Taxation – Federal Income Tax- Full Payment a Prerequisite to Refund Suit

A tax deficiency of $28,908.60 including interest was levied by the Commissioner of Internal Revenue against the petitioner for a single tax year. Petitioner paid $5,058.54 but later filed a claim for refund which was disallowed by the Commissioner. On suit by petitioner in a United States district court for the refund, the court held the petitioner was not entitled to the refund because the claimed losses were actually capital in nature. The Court of Appeals for the Tenth Circuit reversed and dismissed the complaint on the ground that the district court could not have jurisdiction until there had been full payment of the assessed deficiency. On certiorari to the United States Supreme Court, held, affirmed, one justice dissenting. On rehearing, held, affirmed, four justices dissenting. Congress has erected a comprehensive structure of tax procedure premised upon the general understanding that full payment was a prerequisite to a refund; to rule otherwise now would produce disharmony within this structure and would obstruct tax collection. Flora v. United States, 362 U.S. 145 (1960).