Memorandum of Disapproval of Bill for the Relief of Mrs. Lourene O. Estes.

I AM withholding my approval from H.R. 6335, "For the relief of Mrs. Lourene O. Estes."

Mrs. Estes, on her income tax returns for 1952 and 1953, reported as income certain disability payments received from her employer. Prior to the time the taxpayer filed these returns, the Court of Appeals for the Seventh Circuit had held that such disability payments were excludable from gross income, although the Internal Revenue Service had ruled to the contrary.

On April 1, 1957, the United States Supreme Court decided that disability payments of the type here in question were excludable from gross income. On April 15, 1957, Mrs. Estes filed claims for refund for 1952 and 1953 based upon the excludability of the disability pay received by her. These claims were rejected because filed after the expiration of the 3-year period of limitations prescribed by law for the filing of such claims.

During the last Congress, I approved legislation designed to grant general relief, on a nondiscriminatory basis, to taxpayers who had received disability pay which was excludable from gross income under the Supreme Court decision. This general legislation does not provide relief for taxpayers, such as Mrs. Estes, who did not attempt to protect their rights by filing timely claims for refund.

The statutory period of limitations, which the Congress has included in the revenue system as a matter of sound policy, is essential in order to achieve finality in tax administration. A substantial number of taxpayers paid income tax on disability payments received by them and failed to file timely claims for refund. Accordingly, to grant special relief in this case, where a refund was not claimed in the time and manner prescribed by law, would be to discriminate against such other similarly situated taxpayers and to create an undesirable precedent.

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

DWIGHT D. EISENHOWER