Tax liability

“ It is settled by many decisions that a taxpayer may not accrue an expense the amount of which is unsettled or the liability for which is contingent, and this principle is fully applicable to a tax, liability for which the taxpayer denies, and payment whereof he is contesting. [5] Here the petitioner, in figuring its costs and its sales price to consumers, added the amount of the processing tax, but it collected its purchase price as such and designated no part of it as representing the tax. ”

“ Thus either a pre-existing tax lien or personal liability for the taxes on the part of a vendor is sufficient to foreclose a subsequent purchaser, who pays the amount necessary to discharge the tax liability, from deducting such payment as a 'tax paid'. Where both lien and personal liability coincide, as here, there can be no other conclusion than that the taxes were imposed on the vendors. ”

“ The reason given to support such a conclusion is that the liability of the settlor for taxes on trust income is based on the possibility that the settlor may be called upon for additional sums in the future. If the obligation continues, the tax liability continues. If the obligation is ended, the tax liability is ended. ”

“ But 'earnings and profits' in the tax sense, although it does not correspond exactly to taxable income, does not necessarily follow corporate accounting concepts, either. [8] Congress has determined that in certain types of transaction the economic changes are not definitive enough to be given tax consequences, and has clearly provided that gains and losses on such transactions shall not be recognized for income-tax liability but shall be taken account of later. §§ 112, 113. It is sensible to carry through the theory in determining the tax effect of such transactions on earnings and profits. ”

“ Under its formula, the net losses and net income of unregulated companies are first set off one against the other, and the tax savings made possible by losses of unregulated enterprises are thus first allocated to the unregulated companies. Only if 'unregulated' losses exceed 'unregulated' income is the regulated company deemed to have enjoyed a reduction in its taxes as a result of the consolidated return. If there is more than one regulated company in the group, they will share the tax liability or tax saving in proportion to their taxable income. ”

“ Taxation is neither a penalty imposed on the taxpayer nor a liability which he assumes by contract. It is but a way of apportioning the cost of government among those who in some measure are privileged to enjoy its benefits and must bear its burdens. Since no citizen enjoys immunity from that burden, its retroactive imposition does not necessarily infringe due process, and to challenge the present tax it is not enough to point out that the taxable event, the receipt of income, antedated the statute. ”

“ The bar of the statute of limitations against the United States in respect of any internal-revenue tax shall not only operate to bar the remedy but shall extinguish the liability; but no credit or refund in respect of such tax shall be allowed unless the taxpayer has overpaid the tax. The bar of the statute of limitations against the taxpayer in respect of any internalrevenue tax shall not only operate to bar the remedy but shall extinguish the liability ”

“ He must first find the cash for a liability for which he may not have provided. * * * The first interest of all of the people is, of course, that the Government continue to function, and to do this it must have the means of prompt collection of the necessary supplies to keep it going, that is, taxes. The method was, therefore, the determination by the Commissioner of the amount of tax due, its collection and suit to recover. * * * (T) he tax as assessed had to be paid and the taxpayer was left to his remedy in the courts. ”

“ And they show that to impose liability for the tax, as a gift tax, upon the estate, as they in terms require, is, in effect, to exact tribute from the gains or property of one measured by the gains or property of another. ”

“ Section 280 (a) (1) provides the United States with a new remedy for enforcing the existing 'liability, at law or in equity.' The quoted words are employed in the statute to describe the kind of liability to which the new remedy is to be applied and to define the extent of such liability. The obligation to be enforced is the liability for the tax. ”

“ No person shall be relieved from liability for any income tax levied by any State, or by any duly constituted taxing authority therein, having jurisdiction to levy such a tax, by reason of his residing within a Federal area or receiving income from transactions occurring or services performed in such area ”

“ While personal liability for the tax may be and sometimes is imposed, the power to tax is predicated upon jurisdiction of the property, not upon jurisdiction of the person of the owner, which often is lacking without impairment of the power to tax. ”

“ Third. As to the validity of section 611. This is not a case of an attempt retroactively to create a liability in relation to a transaction as to which no liability had previously attached. [14] There is no question here as to the original liability of the taxpayers. The tax was a valid one, and the fact that the taxpayers had been indebted to the Government for the amount which was subsequently collected is not now open to dispute. ”

“ Petitioner argues that respondent’s proposed levy action is inappropriate because his correct tax liability for each of 1995, 1996, and 1997 is zero. Petitioner argues that he received neither respondent’s notice of jeopardy assessments nor the notice of deficiency relating to his 1995, 1996, and 1997 Federal income taxes, and petitioner therefore argues that he has not had an opportunity to challenge the existence and amount of the underlying tax deficiencies determined by respondent. ”

“ As by D above referred to trustees and associations acting in a fiduciary capacity have the exemption that individual stockholders have from taxation upon dividends of a corporation that itself pays an income tax, and as the plaintiffs undeniably are trustees, if they are to be subjected to a double liability the language of the statute must make the intention clear. ”

“ Section 4944 (b) (1) imposes liability for the second-tier tax on a foundation "in any case in which an initial tax is imposed by subsection (a) (1) [imposing a first-tier tax] on the making of an investment and such investment is not removed from jeopardy within the taxable period". Section 4945 (b) (1) similarly imposes liability for the second-tier tax on a foundation "In any case in which an initial tax is imposed by subsection (a) (1) on a taxable expenditure and such expenditure is not corrected within the taxable period". ”

“ Petitioner counters that the notice is invalid on the ground that respondent's course of conduct prior to the mailing of the deficiency notice demonstrates that respondent was fully aware that correspondence concerning petitioner's tax liability for the year in issue should have been mailed to petitioner in care of Michael Saltzman in New York. While the parties' contentions regarding petitioner's last known address present an interesting factual issue, we need not resolve that question here. ”

“ The adoption of the taxing act, as recommended by the commission, may therefore be taken, as appellant contends, to evidence a definite and specific legislative purpose to levy a new type of franchise tax, measured by corporate net income, including the tax exempt income from federal and state bonds. ”

“ As compared with the company deriving its income only from taxable sources, the enterprise with the same total amount of investment income derived partly from exempt and partly from taxable sources would pay more tax per dollar of taxable gross income, i.e., taxable income before deduction for the reserve. ”

“ Circumstances wholly fortuitous may determine the year in which income, whenever earned, is taxable, and may thus affect the amount of tax. Receipt of income or accrual of the right to receive it within the tax year is the test of taxability, not the time it has taken the taxpayer to earn it nor the duration of his investments which have finally resulted in profit. ”

“ Corporations are allowed to make certain deductions from gross income, including amounts paid for personal services of officers and employes and other ordinary expenses paid out of income in the maintenance and operation of business and property, including a reasonable allowance for depreciation, losses not compensated for by insurance or otherwise, taxes, etc. These need not be further mentioned, beyond saying that the intent and necessary effect of the act is to tax not gross receipts but net income ”

“ If any person 'liable to tax' fails to pay the taxes assessed against him within the time prescribed, the collector may 'make distraint therefor as provided by law.' Section 3185. The tax so due from any person 'liable to pay' it, together with the interest, penalties, and costs that may accrue in addition thereto, is a lien in favor of the government upon all property, and rights of property, 'belonging to such person.' Section 3186. ”

“ Board of Assessors, 121 La. 116, 46 So. 122, where open accounts arising on the sale of merchandise were the subject of the assessment, the court said: 'There can be no serious question but that the legislature has provided that credits due upon open accounts arising out of business done in this state by nonresidents shall be taxed. . . . The state imposes this tax because of her need of the revenue to be derived from it; she extends to the business the protection of her laws, and seeks to make the business bear its just proportion of the burden of taxation. ”

“ But taxation is not so much concerned with the refinements of title as it is with actual command over the property taxed-the actual benefit for which the tax is paid. If a man directed his bank to pay over income as received to a servant or friend, until further orders, no one would doubt that he could be taxed upon the amounts so paid. ”

“ It is equally true and obvious. and of some importance to the correct interpretation of the statute, that any depreciation in excess of the reasonable allowance authorized can, under the statute, result in no tax advantage to the taxpayer and in no tax prejudice to the Government, unless the excess has in fact been deducted from the taxpayer's gross income. ”

“ At the outset appellant contends that the tax, although stated in the Taxing Act to be on corporate franchises, is in reality a tax on income, and as such falls within the class of taxes which concededly may not be directly imposed on federal instrumentalities. ”

“ A tax upon the assets of a corporation is bad if obligations of the United States are included in the assessment. [25] A gross income tax is invalid to the extent that it is laid on income from federal securities. [26] The reason is that 'the tax * * * is a tax upon the contract subsisting between the government and the individual. ”

“ The only limitations imposed are that direct taxes, including the capitation tax, shall be apportioned; that duties, imposts, and excises shall be uniform; and that no duties shall be imposed upon articles exported from any state. With these exceptions, the exercise of the power is, in all respects, unfettered.
'If a tax upon carriages, kept for his own use by the owner, is not a direct tax, we can see no ground upon which a tax upon the business of an insurance company can be held to belong to that class of revenue charges. ”

“ But, wholly apart from extrinsic circumstances, the statute itself in terms seems clearly to impose an income tax. The tax is not one upon the privilege of doing business, but it is an annual tax for the privilege of doing business, to be computed upon the basis of the net income for the year next preceding. ”

“ It is therefore apparent, giving all the words of the statute effect, that the tax is imposed not upon the franchises of the corporation, irrespective of their use in business, nor upon the property of the corporation, but upon the doing of corporate or insurance business, and with respect to the carrying on thereof, in a sum equivalent to 1 per centum upon the entire net income over and above $5,000 received from all sources during the year ”

“ The first answer to be given to these suggestions, is, that the tax is to be levied upon a valuation of the income of the office. But besides, the obligation upon persons to pay taxes, is mistaken, and the sense in which a tax is a personal charge, is misunderstood. The foundation of the obligation to pay taxes is not the privileges enjoyed or the protection given to a citizen by government, though the payment of taxes gives a right to protection. ”

“ If the tax was erroneous and illegal, as is alleged, it must be conceded that, under the system then in force, there accrued to the taxpayer when he paid the tax a right to have it refunded without any showing as to whether he bore the burden of the tax or shifted it to the purchasers. ”

“ The provision is general, and applied alike to all taxpayers; its purpose is to guide the ascertainment of taxable income in each year. It is a familiar rule that tax laws are to be liberally construed in favor of taxpayers. ”

“ The power to tax income like that of the new corporation is plain and extends to the gross income. Whether and to what extent deductions shall be allowed depends upon legislative grace; and only as there is clear provision therefor can any particular deduction be allowed.
The statutes pertaining to the determination of taxable income have proceeded generally on the principle that there shall be a computation of gains and losses on the basis of a distinct accounting for each taxable year ”