Palmisano v. United States, Civ. A. No. 6522
Decision Date | 22 January 1958 |
Docket Number | 6523.,Civ. A. No. 6522 |
Parties | Dominick PALMISANO, Plaintiff, v. UNITED STATES of America, Defendant. Salvador J. CAMPAGNA et al., Plaintiffs, v. UNITED STATES of America, Defendant. |
Court | U.S. District Court — Eastern District of Louisiana |
Anzelmo, Maxwell & Thriffiley, Paul J. Thriffiley, Jr., New Orleans, La., for plaintiffs.
M. Hepburn Many, Prim B. Smith, Jr., New Orleans, La., for defendant.
The single question presented by these cases is: May the penalty imposed for substantial underestimation of estimated tax be assessed against taxpayers when the penalty for failure to file a declaration of estimated tax has previously been assessed. Taxpayers here failed to file a declaration of estimated tax as required by Section 294(d) (1) (A)1 of the Internal Revenue Code of 1939, as amended. The Commissioner assessed the penalty provided under that statute for failure to file a declaration of estimated tax, and, in addition, assessed the penalty under Section 294(d) (2)2 of Internal Revenue Code 1939, for substantial underestimation of estimated tax. The taxpayers, having paid both penalties, in these proceedings are suing for the refund of the penalty imposed for substantial under-estimation of estimated tax.
The position of the taxpayers is very simple. They contend that since they did not estimate their tax for the year in question, 1953, they cannot possibly be said to have underestimated it. They assert that the two penalties are mutually exclusive, that when one is imposed, the other may not be. They cite several district court cases which have decided the precise question in favor of the taxpayer. Jones v. Wood, D.C., 151 F.Supp. 678; Stenzel v. United States, D.C., 150 F.Supp. 364; Powell v. Granquist, D.C., 146 F.Supp. 308; Owen v. United States, D.C., 134 F.Supp. 31; United States v. Ridley, D.C., 120 F.Supp. 530; Hodgkinson v. United States (S.D.Cal.), decided December 18, 1956 (1956 P-H, par. 72,434); Glass v. Dunn (N.D.Ga.), decided July 9, 1956 (1956 P-H, par. 73,100).
The Government admits, as it must, that Section 294(d) (2) does not specifically provide for penalties for substantial underestimation of estimated tax where no declaration of estimated tax is filed. It points, however, to the conference report explaining Section 294(d) (2) which says "In the event of a failure to file any declaration where one is due, the amount of the estimated tax for the purposes of this provision will be zero."3 This construction of the statute is embodied almost verbatim in Section 29.294-1(d) (3) (A) of Treasury Regulation 111.4 The Government cites several district court, as well as tax court, cases which support its position and are in direct conflict with the cases relied on by the taxpayers. Fuller v. Commissioner, 20 T.C. 308, affirmed on other grounds, 10 Cir., 213 F.2d 102; Ressnier v. United States, D.C.W.D.Ky., Civil Action No. 3273, 1957; Farrow v. United States, D.C., 150 F.Supp. 581; Peterson v. United States, D.C., 141 F.Supp. 382, 384; Hartley v. Commissioner, 23 T.C. 353, 360; Smith v. Commissioner, 20 T.C. 663.
Treasury regulations are presumptively valid and "must be sustained unless unreasonable and plainly inconsistent with the revenue statutes." Commissioner of Internal Revenue v. South Texas Lumber Co., 333 U.S. 496, 501, 68 S.Ct. 695, 698, 92 L.Ed. 831; United States v. Birdsall, 233 U.S. 223, 34 S.Ct. 512, 58 L.Ed. 930; United States v. Grimaud, 220 U.S. 506, 31 S.Ct. 480, 55 L.Ed. 563. Moreover, Treasury regulations, "long continued without substantial change, applying to unamended or substantially reenacted statutes, are deemed to have received congressional approval and have the effect of law." Helvering v. Winmill, 305 U.S. 79, 83, 59 S.Ct. 45, 46, 83 L.Ed. 52; Gus Blass Co. v. Commissioner of Internal Revenue, 8 Cir., 204 F.2d 327.
While it must be admitted that the sections of the statute in question themselves, without more, would leave one in a quandary as to the applicability of the substantial underestimation penalty in cases where no declaration of estimated tax has been filed, the legislative history accompanying the legislation plainly shows the congressional intent. This congressional intent has been embodied in the Treasury Regulations since November 15, 1943.5 Although Congress has seen fit to amend, but substantially re-enact, the section of the statute here in suit several times since 1943,6 it has not in any way indicated its disapproval of the Treasury Department's interpretation of the section as contained in its regulation. It may be safely assumed, therefore, that the Department's interpretation accords with the congressional intent. Helvering v. Winmill, supra; Gus Blass Co. v. Commissioner of Internal Revenue, supra.
Taxpayers suggest that the legislative history of the Acts amending but substantially re-enacting the sections here in suit do not repeat the interpretation of these sections contained in the Conference Report which accompanied the original legislation, and, consequently, this interpretation should be disregarded. In this contention they are supported by Stenzel v. United States, supra, 150 F.Supp. 365 which states, With deference, this Court does not agree. The fact that the Congress amended but substantially re-enacted Section 294(d) (2) in the Revenue Act of 1943, as well as in subsequent revenue acts, without indicating disapproval of current, consistent and continued Bureau interpretation manifests congressional approval of the interpretation. Helvering v. Winmill, supra; Gus Blass Co. v. Commissioner of Internal Revenue, supra.
Judgments for the defendant.
2 Section 294(d) (2) reads:
...
To continue reading
Request your trial-
Hansen v. Commissioner of Internal Revenue
...T.C. 308, affirmed on other grounds, 10 Cir., 1954, 213 F.2d 102), and other District Courts have similarly decided: Palmisano v. United States, E.D.La.1958, 159 F.Supp. 98; Farrow v. United States, S.D.Cal.1957, 150 F.Supp. 581; Erwin v. Granquist, D.Or.1957, affirmed on other grounds 9 Ci......
-
Acker v. Commissioner of Internal Revenue
...20 T.C. 308, 316, affirmed, on other grounds, 10 Cir., 1954, 213 F.2d 102, and by some District Court decisions Palmisano v. United States, D.C.E.D.La. 1958, 159 F.Supp. 98; Farrow v. United States, D.C.S.D.Cal.1957, 150 F.Supp. 581; Peterson v. United States, D.C.S.D. Tex.1956, 141 F.Supp.......
-
Patchen v. Commissioner of Internal Revenue
...Appeals. 13 Peterson v. United States, D.C.Tex., 141 F.Supp. 382; Farrow v. United States, D.C.Cal., 150 F.Supp. 581; Palmisano v. United States, D.C.La., 159 F.Supp. 98. 14 United States v. Ridley, D.C.Ga., 120 F.Supp. 530; Owen v. United States, D.C.Neb., 134 F.Supp. 31, appeal by United ......
-
Abbott v. Commissioner of Internal Revenue, 12439
...F. Buckley, 1957, 29 T.C. 455; Marcel Garsaud, 1957, 28 T.C. 1086; Walter H. Kaltreider, 1957, 28 T.C. 121; Palmisano v. United States, D.C.E.D.La.1958, 159 F. Supp. 98; Farrow v. United States, D.C. S.D.Cal.1957, 150 F.Supp. 581; Peterson v. United States, D.C.S.D.Texas 1956, 141 F.Supp. 3......