TAX LAWS SUBJECT TO STRICT CONSTRUCTION
Tax
laws are clearly in derogation of personal rights and property interests and
are, therefore, subject to strict construction, and any ambiguity must be
resolved against imposition of the tax. In Billings
v. U.S., 232
"Tax statutes . . . should be strictly construed, and, if any ambiguity be found to exist, it must be resolved in favor of the citizen. Eidman v. Martinez, 184 U.S. 578, 583; United States v. Wigglesworth, 2 Story, 369, 374; Mutual Benefit Life Ins. Co. v. Herold, 198 F. 199, 201, aff'd 201 F. 918; Parkview Bldg. Assn. v. Herold, 203 F. 876, 880; Mutual Trust Co. v. Miller, 177 N.Y. 51, 57."
(Id at p. 265, emphasis added)
Again, in United
States v. Merriam, 263
"On behalf of the Government it is urged that
taxation is a practical matter and concerns itself with the substance of the
thing upon which the tax is imposed rather than with legal forms or
expressions. But in statutes levying
taxes the literal meaning of the words employed is most important, for such
statutes are not to be extended by implication beyond the clear import of the
language used. If the words are doubtful, the doubt must be resolved against
the Government and in favor of the taxpayer. Gould v. Gould, 245
(emphasis added)
And again, in United States v. Goldenberg, 168
“The primary and general rule of statutory construction is that the intent of the lawmaker is to be found in the language that he has used. He is presumed to know the meaning of the words and the rules of grammar"
This rule of strict construction against the taxing authority was reiterated in Tandy Leather Company v. United States, 347 F.2d 693 (5th Cir. 1965), where Judge Hutcheson of our 5th Circuit eloquently and unequivocally proclaimed at p. 694-5:
". . . In ruling as he did, that the taxpayer had the obligation to show that sales of the articles in suit were not subject to the excise taxes collected, the district judge was misled by the erroneous contention of the tax collector into misstating the rule of proof in a tax case. This is: that the burden in such a case is always on the collector to show, in justification of his levy and collection of an excise tax, that the statute plainly and clearly lays the tax; that, in short, the fundamental rule is that taxes to be collectible must be clearly laid.
"The Government's claim and the judge's ruling
come down in effect to the proposition that the state of construction of
appellants' kits had reached such an advanced level that the tax levied on the
finished products could be collected on their sale, though none had been
clearly laid thereon by statute. Shades of Pym and John Hampden, of the
'Although it is sometimes broadly stated either that tax laws are to be strictly construed or, on the other hand, that such enactments are to be liberally construed, this apparent conflict of opinion can be reconciled if it is borne in mind that the correct rule appears to be that where the intent of meaning of tax statutes, or statutes levying taxes, is doubtful, they are, unless a contrary legislative intention appears, to be construed most strongly against the government and in favor of the taxpayer or citizen. Any doubts as to their meaning are to be resolved against the taxing authority and in favor of the taxpayer. * * *'
"The judgment was wrong. It is, therefore, reversed and the cause is remanded with directions to enter judgment for plaintiffs and for further and not inconsistent proceedings."
(emphasis is the Court's)
See
also: Gould v. Gould, 245
Thus, as we enter into
the labyrinth of the Internal Revenue Code and its related regulations, we must
do so mindful that the courts have repeatedly recognized as indisputable certain “canonized” standards of legal construction, as in Commonwealth Natural Resources, Inc. v. Commonwealth, 219
"A cardinal rule of statutory construction is that a statute be construed from its four corners and not by singling out a particular word or phrase.”
The hornbook rule reminds us that tax laws are strictly construed, and that when the letter of the law is subject to more than one interpretation, it must be construed against the imposition of the tax, the rule of interpretation of taxes being:
"that the burden in such a case is always on the collector to show, in justification of his levy and collection of an excise tax, that the statute plainly and clearly lays the tax; that, in short, the fundamental rule is that taxes to be collectible must be clearly laid." Tandy Leather Company, supra, at 694.
(emphasis added)
Federal courts limited to the statutory construction
used
The courts of the
“All legislative powers herein granted shall
be vested in a Congress of the
This means that while the courts possess the power to reject a provision, or a statute in its entirety, for want of constitutionality, it does not possess the power to amend, edit, alter or change the law from the actual language used and written by Congress, who possesses “All legislative powers”. The courts have a plain and simple judicial duty to apply the statutes as written to the circumstances, facts and evidence of the case as presented and argued in the instant matter before them.
The statutes are almost always simple and clear, without ambiguity or conflict. The laws simply mean what the words used in them say, and nothing more can be read into the law or assumed about it into existence. The following U.S. Supreme Court cases below clearly reveal these irrefutable facts
In
Demarest v. Manspeaker, 498
"In deciding a question of statutory construction, we begin of course with the language of the statute."
In
"When the words of a statute are unambiguous, the first canon of statutory construction -- that courts must presume that a legislature says in a statute what it means and means in a statute what it says, there is also the last, and judicial inquiry is complete."
In
McNary v
"In construing
a federal statute, it is presumable that Congress legislates with knowledge of
the United States Supreme Court's basic rules of statutory construction."
In Reiter v Sonotone
Corp., 442
"As in all cases involving statutory construction, "our starting point must be the language employed by Congress,",
And again, in Richards v
“we assume that the legislative purpose is expressed by the ordinary meaning of the words used."
In Consumer Product Safety Comm'n v GTE Sylvania, Inc., 447
"…absent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive."
And in Freytag v. Commissioner, 501
"When the terms of a statute are unambiguous, judicial inquiry is complete except in rare and exceptional circumstances."
In Fuller v. United States 615 F. Supp. 1054 (D.C. Cal 1985) , West’s Key 188 quoting Richards v. United States 369 US 1, 9, 82 S. Ct. 585, 590, 7 L.Ed. 2d 492 (1962), the court expands on this point:
"The starting
point in any endeavor to construe a Statute is always the words of the Statute
itself; unless Congress has clearly indicated that its intentions are contrary
to the words it employed in the Statute, this is the ending point of
interpretation."
And, this is echoed in Estate of Cowart v. Nicklos
Drilling Co., 505 US 120 L Ed 2d 379, 112 S
"In a statutory
construction case, the beginning point must be the language of the statute, and
when a statute speaks with clarity to an
issue, judicial inquiry into the statute's meaning--in all but the most
extraordinary circumstance--is finished; courts must give effect to the clear
meaning of statutes as written."
And again in Washington Market Co.
v. Hoffman, 101
"Words used in
the statute are to be given their proper signification and effect."
And again in Beecham v. United States, 511 US 128 L Ed 2d 383 (1994):
"The court's task is to determine whether the language the legislators actually enacted has a plain, unambiguous meaning."
And in recognition of
the lack of judicial power to alter written law, in Federal Trade Com. v Simplicity Pattern Co.,
360
"The United
States Supreme Court cannot supply what Congress has studiously omitted in a
statute."
And continuing, from Product Safety Comm'n
v. GTE Sylvania, 447
"The starting point for interpreting a statute is the language of the statute itself; absent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive."
In United States v. Lexington Mill & E. Co., 232
"We are not at
liberty to construe any statute so as to deny effect to any part of its
language. It is a cardinal rule of statutory construction that significance and
effect shall, if possible, be accorded to every word.
As early as in Bacon's Abridgment, § 2, it was said that 'a statute ought, upon
the whole, to be so construed that, if it can be prevented, no clause,
sentence, or word, shall be superfluous, void, or insignificant.' This rule has
been repeated innumerable times."
In Busse v. Commissioner of Internal Revenue, 479 F2d 1143, the court again is consistent in its recognition of both its own duty, and the limits of its own power to create effect with its rulings:
"Courts have no power to rewrite legislative enactments to give effect to their
ideas of policy and fitness or the desirability of symmetry in statutes."
And, in CBS, Inc. v FCC, 453
"The construction of a statute by those charged with its execution should be followed unless there are compelling indications that it is wrong, especially when Congress has refused to alter the administrative construction, and such deference is particularly appropriate where an agency's interpretation involves issues of considerable public controversy and Congress has not acted to correct any misperception of its statutory objectives."
In Russello v
"This fact only underscores our duty to refrain from reading a phrase into the statute when Congress has left it out. Where Congress includes particular language in one section of a statute but omits it in another ..., it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion."
And in American Tobacco Co. v
Patterson, 456
"It is not a
function of the United States Supreme Court to sit as a super-legislature and
create statutory distinctions where none were intended."
In Ratzlaf v.
United States, 510
"...courts do not resort to
legislative history to cloud a statutory text that is clear"
In Piper v. Chris-Craft Industries, Inc.,
430
"Going behind the plain language of a statute in search of a possibly contrary congressional intent is "a step to be taken cautiously" even under the best of circumstances."
And in United States v. Calamaro, 354 U.S. 351, 1 L. Ed. 2d 1394, 77 S Ct 1138 (1957), the
court held in response to the government’s argument that regulations may serve
as the sole founding source of authority for it’s collection actions, that:
"In construing
federal revenue statute, Supreme Court gives no weight to Treasury
regulation which attempts to add to statute something which is not there."
Subsequently, in Water Quality Ass'n v. United States, 795 F.2d 1303 (7th Cir. 1986), where, citing and quoting Calamaro, the court added at p. 1309:
"It is a basic principle of statutory construction that courts have no right first to determine the legislative intent of a statute and then, under the guise of its interpretation, proceed to either add words to or eliminate other words from the statute's language. DeSoto Securities Co. v. Commissioner, 235 F.2d 409, 411 (7th Cir. 1956); see also 2A Sutherland Statutory Construction § 47.38 (4th ed. 1984). Similarly, the Secretary has no power to change the language of the revenue statutes because he thinks Congress may have overlooked something."
(emphasis added)
In Koshland v. Helvering, 298
“We find neither argument persuasive. In light of the above discussion, we cannot but regard this Treasury Regulation as no more than an attempted addition to the statute of something which is not there. As such the regulation can furnish no sustenance to the statute.”
And finally,
in Reinecke v. Gardner, 277
"The extension of tax by implication is not favored"
In Hassett v. Welch.,
303
"In view of other settled rules of statutory construction, which teach that a law is -presumed, in the absence of clear expression to the contrary, to operate prospectively; that, if doubt exists as to the construction of a taxing statute, the doubt should be resolved in favor of the taxpayer..."
And finally, in Greyhound Corp. v. United States, 495 F2d 863, the similarly court commands,
"Doubt relative to statutory
construction should be resolved in favor
of the individual, not the government"
COEXISTENCE OF STATUTORY PROVISIONS
When two
statutes do not appear to be in direct conflict with one another, they are
taken to coexist as equally effective. When two statutes conflict with one
another regarding a Citizen and his rights, the Citizen, and not the Government
and its claims, are to be favored and secured under the law..
The court recognizes and upholds this principle in Morton v Mancari, 417
Judges "are not at liberty to pick and choose among congressional enactments, and when two [or more] statutes are capable of coexistence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective."
CONCLUSION
Thus, as we enter into the labyrinth of the Internal Revenue Code and its
related regulations, we must do so mindful of the hornbook rule that tax laws
are strictly construed, and that when the letter of the law is subject to more
than one interpretation, it must be construed against the imposition of the tax
and for the individual, the rule of interpretation of taxes being against the
implication of tax by presumption. This
rule of strict construction, and against presumptions made by the taxing
authorities, was reiterated in Tandy
Leather Company v. United States, 347 F.2d 693 (5th Cir. 1965), where Judge
Hutcheson of the 5th Circuit eloquently and unequivocally proclaimed at p.
694-5:
"that the burden in such a case is always on the collector to show, in justification of his levy and collection of an excise tax, that the statute plainly and clearly lays the tax; that, in short, the fundamental rule is that taxes to be collectible must be clearly laid." Tandy Leather Company, supra, at 694.