Court Opinion

ID: 4483020
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:15:50.552142+00
Date Added: 2024-06-11T14:38:40.528235
License: Public Domain

Simpson, J., dissenting: In its decision today, the Court has adopted a mechanistic approach to the interpretation of the statute. Though the meaning of the statute is far from explicit, the Court has virtually ignored the legislative history and refused to adopt an interpretation tailored to carry put the purposes for the enactment of section 7502 and for making it applicable to tax returns. Furthermore, the Court has unnecessarily adopted an interpretation that applies the statute of limitations and deprives a party of its day in court. I cannot agree with such an approach to the construction of the statute. In relevant part, section 7502(a)(1) provides: (1) Date of DELIVERY. — If any return, claim, statement, or other document required to be filed * * * within a prescribed period or on or before a prescribed date under authority of any provision of the internal revenue laws is, after such period or such date, delivered by United States mail to the agency, officer, or office with which such return, claim, statement, or other document is required to be filed * * *, the date of the United States postmark stamped on the cover in which such return, claim, statement, or other document * * *, is mailed shall be deemed to be the date of delivery * * * Such provision does not state whether the postmark date is to be treated as the date of delivery only for purposes of determining whether a return, claim, statement, or other document has been filed within the prescribed period or on or before the prescribed date, or whether such rule is to be applied for all purposes under the internal revenue laws. It is that question which we must answer in this case. It is true, as the majority assumes, that as a general rule, when a term or phrase is defined for one purpose, it may be assumed that the term or phrase was intended to have the same meaning for all purposes. See Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87 (1934); Whirlpool Corp., 61 T.C. 182, 187 (1973). However, the majority fails to recognize that such principle is merely a general rule; the courts have repeatedly held that the meaning of a term or phrase must be ascertained in the light of the circumstances surrounding its enactment. For example: Helvering v. Morgan’s Inc., 293 U.S. 121, 128 (1934), held that the term “taxable year” had a more expansive meaning when used in section 206(b) of the Revenue Act of 1926 than when it was used in section 200(a) of the same Act. Helvering v. Stockholms Enskilda Bank, supra, held that the term “interest-bearing obligations,” for purposes of section 217 of the Revenue Act of 1926, had a broader meaning than when it was used in section 213(b)(4) of the same Act. Atlantic Cleaners & Dyers v. United States, 286 U.S. 427, 433 (1932), held that for purposes of section 3 of the Sherman Antitrust Act, the term “restraint of trade” had a more inclusive meaning than such term when used in section 1 of such Act. American Security & Trust Co. v. Commissioners of the District of Columbia, 224 U.S. 491, 494 (1912), held that an act of Congress relating to a local matter in the District of Columbia was not a “law of the United States” for purposes of conferring appellate jurisdiction on the United States Supreme Court under section 250 of the Judicial Code of March 3,1911, 36 Stat. 1087, ch. 231, even though such act of Congress might constitute a “law of the United States” within the meaning of the third clause of that section. In deciding on the scope of section 7502, the Court has refused to be guided by the circumstances which caused Congress to make it applicable to tax returns. Before section 7502 was made applicable to tax returns in 1966, it had long been settled that a return was “filed” so as to start the running of the statute of limitations only when it was actually received by the IRS. Phinney v. Bank of the Southwest National Assn., Houston, 335 F. 2d 266 (5th Cir. 1964); W. H. Hill Co. v. Commissioner, 64 F. 2d 506 (6th Cir. 1933), affg. 22 B.T.A. 1351 (1931), cert. denied 290 U.S. 691 (1933); O’Bryan Brothers, 42 B.T.A. 18 (1940), affd. 127 F. 2d 645 (6th Cir. 1942), cert. denied 317 U.S. 647 (1942); see Automobile Club of Michigan v. Commissioner, 353 U.S. 180, 187 (1957); Lucia v. United States, 474 F. 2d 565, 570 (5th Cir. 1973); United States v. Thompson, 262 F. Supp. 340, 342 (S.D. Tex. 1966); cf. United States v. Lombardo, 241 U.S. 73, 76 (1916); Real Estate Corp. v. Commissioner, 301 F. 2d 423, 428-429 (10th Cir. 1962), affg. 35 T.C. 610 (1961), cert. denied 371 U.S. 822 (1962); Edward Barron Estate Co. v. Commissioner, 93 F. 2d 751, 753 (9th Cir. 1937), affg. 34 B.T.A. 1256 (1936); Poynor v. Commissioner, 81 F. 2d 521, 522 (5th Cir. 1936), affg. a Memorandum Opinion of this Court; Lewis-Hall Iron Works v. Blair, 23 F. 2d 972, 974 (D.C. Cir. 1928), cert. denied 277 U.S. 592 (1928); Frank A. Gray, 16 T.C. 262, 266 (1951). As a result of such interpretation, the Commissioner had a full 3-year period in which to examine a taxpayer’s return and carefully prepare a notice of deficiency, if necessary. The question thus arises as to whether, when section 7502 was made applicable to tax returns, the change was also meant to affect the time when the statute of limitations would begin to run. After its amendment in 1966, section 7502(a) was made applicable to returns “required to be filed * * * within a prescribed period or on or before a prescribed date under authority of any provision of the internal revenue laws.” Since the provision only applies when a return or other document is required to be filed “within a prescribed period or on or before a prescribed date,” it is clear from the words of the statute that Congress had in mind those taxpayers who were required to meet such filing requirements and that the provision was designed to provide relief for them. This view is reinforced by the heading given to section 7502, “Timely Mailing Treated as Timely Filing * * *.” Although the heading of a provision is not a part of it, the Supreme Court has stated that it may be examined to ascertain the intent of Congress and to resolve any ambiguity in the statute. Federal Trade Commission v. Mandel Brothers, 359 U.S. 385 (1959); Maguire v. Commissioner, 313 U.S. 1 (1941); White v. United States, 191 U.S. 545 (1903); Coosaw Mining Co. v. South Carolina, 144 U.S. 550 (1892); Church of the Holy Trinity v. United States, 143 U.S. 457 (1892). The title of the section also indicates that the time of mailing is taken into consideration only for the purpose of determining whether the filing is timely — it does not indicate that the time of mailing is to be treated as the time of filing for all purposes. The legislative history of the 1966 amendment furnishes additional support for such view. The amendment of section 7502 to include tax returns within the timely-mailing-timely-filing rule was made by section 5 of the Act of November 2, 1966, Pub. L. 89-713, 80 Stat. 1110. Section 1(a) of that Act authorized the Secretary of the Treasury to require the filing of tax returns at regional service centers rather than at the district offices. Congress was concerned that such a change in the place of filing tax returns would “technically require many taxpayers (for example, those in Hawaii) to mail their returns * * * at a much earlier date in order to insure delivery by the due date.” (Emphasis supplied.) S. Rept. No. 1625, 89th Cong., 2d Sess. (1966), 1966-2 C.B. 803, 809. In explaining the provision to the House, Mr. Mills said: Technically, under present law taxpayers could be required — if they hope to avoid penalties for late filing — to mail their returns and payments at a sufficiently earlier date before the filing date so that they arrived at the tax offices by the due date. * * * This bill gives specific sanction to * * * the practice * * * [of the IRS in accepting returns as timely if the postmark so indicates). [112 Cong. Rec. 21786 (1966); emphasis supplied.) It is thus clear that section 7502 was made applicable to tax returns to prevent the imposition of late filing penalties which might have resulted because of the extra time required for returns to reach the more remote regional service centers rather than the closer district offices. Every statement in the legislative history manifests that Congress’ only concern was to assist taxpayers in meeting the time requirements, there is not one iota of evidence indicating that Congress considered that the amendment would affect the running of the statute of limitations and shorten the period of time given to the Commissioner for the examination of returns. Nor is there any evidence that Congress contemplated or recognized that the amendment would have general applicability. Furthermore, it is clear that the salutary purpose intended by Congress can be accomplished without affecting the running of the statute of limitations on assessments. Section 7502 is remedial legislation with an evident limited purpose. With respect to the construction of such legislation, the Supreme Court has instructed: “Nor can the doctrine that remedial legislation is entitled to liberal construction * * * be stretched to expand the reach of a statute of such evident limited purpose as this one.” United States v. Zacks, 375 U.S. 59, 68 (1963). The legislative history of the statute of limitations strongly suggests that Congress wanted the Commissioner to have a full 3-year period in which to assess a deficiency. Section 275(a) of the Revenue Act of 1934, ch. 277,48 Stat. 745, increased the general limitation period from 2 to 3 years. The House committee report stated the following reasons for the increase in the statutory period from 2 years: Experience has shown that this period is too short in a substantial number of large cases, resulting oftentimes in hastily prepared determinations with the result that additional burdens are thrown upon taxpayers in getting ill-advised assessments removed. In other cases, revenue is lost by reason of the fact that sufficient time is not allowed for disclosure of all the facts. * * * [H. Rept. No. 704, 73d Cong., 2d Sess. (1934), 1939-1 (Part 2) C.B. 554,580.] Moreover, the same 3-year period is applicable from the date the return is filed, whether or not the filing is timely for other provisions of the Code. Thus, section 6501(a) provides in relevant part: (a) GENERAL Rule. — Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed)* * * [Emphasissupplied.] Yet, by its decision today, the Court has reduced the period allowed the Commissioner for examining returns and making assessments. Ordinarily, the reduction in such period will be only slight — the several days ordinarily required by the U.S. Post Office to deliver a tax return, but if a return is misplaced by the post office, the reduction in such period will be substantial. What is more, the majority’s interpretation of section 7502 will have many other consequences. For example, as a result of this decision, the time within which a taxpayer must file a claim for. refund under section 6511(a) will be shortened. Section 6511(a) provides that a claim for refund must be filed within 3 years from the time the return was filed, or 2 years from the time the tax was paid, whichever period expires the later. Traditionally, it was thought that the 3-year period commenced to run from the time the IRS actually received the taxpayer’s return. However, under the majority’s interpretation, the return will be “filed” as of the date of the postmark, and the taxpayer’s period for filing his claim for a refund will be reduced accordingly. In like manner, the period allowed the Commissioner for the consideration of a claim for refund will be shortened. Section 6532(a) provides that a taxpayer may not institute a suit for refund before the expiration of 6 months from the date of filing of his claim for refund with the IRS, unless the Commissioner denies the claim before the expiration of such period. Heretofore, it has been assumed that the Commissioner has had a full 6-month period in which to decide whether to honor the claim for refund. There is absolutely no indication in the legislative history of the amendment making section 7502 applicable to tax returns that Congress considered or recognized that its change would have any such widespread results. The majority’s treatment of Brown v. United States, 391 F. 2d 653 (Ct. Cl. 1968), is baffling. Brown dealt with section 7503, which provides that where the last day for performing any act falls on a Saturday, Sunday, or legal holiday, the performance of such act shall be considered timely if it is performed on the next succeeding day which is not a Saturday, Sunday, or legal holiday. In Brown, for purposes of a summary judgment motion, it was assumed that the IRS actually received the return on Monday, April 16,1956, although it was due the day before, Sunday, April 15,1956. The court agreed that the return was “timely,” but the issue was whether the statute of limitations commenced from the actual date of receipt or from April 15, 1956. The taxpayer argued that the statute of limitations commenced from April 15, 1956, on the ground that the return could only be timely because section 7503 treated the return as though it were filed on April 15, 1956. The taxpayer argued that the return ought to be considered “filed” for all purposes on April 15, 1956. The court rejected this argument and stated at 391 F.2d 655-656: We do not agree with the plaintiffs’ position that the legal effect of section 7503 * * * is to treat their return as if it was filed on Sunday so that the limitation period on assessment of a deficiency begins to run from Sunday, April 15. Section 7503 merely considers the performance of such act on the next succeeding business day as being timely and does not operate to negate the effect of the actual date of performance for other purposes, i.e., the actual date of filing for commencing the limitation period on assessments. By its terms, section 7503 does not purport to diminish the statute of limitations for making assessments. Thus, the fact is that in Brown, the taxpayer took the position that the enactment of section 7503 changed the time of filing for purposes of the beginning of the running of the statute of limitations — a position similar to that adopted by the petitioner in this case, and the Court of Claims unequivocally rejected such position. Finally, this case arose because the Commissioner asserted that the petitioner owed a very large tax deficiency. By its holding today, the Court has decided that the statute of limitations has run on the assessment of such deficiency and that the merits of the controversy need not be adjudicated. It has often been held that statutes of limitations should be construed narrowly and that courts should be reluctant to interpret them in such a manner as to restrict the activities of the United States. See Automobile Club of Michigan v. Commissioner, 353 U.S. 180, 187 (1957); Lucas v. Pilliod Lumber Co., 281 U.S. 245, 249 (1930); E. I. DuPont de Nemours & Co. v. Davis, 264 U.S. 456, 462 (1924); Lucia v. United States, 474 F. 2d 565, 570 (5th Cir. 1973); McDonald v. United States, 315 F. 2d 796, 801 (6th Cir. 1963); Pacific Coast Steel Co. v. McLaughlin, 61 F. 2d 73, 75 (9th Cir. 1932), affd. 288 U.S. 426 (1933); Loewer Realty Co. v. Anderson, 31 F. 2d 268, 269 (2d Cir. 1929), cert. denied 280 U.S. 558 (1929); J. Friedman & Co., 16 B.T.A. 1119, 1122 (1929); August Belmont Hotel Co., 15 B.T.A. 1215, 1217 (1929). For my part, I hate to see the Court unnecessarily construe a statute so as to deprive any party of his day in court. Samuel J. King, 51 T.C. 851 (1969); Associates Investment Co., 59 T.C. 441 (1972). When one considers these principles and considers that the legislative history surrounding the enactment of section 7502 contains absolutely no indication that the change was intended to affect the running of the statute of limitations, I conclude that section 7502 should not be applicable in determining when the statute of limitations commences to run. Drennen and Irwin, JJ., agree with this dissent.