Source: https://supreme.justia.com/cases/federal/us/338/411/
Timestamp: 2019-04-19 19:10:00+00:00

Document:
Petitioner, an instrumentality of a State, operated on a nonprofit basis a public bathing beach to which all persons entering were charged admission. For failure to collect and pay the tax imposed by § 1700(a) of the Internal Revenue Code on charges for "admission to any place," penalties were assessed against petitioner under § 1718 of the Code.
1. Having paid the penalties from its general revenue fund, petitioner's financial interest was sufficient to give it standing to sue for refund. P. 338 U. S. 414.
2. Within the meaning of § 1700(a), the charge made by petitioner for admission to the beach was an "amount paid for admission to any place," and that section was applicable. Pp. 338 U. S. 414-419.
(a) Congress did not intend by § 1700(a) to tax only admissions to "spectator entertainments." P. 338 U. S. 415.
(b) The beach area here involved was a "place" within the meaning of § 1700(a)(1). Pp. 338 U. S. 415-416.
(c) Congress did not intend to exempt nonprofit operations from the admissions tax imposed by § 1700(a) of the Code, notwithstanding certain exemptions that had previously been allowed. P. 338 U. S. 416.
(d) That activities conducted by a municipality were not intended to be exempt from the admissions tax is indicated by a long continued administrative construction, expressly denying such exemption, which has been followed by repeated reenactment of the relevant language without change. Pp. 338 U. S. 416-418.
(e) The fact that petitioner's beach patrons make use of a beach and its facilities, and that its admission charge may by local law be considered a "use tax," does not render § 1700(a) inapplicable. Pp. 338 U. S. 418-419.
3. The application of the admissions tax in connection with this activity of the petitioner, though an instrumentality of a State, does not violate the Federal Constitution. Pp. 338 U. S. 419-420.
In a suit for refund of penalties assessed for failure to collect federal admissions tax, the District Court entered judgment for petitioner. 76 F.Supp. 924. The Court of Appeals reversed. 172 F.2d 885. This Court granted certiorari. 37 U.S. 937. Affirmed, p. 338 U. S. 420.
"Every person receiving any payments for admission . . . subject to the tax imposed by section 1700 . . . shall collect the amount thereof from the person making such payments."
whether the imposition of admissions tax in connection with such state activity is within the constitutional power of Congress.
Petitioner is Wilmette Park District, a body politic and corporate located within the Village of Wilmette, Cook County, Illinois. Organized and administered pursuant to Illinois statutes, the District includes within its jurisdiction four park areas. The largest, Washington Park, extends for approximately three-fourths of a mile along Lake Michigan, and was acquired partly by grant from the Illinois, partly by purchase, and partly by exercise of the power of eminent domain. At the north end of Washington Park, petitioner has operated a public bathing beach during the summer months for many years, under authority conferred by the Illinois Legislature. The beach has been used primarily by residents of the District, but also has been open to nonresidents.
Among the facilities which the District provided at the beach during the period under review were a bath house, automobile parking area, lifesaving equipment, floodlighting, drinking fountains, showers, spectator benches, bicycle racks, first aid, and supplies. The operation and maintenance of the area and its various services were solely by the District, which employed the necessary personnel.
maintained on a cash receipts and disbursements basis, reflected an excess of receipts over expenditures of $42.11.
In July, 1941, the Collector notified petitioner to collect a tax of 10 percent on all tickets to the beach sold on or after July 25 of that year. Petitioner had not previously collected such taxes, and it refused to do so after the Collector's notice. Subsequently the Commissioner, under § 1718 of the Code, assessed, over petitioner's protest, penalties in the amount of the tax which the Commissioner claimed should have been collected under § 1700(a) from July 25, 1941 through 1945, plus interest and sums due under § 3655(b) of the Code for failure to pay the tax on demand. These penalties amounted to $6,139.93 and were paid out of petitioner's general funds raised by property taxes.
Petitioner filed timely claims for refund which were rejected, and, in 1946, brought this suit against the Collector. The District Court entered judgment for petitioner. 76 F.Supp. 924. [Footnote 2] The Court of Appeals for the Seventh Circuit reversed. 172 F.2d 885. Because the questions presented have importance in the administration of the admissions tax sections of the Code, we granted certiorari. 337 U.S. 937.
within the meaning of the statutory language, an "amount paid for admission to any place."
We cannot agree with petitioner's suggestion that Congress intended to exempt from tax admissions to any activity not conducted for gain. Section 1701 of the Code did allow certain exemptions prior to their termination on October 1, 1941 pursuant to the Revenue Act of 1941, § 541(b), 55 Stat. 687, 710. In § 1701, Congress exempted admissions to certain classes of events and admissions all the proceeds of which inured exclusively to the benefit of designated classes of persons or organizations. But since Congress did not exempt all activities not for profit, as it readily might have done, it appears that admissions to such activities are not, for that reason, outside the admissions tax scheme. Exmoor Country Club v. United States, 119 F.2d 961 (1941).
of the relevant language without change. [Footnote 9] Cf. Helvering v. Winmill, 305 U. S. 79 (1938).
is derived from a statute which contemplates a charge for "use." Ill.Rev.Stat. c. 105, § 8-7d (1947). The application of the federal admissions tax statute is not controlled by the characterization of petitioner's fee by local law. Cf. Morgan v. Commissioner, 309 U. S. 78, 309 U. S. 81 (1940).
We conclude that § 1700(a) is applicable.
Third. The constitutionality of admissions tax levied in connection with an activity of a state instrumentality was before this Court in Allen v. Regents of the University System of Georgia, 304 U. S. 439 (1938). We there found no constitutional inhibition against a nondiscriminatory imposition of such tax on admissions to an athletic exhibition conducted in connection with a state educational administration and in the performance of a governmental function.
"principle, exemplified by those cases where the tax laid upon individuals affects the state only as the burden is passed on to it by the taxpayer, forbids recognition of the immunity when the burden on the state is so speculative and uncertain that, if allowed, it would restrict the federal taxing power without affording any corresponding tangible protection to the state government."
or entirely absorbed by private persons." Id. at 304 U. S. 420.
While the Allen decision assumed that the admissions tax there imposed was a direct burden on the State, that assumption was required only for the purpose of considering the first principle of limitation of immunity as formulated in the Gerhardt case. Such an assumption need not be made here. It is true, of course, that, unless there is a shift in demand for admissions to petitioner's beach, imposition of the tax may to an undeterminable extent adversely affect the volume of admissions. [Footnote 11] Insofar as this occurs, the services of the District will be less widely available, and its revenues from beach admissions will be reduced. But admissions tax, which is "paid by the person paying for such admission," is so imposed as to facilitate absorption by patrons of the beach, rather than by the District, and we have no evidence that the District will be forced to absorb the tax in order to maintain the volume of its revenues and the availability of its benefits. Cf. Metcalf & Eddy v. Mitchell, 269 U. S. 514, 269 U. S. 526 (1926).
"The mere fact that the economic burden of such taxes may be passed on to a state government, and thus increase to some extent, here wholly conjectural, the expense of its operation, infringes no constitutional immunity. Such burdens are but normal incidents of the organization within the same territory of two governments, each possessed of the taxing power."
Helvering v. Gerhardt, supra, 304 U.S. at 304 U. S. 422.
MR. JUSTICE DOUGLAS and MR. JUSTICE MINTON took no part in the consideration or decision of this case.
A war tax rate of 1 cent for each 5 cents or major fraction thereof has been in effect since April 1, 1944, pursuant to Revenue Act of 1943, § 302(a), 58 Stat. 21, 61, Act Feb. 25, 1944.
The District Court allowed recovery only of payments made since January 1, 1945, when respondent took office as Collector. These payments were based on petitioner's operations after October 1, 1941, through 1945. Prior to January 1, 1945, petitioner paid $57.20 on the basis of operations from July 25, 1941, to October 1, 1941.
See 42 Ill.L.Rev. 818, 819-820 (1948).
"recommended that this tax be imposed upon all places to which admission is charged, such as motion picture shows, theaters, circuses, entertainments, cabarets, ball games, athletic games, etc., but not upon admissions all the proceeds of which will go exclusively to the benefit of religious or charitable institutions or for agricultural purposes."
H.R.Rep. No.45, 65th Cong., 1st Sess. 8 (1917). See 55 Cong.Rec. 2148 (1917).
In the admissions tax provisions of the Code, words restricting the imposition of tax to certain classes of places appear only in subsections other than (a) of § 1700. Section 1700(b) imposes a tax of 11 percent on the permanent use or lease of boxes or seats "in an opera house or any place of amusement;" such tax is in lieu of that provided for under § 1700(a). Section 1700(c) imposes on the sale outside box offices, of tickets to "theaters, operas, and other places of amusement" a tax of 11 percent of the price in excess of the box office price; such tax is in addition to the tax imposed by § 1700(a). Section 1700(d) imposes a tax of 50 percent on the amount of sales in excess of regular price by the management of "any opera house, theater, or other place of amusement." Section 1700(e) imposes a tax of 5 percent on amounts paid for admission, refreshment, service, or merchandise, "at any roof garden, cabaret, or other similar place furnishing a public performance for profit;" in such cases, no tax may be imposed under § 1700(a).
Compare Exmoor Country Club v. United States, 119 F.2d 961 (1941); Twin Falls Natatorium v. United States, 22 F.2d 308 (1927); United States v. Koller, 287 F. 418 (1921).
Accord: Dashow v. Harrison, 87 F.Supp. 553 (1946).
"admissions all the proceeds of which inure . . . exclusively to the benefit of . . . societies or organizations conducted for the sole purpose . . . of improving any city, town, village, or other municipality,"
we need not determine whether the exemption was properly interpreted as inapplicable to activities conducted by a municipal corporation. See Treas.Reg. 43 (1928 Ed.) art. 22; id. (1932 Ed.) art. 22; id. (1940 Ed.) § 101.25. The provision became inapplicable prior to the period for which petitioner made payments which could be recovered against the present respondent. See note 2 supra.
Petitioner has argued that the specific exemption benefiting municipal improvement societies was intended to afford them the same exemption which Congress thought applied to municipal corporations; thus, it is urged, repeal of the societies' exemption still would leave the exemption in the case of municipally conducted activities. If Congress assumed that any such municipal corporation exemption existed by implication, it seems likely that it did so because of constitutional considerations which we notice hereafter, and not because of a belief or purpose that the tax was not applicable to activities conducted by any public agency. Thus, Congress, in adopting 49 Stat. 1757, 1792, Act June 22, 1936 and 55 Stat. 303, 350, June 28, 1941, apparently assumed that an express exemption was necessary in order to withdraw admissions to National Parks from the tax statute. Cf. 55 Stat. 687, 710, Sept. 20, 1941, terminating such exemptions of park admissions.
Treas.Reg. 43 (1919 Ed. Part 1) art. 42; id. (1921 Ed. Part 1) art 42; id. (1922 Ed. Part 1) art. 26; id. (1924 Ed. Part 1) art. 26; id. (1926 Ed. Part 1) art. 26; id. (1928 Ed.) art. 24; id. (1932 Ed.) art. 24; id. (1940 Ed.) § 101.27; id. (1941 Ed.) § 101.16.
Revenue Act of 1918, § 800, 40 Stat. 1057, 1120; Revenue Act of 1921, § 800, 42 Stat. 227, 289; Revenue Act of 1924, § 500, 43 Stat. 253, 320; Revenue Act of 1926, § 500, 44 Stat. 9, 91; Revenue Act of 1928, § 411, 45 Stat. 791, 863; Revenue Act of 1932, § 711, 47 Stat. 169, 271; Pub.Res.No.36, June 28, 1935, 49 Stat. 431; I.R.C. §§ 1700, 1701 (1939); Revenue Act of 1941, § 541, 55 Stat. 687, 710.
See Huguenot Yacht Club v. United States, 32 F.Supp. 387, 388 (1940); Lent, The Admissions Tax, 1 Nat.Tax J. 31, 35-36 (1948); 61 Harv.L.Rev. 894 (1948).
See Lent, note 10 supra at 40-42.

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