Court Opinion

ID: 4477801
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:12:43.824118+00
Date Added: 2024-06-11T14:53:55.204140
License: Public Domain

Mukdook, /., dissenting: The Commissioner determined that the zero declarations were insufficient to avoid the imposition of additions to the tax under section 294 (d) (1) (A). The petitioners had the burden of proving error in that determination. The findings above show nothing on the subject, but the stipulation (adopted as findings) is that each of the four men “forwarded declarations of estimated tax for the year 1948 to the collector of internal revenue in March, 1948 * * * for estimated income of zero for said period.” Those documents were not accompanied by the payment of any estimated tax for 1948. Section 58 (a) (2), as applicable to these petitioners for the year 1948, required each to “make a declaration of his estimated tax for the taxable year if — * * * (2) his gross income from sources other than wages (as defined in section 1621) can reasonably be expected to exceed $100 for the taxable year and his gross income to be $600 or more.” Section 58 (a) also required later filing of the declaration of estimated tax up to January 15,1949, if the requirements for filing were first met later in the year. No facts are found to show why the petitioners filed the zero estimates “in March, 1948.” No declaration is required on an honest estimate of zero income. However, the duty of each did not end there, even if he was acting honestly, because he was required by law to make and file the estimate later if, after March 1, 1948, for the first time it could have been reasonably estimated that his gross income from other than wages would exceed $100 and his gross income would be $600 or more. Each of these taxpayers had non-wage income for 1948 far in excess of $100 and had gross income far in excess of $600. There is no proof in this record that any one of them could not haye estimated reasonably at some time during the year 1948 or prior to J anuary 15, 1949, that his income would have been substantial. There is no showing that during March, when they filed the so-called declarations, it would not have been reasonable on the part of each one of them to have estimated that he already had or would have a substantial amount of taxable income on which he was required under the law to make an honest declaration of estimated tax and pay a portion thereof at the time of filing the declaration. Obviously it was apparent to each one of them before January 15,1949, the last date for filing a declaration of estimated tax for 1948, that each had had substantial income and was liable for a substantial amount of tax. None ever filed any further declaration. The evidence indicates to me that these petitioners have flaunted the requirements of sections 58 and 294 (d) (1) (A). The zero declarations were not the required declarations. The majority Opinion in recognizing their zero declarations as avoiding additions to the tax provided by the latter section, has exaggerated a form over the substance required and has allowed these taxpayers to frustrate the intent of Congress in regard to the current payment provisions of the statute and substantially emasculates the provisions of section 294 (d) (1) (A) which provides that: In the case of a failure to make and file a declaration of estimated tax within the time prescribed, unless such failure is shown to the satisfaction of the Commissioner to be. due to reasonable cause and not to willful neglect, there shall be added to the tax 5 per centum of each installment due but unpaid, and in addition, with respect to each such installment due but unpaid, 1 per centum of the unpaid amount thereof for each month (except the first) or fraction thereof during which such amount remains unpaid. * * * For the purposes of this sub-paragraph the amount and due date of each installment shall be the same as if a declaration had been filed within the time prescribed showing an estimated tax equal to the correct tax reduced by the credits under sections 32 and 35. Those provisions are entirely aside and in addition to those provided for substantial underestimate of estimated tax contained in section 294 (d) (2). I think the petitioners in this case have failed to overcome the presumption of correctness attaching to the Commissioner’s determination that the zero declarations which they filed in March 1948 were not declarations within the meaning of sections 58 and 294 (d) (1) (A). Cf. Ferrando v. United States, 245 F. 2d 582. I agree with the majority on all other issues. PieRce, J., agrees with this dissent.