Source: https://m.openjurist.org/361/us/87
Timestamp: 2020-02-28 05:41:25
Document Index: 616806103

Matched Legal Cases: ['§ 294', '§ 294', '§ 294', '§ 294', '§ 294', '§ 294', '§ 294']

361 U.S. 87 - Commissioner of Internal Revenue v. N Acker
361 US 87 Commissioner of Internal Revenue v. N Acker
Fred N. ACKER.
We are here concerned with a taxing Act which imposes a penalty.4 The law is settled that 'penal statutes are to be construed strictly,' Federal Communications Commission v. American Broadcasting Co., 347 U.S. 284, 296, 74 S.Ct. 593, 601, 98 L.Ed. 699, and that one 'is not to be subject to a penalty unless the words of the statute plainly impose it,' Keppel v. Tiffin Savings Bank, 197 U.S. 356, 362, 25 S.Ct. 443, 445, 49 L.Ed. 790. See, e.g., Tiffany v. National Bank of Missouri, 18 Wall. 409, 410, 21 L.Ed. 862; Elliott v. Railroad Co., 99 U.S. 573, 576, 25 L.Ed. 292.
Viewing § 294(d)(2) in the light of this rule, we fail to find any expressed or necessarily implied provision or language that purports to authorize the treatment of a taxpayer's failure to file a declaration of estimated tax as, or the equivalent of, a declaration estimating his tax to be zero. This section contains no words or language to that effect, and its implications look the other way. By twice mentioning, and predicating its application upon, 'the estimated tax' the section seems necessarily to contemplate, and to apply only to, cases in which a declaration of 'the estimated tax' has been made and filed. The fact that the section contains no basis or means for the computation of any addition to the tax in a case where no declaration has been filed would seem to settle the point beyond all controversy. If the section had in any appropriate words conveyed the thought expressed by the regulation it would thereby have clearly authorized the Commissioner to treat the taxpayer's failure to file a declaration as the equivalent of a declaration estimating his tax at zero and, hence, as constituting a 'substantial underestimate' of his tax. But the section contains nothing to that effect, and, therefore, to uphold this addition to the tax would be to hold that it may be imposed by regulation, which, of course, the law does not permit. United States v. Calamaro, 354 U.S. 351, 359, 77 S.Ct. 1138, 1143, 1 L.Ed.2d 1394; Koshland v. Helvering, 298 U.S. 441, 446—447, 56 S.Ct. 767, 769 770, 80 L.Ed. 1268; Manhattan General Equipment Co. v. Commissioner, 297 U.S. 129, 134, 56 S.Ct. 397, 399, 80 L.Ed. 528.
The Commissioner points to the fact that both the Senate Report5 which accompanied the bill that became the Current Tax Payment Act of 1943,6 and the Conference Report7 relating to that bill, contained the statement which was later embodied in the regulation. He then argues that by reading § 294(d) (2) in connection with that statement in those reports it becomes evident that Congress intended by § 294(d)(2) to treat the failure to file a declaration as the equivalent of a declaration estimating no tax. He urges us to give effect to the congressional intention which he thinks is thus disclosed. However, these reports pertained to the forerunner of the section with which we are now confronted, and not to that section itself. Bearing in mind that we are here concerned with an attempt to justify the imposition of a second penalty for the same omission for which Congress has specifically provided a separate and very substantial penalty, we cannot say that the legislative history of the initial enactment is so persuasive as to overcome the language of § 294(d)(2) which seems clearly to contemplate the filing of an estimate before there can be an underestimate.
The Commissioner next argues that the fact that Congress, with knowledge of the regulation, several times amended the 1939 Code but left § 294(d)(2) unchanged, shows that Congress approved the regulation, and that we should accordingly hold it to be valid. This argument is not persuasive, for it must be presumed that Congress also knew that the courts, except the Tax Court, had almost uniformly held that § 294(d)(2) does not authorize an addition to the tax in a case where no declaration has been filed, and that the regulation is invalid.8 But the point is immaterial, for Congress could not add to or expand this statute by impliedly approving the regulation.
English courts would decide the case as it is being decided here. They would do so because English courts do not recognize the relevance of legislative explanations of the meaning of a statute made in the course of its enactment. If Parliament desires to put a gloss on the meaning of ordinary language, it must incorporate it in the text of legislation. See Plucknett, A Concise History of the Common Law (5th ed.), 330—336; Amos, The Interpretation of Statutes, 5 Camb.L.J. 163; Davies, The Interpretation of Statutes, 35 Col.L.Rev. 519; Lord Haldane in Viscountiss Rhondda's Claim, (1922) 2 A.C. 339, 383—384. Quite otherwise has been the process of statutory construction practiced by this Court over the decades in scores and scores of cases. Congress can be the glossator of the words it legislatively uses either by writing its desired meaning, however odd, into the taxt of its enactment, or by a contemporaneously authoritative explanation accompanying a statute. The most authoritative form of such explanation is a congressional report defining the scope and meaning of proposed legislation. The most authoritative report is a Conference Report acted upon by both Houses and therefore unequivocally representing the will of both Houses as the joint legislative body.
The revision of the section eight months later by the Revenue Act of 1943, c. 63, 58 Stat. 21, did not affect its substance, and this provision, therefore, continued to carry the original gloss. While the Court adverts to this congressional definition, it disregards its controlling significance.*
From the beginning of litigation involving the question here presented, a large majority of the published opinions of the District Courts have held that § 294(d)(2) does not authorize the treatment of a taxpayer's failure to file any declaration at all as the equivalent of a declaration estimating his tax to be zero, and that the regulation attempts to amend and extend the statute and is therefore invalid. See, e.g., United States v. Ridley, D.C., 120 F.Supp. 530, 538; United States v. Ridley, D.C., 127 F.Supp. 3, 11; Owen v. United States, D.C., 134 F.Supp. 31, 39, modified on another point sub nom. Knop v. United States, 8 Cir., 234 F.2d 760; Powell v. Granquist, D.C., 146 F.Supp. 308, 312, affirmed 9 Cir., 252 F.2d 56; Hodgkinson v. United States, 57—1 U.S.T.C. 9294; Jones v. Wood, D.C., 151 F.Supp. 678; Glass v. Dunn, 56—2 U.S.T.C. 9840; Stenzel v. United States, D.C., 150 F.Supp. 364; Todd v. United States, 57—2 U.S.T.C. 9768; Erwin v. Granquist, 57—2 U.S.T.C. 9732, affirmed Erwin v. Cranquist, 9 Cir., 253 F.2d 26; Barnwell v. United States, D.C., 164 F.Supp. 430. Three District Court opinions have held the other way, Palmisano v. United States, 158 F.Supp. 98; Farrow v. United States, 150 F.Supp. 581; and Peterson v. United States, 141 F.Supp. 382; and the Tax Court has consistently so held. See, e.g., Buckley v. Commissioner, 29 T.C. 455; Garsaud v. Commissioner, 28 T.C. 1086, 1090.