. However, Congress has determined it to be a sound policy to include in the revenue system a statute of limitations which, after a period of time, bars taxpayers from obtaining refunds of tax overpayments and bars the Government from collecting additional taxes. Such a provision is essential to finality in tax administration.

The basic justification for the statute of limitations is that, after the passing of a reasonable period of time, witnesses may have died, records may have been destroyed or lost, and problems of proof and administration of tax claims become too burdensome and unfair for both taxpayers and the Government. The basic purposes underlying the statute of limitations continue in force even in cases where a taxpayer, after having paid a tax, discovers that the interpretation of the law has been changed by a judicial decision or by a modification in regulations and rulings.

There are no special circumstances in this case to justify singling out the named taxpayers for special relief from the statute of limitations. The bill, therefore, would unfairly discriminate against other taxpayers similarly situated and would create an undesirable precedent.

DWIGHT D. EISENHOWER