The taxpayer, who was a U.S. citizen resident in Canada, did not claim treaty benefits when filing his U.S. return, with the result that his U.S.-source pension income was subject to U.S. income tax at graduated rates rather than the treaty-reduced rate of 15%.
In finding that the excess over 15% did not qualify as a tax, Hershfield J. noted that where the taxpayer has refused to establish that a payment was not an error and refused to correct the error, such overpayment does not qualify as a "tax". It also was appropriate for the Agency to compute the overpayment on the basis that the same rate of graduated U.S. income tax was applicable to both the taxpayer's pension income and employment income.