United States v. Zacks

PETITIONER: United States
LOCATION: New York Times Office

DECIDED BY: Warren Court (1962-1965)

CITATION: 375 US 59 (1963)
ARGUED: Oct 21, 1963
DECIDED: Nov 21, 1963

Facts of the case


Media for United States v. Zacks

Audio Transcription for Oral Argument - October 21, 1963 (Part 1) in United States v. Zacks

Audio Transcription for Oral Argument - October 21, 1963 (Part 2) in United States v. Zacks

Scott P. Crampton:

May it please the Court, we would like to comment briefly on the general approach of the government by looking at other statutes that have been enacted in this ten-year period to the extent that, that might be at all pertinent.

It seems to us that there is no clear pattern evident from these enactments.

In some of them, Congress said to taxpayers, we're going to give you a benefit, but if you want to take advantage of this benefit why then we want you to file a claim for refund within six months or a year or some shorter period.

It seems to us that that's clearly within the power of Congress to shorten that.

In one instance Congress in 1951, changed the law to give taxpayers a retroactive benefit for the years 1941 to 1947.

In other words they went back ten years, but as here they said nothing about the Statute of Limitations.

The problem was presented to Congress in 1955 and Congress then amended the original amendment to provide for filing claims and in the legislative history said they wanted to correct what was apparently an oversight.

It seems logical to us to think that if this matter had been presented to Congress specifically that was regard to Section 117 (q) it would have probably corrected what it may have considered to have been an oversight just as it did in the 1951 Act.

Hugo L. Black:

To what type of tax did that apply?

Scott P. Crampton:

It's covered on Page 29 of the government's brief.

I think it was an income tax --

Hugo L. Black:

Right, I'll find it.

Scott P. Crampton:

For the benefit of serviceman killed an action I believe.

It was some type of a remedy that they waned to give serviceman or their beneficiaries.

We submit that in determining the issue here, the court should look to Section 117 (q) alone and that in doing so it should be remembered that this statute created entirely new rights as to professional inventors and as to taxpayers having any problem with the holding period it made those rights expressly applicable to the year 1952, which was otherwise barred here and the same would be true of 1951, and that under well established rules in statutory construction, the new legalization is entitled to a reasonable construction to make it fully effective.

We believe that the holding of the court of claims does so by giving full effect to Section 117 (q) and by then applying the Statute of Limitations to Section 117 (q) from the time of its enactment to the extent that this constructive payment may seen like somewhat of a new concept.

It occurs thus that it just the reverse of the coin in that the Internal Revenue Service is often collecting taxes on theories of constructive payment and it's a situation where perhaps the same rules should work both ways.

Finally, it seems to us that if there is any doubt in the interpretation of this problem that the interpretation should be against the Commissioner of Internal Revenue because of his position in the matter.

We submit that it is poor tax administration for the Commissioner of Internal Revenue to tell people in this four-year period that they should report their royalties as ordinary income and then after Congress changes the law to come into this Court and in substance say well you shouldn't have believed what I told, you should have filed claims for refund even though as we say from a point of view of a profession inventor there was absolutely no basis for doing so.

In short, this taxpayer should not be penalized for having followed the government's instructions.

As to this particular statute applied to this particular taxpayer, it seems to us that the Court of Claims was entirely correct in saying that the entire enactment would have been an idle gesture if Congress in giving this benefit for 1952 did not intend taxpayers to get benefit because of the previously outstanding Statute of Limitation.

Am I wrong on this that as far as Mr. Zack is concerned, they were returned to 52, was it?

Scott P. Crampton:

Yes sir.

And the 54 statute was already -- the 54 statute was signed by Congress enacted 56 statute, it was already on the books?

Scott P. Crampton:

That's right.

And as far as a taxpayer that kind of (Inaudible) concern 54 to 56 statute (Inaudible)

Scott P. Crampton:

No, not as to this year.

The 54 statute moved forward.

Not as the 52?

Scott P. Crampton:

That's right.