DocketNumber: Docket No. 9631-77
Citation Numbers: 72 T.C. 757, 1979 U.S. Tax Ct. LEXIS 82
Judges: Chabot
Filed Date: 8/3/1979
Status: Precedential
Modified Date: 10/19/2024
*82
*758 OPINION
Respondent determined a deficiency of $ 318.09 in petitioner's Federal income tax for 1975. The only issue presented for our consideration is the constitutionality of
Respondent disallowed the dependent care expense deduction on the ground that the payments were made to individuals bearing a relationship to petitioner as described in paragraphs (1) through (8) of
(1) The classification created by
(2) The section establishes an impermissible "irrebuttable or conclusive presumption" that the payor of dependent care expenses to the listed relatives is making a fraudulent claim;
We agree with respondent.
Where it can fairly do so, a court should interpret statutory provisions so as to avoid serious doubts as to their constitutionality. E.g.,
For the taxable year before the Court (1975),
(2) If the taxpayer maintained a household which contained *760 either an under-15 dependent or a dependent or spouse incapable of taking care of himself or herself (
(3) If the expenses were incurred in order to permit the taxpayer to be gainfully employed (
(4) Up to specified maximum dollar amounts (
(5) Under an adjusted gross income phase-out rule (
(6) If, in the case of married taxpayers, they file a joint return (
(7) If the person to whom the payments are made does not bear any relationship to the taxpayer who is described in any of the first eight paragraphs of
Before enactment of
The Tax Reform Act of 1976 (Pub. *92 L. 94-455) repealed
*762 The committee also views the bar on deducting payments to relatives for the care of children as overly restrictive. Relatives generally provide superior attention. In order to cover the child care expenses paid to relatives and also to limit the risks of abuse (such as splitting or transferring income by gift to relatives who are in lower brackets or have incomes below taxable levels) the committee has provided the child care allowance only for those payments made to a relative who is not the taxpayer's dependent and whose wages are subject to social security tax.
The Senate amendment differed only slightly from the bill passed by the House of Representatives and the report of the House Committee on Ways and Means provided essentially the same explanation for the change from then present law. (H. Rept. 94-658, p. 148 (1975), 1976-3 C.B. (Vol. 2) 695, 840. See S. Rept. 94-1236 (Conference Rept.), p. 432, 1976-3 C.B. (Vol. 3) 807, 836;*94 General Explanation of the Tax Reform Act of 1976, prepared by the staff of the Joint Committee on Taxation, p. 125, 1976-3 C.B. (Vol. 2) 1, 137.)
This provision was further revised by section 121 of the Revenue Act of 1978 (Pub. L. 95-600, 92 Stat. 2779), for taxable years beginning after December 31, 1978, to eliminate the requirement that the relative's services be considered employment for Social Security purposes.
What my amendment does is simply to delete this cross reference and *763 rewrite the part of
*96 This is substantially the same explanation given by the House Committee on Ways and Means for the adoption of that statutory language in H.R. 8535. H. Rept. 95-1092. See H. Rept. 95-1800 (Conference Rept.), pp. 202-203, 1978-3 C.B. (Vol. 1) 521, 536-537; General Explanation of the Revenue Act of 1978, prepared by the staff of the Joint Committee on Taxation, p. 64.
Petitioner asserts that the classification created by
It is well settled that deductions are a matter of legislative grace. E.g.,
The parties agree that a classification not involving a fundamental right or suspect category is constitutional if the classification is reasonable and rests upon some ground of difference having a fair and substantial relation to the object of the legislation.
In the area of economics and social welfare, *99 a State does not violate the
"Normally, a legislative classification will not be set aside if any state of facts rationally justifying it is demonstrated to or perceived by the courts."
This Court has previously considered the constitutionality of various provisions of
*102 In one case,
We believe that the Congress acted within the bounds of its constitutional*103 power in enacting
The problems of government are practical ones and may justify, if they do not require, rough accommodations * * * . Mere errors of government are not subject to our judicial review. It is only its palpably arbitrary exercises which can be declared void under the
Because of the foregoing, we hold that
We do not find petitioner's constitutional argument more persuasive merely because the Tax Reform Act of 1976 and the Revenue Act of 1978 removed, in whole or in part, the restriction on payments to relatives. "The mere fact that Congress*105 has not, in the past, favored petitioner is not grounds for asserting that Congress exceeded its constitutional authority."
Petitioner argues that
The general principle of the doctrine of *106 the unconstitutionality of "irrebuttable presumptions" is that crucial facts may not constitutionally be conclusively presumed against someone so as to deprive that person of any significant interest in life, liberty, or property.
The current status of the irrebuttable presumption approach has been dealt with by the Supreme Court in a number of cases during the current decade. These cases are analyzed in the opinion of the Court of Appeals for the Second Circuit in
Thus, assuming arguendo that
Petitioner, at one point in her brief, seems to be asserting that since
*768 V.
Petitioner advances a third argument -- that
In our discussion of petitioner's claim that
We conclude that
1. Unless indicated otherwise, all section references are to sections of the Internal Revenue Code of 1954, as in effect for the taxable year in issue.↩
2. The revision of the relevant provisions by the Tax Reform Act of 1976 modified the restrictive language challenged by petitioner, but only for taxable years beginning after Dec. 31, 1975. The Revenue Act of 1978 then removed the challenged language, but only for taxable years beginning after Dec. 31, 1978.↩
3. Respondent concedes that the expenses would be deductible as dependent care expenses in the absence of the requirements of
4. Presumably, the parties intend particularly to refer to paragraph (4) in the case of Cannon and paragraph (6) in the case of Porter.↩
5. In her petition, petitioner alleges the section is also unconstitutional because it "creates an irrebuttable or conclusive presumption of dependency from relationship alone." Her assertion of this particular irrebuttable presumption appears to have been abandoned on brief, and since we are uncertain about the reasoning behind the assertion, we have not considered it.↩
6.
(a) Allowance of Deduction. -- In the case of an individual who maintains a household which includes as a member one or more qualifying individuals (as defined in subsection (b)(1)), there shall be allowed as a deduction the employment-related expenses (as defined in subsection (b)(2)) paid by him during the taxable year.
[This deduction (
7.
(a) General Definition. -- * * * (1) A son or daughter of the taxpayer, or a descendant of either, (2) A stepson or stepdaughter of the taxpayer, (3) A brother, sister, stepbrother, or stepsister of the taxpayer, (4) The father or mother of the taxpayer, or an ancestor of either, (5) A stepfather or stepmother of the taxpayer, (6) A son or daughter of a brother or sister of the taxpayer, (7) A brother or sister of the father or mother of the taxpayer, (8) A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law of the taxpayer, (9) An individual (other than an individual who at any time during the taxable year was the spouse, determined without regard to
8.
(e) Special Rules. -- For purposes of this section --
* * * * (4) Payments to related individuals. -- No deduction shall be allowed under subsection (a) for any amount paid by the taxpayer to an individual bearing a relationship to the taxpayer described in paragraphs (1) through (8) of
9.
(b) Limitations. -- (1) In general. -- The deduction under subsection (a) -- (A) shall not exceed $ 600 for any taxable year; and (B) shall not apply to any amount paid to an individual with respect to whom the taxpayer is allowed for his taxable year a deduction under
10.
(f) Special Rules. -- for purposes of this section --
* * * * (6) Payments to related individuals. -- (A) In general. -- Except as provided in subparagraph (B), no credit shall be allowed under subsection (a) for any amount paid by the taxpayer to an individual bearing a relationship to the taxpayer described in paragraphs (1) through (8) of (B) Exception. -- Subparagraph (A) shall not apply to any amount paid by the taxpayer to an individual with respect to whom, for the taxable year of the taxpayer in which the service is performed, neither the taxpayer nor his spouse is entitled to a deduction under
11.
(6) Payments to related individuals. -- No credit shall be allowed under subsection (a) for any amount paid by the taxpayer to an individual -- (A) with respect to whom, for the taxable year, a deduction under (B) who is a child of the taxpayer (within the meaning of
12. "Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."↩
13. "No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."↩
14.
15. A. Feld, "Deductibility of Expenses for Child Care and Household Services: New
Kotch v. Board of River Port Pilot Comm'rs for Port of New ... , 330 U.S. 552 ( 1947 )
Flemming v. Nestor , 80 S. Ct. 1367 ( 1960 )
Shapiro v. Thompson , 89 S. Ct. 1322 ( 1969 )
United States v. Maryland Savings-Share Ins. Corp. , 91 S. Ct. 16 ( 1970 )
Metropolis Theater Company, Plffs. In Err. v. City of ... , 33 S. Ct. 441 ( 1913 )
Reed v. Reed , 92 S. Ct. 251 ( 1971 )
Nicol v. Ames , 19 S. Ct. 522 ( 1899 )
Charles E. Moritz v. Commissioner of Internal Revenue , 469 F.2d 466 ( 1972 )
Speiser v. Randall , 78 S. Ct. 1332 ( 1958 )
William G. Barter, Wanda B. Barter, Ralph D. Blair and ... , 550 F.2d 1239 ( 1977 )
Naomi Jablonski Cash v. Commissioner of Internal Revenue , 580 F.2d 152 ( 1978 )
Maryland Savings-Share Insurance Corp. v. United States , 308 F. Supp. 761 ( 1970 )
New Colonial Ice Co. v. Helvering , 54 S. Ct. 788 ( 1934 )
United States v. Carolene Products Co. , 58 S. Ct. 778 ( 1938 )
Bolling v. Sharpe , 74 S. Ct. 693 ( 1954 )
Grosjean v. American Press Co. , 56 S. Ct. 444 ( 1936 )
Dandridge v. Williams , 90 S. Ct. 1153 ( 1970 )
Johnson v. Robison , 94 S. Ct. 1160 ( 1974 )
Lindsley v. Natural Carbonic Gas Co. , 31 S. Ct. 337 ( 1911 )
Elizabeth B. Nammack v. Commissioner of Internal Revenue , 459 F.2d 1045 ( 1972 )