Court Opinion

ID: 9488580
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:49:13.937228+00
Date Added: 2024-06-11T17:52:58.090632
License: Public Domain

LEVAL, Circuit Judge,
dissenting:
The statutes in question penalize taxpayers for failure to file returns in a timely manner due to “wilful neglect,” 26 U.S.C. § 6651(a)(1), or “negligence,” 26 U.S.C. § 6653(a). The question we face on this appeal is whose neglect or negligence causes the inflicting of statutory penalties on the taxpayer. To my mind, the natural inference suggested by this language is that it refers to the neglect or negligence of the taxpayer.
*33A rule calling for the imposition of penalties by reason of misconduct would seem, giving words their most likely significance, to intend to impose the penalties on the person who committed the misconduct. To the extent that a statutory formulation visits penalties on a “taxpayer” by reason of misconduct, its reference to the misconduct justifying punishment seems most reasonably to refer to the misconduct of the taxpayer who will bear the punishment. For prudential reasons and in the application of conventional notions of derivative responsibility, the law extends a taxpayer’s responsibility to include, under appropriate circumstances, the misconduct of persons chosen by the taxpayer to act on the taxpayer’s behalf. See United States v. Boyle, 469 U.S. 241, 249-50, 105 S.Ct. 687, 691-92, 88 L.Ed.2d 622 (1985). I can see little reason, however, to construe this language as intending to impose penalties on the taxpayer by reason, of the misconduct of persons who are neither the taxpayer, nor the taxpayer’s chosen representatives.
My colleagues argue that Congress’s “lack of specificity [as to whose negligence will cause imposition of penalties on the taxpayers] suggests that, when a person other than the taxpayer has the legal obligation to file the return, Congress did not intend the focus to be solely on [the taxpayer] ...; had Congress so intended, it would have been a simple enough matter to insert ‘by the taxpayer’ after ‘neglect’ in § 6651 and after ‘negligence’ in § 6653.” Supra, at 31. In the absence of such a restriction, the majority argues that the “most reasonable” reading of these statutes imposes penalties on the taxpayer by reason of the neglect of any person with a duty to file on a taxpayer’s behalf, regardless of whether the taxpayer chose such person to act for her, regardless of whether she exercised any control over the person, and regardless of whether she realized any benefit from such person’s failure to file.
This argument proves too much. If inferences are to be drawn from congressional silence, why stop there? As Congress failed to specify any restriction on whose negligence might cause penalties for the taxpayer, it could be no less sensibly argued that Congress intended to impose penalties on the taxpayer when anyone’s neglect results in the taxpayer’s failure to file. The formulation of the majority’s argument could equally suggest an inference, based on this lack of specificity, that “Congress did not intend the focus to be solely on” the person having the legal obligation to file; “had Congress so intended, it would have been a simple enough matter to insert” that limitation. Supra, at 31. Courts have for good reason not so interpreted the statute. Where, for example, failure to file results from the neglect of the postal service, neither courts nor the I.R.S. have construed the statute, to impose penalties on the taxpayer. See Ferguson v. Comm’r of Internal Revenue, 14 T.C. 846, 850, 1950 WL, 190 (1950) (construing parallel tax code provision); United States v. Boyle, 469 U.S. 241, 243 n. 1, 105 S.Ct, 687, 689 n. 1, 83 L.Ed.2d 622 (1985) (describing I.R.S. interpretation). I cannot read Congress’s silence to communicate the message the majority finds in it.
The majority’s opinion also stands in opposition to the Supreme Court’s suggestion in Boyle that an incompetent “might well” not be subject to penalties for a filing default caused by the negligence of an attorney or accountant since this would violate “[t]he principle underlying the IRS regulations and practices — that a taxpayer should not be penalized for circumstances beyond his control.” Boyle, 469 U.S. at 248 n. 6, 105 S.Ct. at 692 n. 6; see also id. at 253, 105 S.Ct. at 693-94 (Brennan, J., concurring) (arguing that incompetent taxpayers should not be penalized under § 6651 for failure to exercise “ordinary business care and prudence”).
The question before us involves an infant who has no legal competence. I see no reason why such an infant (or incompetent) should suffer penalties premised on the negligence of a parent or legal guardian who fails to file the tax returns that were due.
The government argues that the imposition of penalties on child taxpayers under those statutes is necessary to induce the parents to exercise care to file on their chil*34dren’s behalf.1 This assumes that parents act in pursuit of their children’s best interests, and that it is the child who benefítted from the parents’ failure to perform the child’s taxpaying obligation. If this were the norm of human behavior, the government’s argument might make practical sense. Fear of the infliction of penalties on the child might impel parents to perform the child’s taxpaying obligations.
Although, without doubt, some parents are so motivated, there are many who exploit their children. In some cases, the failure of the parents to file the child’s tax return is because the parents are misappropriating the child’s income2 and have no desire to share the fruits of the child’s labor with the Treasury. A parent’s failure to pay taxes may not have enriched the child, but rather the parent, who has wrongfully taken the child’s money. For the child then to be again punished by the I.R.S. for the parent’s failure to fulfill the child’s tax obligations would be grossly inequitable.
No doubt Congress has the power to impose such a penalty. But, as the majority recognizes, the provisions of § 6651 and § 6653 “lack ... specificity.” Neither statute “specifies whose reasonable care or whose lack of negligence will excuse the taxpayer from the prescribed penalties.” Supra, at 31. The Supreme Court has repeatedly stated that ambiguities in the penalty provisions of tax statutes are to be strictly construed against the government. See Commissioner of Internal Revenue v. Acker, 361 U.S. 87, 91, 80 S.Ct. 144, 147, 4 L.Ed.2d 127 (1959) (“[O]ne is not to be subjected to a penalty unless the words of the statute plainly impose it....”) (internal quotation marks omitted); Ivan Allen Co. v. United States, 422 U.S. 617, 626, 95 S.Ct. 2501, 2506, 45 L.Ed.2d 435 (1975) (strict construction of penalty aimed at taxable income accumulated in corporate entities); see also Haberern v. Kaupp Vascular Surgeons Ltd., 24 F.3d 1491, 1505 (3d Cir.1994) (strictly construing penalty provisions of ERISA), cert. denied, - U.S. —, 115 S.Ct. 1099, 130 L.Ed.2d 1067 (1995); Bradley v. United States, 817 F.2d 1400, 1402-03 (9th Cir.1987). The majority has done exactly the opposite, construing an ambiguous tax penalty provision against the interests of the taxpayer to hold an incompetent infant responsible for errors that she did not commit.
I would expect that so illogical and potentially unfair a result would need to be clearly required by the Act of Congress. In my reading of this statute, there is no such clear statement and therefore no such penalty.
I respectfully dissent.

. If it is true, as the government's brief suggests, that under present law, the I.R.S. can pursue the parents for the penalty, this contradicts the government's argument. If the present law does not permit such recourse, the I.R.S. is free to seek legislation imposing penalties on the person charged with the duty to file the return.

. Indeed, at common law parents are entitled to the fruits of their children’s labors, and may use these funds for any purpose whatsoever so long as the children are properly maintained. See In re Laponzina, 116 N.Y.S.2d 750, 751 (N.Y.Surrog.Ct.1952) (parent entitled to child's earnings despite fact that "father exploited the infant” by using child's money to purchase car for father's personal use); Cole v. Jaeger, 80 N.Y.S.2d 92, 93 (N.Y.Sup.Ct.1947), aff'd, 273 A.D. 911, 78 N.Y.S.2d 381 (1948), leave to appeal and reargue denied, 273 A.D. 1008, 79 N.Y.S.2d 519 (1948).