Court Opinion

ID: 9444978
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:17:21.187403+00
Date Added: 2024-06-11T17:30:05.114862
License: Public Domain

MAGRUDER, Chief Judge
(concurring).
Although the opinion of the court is premised upon constitutional objections to the definition of a professional gambler’s gross income given in the district *777court’s instructions to the jury, I think there is no fundamental constitutional impediment involved. Cf. Commissioner v. Weisman, 1 Cir., 1952, 197 F.2d 221, 224-226. It must be remembered that this was a prosecution for failure to file a return, not a suit to collect a tax upon the gross receipts of the defendant. The limitations upon the congressional power to define gross income, as indicated in the court’s opinion, do not have to be carried over, as a constitutional imperative, to the congressional power to require the making of a return by a class of persons, or to the congressional power to punish criminally a willful failure to make such a return.
The trouble is that Congress, having defined “gross income” in § 22(a) of the 1939 Code, I.R.C.1954, § 61(a), in terms applicable to all classes of taxpayers and equivalent to the maximum amount which could be subjected to taxation under the concept of income in the Sixteenth Amendment, went on to use the term “gross income” repeatedly throughout the Internal Revenue Code. The primary purpose of the § 22(a) definition, as modified by the “exclusions from gross income” listed in § 22(b), is to determine the starting figure from which the “net” or “taxable” income is computed by subtracting statutory “deductions.” See § 21, I.R.C.1954, § 63. But there can be no doubt, in view of the integrated structure and careful definitions that typify the Internal Revenue Code, that the term “gross income” is used throughout that massive statute as a “word of art,” with the constant meaning spelled out for it in § 22. Thus our examination of the statutory and constitutional concept of gross income in this case was forced by the choice Congress made of expressing the requirement of a return, in § 51(a), by reference to that term: “Every individual having for the taxable year a gross income of $600 or more shall make a return * * I.R.C.1954, § 6012 (a). It was for willful failure to comply with the duty so defined that defendant was indicted under § 145(a). I.R.C. 1954, § 7203.
The power of Congress to exact information that will be helpful in effectuating the collection of taxes is not so limited by any constitutional requisite. It is clear that the duty to make returns, or to keep financial records, may be imposed upon persons who, in the end, are found to be not liable for any tax. Congress could define the reporting duty of professional gamblers in terms of a given amount of gross receipts or a given total of individual wagers won from bettors. Or it could compel the gamblers, or indeed all of us who are potential taxpayers, to make annual returns regardless of whether a particular individual took in any “gross income” or even any gross receipts. This may be what Congress has done in requiring a return from “Every corporation subject to taxation under this chapter”, § 52(a), and from the fiduciary for “Every estate or trust of which any beneficiary is a nonresident alien,” § 142(a). I.R.C.1954, § 6012(a). Other sections of the Code require a return from organizations which as a class are not subject to taxation at all. See § 54(f) (certain exempt organizations); § 187 (partnerships). I.R.C.1954, §§ 6033, 6031. Indeed, “information” returns of various types are demanded in some cases from persons who have merely made payments to others, as an aid in determining the tax liability of the recipients. E. g., §§ 147-49. I.R.C. 1954, §§ 6041-45. All of these reporting requirements would seem to have a reasonable relation to the collection of taxes imposed by the Internal Revenue Code. I have no doubt that Congress could also write an effective reporting requirement for professional gamblers, so long as an allowance (whether denominated an “exclusion,” a “deduction,” or a “credit”) is made for losses in computing the taxable income, to the extent required by the constitutional concept of income, as explained in the opinion of the court.
*778■ Congress could also authorize the Secretary or the Commissioner to promulgate a reporting requirement by appropriate regulations. Indeed, it may have already conferred such authority in § 54. I.R.C.1954, § 6001.
“§ 54. Records and special returns
“(a) By taxpayer. Every person liable to any tax imposed by this chapter or for the collection thereof, shall keep such records, render under oath such statements, make such returns, and comply with such rules and regulations, as the Commissioner, with the approval of the Secretary, may from time to time prescribe.
“(b) To determine liability to tax. Whenever in the judgment of the Commissioner necessary he may require any person, by notice served upon him, to make a return, render under oath such statements, or keep such records, as the Commissioner deems sufficient to show whether or not such person is liable to tax under this chapter.”
The Income Tax Regulations [Reg. 118, 26 C.F.R. Part 39 (1953)] do not show any use that has been made of this authority that is relevant to the problem of exacting returns from gamblers. But the Commissioner has imposed certain reporting requirements supplementary to those enumerated in the statute itself. E. g., 26 C.F.R. § 39.101-1 (a), (j) (exempt organizations), § 39.142-5 (fiduciaries for nonresident alien beneficiaries), § 39.146-1 (b), (c) (aliens departing from United States). The statutory authority quoted above would seem to be broad enough to permit a like solution in defining when professional gamblers must make returns.
Thus the difficulty our decision in this case presents to the Government in prosecuting a gambler for willful failure to file a return, although it is founded on .constitutional considerations, is easily capable of removal by action of Congress or of the Treasury Department.