Court Opinion

ID: 4614007
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:54:42.490926+00
Date Added: 2024-06-11T07:54:43.220093
License: Public Domain

J. F. ROBERTS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Roberts v. CommissionerDocket No. 12248.United States Board of Tax Appeals13 B.T.A. 438; 1928 BTA LEXIS 3250; September 20, 1928, Promulgated *3250  Under the facts of this case, held, that petitioner was not an "officer or employee" of the State of Georgia or political subdivision thereof, and that the compensation received by him, under certain contracts for the collection of delinquent taxes is not exempt from taxation under section 1211 of the Revenue Act of 1926.  D. J. Gantt, Esq., and Levi O'Steen, Esq., for the petitioner.  J. E. Marshall, Esq., for the respondent.  TRAMMELL *438  This is a proceeding for the redetermination of deficiencies in income taxes for the calendar years 1920 and 1921 in the amounts of *439  $161.19 and $10,372.26, respectively.  The sole issue raised by the pleadings is whether certain income received by the petitioner in said years was received by him as compensation for personal services as an officer or employee of the State of Georgia or political subdivision thereof, and therefore exempt from taxation under the provisions of section 1211 of the Revenue Act of 1926.  FINDINGS OF FACT.  The petitioner is an individual residing in the City of Atlanta, Ga.  During the years 1920 and 1921, he was appointed and employed by the State Tax Commissioner*3251  of Georgia as a special tax agent or investigator for said State, pursuant to provisions of section 17 of the General Tax Act of the State of Georgia, approved August 18, 1919, his employment and appointment having been made upon recommendation of the Governor, as required by said law, and evidenced by written contracts executed by said State Tax Commissioner and the petitioner as follows: WHEREAS, the Legislature of the State of Georgia, by Act approved August 19, 1919, authorized the State Tax Commissioner, under certain specified conditions, to employ competent men to investigate tax matters in the several counties of the State with a view to assisting the local authorities in securing proper returns for ad valorem taxes.  AND WHEREAS, the Governor has recommended the employment of the undersigned, J. F. Roberts, as a suitable person to conduct investigations of this character.  THEREFORE, he is hereby authorized to represent the State in making investigations in such counties as may through their constituted authorities employ his services for the benefit of said county for the purpose of securing the return of property which has been omitted from the returns heretofore, *3252  and procuring the proper return of the same for ad valorem taxes.  For this service to the State he shall receive a commission on the taxes accruing to the State of the same percentage as he may be paid by the county authorities on the amount which accrues to the county as a result of his investigations and efforts.  This contract of employment being personal on account of the confidence imposed in the said J. F. Roberts and his special fitness for this line of work, is not transferable, and it is understood that the work is to be carried on by him in person.  The said J. F. Roberts will make report once a month to the office of the State Tax Commissioner, showing the amount of property which has been placed on the Digest of the counties in which he may be employed, the amount of commissions claimed by him against the counties so employing him, and the amount of commission which he claims on the State's part of the tax.  It is understood that this contract may be terminated at any time by either said J. F. Roberts or the State Tax Commissioner, upon giving the other party five days written notice.  Executed in triplicate this 29 day of Mch. 1920.  *440  Amendment*3253  to contract between H. J. Fullbright, State Tax Commissioner, and J. F. Roberts, Special Tax Investigator, of March 29, 1920.  It is hereby mutually agreed that Paragraph 5 of the above-recited contract be amended by adding to the end thereof the following proviso: He may however employ such clerical assistance as may be necessary to enable him to carry out his work under this contract.  This the 20th day of May, 1920.  The attached contract between H. J. Fullbright, State Tax Commissioner, and J. F. Roberts, Special Tax Investigator, is further amended by extending the authority of the same so as to authorize the said Roberts to investigate estates subject to the payment of inheritance taxes, and make collection of such taxes on any and all estates liable for the same in the counties having jurisdiction of such estates in which he has contracts with the county authorities to make examinations and investigations as to property subject to the ad valorem tax which has been unreturned.  This will apply only to estates where more than 12 months have elapsed since the death of the decedent and no proceedings have been instituted to have such inheritance tax determined and paid. *3254  This contract is further extended to authorize said Roberts to audit books of the Tax Collectors and County Commissioners in those counties having Boards of County Commissioners, and of the Ordinaries in the Counties where the Ordinary has charge of the fiscal affairs of the county, in order to determine whether said counties and said officers have correctly accounted for all funds of the State which have come into their hands.  His compensation for collection made under this amendment shall be 15% of collections.  It is further understood and agreed that said Roberts shall give such Bond with such security as the Governor may approve, conditioned for his faithful accounting to the State for any all moneys collected by him under the terms either of the original contract or the amendment thereto.  This July 21, 1920.  On motion adopted by the Board of Commissioners of Camden County, Georgia, January 4, 1921, the petitioner was employed to collect delinquent taxes due said county as follows: On motion the following was adopted: The Board hereby employs Mr. J. F. Roberts, State Tax Agent to collect all back taxes found due the County, for seven years back, but he is instructed*3255  to collect only a single tax and not a double tax.  The Board agrees to give Mr. Roberts a commission of 33 1/3 per cent. out of all taxes collected by him, with the understanding, however, that no expense whatsoever attaches to the County for the collection of said taxes, and he inform the Tax-receiver of all property found not returned for taxation by him.  Any persons having already paid Mr. Roberts double tax, if dissatisfied therewith, are authorized to present their claims to the Commissioners for such action as they deem proper.  Mr. Roberts is instructed to deposit all money collected by him on back taxes due the county immediately upon collection in the County depository, and to make monthly itemized statements to this Board, of all such taxes collected.  *441  Under date of November 8, 1921, the petitioner entered into a written contract with the Commissioners of Thomas County, Ga., as follows: STATE OF GEORGIACOUNTY OF THOMAS By virtue of resolutions this day adopted by the Commissioners of the County of Thomas appointed Duncan Bickley, O. A. Thomas and Homer Williams, County Commissioners of said County for and in behalf of the County of Thomas, to enter*3256  into a contract with J. F. Roberts for the purpose of employing the said Roberts to represent the County of Thomas in the matter of ascertaining the names of all citizens of said County who are delinquent tax payers and collecting and furnishing to the Tax Receiver of said county the names of such persons and the amount, character and description of properties owned, held and controlled by them subject to taxation in the County of Thomas, together with the location of such properties at and for a consideration of 15% of all sums which may be finally collected by the said County of Thomas as a result of such services aforesaid on the part of said J. F. Roberts in manner and form and subject to the conditions and stipulations hereinafter set forth.  Now, therefore, this contract witnesses that the said County of Thomas has this day employed the said J. F. Roberts for the purpose hereinbefore set forth and agrees to pay to the said Roberts a percentage of fifteen cents on the dollar on all sums of money which shall be collected thur the regular channels in the County of Thomas out of delinquent tax payers and their properties omitted from the tax registers for years preceding the year*3257  1921; such sums to be paid to the said Roberts whenever such delinquent taxes shall have been collected and paid over to the County of Thomas.  The duration of this contract shall be for one year from this date but may be terminated at the instance of either party hereto upon ten days notice.  The term delinquent tax payers as used herein shall not apply to the taxes due for any current year but shall have reference only to taxes to be collected upon properties as to which no return has been made by the tax payer for the years preceding the year 1921.  The said Roberts agrees to give to the said County of Thomas, his entire undivided time and attention and to faithfully discharge all the duties devolving upon him under this contract, and to furnish to the said County Commissioners from time to time as he may be called upon to do, any and all information pertaining to both the tax payers and their properties, the amount and location thereof.  In Witness Whereof the parties hereto have set their hands and affixed their seals, the County of Thomas signing this contract by and thru its authorized Commissioners hereinbefore designated and the said J. F. Roberts signing in his own*3258  behalf.  This November 8th, 1921.  During the year 1920, the petitioner had similar contracts with the Counties of Clark, Madison and Dury, and during the year 1921, with the Counties of Wayne, Thomas, Camden and Hart.  During the year 1920, the petitioner received the amount of $6,386.57, and during the year 1921, the amount of $54,030.18, as commissions on delinquent taxes collected by said State and counties as the result of his services, and he paid all expenses incurred in connection with his work.  *442  The petitioner was not required to take any oath of office under his employment by either the State or the counties, and did not give a bond of any description to any of said counties for the faithful performance of his duties, or otherwise, under his contracts.  The petitioner executed a bond in connection with his appointment and employment as special tax agent or investigator by the State Tax Commissioner, under the contracts hereinbefore mentioned, as follows: HOME OFFICE NATIONAL SURETY COMPANY 115 Broadway, New York.  KNOW ALL MEN BY THESE PRESENTS, That we John F. Roberts of Greensboro in the State of Georgia as Principal, and NATIONAL SURETY COMPANY, *3259  a corporation duly organized and existing under and by virtue of the laws of the State Georgia as Surety, are held and firmly bound unto Hugh M. Corsey, Governor, in the State of Georgia in the full and just sum of TWO THOUSAND ($2000.00) Dollars lawful money of the United States, for the payment of which well and truly to be made, we bind ourselves, our heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents.  SIGNED AND SEALED this 22nd day of July A.D. 1920.  WHEREAS, the said John F. Roberts has been duly appointed to the office of Special Tax Investigator for a term of years beginning on the 21st day of July 1920, and ending on the day of 191 , or until his successor is duly elected or appointed and qualified.  NOW, THEREFORE, THE CONDITION OF THE ABOVE OBLIGATION IS SUCH, that if the above bounden John F. Roberts shall faithfully and truly perform all the duties of his office and shall pay over and account for all funds coming into his hands by virtue of his said office of Special Tax Investigator as required by law, then this obligation to be void; otherwise to be and remain in full force and virtue.  IN WITNESS WHEREOF, *3260  the said Principal has hereunto set his hand and seal, and the said NATIONAL SURETY COMPANY has caused these presents to be signed by its Resident Vice-President, attested by its Resident Assistant Secretary, and its corporate seal to be hereunto affixed, the day and year first above written.  OPINION.  TRAMMELL: The petitioner contends that the income here in controversy is exempt from tax under section 1211 of the Revenue Act of 1926, which provides as follows: SEC. 1211.  Any taxes imposed by the Revenue Act of 1924 or prior Revenue Acts upon any individual in respect of amounts received by him as compensation for personal services as an officer or employee of any State or political subdivision thereof (except to the extent that such compensation is paid by the United States Government directly or indirectly) shall, subject to the statutory period of limitations properly applicable thereto, be abated, credited, or refunded.  The petitioner's contention is founded upon the theory that, during the years under review, he was an "officer," either de jure or de facto, or if not such officer, he was an "employee" of the State of Georgia and of certain political subdivisions*3261  thereof, and that the compensation *443  which gives rise to the deficiencies asserted for said years was received by him for personal services rendered as such officer or employee.  The facts show that the petitioner was appointed and employed by the State Tax Commissioner as a special tax agent or investigator, pursuant to authority granted by section 17 of the General Tax Act of the State of Georgia, approved August 18, 1919, which provided as follows: Special Tax Agents. Whenever the State tax commissioner shall have reason to believe that the taxpayers in any county are not registering their business with the ordinary as required by law, or failing to properly return their property as required by law, or returning their property at a false valuation, he shall have authority upon recommendation of the Governor to employ a competent person to go into each county, vested with all the powers, as are now given to county boards of assessors, to ascertain such fact; report on such investigation to be made to the State tax commissioner.  The compensation of such person so employed shall be a per centum of the taxes accruing to the State from his efforts, the amount to be*3262  fixed by the State tax commissioner and approved by the Governor.  Park's Annotated Code of Georgia, 1914, vol. 8, 1922 Supplement, § 963 (gggggg).  Under his contract with the State Tax Commissioner, dated March 29, 1920, and which is set out in our findings of fact above, the petitioner was authorized to represent the State in making investigations pertaining to delinquent taxes in such counties as might employ his services for the benefit of the counties in that capacity, and he was to receive commissions on the taxes accruing to the State of the same percentage as paid by the counties.  The petitioner was required to make a report to the State Tax Commissioner once a month, giving certain specified information, and the contract provided that it might be terminated at any time by either party giving to the other five days' written notice.  The petitioner thereafter entered into contracts with certain counties of the State of Georgia, as indicated in our findings of fact, and during the years 1920 and 1921 received total commissions on delinquent taxes, accruing to the State and said counties through his efforts, in the amounts of $6,386.57 and $54,030.18, respectively.  *3263  Under these facts, was the petitioner, during said years, an "officer" of the State of Georgia or political subdivision thereof?  The term "public officer" has been judicially defined as "one who exercises, in an independent character, a public function in the interest of the people by virtue of law, which is only saying in another form that he exercises a portion of the sovereignty of the people delegated to him by law." ; . *444  In Commonwealth v. Murphy, 17 Montg. Co. Law Rep'r, 174, 176, it is said: The thought running through every definition of an "officer" is that he shall perform some service or owe some duty to the government, state or municipal corporation, and not merely to those who appoint or elect him.  His tenure must be definite, fixed and certain and not arising out of mere contract of employment.  The Supreme Court of the United States, in considering the essential qualifications embraced by the term "officer," said: An office is a public station conferred by the appointment of government. *3264  The term embraces the idea of tenure, duration, emolument and duties fixed by law.  Where an office is created, the law usually fixes its incidents, including its term, its duties, and its compensation.  ; . The term "officer" is one inseparably connected with an office; * * * (.) We think the petitioner clearly fails to bring himself within any of the foregoing definitions of an "officer." Section 17 of the General Tax Act of the State of Georgia, passed in 1919, above quoted, under authority of which the petitioner was employed and by virtue of which he claims to have been an "officer," did not create a public office.  It did not provide for any definite, fixed and certain tenure or duration; no duties of office were imposed, and no compensation or emolument was fixed.  It merely authorized the State Tax Commissioner, under certain circumstances, to employ, upon recommendation of the Governor, a competent person to make investigations concerning delinquent taxes, whose compensation should*3265  be a per centum of the taxes so collected, the amount thereof to be fixed by the State Tax Commissioner and approved by the Governor.  The statute not having created a public office, it follows that the employment of the petitioner thereunder did not make him an "officer" either de jure or de facto, of the State of Georgia or any political subdivision thereof.  Was the petitioner an "employee" of the State of Georgia or political subdivision thereof?  In ; , the court said: One is an employe of another when he renders service for him and what he agrees to do or is directed to do is subject to the will of that other in the mode and manner in which the service is to be done and in the means to be employed in its accomplishment as well as in the result to be attained.  If one carries on work for another, and in the mode, manner, and means is independent of that other's control, he is an independent contractor.  In , the court held that the plaintiffs were neither "officers" nor "employees" of a State or *445  political*3266  subdivision thereof, and in considering the latter status said: So far as appears, they were in the position of indepedent contractors.  The record does not reveal to what extent, if at all, their services were subject to the direction or control of the public boards or officers engaging them.  In each instance the performance of their contract involved the use of judgment and discretion on their part and they were required to use their best professional skill to bring about the desired result.  This permitted to them liberty of action which excludes the idea of that control or right of control by the employer which characterizes the relation of employer and employee and differentiates the employee or servant from the independent contractor.  In the case of , the services of the plaintiff were engaged by the board of local improvements, an adjunct of the municipal government of the City of Chicago, as a building expert in connection with the valuation of buildings affected by certain local improvements in widening and opening streets.  The court held that he was an independent contractor, saying: *3267  Plaintiff occupied no public office and transacted no business in which the public generally was interested.  He selected his own office, paid the rent and for its equipment, and employed at his own expense his assistants.  * * * He used his own methods and instrumentalities and did the work of appraising values in his own way and as his judgment dictated, and in so doing he was free, and for such work he received his pay.  As to how, with what assistance, and in what time he should perform it he was judge and master.  * * * Clearly, from the foregoing, the relation of master and servant did not exist.  What was said respecting the plaintiff in the Mesce case may substantially be said of the petitioner in the instant proceeding.  The petitioner was not, under the terms of his contract, subject to the will of the State Tax Commissioner, nor of the County authorities, in the mode and manner in which his service was to be performed, nor in the means to be employed in its accomplishment.  He was required only to submit monthly reports to the State official, showing results accomplished, and to furnish certain information as might be required by the county commissioners from*3268  time to time concerning delinquent taxpayers and their properties.  He paid his own traveling and other expenses, including the cost of such clerical assistants as he may have found it desirable to employ.  The fact that he was to do the work personally and the further fact that he agreed to give the work of certain counties his entire time and attention until his contract with that county was completed, do not, we think, under all the facts and circumstances, preclude his being an independent contractor.  Since we have found that the petitioner was not an "officer or employee" of the State of Georgia or political subdivision thereof, the commissions received by him under the contracts referred to, are not *446  exempt from tax under the provisions of section 1211 of the Revenue Act of 1926, supra.No issue having been raised as to the correctness of the amounts of the deficiencies asserted by the respondent herein if the income in question was not exempt from tax, said deficiencies are approved.  Reviewed by the Board.  Judgment will be entered for the respondent.