Rev. Rul. 59-366

Advice has been requested on the questions stated below which concern the filing of a return for Federal excise taxes and the limitations on assessment and collection under section 6501 of the Internal Revenue Code of 1954.

Question (1). Does the conclusion of Revenue Ruling 58-274, C.B. 1958-1, 495, which mentions only retailers excise taxes, also apply to the other miscellaneous excise taxes required to be reported on Form 720, Quarterly Federal Excise Tax Return?

Question (2). Where a person enters the word `none' or a `zero' on any line of Form 720, has a return been filed for the category or categories of excise tax to which that line relates?

Section 6501(a) of the Code provides, in part, that the amount of any tax imposed by the Code shall be assessed within three years after the return was filed (whether or not such return was filed on or after the date prescribed), and no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period. Section 6501(c)(3) of the Code provides that in the case of a failure to file a return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.

Revenue Ruling 58-274 provides, in effect, that where a retailer is liable for retailers excise taxes imposed by two or more sections of the Code and does not make an entry on his return, Form 720, for one of the categories involved, he has filed no return for such category. Accordingly, the limitations on assessment and collection of the tax, as provided for in section 6501(a) of the Code, do not apply with respect to the category of tax for which no entry was made. The retailers excise taxes imposed by different sections of the Code are separate and distinct taxes. The requirements for filing a return apply separately to each category, even though for convenience a return for all categories may be made on the same form.

In answer to question (1) above, it is held that, while Revenue Ruling 58-274 mentions specifically the retailers excise taxes, the rationale leading to the conclusion set forth in that ruling equally applies to all of the excise taxes required to be reported on Form 720, Quarterly Federal Excise Tax Return. Accordingly, where a person, who is liable for reporting more than one category of the excise taxes required to be reported on Form 720, files a return on which he reports one or more categories of tax, but makes no entry on the return concerning any other category, he has filed no return for the category of tax for which no entry was made. In effect, a blank space opposite a category of excise tax on Form 720, even though due to oversight or to incompletion of the form, will not be considered as a return for that category.

In regard to question (2) above, where the Internal Revenue Service has adopted for use by taxpayers a return form which calls for somewhat detailed information and which, when properly executed, will provide the Service with a means of accurately auditing the tax computation, a question may arise as to whether the information furnished by any particular taxpayer is sufficient to qualify the form as a complete return. See Commissioner v. Lane-Wells Company , 321 U.S. 219, Ct. D. 1602, C .B. 1944, 539. However, a properly executed Form 720 does not require detailed information and does not provide a basis for independent verification of the tax computation. Only by inspection of the records and accounts required to be maintained by the person required to file the return can the accuracy of a return on Form 720 be verified by the Service. Thus, the question of sufficient information can have little or no application to Form 720. It is the mere entry of the amount of the tax liability on the appropriate line which determines that the person submitting the form has filed a return for the category or categories of tax listed on that line.

It is held, therefore, that where a person who is required to file a Form 720, Quarterly Federal Excise Tax Return, enters on any line of Form 720 the word `none,' a `zero,' or some other comparable entry clearly indicating a denial of liability for a category of tax, such entry constitutes the filing of a return for the category or categories of excise tax to which that line relates. Accordingly, with respect to the person submitting the Form 720, the statute of limitations, as it relates to the assessment and collection of the category of excise tax involved, starts to run from the date the return is filed.

However, it should be noted that with respect to the so-called `collected' excise taxes, the filing of a timely return by a collecting agency does not constitute the filing of a return for any `taxpayer' who has failed or refused to pay any category of tax to the collecting agency, unless the collecting agency reports that it has not collected the tax from that taxpayer. See Rev. Rul. 58-158, C.B. 1958-1, 562, and Rev. Rul. 59-127, C.B. 1959-1, 656.

Revenue Ruling 58-274 is hereby amplified.