In the case of Rothensies, Collector of Internal Revenue v. Electric Storage Battery Co., 1946, the U.S Supreme Court was tasked with determining whether a tax refund claim by Electric Storage Battery Company (ESBC) was valid under Section 322(b)(1) of the Revenue Act. The ESBC had paid taxes on profits from sales to its subsidiary during World War I and later claimed a refund after discovering that these transactions were not taxable due to an exemption for war-time business activities. However, this discovery occurred outside the statutory three-year period for filing such claims. The court ruled in favor of Rothensies, stating that while there is no statute of limitations on claiming refunds based on newly discovered evidence or changes in law interpretation; taxpayers must still adhere to existing time limits when they are aware or should have been aware at payment time about potential grounds for dispute over their tax liability. Therefore, since ESBC knew about its subsidiary's wartime status when it made those payments but did not file any protest then nor within three years afterward; it could not now claim ignorance as an excuse for late filing.

In the dissenting opinion for Rothensies v. Electric Storage Battery Co., Justice Frankfurter disagreed with the majority's interpretation of "overpayment" in Section 322(b) of the Revenue Act, arguing that it should be understood as any payment exceeding what was rightfully due under law at time of payment. He contended that this definition would align more closely with common understanding and usage. Furthermore, he criticized the majority’s reliance on a narrow technicality to deny refund claims by taxpayers who had paid more than they owed based on an incorrect legal interpretation later corrected by court rulings. In his view, such an approach undermined fairness and equity in tax administration because it effectively penalized taxpayers for not predicting future changes in law or policy correctly.