Document: 54 L.Ed.2d 252 98 S.Ct. 315 434 U.S. 77 COMMISSIONER OF INTERNAL REVENUE, Petitioner,v.Robert J. KOWALSKI et ux. No. 76-1095. Argued Oct. 12, 1977. Decided Nov. 29, Syllabus New Jersey provides a cash meal allowance for its state police troopers, which is paid biweekly in advance an amount varying with the trooper's rank and included, although separately stated, his salary gross pay purposes of calculating pension benefits. Although troopers are required to remain on call their assigned patrol areas during midshift break, they not eat lunch at any particular location, indeed may home, nor spend food. No reduction made periods when trooper patrol. Respondents, wife, included only part allowances received by 1970 federal income tax return Commissioner assessed deficiency respect remainder. The respondents argued Tax Court that was within § 61(a) Internal Revenue Code 1954, defines as "all from whatever source derived, including (but limited to) . (1) Compensation services, fees, commissions, similar items." In alternative, were excludable 61 because 119 Code, creates exclusion "the value meals furnished [an employee] employer convenience employer, but if business premises employer," further "[in] determining whether provisions employment contract or State statute fixing terms shall be determinative intended compensation." rejected both contentions, Appeals reversed. Held: 1. absence specific exemption, meal-allowance payments under 61(a), since "undeniabl[y] accessions wealth, clearly realized, over [trooper has] complete dominion." v. Glenshaw Glass Co., 348 426, 431, 75 473, 476, 99 L.Ed. 483. P. 82-84. 2. subject 119, terms, covers reimbursements meals. 84. 3. exemption can claimed basis once-recognized doctrine benefits conferred employee "for employer" meaning it appears legislative history comprehensively modify prior law, expanding contracting previously provided, therefore must construed replacement designed end confusion had developed respecting convenience-of-the-employer determinant status Pp. 84-95. 3rd Cir., 544 F.2d 686, Stuart A. Smith, Washington, D. C., petitioner. Carl B. Cordes, York City, respondents. Mr. Justice BRENNAN delivered opinion Court. 1 This case presents question designated allowances, 26 U.S.C. 61(a),1 and, so, otherwise 119.2 2 * pertinent facts dispute. Respondent3 employed Division Police Department Law Public Safety Jersey. During 1970, year question, he base $8,739.38, additional $1,697.544 3 instituted officers July 1949. Prior time, all provided midshift5 kind various stations located throughout State. A unable official station could, however, restaurant obtain reimbursement. meal-station system proved unsatisfactory leave unguarded extended time. As result, closed cash-allowance system. Under this system, break. Otherwise, restricted way where area indeed, home area. Troopers also bring job near cars. 4 salary. money accounted State's accounting Funds never commingled between accounts. Because these characteristics concluded "meal represent 65 T.C. 44, 47 (1975). 5 Notwithstanding conclusion, disputed has many features inconsistent characterization simple reimbursement would have been taken station. For example, meals, account manner spent. With one exception relevant here,6 no because, headquarters building away active duty vacation, leave, sick leave. addition, described recruitment brochure item addition officer's negotiations troopers' union. Finally, varies rank7 6 On return, respondent reported $9,066 wages. That plus $326.45 represented respondent's Wage Statement (Form W—2).8 remaining allowance, $1,371.09, reported. audit, determined should deficiency. 7 Respondent sought review United States Court, arguing compensatory hence "income" that, could excluded 119. reviewed decision, six dissents,9 held such 119.10 44 Third Circuit, per curiam opinion, earlier decision Saunders Revenue, 215 768 (1954), program taxable, reversal. 686 (1976). We granted certiorari resolve conflict among Courts question.11 430 944, 97 1578, 51 791 (1977). reverse. II 8 starting point determination scope "gross income" cardinal principle Congress creating "to use full measure taxing power." Helvering Clifford, 309 331, 334, 60 554, 556, 84 788 (1940); accord, Midland Mutual Life Ins. 300 216, 223, 57 423, 425, 81 612 (1937); Douglas Willcuts, 296 1, 9, 56 59, 62, 80 (1935); Irwin Gavit, 268 161, 166, 45 475, 69 897 (1925). applying construction 22(a) 193912 stated "Congress applied limitations taxable receipts, restrictive labels nature [, intended] gains except those specifically exempted." 429-430, 483 (1955), citing Jacobson, 336 28, 49, 358, 369, 93 477 (1949), Stockholms Enskilda Bank, 293 84, 87-91, 55 50, 51-53, 79 211 (1934). simplified definition 1954 did intend thereby narrow concept. See supra, 432, n. 11; H.R.Rep. 1337, 83d Cong., 2d Sess., A18 (1954); S.Rep. 1622, 168 U.S.Code Cong. & Admin.News p. 4025.13 therefore, since, like involved [respondent 477. LoBue, 351 243, 247, 76 800, 803, 100 1142 (1956); Van Rosen Commissioner, 17 834, 838 (1951). 9 contends, covering troopers. Alternatively, argues notwithstanding found line lower-court cases administrative rulings recognize employer"—at least "compensatory"—are Code. responding we turn first Since hold does cover kind, then trace development several decades lodging, turning finally lodging survives enactment 1954. B 10 Section exclude him ." By mere oversight. explain greater length below, form enacted originated Senate Report accompanying bill very clear: "Section applies kind." 190 4825. Treas.Reg. 1.119-1(c)(2), CFR 1.119-1 Accordingly, C 11 tidy one. phrase "convenience appeared O.D. 265, Cum.Bull. 71 (1919), ruling exempting board seamen aboard ship. following year, T.D. 2992, (1920), issued added section Treas.Regs. 45, Art. 33, regulations effect.14 modified, 33 stated: 12 "Art. 33. other than cash. When living quarters camps employees ratable need compensation employee, person receives services rendered thereto quarters, constitutes tax. 13 While 2992 test general rule solely items 514, 90 "supper money."15 14 rationale 514 circumstances income. Subsequent equivocate noncompensatory character benefit inferred merely there evidence employer's function properly unless premises. focuses characterization.16 Two 1921, dealing respectively cannery workers17 hospital employees,18 emphasize necessity functioning business, emphasis authoritative interpretation Mim. 5023, 1940-1 14.19 15 Adding complexity, 6472, 1950—1 15, 1950. mimeograph states part: 16 "The 'convenience employer' simply determinable. It follows evident receipt represents rendered." Ibid. Mimeograph 6472 expressly modified previous suggested upon finding furnishing necessary allow perform duties properly.20 However, apparently affect which, noted above, based payment noncompensatory. Coexisting determinations Treasury, independent them, body law employee's statutory employer. 18 An early Jones States, Ct.Cl. 552 There Claims ruled neither Army officer nine months commutation remainder includable rest conclusion public tradition "compensation such" 213 Act 42 Stat. 237, proposition "public housing much military procurement implements warfare training troops." Ct.Cl., 569; see id., 565-568. Claims, argument ground "gain derived labor" Eisner Macomber, 189, 40 64 521 most himself instances Government convenient task procuring individual officer. 574-578. 19 judicial centered primarily two decided more decade apart, Benaglia 36 B.T.A. (1937), 834 (1951), court settled business-necessity excluding food income.21 Rosen's unanimous interest interpreting recodification predates three years. There, reading Jones, make consequences intent even though subsistence litigation regulation.22 refused follow holding theory civilian who expenses nondeductible funds "take, appropriate, expend," 838, substantially same "any whose permit live while performing employment." Id., 836; 839-840. clear last notions equity taxpayers evidentiary allowed duties, lodging. 20 years later, unreviewed Doran 21 374 (1953), returned employer's-characterization Rosen. Doran, taxpayer school. compensation. 24-hour call, reason normally sufficient justify exclusion,23 law. approach supra.24 Second Diamond Sturr, 221 264 indistinguishable view test, "having persisted through interpretations Treasury re-enactment Code," sole applied. 268. D Even assume 1939 pursuant just sketched, nonetheless inquire implied Cf. Winmill, 305 79, 83, 59 46, 83 52 (1938). inquiry: 120,25 now repealed,26 up $5 day. 22 enacting "end employer." 4042. House initially differed significance given explained Report, proposed "if [were] place [was] accept them condition 18; H.R. 8300, reference whatsoever concept, "designed disregard doctrine; 23 Senate, role play. After noting existence Court's reliance refuse apply states: 24 "Your committee believes provision ambiguous providing premises, employment, Your basic (and thus excludable) taxable). deciding fact indicate determinative. means institutions will taxed indicates 19; 4649. 25 technical appendix, elaborated: kind. Therefore, continue includible extent constitute 190-191; 27 conference, acquiesced Senate's version this, urges passed discard doctrine, endorsed shorn created Doran. negative implication, appendix class disagree. 28 unquestionably overrule 6472. Equally completely abandon wished do. hand, propose undisturbed evolved promulgation language 11927 quite plainly rejects reasoning behind payment.28 buttressed choice term art, describing conditions so choosing, obviously adopt except, course, overrules decisions controlling time employer"—and implication 514—and adopted exclusive theory. T.C., 838-840. 85-86, 19. define describe situations reverse courts create "[an] order duties." 190; 29 step restructuring restriction theretofore Thus draftsmen be—as [its] confusion." 30 replaces argument—that recognized payments—is without merit. If showing served suggests, widely extraordinary result presumptively obvious excluded. Moreover, suppose wanted payments. precedents cash—O.D. States—both heart undercut Report. rests read Eisner's into assumption squarely odds (1955).29 430-431, 475-476. petitioner reasonable cryptic statement appendix—"cash compensation"—was meant deductible 162(a)(2) Code30 affected 31 qualify express embodied still here pre-1954 Indeed, drastically changed (CA3 1954), relied Circuit below 82, present Saunders' analysis.31 case, avoid unwarranted larger demonstrated "properly suggestion record necessity. 32 unfair members cannot. arguments little force construing boundaries exclusions deductions administrable, arbitrary. already considered repeal 120 repealed after four years, "inequitable require incur expenditures regardless effect. Thus, certain officials placed favorable position tax-wise types expense. 775, 85th 1st (1957). Reversed. 34 BLACKMUN, whom Chief joins, dissenting. 35 More ago Eighth Morelan, 356 199 (1966), $3-per-day Minnesota highway patrolmen held, alternatively, income, ordinary meal-cost trade expense 162(a)(2). I sat Judge case. happy join Vogel's felt, do, correct grounds. Certainly, despite usual persistent opposition available, authority appellate level time.* cases, Magness 247 740 (CA5 1957), cert. denied, 355 931, 78 412, 414 (1958), Hyslope 131 distinguished. F.2d, 207. December 11, 1967, 5-3 vote Correll, 389 299, 88 445, 537, restricting overnight trips travel-expense deduction costs disapproved Morelan's alternative decision. am frank say Member Correll decided, joined dissent, U.S., 307, S.Ct., 449, fully agree Douglas' observation there, Justices Black Fortas—an me, unanswerable unanswered—that bow Government's convenience, conceding element arbitrariness, id, 303, 447, word "overnight" 162(a)(2), speaks geographical terms. 37 faced understandably press issue, confines defense §§ 38 quarrel constituted 61. my stance Morelan leads me disagree draws in-cash in-kind distinction. appeal persuasion speak refer "meals words consequence. sure. event, Jersey, wherever statewide. 39 makes passing comment, fairness, ironical difference treatment accords paramilitary structure military. distinction embarrassing here, forced find support it—support stretch find—only regulation. 1.61—2(b), 1.61-2(b) (1977), military, references 101(25) (1970 ed., Supp. V), Pub.L. 93-419, 1152, "regular compensation" "Federal advantage accruing aforementioned Federal tax." This, thin weak recognizing substantial denying counterpart. fear country over, handsomely begin with, understand today's And doubt opinion—if, layman expected wording—will convince situation purports it. "§ Gross defined.— "(a) General definition. "Except subtitle, items: "(1) Meals "There if— "In References "respondent" Robert Kowalski. Nancy Kowalski, respondent, party she filed joint her husband year. entitled $1,740 7, infra, reasons disclosed lesser amount. duty, generally barracks. barracks before shift Nor eaten duration some patrols, road. adjusted Troopers, noncommissioned year; lieutenants captains $1,776, majors $1,848, Superintendent $2,136. October began withhold amounts allowances. claim change division's withholding policy relevance seventh judge concurred majority dissented 162(a) Code; 30, "ordinary petitioner's 63. contention occasion consider attributable "away home" defined deducted travel expenses. 537 (1967). holding. Wilson 412 694 (CA1 1969) (troopers' taxable); Keeton, 383 429 (CA10 1967) (per ) nontaxable); (CA8 1966) (same); Barrett, 321 911 1963) 1957) taxable), (1958); 1954) nontaxable). Ghastin (1973) (1953) 53 amended, ch. 574. provided: GENERAL DEFINITION.—'Gross income' includes gains, profits, salaries, wages, personal service, profits whatever." (Emphasis added.) Reports state: "[Section 61] corresponds existing simplified, all-inclusive thereby. broad 22(a)." 4155. Substantially identical date 111, 29.22(a)-3 (1943); 118, 39.22(a)-3 (1953). " 'Supper money' voluntarily performs extra labor regular hours, being charged account, .." supra. 914, 85 (1921), another intention Indian Service Interior appropriation paid; otherwise, not. 66 (1919) (semble ("maintenance" Red Cross workers exceeds actual expenses). "Where, location work, engaged fishing canning sustenance not, computing net 814, 84-85 (1921). "Where immediate service demand twenty-four hours day hospital, employees. desired, elsewhere yet 915, 85, 85-86 "3. rule, satisfied Cum.Bull., 18. 1950-1 16. better accurate found, think, Arthur Benaglia, pointed out facts, supplied 'for convenience[,] comfort pleasure, him.' words, gain supply himself, nothing take, expend according own dictates, rather, ends dominated controlled, work supplying tools machinery work. wants needs secondary incidental 838. ship captain Transportation Corps. 834. capacity, Marine Personnel Regulations Corps Army. 837. His principal factual similarity 839-840 116 F.Supp. (NDNY 1953), rev'd, (CA2 1955) (value lodgings ); Romer 1228 (1957) (following governed Code); Dietz 1255 (1956) (holding apartment consideration janitorial services). "Sec. 120. STATUTORY SUBSISTENCE ALLOWANCE RECEIVED BY POLICE. Rule.—Gross include "(b) Limitations.— Amounts subsection (a) exceed "(2) applies, chapter excess allowable chapter." 68A 39. Technical Amendments 1958, 3, 72 1607. "[T]he do decide today whether, money" justified See, e. g., Department, Proposed Fringe Benefit Regulations, Fed.Reg. 41118, 41121 (1975) (example 8). sporadic "salaries, service" States. 563. assumed distinguishing narrowly levying characterized ibid. reason, contains remotely 213. 162. Trade general.—There incurred carrying including— .; Traveling (including expended lavish extravagant circumstances) pursuit Compare supra 80-81 Revenue. 1954); 1963); Hanson 298 391 1962).

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