Sayles v. Comm'r of Corps. & Taxation

• Decision Date: 30 March 1934
• Citation: 189 N.E. 579,286 Mass. 102
• Parties: SAYLES v. COMMISSIONER OF CORPORATIONS AND TAXATION.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

286 Mass. 102

189 N.E. 579

SAYLES

v.COMMISSIONER OF CORPORATIONS AND TAXATION.

Supreme Judicial Court of Massachusetts, Suffolk.

March 30, 1934.

Appeal from Board of Tax Appeals.

Petition by Mary H. Sales to review an order of the Board of Tax Appeals affirming action of the Commissioner of Corporations and Taxation fixing a deficiency in petitioner's income tax for 1930. From a decision in favor of the Commissioner, the petitioner appeals under St. 1931, c. 218.

Petition dismissed.

W. H. Hitchcock, of Boston, for appellant.

C. F. Lovejoy, Asst. Atty. Gen., for Commissioner of Corporations and Taxation.

DONAHUE, Justice.

The appellant, as inhabitant of Massachusetts, during the year 1929 owned, and received interest from, bonds of various corporations. The interest received was subject to taxation, was reported by her in her income tax return for that year and she paid a tax assessed to her upon it. The bonds contained a provision in substance that the corporations would reimburse a holder thereof who was a resident of Massachusetts for any income tax imposed by the Commonwealth on account of interest from such bonds, if application for reimbursement were made within a stated time after payment of the tax. The appellant duly made an application and received from the corporations the sum of $257.84 as such reimbursement. She did not include that sum in any tax return. The commissioner of corporations and taxation in 1932 assessed to the appellant an additional income tax for the year 1930 amounting with interest to $17.25, based on the amount of $257.84 which she had received as such reimbursement. An application to the commissioner for an abatement of the tax of $17.25 was refused, she paid the tax under protest and took an appeal by petition to the Board of Tax Appeals. From its decision in favor of the commissioner, she has appealed to this court.

The only issue is whether the sum of $257.84 received by the appellant as reimbursement for the tax paid by her on interest received from her bonds was taxable as ‘interest from bonds' under G. L. (Ter. Ed.) c. 62, § 1(a). That statute so far as here material provides: ‘Section 1. Income of the classes described in subsections (a), (b), (c) and (e) received by any inhabitant of the commonwealth during the preceding calendar year, shall be taxed at the rate of six per cent per annum. (a) Interest from bonds, notes, money at interest and all debts due the person to be taxes. * * *’

In construing the statute we have in mind that tax statutes must be construed strictly, and that the power to tax must be found expressed in apt words and cannot be deduced by implication. Osgood v. Tax Commissioner, 235 Mass. 88, 90, 126 N. E. 371;DeBlois v. Commissioner of Corporations and Taxation, 276 Mass. 437, 438, 177 N. E. 566. ‘* * * The natural import of words according to the ordinary and approved usage of the language when applied to the subjectmatter of the act, is to be considered as expressing Boston & Maine Railroad v. Town of Billerica, Boston & Maine Railroac V. Town of Billerica, 262 Mass. 439, 444, 160 N. E. 419, 422.

The bonds obligated the corporations issuing them to make regular periodical payments of sums of money computed at a stated rate on the principal amount of the bonds. Such payments are manifestly to be made as compensation for the use of that amount of money and are generally and properly described as payments of ‘interest.’ The bonds contain a further obligation of the corporations to any owner residing in this Commonwealth. Such an owner is entitled to receive not only interest at the stated rate but, as well, a further sum of money if the amount he has received as ‘interest’ becomes depleted by the payment of an income tax assessed to the owner based on that ‘interest.’ Because of this provision for reimbursement his actual yearly return or income from the bonds is in fact not permanently diminished by reason of the payment of that income tax. The question...