RESPONDENT: Commissioner of Internal Revenue
LOCATION: Military Stockade
DOCKET NO.: 89
DECIDED BY: Warren Court (1957-1958)
LOWER COURT: United States Court of Appeals for the Sixth Circuit
CITATION: 353 US 180 (1957)
ARGUED: Mar 06, 1957 / Mar 07, 1957
DECIDED: Apr 22, 1957
Facts of the case
Media for Automobile Club of Michigan v. Commissioner of Internal RevenueAudio Transcription for Oral Argument - March 07, 1957 in Automobile Club of Michigan v. Commissioner of Internal Revenue
Audio Transcription for Oral Argument - March 06, 1957 in Automobile Club of Michigan v. Commissioner of Internal Revenue
Number 89, Automobile Club of Michigan, Petitioner, versus Commissioner of Internal Revenue.
Ellsworth C. Alvord:
May it please the Court.
Ellsworth C. Alvord:
We are here on certiorari to the Sixth Circuit.
The facts are stipulated and there are three issues in the case, almost three different cases.
I will attempt to cover the first two issues in the order in which they appear in the Government brief and Mr. Berry will cover the third issue.
The first issue does the Commissioner have power to revoke retroactively a ruling of some nine-year standing, eleven-year standing, granting tax exemption to the petitioner.
The second issue is, did he act within the applicable statute of limitations.
The third issue which Mr. Berry will cover is, did the Commissioner have power to compel the petitioner to change his long standing, consistent methods of accounting.
These are the facts that were stipulated and relatively simple.
The petitioner is an automobile service organization, organized under the nonprofit laws of Michigan having no stockholders, only members governed by the Board of Directors.
Like in other, certificate of incorporations and by-laws, all of which are in the record.
Its principal purpose is exactly what we all know an Automobile Association is to give its members emergency service.
If your car doesn't start in the morning, you get stuck on the road, you may call and service is sent.
The Club pays the cost of the service under contracts of various service garages.
That is its principal function.
It also supplies road service to its members, and less, rising where the roads are good and where they're bad.
It also gives a magazine.
Its membership is on annual basis.
It has never paid a dividend and could not pay a dividend.
Early in 1934, it was concerned about the application of Section 215 of the National Recovery Act which imposed a capital stock tax upon corporations.
And as a result of its inquiry the Commissioner wrote a letter and said, "Please send me the facts" and imposed the question there which call for a very detailed facts.
In June of 1934, the Commissioner by letter advised the petitioner, that was exempt from tax under what is now known as Section 101 (9), the same Section under which golf clubs, private golf clubs are exempted, the Metropolitan Club and the Press Club, and all recreations, social subject exempt a value of the petitioner that was exempt under 101(9).
And that it need not file income tax returns, either for the past or for the future.
Somewhat later in 1937 the Commissioner in accordance with his practice have attempted to check on tax exempt organizations or organizations which have been ruled tax exempt as for another questionnaire with a copy filled in and returned.
A second letter came out a few months later saying, "We affirm our prior ruling that you are not -- that you're exempt and you were not called upon to prior corporate income tax returns".
And there the matter stood.
Until my point of view, 1945 but there's an intervening factor of no consequence although the Government pays a great deal of weight to it.
A General Counsel Memorandum which has nothing but the opinion of the General Counsel of the Bureau of Internal Revenue given to the Commission of Internal Revenue for his guidance which he may follow or my not.
He often does not.