Hayes v. Commissioner of Corp. and Taxn.
| Decision Date | 17 October 1927 |
| Citation | 261 Mass. 134 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | WILLIAM C. HAYES & another v. COMMISSIONER OF CORPORATIONS AND TAXATION. |
September 22, 1927.
Present: BRALEY CROSBY, PIERCE, CARROLL, & WAIT, JJ.
Tax, On income. Interest. Sale, Conditional. Statute, Construction.
A tax statute is to be strictly construed; the right to tax must be found within the letter of the law; it is not to be extended by implication beyond the clear meaning of the language used.
Upon a complaint for an abatement of an income tax, it appeared that the complainant was engaged in selling merchandise, mostly clothing, by the use of credit orders. Customers who desired to purchase clothing were given written orders on certain retail stores, the complainant agreeing to pay the storekeeper. The customers signed conditional sales agreements. The clothing was to remain the property of the complainant until paid for, and the customer was to pay interest "on any sums that shall not be paid when due." The goods were billed to the complainant, a discount of fifteen per cent from the "regular prices" being allowed by the retail stores to the complainant. The complainant added ten per cent to the regular store prices for his selling price to his customers. The complainant's income was made up of the fifteen per cent discount and the ten per cent charge in advance of "the regular prices." The goods were delivered to the customers at the storekeeper's place of business, and not at the complainant's place of business. Held, that a tax should not be assessed upon the ten per cent added by the complainant to "the regular price" on the ground that it was interest under G.L.c. 62,
COMPLAINTS, filed in the Superior Court on March 26, 1926, for abatement of income taxes.
The complaints were heard by Callahan, J., without a jury, upon facts agreed upon. The material facts are stated in the opinion. The judge found for the respondent and reported the cases to this court for determination, upon the stipulation that, if the "complainants were entitled to recover at all, the findings should have been for $656.76 on the complaint as to the 1924 tax and $380.98 as to the 1925 tax with interest on both amounts from October 23 1925."
H.E. Allen, for the complainants. G.J. Callahan, Assistant Attorney General, for the respondent.
These are complaints for abatement of taxes assessed upon the petitioners as additional taxes for the years 1924 and 1925.
The complainants were "engaged in . . . selling merchandise, mostly clothing, by the use of credit orders." Customers who desired to purchase clothing were given written orders on retail stores in Springfield, the complainants agreeing to pay the storekeeper. The customers signed conditional sales agreements. The clothing was to remain the property of the complainants until paid for, and the customer was to pay interest "on any sums that shall not be paid when due." The goods were billed to the complainants, a discount of fifteen percent from "the regular prices [was] allowed by the retail stores to the complainants" and the complainants added ten per cent to the regular store prices. The complainants' income was made up of the fifteen per cent discount and the ten per cent charge in advance of "the regular prices."
The complainants contend that they should be taxed at one and one half per cent on their income, under G.L.c. 62, Section 5(b). They were assessed at the rate of six per cent under G.L.c. 62 Section 1(a) on the ten per cent price added to the store price. The respondent contends that this ten per cent is "interest" and taxable as such under the statute at six per cent.
The tax commissioner has ruled that "Persons in the business of loaning money in the form of credit orders for merchandise are taxable at the rate of six per cent . . . upon the charge made to the customer for the accommodation in excess of the purchase price of goods bought by the customer under the credit order" and at "the rate of 1 1/2 per cent upon the discount allowed them by the merchant who delivers the goods to the customer." Under Section 1(a) of G.L.c. 62, a tax at the rate of six per cent is authorized upon "Interest from bonds, notes, money at interest and all debts due the person to be taxed," and under Section 5 (b) a tax at the rate of one and one half per cent is authorized upon income over $2,000 "derived from professions, employments, trade or business."
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