Commissioner v. Hansen

PETITIONER: Commissioner
RESPONDENT: Hansen
LOCATION: United States Senate

DOCKET NO.: 380
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 360 US 446 (1959)
ARGUED: Apr 29, 1959 / Apr 30, 1959
DECIDED: Jun 22, 1959

Facts of the case

Question

Media for Commissioner v. Hansen

Audio Transcription for Oral Argument - April 29, 1959 in Commissioner v. Hansen

Audio Transcription for Oral Argument - April 30, 1959 in Commissioner v. Hansen

Earl Warren:

Number 512, Clifton E. Baird and Violet L. Baird, Petitioners, versus Commissioner of Internal Revenue.

Mr. Ponder, you may proceed.

Lester M. Ponder:

Mr. Chief Justice, may it please the Court.

I'd like to refer at this time to two statements that were made -- have been made by the counsel for the Government which are on my mind.

One is that it has been a long established administrative practice to treat the accruals as the Government contends in this case.

I'd like to point out that first on that point, the administrative ruling to which counsel refers was not issued until 1957 long after this question was deeply in litigation in the lower courts.

Secondly, I'd like to point out that the Commissioner has never seen fit to embody this position in regulations either under the 1939 Code or more lately under the 1954 Code.

And we submit that if the Commissioner felt strongly as to the correctness of this administrative position, he would have embodied it in a regulation carrying the weight of a regulation and not of a ruling, which, of course, it does not have the standing on regulation, secondly, on the point just made as to the accrual point of the later deduction.

I believe it is safe to say that a search of all the cases decided by this Court involving the proper year of accrual of items, of income or deductions in the lower courts without exception and that includes two cases, I think the most recent cases of this Court on the accrual question which have not been referred to, those are the Dixie Pine Products and the Security Flour Mills cases which are cited, of course, in the brief in 1944.

And in none of those cases, I submit, has this Court eluded to or ever referred to any later offset or credit as having any possible effect on the year of accrual but the test being as annunciated in the Spring City case and as reiterated in all the later cases that is the right to income which becomes fixed in the year which was determined to question.

The offset to --

Earl Warren:

What --

Lester M. Ponder:

Excuse me.

Earl Warren:

-- what was the practice between 1931, as counsel referred to the ruling of the Department, and 1957.

Did the 1957 regulation changed the practice or did it merely codify it in -- in the regulations?

Lester M. Ponder:

Let me say this, Your Honor, in the first place, it was never put in the regulations in 1957 and has --

Earl Warren:

Well, whatever --

Lester M. Ponder:

The ruling, a revenue ruling.

Earl Warren:

Ruling.

Lester M. Ponder:

As I understand it, Your Honor, there was no change in the treatment accorded by the Commissioner when the question arose as to how taxpayers treated it in that interim period, I cannot say.

In other words, the 1931 ruling was -- what is known as a GCM, which is the General Counsel's Memorandum so-called at that time.

Frequently, as you know, taxpayers do not see fit to follow inferior administrative rulings but preferring to litigate those rulings if they feel they are incorrect.

Now, as -- answering your question, as far as I know, there was no change in this general view of the Commissioner during that period.

But as I say, he failed to give this position the dignity and standing of a regulation even though from the year, I say, 1948 to the present, this question has been litigated time and time again but no changes -- but, as I say, no regulation was issued on the point.

I called the Court's attention briefly to an error in printing on page 9 of the brief.

I do not think it is material.

But in the line on that page in a tabulation entitled Financing Charge Paid to Finance Company $420, that amount should be $1265.80 as it appears on page 18 of the record which is given as the reference there, that is there is no confusion if the record is checked but it's simply in the printing there was a transposition because that figure had appeared earlier in the tabulation.

I simply call that to the Court's attention.

Now, I will endeavor not to repeat the basic accrual points which have already been, I think, very amply covered by preceding counsel.

I would like to point out to the Court, however, that it is the position of the petitioners in the Baird case that their rights to income where even more contingent during the taxable years than those of the automobile dealers.