Court Opinion

ID: 9660271
Source: CourtListenerOpinion
Date Created: 2023-08-23 22:09:12.221105+00
Date Added: 2024-06-11T18:14:17.271182
License: Public Domain

SEILER, Justice,
dissenting.
I respectfully dissent.
*147The principal opinion relies on the general rule that statutes relating to taxation are to be strictly construed against the taxing authority and in favor of the taxpayer.
But we must also bear in mind that “[t]hat rule does not require the language of a taxing statute be ignored and not given a meaning which reasonably accords with ‘the apparent intention of the Legislature as expressed in the statute, with a view to promoting the apparent object of the legislative enactment.’ ” State ex rel. Thompson-Stearns-Roger v. Schaffner, 489 S.W.2d 207, 215 (Mo.1973).
What, then, was the apparent intention of the legislature with respect to payment of withholding taxes by employers, considered in the light of promoting the apparent object of the enactment of statutes making up the chapter on income tax, Chapter 143?1
First, it is evident that employers who are responsible for the withholding taxes collected from their employees are dealt with differently than other taxpayers such as individuals, corporations, trusts and estates, and properly so, because the money which a withholding employer is to pay over to the state is not his money, it is money he collected from his employees. It is held out of their wages. The employer has no investment or rights in it. He is merely a conduit to get it into the hands of the state, where it legally belongs.
By § 143.241, withholding taxes are declared to be a special fund held in trust by the employer for the director of revenue. Congress does the same with federal withholding. See I.R.C. Section 7501, which provides that withheld taxes are to be held in a special fund in trust for the United States.
There are further differences found in Chapter 143 as to withholding employers. Unlike individuals, who must pay only quarterly on their estimates, an employer must keep much more current as to withholding taxes. By § 143.221.2, when the aggregate amount withheld exceeds $100 for either the first or second month of the quarter, the employer must pay it over by the fifteenth day of the following month. He cannot retain it until the end of the quarter. There is too much potential interest income which would be lost to the state if employers were permitted to accumulate and hold large amounts of withholding tax. In the case before us, for example, the three day delay on the $176,660 means a loss to the state of the use of the money for that period of time. One such instance is not too significant money wise, but multiply this by however many late payments there are from the thousands of employers in Missouri required to pay over withholding taxes and it assumes significant proportions, especially at today’s high interest rates.
It becomes apparent, therefore, that it was the intent of the legislature that withholding taxes are in a special category and are to be paid on time. Most of the state’s income taxes come from withholding. The legislature could therefore be expected to insist that they be paid on time. The legislature intended that a penalty be assessed against employers who failed to pay withholding taxes on time.
Second, while it is true, as the principal opinion points out, that there are several sections in the income tax chapter dealing with employers and their various responsibilities, when it comes to the matter of filing returns on time or paying taxes on time, it is further evident that § 143.751.3 is the only portion of the chapter applying solely to employers and withholding.2 Sub*148section 3 refers to failure on the part of any employer “to make a return and pay a tax withheld by him at the time required.” When an employer fails to do both, as in the case here, subsection 3 prescribes a penalty of “the addition to tax provided in subsection 1.”
The principal opinion holds that this reference to subsection 1, where the amount of penalty is set at 5%, also includes the condition that the deficiency must be due to “negligence or intentional disregard of the rules and regulations.” If so, there was no need for the legislature to enact subsection 3 at all, because if the penalty is to be 5% and if it is to be excused unless due to negligence or intentional disregard, etc., this is covered by subsection 1 standing alone. The principal opinion thus “harmonizes” § 143.751.3 by rendering it superfluous.
Certainly the legislature had no such intention. The answer is that subsection 3 deals with a special class of taxpayers-i.e., employers who are to pay over withholding taxes. The language “addition to tax provided in subsection 1” found in subsection 3 is for the purpose of establishing the size of penalty the employer shall pay. The only “addition” to tax mentioned in subsection 1 is 5%. No statutory rule of construction requires incorporation of the provisions of subsection 1 excusing liability for the penalty in order to satisfy the reference to subsection 1 as to the amount of the penalty. Subsection 3 itself states when the penalty is to be paid. It is when the employer “shall fail to ... pay ... at the time required...” No excuses are provided.
By incorporating the excuse clause of subsection 1 into the provisions of subsection 3, the principal opinion nullifies the legislature’s intent that withholding employers must pay withholding taxes on time and are not to have available to them the excuses for late payment available to other taxpayers who are paying their taxes with their own money.3.
If the legislature intended by subsection 3 to give employers who are late in paying withholding tax the same treatment as it intended for individuals and others who are late in paying their own income taxes with their own money, it would have added such words of excuse at the beginning of the opening sentence of subsection 3, where it does restrict the availability of the penalty for employers who failed to file and pay on time to those without intent to evade or defeat the tax.4 Had it also intended to excuse those who failed without negligence or intentional disregard of the rules and regulations, it could easily have so stated. It did not.
As earlier pointed out, the withholding employer is not dealing with his own money. It is money withheld from wages of his employees and the legislature decided in its wisdom to hold such employers to a stricter compliance-either pay over the money collected from employees on time or pay a penalty. This was accomplished by enacting subsection 3 to deal specifically with employers and withholding taxes.
Third, the principal opinion does not permit Armco Steel to retain the $887.74 which it claims as compensation deduction (an amount the employer is entitled to retain to cover the expense of withholding) under § 143.261. The reason is that the withholding tax was not remitted on or before date it was due. Section 143.261, just as is true of § 143.751.3, does not mention lack of negligence as an excuse. Both call flatly for payment on time. Yet the principal opinion holds Armco strictly to the due date so far as the penalty of denying compensation deduction is concerned, but excuses Armco as to the 5% penalty, despite the words of subsection 3 which prescribe the penalty whenever the employer fails “to *149make a return and pay a tax withheld by him at the time required.” Taking away the compensation deduction, as the principal opinion does, for failure to remit on time, despite the fact it was not due to Armco’s negligence, is no different in principle from assessing a 5% penalty for failing to remit on time, which the principal opinion inconsistently does not do.
In conclusion, the principal opinion has the effect of judicially amending the statute by permitting withholding employers to pay withholding, taxes not by the prescribed date, but “on or about” the prescribed date. It permits the “too busy” corporation to trifle and temporize with the due date for paying over withholding tax money which belongs to someone else. It slows up and makes uncertain the collection of the important amounts of state revenue. It interferes with the state’s cash flow. It removes the incentive to be prompt in payment of withholding taxes. And it does this with what the statute declares to be trust money, none of which belongs to the employer.
I do not believe the legislature intended to treat employers who are late in remitting taxes withheld from the wages of their employees, the same as individuals or corporations who are late in paying their own income taxes with their own money. The legislature intended the former to pay on time or suffer the penalty; the latter were to be given the leeway of reasonable excuse where late payment was not due to negligence or intentional disregard. The principal opinion, however, eliminates this distinction, contrary to the statute and to the financial disadvantage of the state.

. Unless otherwise indicated, statutory citations are to RSMo 1978.

. The pertinent portion of section 143.751.3 reads as follows:
“3. If any employer, without intent to evade or defeat any tax imposed by sections 143.011 to 143.996 or the payment thereof, shall fail to make a return and pay a tax withheld by him at the time required by or under the provisions of sections 143.011 to 143.996, such employer shall be liable for such taxes and shall pay the same together with interest thereon and the addition to tax provided in subsection 1 of this section, and such interest and addition to tax shall not be *148charged to or collected from the employee by the employer.”

. The federal treasury regulations make a similar differentiation between the ordinary taxpayer and a withholding employer as to failure to pay on time. Treas.Reg. Sec. 301.6651-l(c)(2) (1980).

. Those who fail to file and pay with such intent are dealt with under subsections 4 and 5 of § 143.751.