United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 25, 2005 Decided December 9, 2005

No. 04-5421

NATIONAL RAILROAD PASSENGER CORPORATION,

APPELLEE

v.

UNITED STATES OF AMERICA,

APPELLANT

Appeal from the United States District Court

for the District of Columbia

(No. 03cv00431)

Teresa E. McLaughlin, U.S. Department of Justice, argued

the cause for appellant. With her on the briefs were Eileen J.

O’Connor, Assistant Attorney General, Kenneth L. Wainstein,

U.S. Attorney, and Robert W. Metzler.

Jean A. Pawlow argued the cause for appellee. With her on

the brief were Shane T. Hamilton and Dennis M. Moore.

Before: TATEL and GRIFFITH, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge TATEL.
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TATEL, Circuit Judge: In this case, we must decide whether

a statute imposing a tax on telephone calls for which the toll

charge “varies in amount with the distance and elapsed

transmission time of each individual communication” covers

long-distance telephone charges varying by time but not by

distance. The district court concluded that the statute does not

cover such charges, and we agree.

I.

Section 4251 of the Internal Revenue Code imposes a tax on

“toll telephone service,” defined in section 4252(b) as 

(1) a telephonic quality communication for which

(A) there is a toll charge which varies in amount with

the distance and elapsed transmission time of each

individual communication and (B) the charge is paid

within the United States, and

(2) a service which entitles the subscriber, upon

payment of a periodic charge (determined as a flat

amount or upon the basis of total elapsed transmission

time), to the privilege of an unlimited number of

telephonic communications to or from all or a

substantial portion of the persons having telephone or

radio telephone stations in a specified area which is

outside the local telephone system area in which the

station provided with this service is located.

26 U.S.C. § 4252(b). Enacted in 1965, this language replaced an

earlier definition of “toll telephone service”: “a telephone or

radio telephone message or conversation for which (1) there is

a toll charge, and (2) the charge is paid within the United

States.” 26 U.S.C. § 4252(b) (1958); Excise Tax Reduction Act

of 1965, Pub. L. No. 89-44, § 302, 79 Stat. 136, 146 (enacting

current language). The 1965 Act phased the tax out over three
3

years, § 302, 79 Stat. at 145, but later Congresses repeatedly

extended the tax, finally making it permanent in 1990, Omnibus

Budget Reconciliation Act of 1990, Pub. L. No. 101-508,

§ 11217, 104 Stat. 1388, 1388-437.

When Congress last amended section 4252(b) in 1965, only

AT&T provided long-distance telephone service. At that time,

AT&T offered two billing plans. The first, Message Toll

Service (MTS), charged each individual call based on duration,

distance traveled, and time of day. Under the second plan, Wide

Area Telephone Service (WATS), customers purchased blocks

of usage time for a flat fee. WATS customers paid either a flat

monthly rate for an unlimited number of calls and minutes or a

lower rate for up to fifteen hours of calling plus a further charge

for each additional hour. Pointing to legislative history, the

parties in this case agree that Congress designed subsection

(b)(1) to cover MTS and subsection (b)(2) to cover WATS. See

H.R. Rep. No. 89-433, at 30 (1965); S. Rep. No. 89-324, at 35

(1965). They also agree that, as Congress intended, section

4252(b) covered all long-distance services existing in 1965.

Taxing all 1965 long-distance service, however, is a far cry

from taxing all long-distance service today. Not only does

AT&T no longer hold a monopoly on long-distance service, but

today’s multitude of long-distance carriers offer far more rate

structures. Most significantly for our purposes, many customers

now pay per-minute charges that remain constant regardless of

how far their calls travel. Appellee National Railroad Passenger

Corporation (“Amtrak”) is one such customer. In particular, for

each of the four services at issue in this case—two types of

domestic “inbound” (also known as “800”) service, an inbound

service from Canada, and a service allowing various Amtrak

locations to contact each other—Amtrak pays a monthly charge

computed by multiplying the number of minutes Amtrak

consumes by a specific rate for that service. As a common
4

carrier, Amtrak is exempt from subsection (b)(2), meaning that

it must pay tax only if its long-distance charges fall within

subsection (b)(1). 26 U.S.C. § 4253(f).

Amtrak initially paid the tax, but believing its service to be

nontaxable under subsection (b)(1), it filed a refund claim with

the Internal Revenue Service (IRS). Receiving no response,

Amtrak filed suit in the U.S. District Court for the District of

Columbia. Cf. 26 U.S.C. § 6532(a)(1) (requiring taxpayer to

wait six months before filing suit). The district court, joining a

chorus of other federal courts, found subsection (b)(1)

inapplicable because Amtrak’s charges did not vary by distance,

and accordingly granted summary judgment for Amtrak. Nat’l

R.R. Passenger Corp. v. United States, 338 F. Supp. 2d 22

(D.D.C. 2004); see also OfficeMax, Inc. v. United States, ___

F.3d ___, No. 04-4009, 2005 WL 2861031, 2005 U.S. App.

LEXIS 23635 (6th Cir. Nov. 2, 2005) (resolving this issue in

favor of taxpayer), aff’g 309 F. Supp. 2d 984 (N.D. Ohio 2004);

Am. Bankers Ins. Group v. United States, 408 F.3d 1328, 1331-

1337 (11th Cir. 2005) (same), rev’g 308 F. Supp. 2d 1360 (S.D.

Fla. 2004); Hewlett-Packard Co. v. United States, No. C-04-

03832, 2005 WL 1865419, at *2-*5, 2005 U.S. Dist. LEXIS

19972, at *5-*13 (N.D. Cal. Aug. 5, 2005) (same); Reese Bros.,

Inc. v. United States, No. 03-CV-745, 2004 WL 2901579, at *3-

*13, 2004 U.S. Dist. LEXIS 27507, at *10-*44 (W.D. Pa. Nov.

30, 2004) (same); Fortis, Inc. v. United States, No. 03 Civ. 5137,

2004 WL 2085528, at *5-*13, 2004 U.S. Dist. LEXIS 18686, at

*17-45 (S.D.N.Y. Sept. 16, 2004) (same); Am. Online, Inc. v.

United States, 64 Fed. Cl. 571, 576-581 (Fed. Cl. 2005) (same);

Honeywell Int’l, Inc. v. United States, 64 Fed. Cl. 188, 198-203

(Fed. Cl. 2005) (same).

The government now appeals. Our review is de novo.

Dunaway v. Int’l Bhd. of Teamsters, 310 F.3d 758, 761 (D.C.

Cir. 2002).
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II.

We begin, as we must, with the statute’s language. Hughes

Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999). Subsection

(b)(1) imposes a tax only when “there is a toll charge which

varies in amount with the distance and elapsed transmission time

of each individual communication.” 26 U.S.C. § 4252(b)(1).

Amtrak’s charges do not vary by both time and distance, so that

would seem to end the matter. The government nonetheless

urges us to find ambiguity in the statute, arguing that because

Congress sometimes uses the word “and” disjunctively, we

should interpret the statute to require only that the charge vary

with distance or elapsed transmission time. We may not do so.

In 1965, when Congress passed section 4252(b), MTS

charges varied by both time and distance. Reading “and”

conjunctively therefore makes the statute mirror the MTS

system, precisely what Congress intended. See supra at 3. To

be sure, Congress does sometimes use the word “and”

disjunctively. Indeed, it did so in this very statute: No one

would contend that a service must satisfy both subsection (b)(1)

and subsection (b)(2) to constitute “toll telephone service,” as a

conjunctive reading of the “and” separating the two sections

would require. Because the two subsections describe separate

types of services, not criteria for a single service, such a reading

would be absurd. In contrast, reading the “and” that separates

“distance” from “elapsed transmission time” conjunctively

produces just the result Congress intended, i.e., a tax on MTS

service.

The government relies heavily on Slodov v. United States,

436 U.S. 238 (1978), but there too a conjunctive reading would

have done nothing to further Congress’s clear intent. The statute

at issue in Slodov imposed penalties on “[a]ny person required

to collect, truthfully account for, and pay over any tax . . . who

willfully fails to collect such tax, or truthfully account for and
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pay over such tax, or willfully attempts in any manner to evade

or defeat any such tax or the payment thereof.” Slodov, 436

U.S. at 245 (quoting 26 U.S.C. § 6672). Having assumed

control of a corporation after taxes had already been

“collect[ed],” Slodov could not possibly have done all three

acts—“collect, truthfully account for, and pay over” the tax. Id.

at 246. He therefore believed that the statute had no effect on

him. Id. The Supreme Court rejected this argument as

inconsistent with the statute’s purpose, holding that the phrase

in question “was necessary to insure that the penalty . . . would

be read as applicable only to failure to pay taxes which require

collection, that is, third-party taxes,” as distinguished from

“direct taxes such as employer FICA and income taxes.” Id. at

249. In other words, “the phrase . . . was meant to limit § 6672

to persons responsible for collection of third-party taxes and not

to limit it to those persons in a position to perform all three of

the enumerated duties.” Id. at 250. The provision’s legislative

history supported the Supreme Court’s interpretation and gave

no hint that Congress intended a conjunctive reading. Id. at 249.

Here, by contrast, reading “and” conjunctively accomplishes

exactly what Congress intended.

For the same reason, United States v. American Trucking

Ass’ns, 310 U.S. 534 (1940), does not help the government.

Reading subsection (b)(1) literally produces Congress’s intended

result, not “absurd or futile results” or results “plainly at

variance with the policy of the legislation as a whole.” Id. at

543 (internal quotation marks omitted). Congress meant to tax

all long-distance telephone service existing in 1965, and it

succeeded. At that time, moreover, Congress had no reason to

ensure that the statute covered all future service, as the 1965 Act

phased the tax out by the end of that decade.

Even Revenue Ruling 79-404, upon which the government

relies, conceded that charges like Amtrak’s do not fall within the
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statute’s language. See Rev. Rul. 79-404, 1979-2 C.B. 382. In

that ruling, the IRS considered whether communications to the

United States from ships at sea fell within section 4252(b). Id.

at 382. Like Amtrak’s service, the charge for such

communications varied only with the call’s duration.

“Literally,” the IRS concluded, “the service provided in this case

does not come within the definition of . . . ‘toll telephone

service’ as . . . currently defined in section 4252 of the Code . . .

because the charge for such service does not vary with distance

and therefore does not meet the requirement of section

4252(b)(1).” Id.

Although the IRS nonetheless concluded that

communications from ships should be taxed because “[t]he

intent of the statute would be frustrated if a new type of service

otherwise within such intent were held to be nontaxable merely

because charges for it are determined in a manner which is not

within the literal language of the statute,” id. at 383, we may not

take that approach here. Indeed, the Supreme Court has

expressly rejected this type of reasoning. In Iselin v. United

States, 270 U.S. 245 (1926), the Court considered a provision

that taxed the sale of theater tickets sold at places other than

ticket offices. The provision at issue, paragraph 3, based the

amount of the tax on the difference between the “established

price” at the ticket office and the price for which the ticket was

sold. Id. at 247. Having received and sold a complimentary

ticket, the taxpayer argued that because the ticket she sold had

no “established price,” the statute imposed no tax on the sale.

Id. at 248. The Court summarized the government’s argument

as follows:

It argues that Congress clearly intended to tax all sales

of tickets; that there is in the section no indication of

intention to exempt from the tax any sale of tickets or

any resale at a profit; that the receipts here taxed are in
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character substantially similar to those specifically

described in paragraph 3; that this general purpose of

Congress should be given effect, so as to reach any

case within the aim of the legislation; and that the Act

should, therefore, be extended by construction to cover

this case.

270 U.S. at 250. Rejecting this argument, the Supreme Court

held that because no particular provision referred to this kind of

transaction, and because Congress described with some care the

various situations in which tickets were sold, it would enforce

the statute’s “plain and unambiguous” language. Id. at 250-51.

Even assuming no congressional intent “to exempt from taxation

this class of tickets,” id. at 250, the Court reasoned, “[w]hat the

government asks is not a construction of a statute, but, in effect,

an enlargement of it by the court, so that what was omitted,

presumably by inadvertence, may be included within its scope.

To supply omissions transcends the judicial function.” Id. at

251.

The government makes precisely the same argument here

that it did in Iselin:

It argues that Congress clearly intended to tax all

[long-distance telephone charges]; that there is in the

section no indication of intention to exempt from the

tax any [long-distance telephone charges]; that the

[charges] here taxed are in character substantially

similar to those specifically described in [section

4252(b)(1)]; that this general purpose of Congress

should be given effect, so as to reach any case within

the aim of the legislation; and that the Act should,

therefore, be extended by construction to cover this

case.
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Iselin requires that we give the same reply: “What the

government asks is not a construction of a statute, but, in effect,

an enlargement of it by the court, so that what was omitted,

presumably by inadvertence, may be included within its scope.

To supply omissions transcends the judicial function.” And lest

Iselin’s vintage lead one to doubt its continuing validity, just last

year the Supreme Court relied on it to reject as not “a

construction of [the] statute, but, in effect, an enlargement of it

by the court” an interpretation that would have required adding

a word to the statute’s text. Lamie v. U.S. Tr., 540 U.S. 526, 538

(2004) (quoting Iselin, 270 U.S. at 251) (alteration in original).

III.

We can quickly dispose of the government’s remaining

arguments. Its claim that Congress’s extensions of the tax

following the 1979 revenue ruling amounted to an implicit

adoption of the IRS’s reasoning fails for two reasons. First, as

the ruling itself acknowledges, the statute’s language does not

cover charges varying only by time. Enacting this language

would therefore be a bizarre way for Congress to codify an IRS

ruling applying the tax to such charges. See Brown v. Gardner,

513 U.S. 115, 121 (1994) (“There is an obvious trump to the

reenactment argument, however, in the rule that where the law

is plain, subsequent reenactment does not constitute an adoption

of a previous administrative construction.” (internal quotation

marks omitted)). Second, the government offers no evidence

that Congress ever knew of the revenue ruling. See Pub.

Citizen, Inc. v. HHS, 332 F.3d 654, 669 (D.C. Cir. 2003)

(holding reenactment argument “has little weight absent some

evidence of (or reason to assume) congressional familiarity with

the administrative interpretation at issue”).

The government urges us to read the statute more broadly

because when changing the definition of “toll telephone service”

in 1965, “Congress did not intend to dramatically reduce the
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scope of the tax base.” Appellant’s Br. 25. We agree that the

1965 amendment caused no immediate reduction in the tax base,

as revised section 4252(b) succeeded in taxing all then-existing

long-distance service. But because Congress replaced the pre1965 general language—imposing tax when “there is a toll

charge”—with a precise description of MTS and WATS, we do

not agree that the tax extends to all future service, however

billed.

Nor do we see any merit to the government’s argument that

because the rate for calls from Canada to the United States is

higher than the rate for domestic calls, Amtrak’s charges

actually vary by distance. These rates differ because calls to and

from Canada cross the U.S./Canadian border, not because

Canada is further away. For example, as Amtrak points out,

calls from Niagara Falls, New York and from Niagara Falls,

Canada to the same point in the United States travel the same

distance yet incur different charges. Likewise, calls from

Vancouver to Seattle cost more than calls from Miami to Seattle

even though the latter travel vastly greater distances.

Finally, although the parties discuss whether we should

defer to Revenue Ruling 79-404 pursuant to Chevron U.S.A. Inc.

v. Natural Resources Defense Council, Inc., 467 U.S. 837

(1984), or Skidmore v. Swift & Co., 323 U.S. 134 (1944), we

need not resolve that question. Even were we to afford Chevron

deference to the ruling, we could not let stand an agency

decision that deviates from the statute’s unambiguous meaning.

Chevron, 467 U.S. at 842-43.

We have considered the government’s remaining arguments

and found them to lack merit. Because the district court’s wellreasoned opinion properly ascertains the statute’s meaning, we

affirm the grant of summary judgment to Amtrak. True, this

interpretation limits the effectiveness of the tax on long-distance
11

calls, but because section 4252(b)(1) is unambiguous, the IRS

must take its case to Congress, not this court.

So ordered.