In Garcia v. Collector of Internal Revenue (1938), who is correct about recovering unpaid taxes after confiscation of the subject alcohol?

• A. The taxpayer
• B. The CIR
• C. Both the taxpayer and the CIR
• D. Neither

Answer: (B)

The main point is that a tax debt on goods remains a government claim even if those goods are seized. When alcohol is confiscated, the unpaid internal revenue tax on that liquor does not disappear or transfer to the taxpayer. The government, through the Commissioner of Internal Revenue, has the authority to recover those unpaid taxes. Garcia v. Collector of Internal Revenue holds that the right to recover is with the CIR, not with the taxpayer. Confiscation does not extinguish the tax liability; the government may collect the tax from the confiscated property’s proceeds or by other lawful means, with the CIR representing the government’s claim. The other options would imply the taxpayer has a right to recover or that neither party has a claim, which contradicts the government’s statutory authority to collect taxes.