## Facts

- Louis Rosenman died on December 25, 1933; his executors were responsible for federal estate tax reporting and payment.
- The government extended the deadline to file the estate tax return to February 25, 1935, but did not extend the due date for payment, which was December 25, 1934.
- On December 24, 1934, the executors sent the Collector of Internal Revenue a $120,000 check stated to be “a payment on account” made “under protest and duress” to avoid penalties and interest while disputing that the full amount was due.
- Because no tax assessment was then outstanding, the Collector placed the $120,000 into a “suspense account” to the estate’s credit rather than crediting it as payment of an assessed tax.
- On February 25, 1935, the executors filed the estate tax return showing $80,224.24 due; on March 28, 1935, the Collector applied $80,224.24 from the suspense account to satisfy the tax assessed under the return.
- On March 26, 1938, the executors filed an administrative refund claim for $39,775.76 (the difference between $120,000 and $80,224.24).
- After audit, the Commissioner determined a deficiency of $48,534.84, satisfied in part by applying the remaining $39,775.76 in the suspense account and by an additional $10,497.34 payment made on April 22, 1938.
- The refund claim was rejected; the Court of Claims held the claim partly time-barred by treating the 1934 remittance as the “payment” that started the refund limitations period.

## Issues

1. Whether the executors’ December 24, 1934 remittance—placed by the Collector in a suspense account before any assessment—constituted a “payment” of estate tax starting the three-year refund-claim limitations period.
2. Whether a refund claim filed more than three years after the remittance, but within three years of later application of the remittance to assessed tax (including a later deficiency), was timely.

## Decision

- The Supreme Court reversed the Court of Claims.
- The Court held the December 24, 1934 remittance was not a tax “payment” for limitations purposes; it was, in effect, a deposit held pending determination of liability.
- The limitations period did not begin to run from the date of the remittance placed in a suspense account when no assessment was outstanding.
- Amounts from the deposit became “paid” when the government later applied them to satisfy an assessed or fixed tax liability; a refund claim filed within three years of such application was timely.

## Legal Principles

- For federal estate tax refund limitations, “payment” occurs when money is applied to satisfy an assessed or otherwise fixed tax liability, not necessarily when funds are initially remitted.
- A remittance made before assessment, accompanied by protest and placed in a suspense account, may be treated as a deposit rather than a payment.
- The three-year limitations period for presenting a refund claim runs from the date of payment, measured by the government’s application of the funds to tax, not from the date of a pre-assessment deposit.

## Conclusion

The Court held that a pre-assessment remittance held in a suspense account was a deposit rather than a payment, so the three-year period for filing an estate tax refund claim began when the government later applied the funds to assessed tax liabilities, making the executors’ claim timely to that extent.


Rosenman v. United States, 323 U.S. 658 (1945)