BANKERS'CLUB OF AMERICA v. United States, K-145.

• Decision Date: 10 February 1930
• Docket Number: No. K-145.,K-145.
• Citation: 37 F.2d 982
• Parties: BANKERS' CLUB OF AMERICA, Inc., v. UNITED STATES.
• Court: U.S. Claims Court

37 F.2d 982 (1930)

BANKERS' CLUB OF AMERICA, Inc., v. UNITED STATES.

No. K-145.

Court of Claims.

February 10, 1930.

COPYRIGHT MATERIAL OMITTED

Benjamin B. Pettus, of Washington, D. C. (Colladay, Clifford & Pettus, of Washington, D. C., on the brief), for plaintiff.

Fred K. Dyar, of Washington, D. C., and Herman J. Galloway, Asst. Atty. Gen. (McClure Kelley, of Washington, D. C., on the brief), for the United States.

Before BOOTH, Chief Justice, and WILLIAMS, LITTLETON, GREEN, and GRAHAM, Judges.

BOOTH, Chief Justice.

This tax case, like others of a similar character, turns upon a question of fact. Section 801 of the Revenue Act of 1921 (42 Stat. 291) imposed the tax involved, and is in terms as follows:

"That from and after January 1, 1922, there shall be levied, assessed, collected, and paid, in lieu of the taxes imposed by section 801 of the Revenue Act of 1918, a tax equivalent to 10 per centum of any amount paid on or after such date, for any period after such date, (a) as dues or membership fees (where the dues or fees of an active resident annual member are in excess of $10 per year) to any social, athletic, or sporting club or organization; or (b) as initiation fees to such a club or organization, if such fees amount to more than $10, or if the dues or membership fees (not including initiation fees) of an active resident annual member are in excess of $10 per year; such taxes to be paid by the person paying such dues or fees: Provided, That there shall be exempted from the provisions of this section all amounts paid as dues or fees to a fraternal society, order, or association, operating under the lodge system. In the case of life memberships a life member shall pay annually, at the time for the payment of dues by active resident annual members, a tax equivalent to the tax upon the amount paid by such a member, but shall pay no tax upon the amount paid for life membership."

The Commissioner of Internal Revenue, by the following regulations, prescribed for the administration of the statute, viz.:

"Art. 3. Clubs and Organizations Included. — Dues or membership fees, or initiation fees, paid to any social, athletic, or sporting club or organization, excepting fraternal societies, orders, or associations, operating under the lodge system (see art. 7), if in excess of the amounts specified by the act, are subject in toto to the tax imposed by section 801. The act includes not only `clubs' but also `organizations' of a social, athletic, or sporting character.

"Art. 4. Determination of Character of Club. — The purposes and activities of a club and not its name determine its character for the purpose of the tax on dues. Every club or organization having social, athletic, or sporting features is presumed to be included within the meaning of the phrase `any social, athletic, or sporting club or organization,' until the contrary has been proved, and the burden of proof is upon it. Every such club or organization, therefore, unless it falls within the express exemption of the act (see art. 7 below), must collect, return, and pay over the tax imposed by the act, unless and until it has satisfied the Commissioner of Internal Revenue that it is not in fact `social, athletic, or sporting' within the meaning of the act as defined in these regulations (see arts. 5 and 6 below). If any such club or organization desires to claim that it is not in fact `social, athletic, or sporting,' it shall submit to the collector its charter or constitution and by-laws, together with a statement as to its actual purposes, activities, practices, and facilities, the character of its expenditures, and such other evidence as may be requested. Upon consideration of the evidence submitted the collector will determine whether or not such club or organization is included within the provisions of the act. If, however, the collector is in doubt as to whether or not the club or organization is `social, athletic, or sporting,' he will refer the statement and accompanying papers to the commissioner for decision. * * *

"Art. 5. Social Clubs. — Any organization which maintains quarters or arranges periodical dinners or meetings, for the purpose of affording its members an opportunity of congregating for social intercourse, is a `social * * * club or organization'...