Chatterji v. Comm'r of Internal Revenue
| Decision Date | 24 June 1970 |
| Docket Number | Docket No. 3342-68. |
| Citation | 54 T.C. 1402 |
| Parties | ARUN K. CHATTERJI, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Sherman F. Levey, for the petitioner.
John D. Steele, Jr., for the respondent.
Petitioner's employer erroneously withheld Federal Insurance Contributions Act (FICA) taxes from his wages for the period Jan. 1, 1965, to Oct. 1, 1965. When respondent issued a notice of deficiency to petitioner for the taxable year 1965 with respect to other items in controversy, petitioner did not dispute the deficiency but pleaded that he was entitled to credit the amount of erroneously withheld FICA taxes against the deficiency. Respondent filed a motion to strike those paragraphs of the petition dealing with FICA taxes. Held, that respondent's motion is granted since the Tax Court's jurisdiction in determining an overpayment or credit of FICA taxes is expressly limited by sec. 31(b), I.R.C. 1954, and under the facts is not applicable in the determination of the deficiency herein.
The respondent determined a deficiency in the income tax of petitioner for the year 1965 in the amount of $269.69.
Petitioner's employer, A. D. Little, Inc., erroneously withheld FICA taxes from petitioner's wages for the quarter prior to October 1, 1965. When respondent issued a notice of deficiency to petitioner in the amount of $269.69 for the taxable year 1965, petitioner did not dispute the deficiency but pleaded that he was entitled to credit the amount of erroneously withheld FICA taxes in the amount of $174 against the deficiency. Respondent timely filed a motion to strike those paragraphs of the petition dealing with the subject matter of erroneously withheld FICA taxes on the ground that the Tax Court lacks jurisdiction over the FICA tax subject matter raised in the petition.
Arun K. Chatterji, hereinafter called petitioner, maintained his legal residence at the time he filed the petition herein at Webster, N.Y. He filed his Federal income tax return for the taxable year 1965 with the district director of internal revenue, Buffalo, N.Y.
Petitioner was a nonresident alien as that term is defined under section 101(a)(15)(F) of the Immigration and Nationality Act, as amended, 8 U.S.C.A.sec. 1101(a)(15)(F), for the period June 4, 1964, to October 1, 1965.
During the taxable year 1965, petitioner was an employee of the U.S. Department of Agriculture, Arthur D. Little, Inc., and Xerox Corp., respectively. A schedule of wages paid, Federal income tax withheld, and FICA employee tax withheld is as follows:
+-----------------------------------------------------------------------------+
¦ ¦ ¦Federal ¦FICA ¦
+-------------------------------------------+----------+----------+-----------¦
¦Employer ¦Wages paid¦income tax¦employee ¦
¦ ¦ ¦ ¦tax ¦
+-------------------------------------------+----------+----------+-----------¦
¦ ¦ ¦withheld ¦withheld ¦
+-------------------------------------------+----------+----------+-----------¦
¦ ¦ ¦ ¦ ¦
+-------------------------------------------+----------+----------+-----------¦
¦U.S. Dept. of Agriculture (1/1/65 to 6/1/ ¦$4,705.60 ¦$615.14 ¦ ¦
¦65) ¦ ¦ ¦ ¦
+-------------------------------------------+----------+----------+-----------¦
¦Arthur D. Little, Inc. (6/1/65 to 11/19/65)¦5,538.48 ¦732.00 ¦$174.00 ¦
+-------------------------------------------+----------+----------+-----------¦
¦Xerox Corp. (11/19/65 to 12/31/65) ¦660.32 ¦92.44 ¦23.94 ¦
+-------------------------------------------+----------+----------+-----------¦
¦ ¦10,904.40 ¦1,439.58 ¦197.94 ¦
+-------------------------------------------+----------+----------+-----------¦
¦ ¦ ¦ ¦ ¦
+-----------------------------------------------------------------------------+
Petitioner claimed the standard deduction and the benefits of income averaging on his 1965 Federal income tax return.
The return was audited and a statutory notice was issued to petitioner based on the following adjustments: (a) Since petitioner failed to establish that he qualified for income averaging, his tax was recomputed using the normal-tax rates for a single person. (b) Petitioner was given a credit of.$23.94 for excess FICA taxes withheld from his wages due to his having worked for more than one employer during the taxable year. Secs. 31(b) and 6413(c), I.R.C. 1954.1
The deficiency for the taxable year 1965 was computed as follows:
+--------------------------------------------+
¦Taxable income shown on return ¦$9,304.40¦
+----------------------------------+---------¦
¦Corrected taxable income ¦9,304.40 ¦
+----------------------------------+---------¦
¦Tax (with one allowable exemption)¦1,995.23 ¦
+----------------------------------+---------¦
¦Total tax shown on return ¦1,701.60 ¦
+----------------------------------+---------¦
¦ ¦293.63 ¦
+----------------------------------+---------¦
¦Credit for excess of FICA taxes ¦23.91 ¦
+----------------------------------+---------¦
¦Additional tax due ¦269.69 ¦
+--------------------------------------------+
Respondent asserted a claim for increased deficiency in the amount of $316.12 based on the disallowance to petitioner of the standard deduction in his ‘Motion to Strike and Limit Issues for Trial, and Claim for Increased Deficiency’ filed with the Court on November 15, 1968.
At the trial, the parties agreed that petitioner is entitled to the standard deduction but is not entitled to the benefits of income averaging.
Also, the parties agreed that petitioner is not liable for Federal Insurance Contributions Act (FICA) taxes for the period January 1, 1965, to October 1, 1965, because he was present in the United States as a nonresident alien under section 101(a)(15)(F) of the Immigration and Nationality Act, as amended, 8 U.S.C.A.sec. 1101(a)(15)(F). Sec. 3121(b)(19), I.R.C. 1954.
The statute of limitations for either the petitioner's employer, Arthur D. Little, Inc., or petitioner to file a claim for refund or credit other than with respect to the instant Tax Court proceeding based on the erroneous withholding of FICA taxes from the petitioner prior to October 1, 1965, has expired under the provisions of sections 6511 and 6513(c) of the Code.
Preliminarily, it is expedient to point out that while the self-employment tax provided in sections 1401 to 1403 of the Code of 1954 is collected together with the income tax and is a tax over which this Court has jurisdiction, Joseph M. Philbin, 26 T.C. 1159, 1166 (1956), it is not a part of the income tax itself but a part of the revenue raised to finance the benefits provided by the Social Security Act of 1935, 49 Stat. 620, as amended. Solly K. Frankenstein, 31 T.C. 431 (1958), and Cresence E. Clarke, 27 T.C. 861, 862 (1957). The self-employment tax imposed is ‘an additional tax on the income derived by the self-employed * * * (taxpayer) as an employee.’ Cain v. United States, 211 F.2d 375, 377 (C.A. 5, 1954), certiorari denied 347 U.S. 1013 (1954).
Petitioner's contention that he should be allowed as a credit on his income taxes for 1965 the amount of FICA tax erroneously withheld by his employer must be denied. It is well settled that the statutory requirements conferring jurisdiction upon this Court must be strictly construed. See secs. 6211, 6214, and 7442,2 1954 Code. Tyson v. Commissioner, 66 F.2d 160, 162 (C.A. 7, 1933); J. H. Johnson, et al., 19 B.T.A. 840 (1930), affd. 56 F.2d 58 (C.A. 5, 1932), certiorari denied 286 U.S. 551 (1932).
The Tax Court's jurisdiction is generally limited by section 6214 of the 1954 Code to the redetermination of the correct amount of a deficiency, as defined in section 6211, in income, estate, and gift taxes and does not include employment taxes of which the FICA is one. Our jurisdiction in conferred by the statute and we may not go beyond its scope. Since FICA taxes play no role in the determination of a deficiency and are not deductible from gross income under the provisions of sections 275(a)(1) and 35023 of the Code of 1954, we hold that the Tax Court does not have the authority to consider the subject matter of erroneously withheld FICA taxes.
We are mindful, of course, that section 6512(b) gives us authority to determine an ‘overpayment’ in income, estate, or gift taxes for the same year in respect of which the Secretary or his delegate determined a deficiency. However, in determining an overpayment of FICA taxes, the Court's jurisdiction is expressly limited by section 31(b)4 of the 1954 Code to those instances where excess FICA taxes are withheld as a result of receiving wages from more than one employer. Sec. 1.31-2, Income Tax Regs. The section 31(b) credit is not applicable in the determination of a deficiency herein because respondent has already allowed petitioner the section 31(b) credit resulting from excess FICA taxes withheld by Xerox, his last employer during the taxable year 1965. In the instant case, respondent concedes that petitioner was not liable for the FICA taxes prior to October 1, 1965, and determined that it was necessary for petitioner to file a claim for refund or credit pursuant to section 31.3503-1, Employment Tax Regs.5
We find no merit in petitioner's argument that the FICA tax is an ‘income tax’ within the ambit of section 6211, supra, rather than a tax on ‘self-employment income’ under section 1401, supra, and therefore the credit in question is a tax over...
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