Communist Party of the U.S.A. v. Comm'r of Internal Revenue

Decision Date14 September 1962
Docket NumberDocket No. 63763.
Citation38 T.C. 862
PartiesCOMMUNIST PARTY OF THE U.S.A., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
CourtU.S. Tax Court

OPINION TEXT STARTS HERE

John J. Abt, Esq., for the petitioner.

Charles R. Johnston, Esq., for the respondent.

It has not been shown that the parties who instituted, participated in the preparation and execution of, and filed the petition herein were authorized to do so. Held, that this Court does not have jurisdiction of the proceeding.

WITHEY, Judge:

The respondent has determined a deficiency of $261,050.38 in petitioner's income tax for 1951 and a penalty of $65,262.60 under section 291(a) of the Internal Revenue Code of 1939 on account of the petitioner's failure to file its income tax return within the time prescribed by law. The pleadings as amended present a number of issues among which is that of whether this Court has jurisdiction of the proceeding. An order was entered severing for preliminary determination the issue of jurisdiction and pursuant thereto hearing has been had on that issue.

FINDINGS OF FACT.

An unincorporated association was organized in 1919 under the name of Communist Party of the U.S.A. and was dissolved on May 20, 1944. Thereafter, at a convention held on May 20-22, 1944, an unincorporated association was organized under the name of Communist Political Association. Subsequently and prior to July 28, 1945, that association was dissolved. Subsequent to the dissolution of the Communist Political Association and in or about July 1945 an unincorporated association was organized under the name of The Communist Party of the United States of America, sometimes hereinafter referred to as the Communist Party, and, on July 28, 1945, that association adopted a constitution. Thereafter and during 1951 and subsequently to the time of the hearing herein, the Communist Party was an active and functioning organization. It was a nationwide organization, had State and local groups and international organizations, and ‘did all kinds of things.’

On May 18, 1956, the respondent mailed the notice of deficiency involved herein, dated May 18, 1956, and addressed to:

Communist Party of the U.S.A.

101 West 16th Street

New York 11, New York

At that time the Communist Party maintained and occupied an office at the foregoing address. Eugene Dennis, after having come into possession of the notice of deficiency, gave it to John J. Abt, the petitioner's attorney herein, with a request that he represent the party in the matter.

Theretofore and since about 1951 Abt had represented the Communist Party in various legal matters. Included in such matters was the matter of a jeopardy assessment of a deficiency in Federal income tax for 1951 which had been made against the party in or about March 1956. Pursuant to a request that he represent the party with respect to the tax matter made by William Z. Foster and Eugene Dennis, Abt conferred with the district director about the matter and also instituted proceedings in the United States District Court for the Southern District of New York on behalf of the party to enjoin collection of the tax.

After having received from Dennis the notice of deficiency involved herein and pursuant to the request of Dennis, Abt prepared a petition with respect thereto and discussed with Foster and Dennis the matter of who should verify the petition. Dennis informed Abt that Philip Bart had been appointed acting treasurer of the Communist Party and that he (Dennis) and Foster had authorized Bart to verify the petition. Abt then signed the petition as Counsel for Petitioner and submitted it to Bart who verified it as follows:

STATE OF NEW YORK/COUNTY OF NEW YORK/SS:

Philip Bart, being duly sworn, says that he is the acting treasurer of the petitioner above-named and is duly authorized by it to verify the foregoing petition; that he has read the foregoing petition and is familiar with the statements contained therein, and that the statements contained therein are true, except those stated to be upon information and belief, and that those he believes to be true.

/s/ PHILIP BART.

Subscribed and sworn to before me this 13 day of August, 1956.

/s/ THEODORE MARVIN,

Notary Public.

Following Bart's verification of the petition, Abt forwarded it to the clerk of this Court for filing. Such petition was filed with this Court on August 14, 1956, and is the petition involved herein. Abt was not an official of the party during the period 1951 through 1956, and Foster and Dennis died prior to the hearing herein.

About January 1956, Dennis appointed Philip Bart acting treasurer of the Communist Party. Approximately a year later and in the early part of 1957 Bart ceased to be acting treasurer of the party. At the time he assumed his duties as acting treasurer in 1956, Bart did not receive any books or other records from a predecessor with respect to the office nor did he have knowledge of any such records.

Bart's duties as acting treasurer of the Communist Party were to receive moneys which came in in the form of contributions or ‘from an affair or some such occasion’ which were recorded as income and to disburse them as directed by Dennis. Although Bart had authority to and did sign checks, the disbursements represented thereby were made at the direction of Dennis.

During the period he was acting treasurer, Bart did not keep any bound books or records in which the moneys received were recorded. The books and records kept by him were written monthly reports made by him to Dennis in the form of daily report sheets showing moneys received and sums disbursed. Such a system of bookkeeping was referred to by Bart as a daybook which had an entry of income and a voucher which indicated an expense and so far as Bart knew those were the only books in existence at that time. When he ceased to be acting treasurer, Bart delivered such records as he then had to Dennis.

During the time he was acting treasurer, Bart never made any report to the membership of the Communist Party as to his operations as acting treasurer. Neither did he hold nor was he appointed to or elected to any other office involving the affairs of the party. Bart verified the petition involved herein at the request of Dennis.

The constitution of the Communist Party adopted July 28, 1945, amended August 6, 1948, and in effect at all times pertinent herein, provided, in part, as follows:

ARTICLE III

Membership

Section 3. A Party member is one who accepts the aims, principles and program of the Party as determined by its Constitution and Conventions, who belongs to a Club and attends its meetings, who is active in behalf of the Party program, who reads and circulates the Party press and literature and who pays dues regularly.

ARTICLE IV

Rights and Duties of Members

Section 6. Communist Party members, in accord with the provisions set forth in this Constitution, have the right to be nominated and elected to all offices or committees.

ARTICLE V

Initiation Fees, Dues and Assessments

Section 1. Initiation fees and dues shall be paid according to rates fixed by the National Convention.

Section 2. The income from dues and initiation fees shall be distributed to the various subdivisions of the Party as determined by the National Convention.

Section 3. Special assessments may be levied by the National Convention or by a two-thirds vote of the National Committee. All local or district assessments are prohibited except by special permission of the National Committee.

ARTICLE VII

National Organization

Section 1. The highest authority of the Party is the National Convention. Regular National Conventions shall be held every two years. The National Conventions are authorized to make political and organizational decisions binding upon the entire Party and its membership, except as provided in Article VII, Section 7.

Section 3. Special National Conventions may be called either by a two-thirds vote of the National Committee or by vote of two-thirds of all State and District Committees. The time and place of such special Convention shall be fixed by the National Committee, which shall also fix the basis for representation at such special Conventions and the manner of selection of delegates.

Section 5. The National Convention shall elect a National Committee by a majority vote. A member of the Party to be eligible for election to the National Committee shall have been in continuous good standing for at least five years.

Section 6. The number of members of the National Committee shall be determined by a majority vote of each National Convention.

Section 7. The National Committee is responsible for the enforcement of the Constitution and the execution of the general policies adopted by the National Convention.

Between National Conventions, the National Committee is the highest authority of the Party, representing the Party as a whole, and as such has the sole and complete authority to make all decisions and take all actions necessary and incidental to the good and welfare of the entire Party, and to act upon all problems and developments occurring between Conventions. In connection with its duties, and in the exercise of its responsibilities therefor, the National Committee shall guide and direct all the political and organizational work of the Party; organize and supervise its various departments and committees; elect or remove editors of its publications who shall work under its leadership and guidance; organize and direct all undertakings of importance to the entire Party; and administer the national treasury. The National Committee shall submit a certified audited financial report to each National Convention.

The National Committee shall have the duty and the authority to make such decisions or take such actions as it deems necessary in any emergency or situation affecting the life and welfare of the Party.

The National Committee is authorized in its discretion from time to time to delegate to the National...

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    • U.S. Tax Court
    • 6 de novembro de 1978
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