Johnson v. United States

• Decision Date: 08 November 1976
• Docket Number: F 74-112 and F 74-113.,Civ. No. F 74-111
• Citation: 422 F. Supp. 958
• Parties: Sarah G. JOHNSON v. UNITED STATES of America. William G. BARTER et ux. v. UNITED STATES of America. Ralph D. BLAIR et ux. v. UNITED STATES of America.
• Court: U.S. District Court — Northern District of Indiana

422 F. Supp. 958

Sarah G. JOHNSON v. UNITED STATES of America.

William G. BARTER et ux. v. UNITED STATES of America.

Ralph D. BLAIR et ux. v. UNITED STATES of America.

Civ. Nos. F 74-111, F 74-112 and F 74-113.

United States District Court, N. D. Indiana, Fort Wayne Division.

November 8, 1976.

COPYRIGHT MATERIAL OMITTED

Jeanne S. Miller, New Haven, Ind., for plaintiffs.

John R. Wilks, U. S. Atty., Fort Wayne, Ind., F. Gerald Burnett, Trial Atty., Tax Div. Dept. of Justice, Washington, D. C., for defendant.

MEMORANDUM OF DECISION AND ORDER

ESCHBACH, Chief Judge.

In these three consolidated cases plaintiffs seek refunds of income taxes paid for the year 1971 on the ground that the rate schedules of the Internal Revenue Code, 26 U.S.C. § 1, unconstitutionally discriminate against them as married persons. The cases are now before the court on plaintiffs' and defendant's cross motions for summary judgment. For reasons which are set forth hereinafter, plaintiffs' motion for summary judgment will be denied. Defendant's motion for summary judgment will be granted in the Barter and Blair cases but denied in the Johnson case.

I

With the exception hereinafter noted in the Johnson case, the material facts which give rise to these causes of action are not in dispute. Plaintiff in F 74-111, Sarah G. Johnson, filed an individual income tax return for the year 1971, showing a taxable income of $38,486.19, upon which she paid a tax of $12,913.52, computed at the rate applicable to married persons filing separately, IRC § 1(d). During 1971, all of her taxable income was a result of her separate earnings and income. Throughout that entire year she maintained as her home a household which was the principal place of abode of her three unmarried minor children. She bore all of the cost of maintaining this household and furnished the sole support of her three children by her marriage to their deceased father. In 1971, she remarried, lived with her husband, and remained married to him on December 31, 1971.¹

On January 23, 1973, Ms. Johnson filed a claim for a refund of $2,816.82, the difference between the taxes she paid based on the "married filing separately" rate schedule and the amount she would have paid had she been entitled to file as an "unmarried head of household."² The tax rates for individuals who meet the statutory requirements of "unmarried head of household" are set forth in § 1(b) and are lower than those imposed by § 1(d).

The Internal Revenue Service denied Ms. Johnson's refund claim and she thereafter timely instituted this action pursuant to 28 U.S.C. § 1346.

Plaintiffs in F 74-112 and F 74-113 are married couples who filed joint returns with taxes computed at the rates provided in § 1(a) for married persons filing jointly.

The Barters, plaintiffs in F 74-112, reported a combined taxable income of $20,488.49, of which $12,771.73 was the separate earnings and income of William Barter and $7,716.76 which was attributable to the earnings and income of his wife, Wanda Barter. The Barters paid $4,536.32 in tax on this income, of which they claimed a refund of $160.50 on December 12, 1972. This sum represented the difference in the amount they paid and that which they would have paid had each been allowed to use the rate schedule for single persons, § 1(c).

Plaintiffs in F 74-113 are Ralph and Pauline Blair. Their 1971 joint return showed a taxable income of $25,147.09, on which a tax of $6,072.95 was paid. Mr. Blair's separate earnings and income were $16,539.32 and those of Mrs. Blair were $7,962.45. A refund claim for $479.58 was filed by the Blairs on February 2, 1973. This sum likewise represented the difference between the tax actually paid and that which would have been due if each had been entitled to utilize the unmarried rate schedule of § 1(c).

The Internal Revenue Service denied the refund claims of both couples, and they subsequently instituted timely actions under 28 U.S.C. § 1346 in this court. All plaintiffs profess sincere beliefs in the teachings on marriage of the religious denominations with which they are affiliated.³ Plaintiffs are all residents of Indiana, which is a non-community property state, and which by statute and case law has abrogated the common law disabilities of married women.⁴

II

Specifically, plaintiffs attack sections 1 and 143⁵ of the Internal Revenue Code, as amended by the Tax Reform Act of 1969, Pub.L.No.91-172, 83 Stat. 487. They assert that the rate schedules of section 1, based as they are upon the marital status of the taxpayer, are unconstitutional as applied to them. Their attack is wide-ranging, encompassing provisions of the First, Fourth, Fifth, Ninth and Tenth Amendments to the United States Constitution. They contend that:

1) The due process clause of the Fifth Amendment forbids tax rate differentiation by which the tax on the income of one spouse is measured in part by the income of the other spouse.

2) The due process clause of the Fifth Amendment forbids gender-based tax rate differentiation that results in a greater burden on married female workers than is imposed upon married male workers.

3) The due process clause of the Fifth Amendment forbids marital classification by which higher tax rates are imposed on the taxable income of a married person (whose spouse has significant income) than are imposed on the same taxable income of an unmarried person.

4) The due process clause of the Fifth Amendment forbids classification by which higher tax rates are imposed on the taxable income of a married person who lives with her spouse than are imposed on the taxable income of one who does not.

5) The free exercise clause of the First Amendment prohibits the imposition of higher tax rates on those who practice their religious beliefs in regard to marriage.

6) The "fundamental right to marry," protected by the First, Fourth, Fifth, Ninth and Tenth Amendments is violated by a tax rate differentiation which imposes higher tax rates on the taxable income of a married person (whose spouse has significant income) than on the same taxable income of an unmarried person.⁶

Defendant counters that the tax rate schedules attacked by plaintiffs do not suffer from any constitutional infirmities and that there exist reasonable bases for the differentials in the rate structures. Defendant also raises the question of the plaintiffs' right to any recovery in these actions. It is this latter question to which the court turns first, mindful of the admonition in Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 56 S.Ct. 466, 80 L.Ed. 688 (1936) (Brandeis, J., concurring), that if non-constitutional grounds exist for a decision dispositive of the litigation, the court should not decide the constitutional issues, even though properly presented.

III

The Government contends that because they failed to file separate income tax returns for the 1971 tax year by April 15, 1972, the Barters and the Blairs are not entitled to any recovery of taxes in this suit. The Government's argument is that both couples, by way of this suit, seek in effect to revoke their joint returns and utilize the lower rates applicable to single persons. This, the Government asserts, is precluded by Treas.Reg. § 1.6013-1(a)(1) (1973), which requires that if spouses have previously elected to file a joint return and thereafter wish to file separate returns, they must file their separate returns by the last date on which a joint return could be filed.⁷ In these instances that date would have been April 15, 1972.⁸

Assuming the validity of the regulation in question, the court finds that it does not operate as a bar to the Barters' and Blairs' claims. It is obvious that the regulation was not designed or intended to apply in a situation such as this where the taxpayers attack the constitutionality of the rates which by statute are applicable to them.

Moreover, acceptance of the Government's argument would produce the anomalous result that in order to test the constitutionality of the married rate schedules, the Barters and the Blairs would have been required to pay even more in taxes than would single persons with equal incomes, since it is apparent that had they filed separate returns as married persons the rates of § 1(d) would have produced a greater tax on their incomes than did the § 1(a) rates which they utilized.

Finally, and perhaps most significantly, if the Government's argument were accepted, the practical effect would be to insulate from attack the rate schedule of § 1(a). If all taxpayers, who wished to challenge the rate differentials between single and married persons were required to file a separate return, presumably none would have the requisite "standing" to challenge the "married filing jointly" rates. This court cannot countenance such a result.

Accordingly, the court finds that the Barters' and Blairs' failure to file separate returns does not operate as a bar to their right to recovery.

On the other hand, the Government argues that since Ms. Johnson and her husband had the option of filing a joint return, which at § 1(a) rates would produce a lower tax than those in § 1(b) on equivalent levels of income, she should not be heard to complain. The question, therefore, is whether Ms. Johnson's claim is properly presented.

It is unclear from the record why Ms. Johnson could not file a joint return with her then-husband, Robert Taylor.⁹ Nor does the record indicate whether Taylor had any income. Despite possible discovery problems,¹⁰ the court will refrain from deciding Ms. Johnson's claim absent proof that she as a practical matter could not have filed a joint return.¹¹

By paying taxes at the rate for separate marrieds under § 1(d), the plaintiff may have voluntarily disadvantaged herself solely for the purpose of making this constitutional challenge. In order for Ms. Johnson properly to challenge the statute, she must have a "good-faith pocketbook action." Doremus v. Board...