Veto of Bill for the Relief of Continental Hosiery Mills, Inc.

To the House of Representatives:

I return herewith, without my approval, H.R. 4229, entitled "An Act for the relief of Continental Hosiery Mills, Incorporated, of Henderson, North Carolina, successor to Continental Hosiery Company, of Henderson, North Carolina."

The bill would direct the Secretary of the Treasury to pay the sum of $21,670.11 to Continental Hosiery Mills, Incorporated, of Henderson, North Carolina, successor to Continental Hosiery Company of Henderson, North Carolina, in full settlement of all claims against the United States. The bill states that this sum represents a refund of income tax erroneously collected from said corporation on April 19, 1947, by the Bureau of Internal Revenue.

An examination by the Treasury Department discloses that the amount here involved resulted from deficiencies in income and excess profits taxes for the taxable years ending April 30, 1942, through April 30, 1945, arising from the disallowance of excessive salaries to the president and to the vice president and treasurer of the corporation. The taxpayer, after a conference with a representative of the Internal Revenue Service at which the taxpayer was represented by one of its principal officers and by an attorney and an accountant, executed a waiver of restrictions on assessment and collection of these deficiencies on October 3, 1946. Thereafter, the taxes were assessed and were paid in 1947.

Several years later, during 1959, the taxpayer requested a reopening of the case but this request was denied by the Internal Revenue Service because the period of limitations for claiming a refund had expired in 1949, two years after the taxes were paid.

The taxpayer now appears to rely upon the fact that, in 1943, it had obtained the approval of the Salary Stabilization Unit of the Treasury Department concerning its compensation arrangement with its officers, which was based upon a percentage of the taxpayer's profits. This fact, which presumably was known to the taxpayer in 1947 when the taxes were paid, was not raised by the taxpayer in any appeal either within the Internal Revenue Service or to the courts within the statutory period of limitations. The record in this case discloses no special circumstances justifying the taxpayer's failure to appeal this matter until five years after the tax was paid at which time the expiration of the period of limitations prevented any redetermination of its tax liabilities for the years in question.

The granting of special relief in this case, where a refund was not claimed in the time and manner required by law, would constitute a discrimination against others similarly situated and would create an undesirable precedent.

Under the circumstances, therefore, I am constrained to withhold my approval of the bill.

DWIGHT D. EISENHOWER