Gill v. Commissioner

Robert Gill (plaintiff) was the sole proprietor of a business that maintained its accounting books according to a fiscal year running from May 1 to April 30. Gill was a calendar-year taxpayer. However, Gill reported his business income on his taxes based on his business’s fiscal year. For example, on his 1949 tax return, Gill originally included the business income earned from May 1, 1948, through April 30, 1949. Later, Gill filed for a refund for the 1949 tax year, recomputing his income to exclude the business income earned in 1948. The Internal Revenue Service (IRS) (defendant) denied the refund. Gill litigated the issue, and on July 18, 1958, the United States Court of Appeals for the Fifth Circuit issued an opinion in favor of Gill, holding that his 1949 tax liability had to be computed based on amounts earned during the calendar year. The mandate giving effect to the opinion was issued on September 29, 1958. The IRS then recomputed Gill’s 1948 tax liability to include the business income that the court of appeals had ordered excluded from Gill’s 1949 income. On September 28, 1959, the IRS issued Gill a notice of deficiency based on this recomputation, citing §§ 1311–1314 of the Internal Revenue Code (code), known as the mitigation provisions, as authority to do so. Gill challenged the notice in the United States Tax Court, arguing that the mitigation provisions required the IRS to issue its notice of deficiency within one year of the Fifth Circuit’s opinion. The tax court ruled in favor of the IRS, and Gill appealed.