Legal Document

479 U.S. 442 107 S.Ct. 782 93 L.Ed.2d 800 JERSEY SHORE STATE BANK, Petitioner,v.UNITED STATES. No. 85-1736. Argued Dec. 8, 1986. Decided Jan. 20, 1987. Syllabus Section 3505 of the Internal Revenue Code 1954 (Code) provides that persons such as lenders, who are not employers but directly or indirectly pay employees' wages, will be personally liable for all a portion "a sum equal to" any Social Security and income taxes withheld from wages paid to Government required by Subtitle C Code. § 6303(a) requires Government, within 60 days making an assessment unpaid taxes, notify "each person tax" amount make demand payment. Without first giving notice, brought suit against petitioner in Federal District Court seeking determination it was under amounts reflecting employees third-party employer. The granted summary judgment petitioner, holding notice required. Appeals reversed. Held: does require provide payment lender before bringing civil collect sums which is 3505. Pp. 446-449. (a) 6303(a)'s description recipient "liable clearly include lender, part taxes. P. 446. (b) Compliance with requirements "stat[e] amount" assessed "deman[d] thereof" would frequently have little meaning lenders cases, since stated demanded (1) could employer's share liable; (2) lender's liability only if provided payroll financing throughout period covered assessment; (3) rarely accurate 3505(b), limits exposure 25% funds loaned 446-447. (c) It fundamentally unfair delinquent employers, subject collection procedures soon after employment assessed, far greater need than upon whom can imposed suit. 447-448. (d) A unfairly prejudiced lack even if, contended timely 6501(a) trigger additional 6-year limitation 6502(a)(1) since, 3505's legislative history suggests, Congress envisioned system take their potential into consideration including withholding loans taking adequate security, without prudent may alerted its at time engages "net financing," e.g., providing employer 448-449. 781 F.2d 974 (CA 3 1986), affirmed. REHNQUIST, C.J., delivered opinion unanimous Court. Martin A. Flayhart, Jersey Shore, Pa., petitioner. Alan I. Horowitz, Washington, D.C., respondent. Chief Justice REHNQUIST 1 1954, 26 U.S.C. 3101 et seq. (Code), imposes number among tax employee's tax. divides burden between employee, on employee alone. has responsibility, however, both paying If fails over Within employer, required, Code, In some instances, other wages. Government. This case presents question whether We hold not. 2 United States present action Shore State Bank Middle Pennsylvania, Pennmount Industries. claimed during fourth quarter 1977 through 1980, thereby 3505(a) full period.1 alternative, complaint alleged that, same period, supplied "with actual knowledge" "did intend able desposits [sic ] . deducted withheld" App. Pet. Cert. 40a-41a. Based this latter allegation, asserted 3505(b) 25 percent Pennmount.2 favor 6303(a)3 send 628 F.Supp. 15 (MD Pa.1985). Because conceded had assessments pursuant 6303(a), court concluded barred. Third Circuit (1986).4 certiorari resolve intercircuit conflict issue decided Appeals.5 476 1157, 106 2273, 90 716 (1986). now affirm. 4 tax." According phrase describes relationship clear maintains. declare Instead, section taxes." §§ 3505(a), (b). 5 Other portions text further demonstrate connection shall give "to each tax," also "stating "demanding thereof." 6303(a). Notice complying these two lender. place, liable. See 3505; H.R.Rep. 1884, 89th Cong., 2d Sess., 21 (1966) (a "is taxes"); S.Rep. 1708, 23 (1966), U.S.Code Cong. & Admin.News 1966, pp. 3722, 3744 (same). Even where reflected assessment. Moreover, chances slim Accordingly, sent likely different find improbable intended result. Reading sections together, we agree most logically read apply seeks 6 arguing contrary, urges notice. maintains because similarly situated procedural applicable must accorded lenders. But assuming meaningful information, unpersuaded contention. Under mechanisms established very positions. While Government's see, 6321, 6322, 6331, 6335, makes forcibly filing 66 (where voluntarily satisfy 3505, "the appropriate proceeding"). An therefore procedures. 7 reject Shore's related contention effect statute limitations suits. general rule set forth 6501(a), years return filed no proceeding begun expiration period." Nevertheless, proper been made, generally "may collected levy assessment." 6502(a)(1). reading provisions, enjoys collecting three corresponding filed. submits benefit longer when requiring 8 Assuming, deciding, provisions correct, convinced they render our construction implausible. unless either "pays directly" supplies "actual unable intention doing so. deemed knowledge exercise due diligence, aware 6323(i)(1). engaged what practice whereby net Thus, steps protect itself possibility future Committee Reports concerning considered precautions third parties themselves: 9 "[S]ureties themselves losses attributable risk establishing premiums, security." (1966); 22 p. 3744.6 10 As recognized, passage suggests "Congress entered transaction exposing them statute." F.2d, 982. 11 For foregoing reasons, conclude did 12 Affirmed. provides, pertinent part: "[I]f surety, person, respect pays ., his own estate (together interest) withheld. ." "If specific purpose deposit However, limited so purpose." "Where otherwise title, Secretary shall, practicable, days, 6203, tax, stating demanding One judge dissented majority opinion, plain language addition Circuit, four Circuits addressed v. Messina Builders Contractors Co., 801 1029 (CA8 1986) (§ required), cert. pending, 86-1007; Hunter Engineers Constructors, Inc., 789 1436 (CA9 86-209; Merchants National Mobile, 772 1522 (CA11 1985) 85-1480; Associates Commercial Corp., 721 1094 (CA7 1983) required); see Friedman, 739 252 1984) (failure bar 3505). argues relate instead refers amendment Miller Act performance bonds public works. true appears Report subheadings referencing Act. Reports, immediately follows discussion sureties, prefaced "[i]n cases discussed above." context relates

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