Opinion · Court of Appeals for the Fourth Circuit

Koerner v. United States

550 F.2d 1362

Type
Opinion
Court
Court of Appeals for the Fourth Circuit
Jurisdiction
Federal
Date
1977-02-28
Topic
employee-benefits-and-executive-compensation

How later courts describe this case

  • holding meal allowances not to be excludable under sec. 119

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Authority status
pending
Cited by
4 opinions
KOERNER v. UNITED STATES,550 F.2d 1362(4th Cir. 1977)
MORGAN P. KOERNER AND JUANITA B. KOERNER, WHO INDIVIDUALLY AND AS CLASS
REPRESENTATIVES OF ALL MEMBERS OF THE WEST VIRGINIA DEPARTMENT OF PUBLIC
SAFETY, AND THEIR SPOUSES, APPELLEES v. UNITED STATES OF AMERICA,
APPELLANT.
No. 76-1495.
United States Court of Appeals, Fourth Circuit.
Argued December 9, 1976.
Decided February 28, 1977.
Page 1363
William A. Friedlander, Atty., Tax Div., Dept., of Justice, Washington, D.C. (Scott P. Crampton, Asst. Atty. Gen., Washington, D.C., John A. Field, III, U.S. Atty., Charleston, W. Va., Raymond L. Hampton, II, Asst. U.S. Atty., Huntington, W.Va., Gilbert E. Andrews and Alfred S. Lombardi, Attys., Tax Div., Dept. of Justice, Washington, D.C., on brief), for appellant.

Edward V. Lee, Huntington, W. Va., for appellees.
Appeal from the United States District Court for the Southern District of West Virginia.
Before CRAVEN, RUSSELL and WIDENER, Circuit Judges.
PER CURIAM:
[1] Plaintiffs are members of the West Virginia Department of Public Safety, commonly known as State police. Under West Virginia law, they are provided a subsistence allowance for each working day, in lieu of housing, quarters and rations,1On the joint returns filed for the years 1967, 1968 and 1969, plaintiffs included these payments in their gross income, but subsequently filed amended returns for the years in issue, claiming an overpayment in taxes for each year based upon their erroneous treatment of the subsistence payments as income. The Commissioner of Internal Revenue denied the claims for refund on the ground that such payments were income and not excludable.2Thereafter, plaintiffs filed this refund action.3The District Court entered judgment in favor of the plaintiffs and the United States appealed. We reverse.

[2] It is settled that deductions from income for federal tax purposes exist only as specifically authorized by statute.4and statutes authorizing such deductions are to be strictly construed.5The right to exclude from gross income "the value of any meals or lodging furnished to [an employee] by his employer for the convenience of the employer"Page 1364is specifically limited by the Internal Revenue Code to meals "furnished on the business premises of the employer."6The phrase "furnished on the business premises of the employer" is neither vague nor indefinite; it is, as the Court said inWilson v. United States(1st Cir. 1969)412 F.2d 694at 696, a phrase "of great specificity." The plaintiffs while engaged in their duties concededly are not furnished meals "on the business premises of the employer." The payments made to them by the State of West Virginia cannot consequently meet the clearly stated requirements for exclusion from gross income under the Internal Revenue Code. The District Court should, therefore, have entered judgment for the United States.

[3] We realize that in directing judgment for the United States, we are going against decisions in the Third,7Fifth,8Eighth9and Tenth Circuits,10but, like the First Circuit,11we cannot read the plainly stated language of § 119 as authorizing the exclusion of these payments to the plaintiffs for "meals" from gross income. It may seem unfair to make the distinction between meals "furnished * * * on the business premises of the employer" and those provided elsewhere, but deductions from income depend entirely on legislative grace and not on principles of absolute fairness.12Actually, it is unlikely that a completely fair system of taxation could be formulated.

[4] The judgment of the District Court is reversed and the cause is remanded for the entry of judgment in favor of the United States.

[5] REVERSED.Page 289
  1. After suit was filed, plaintiffs were allowed, without notice to the United States, through amendment of their complaint, to proceed both individually and as representatives of a class consisting of all the members of the State police in West Virginia. The United States claims error in allowing the action to proceed as a class action. We are inclined to agree with such contention,see, Lipsett v. United States(S.D.N.Y. 1965)37 F.R.D. 549,552, app. dism.359 F.2d 956, but, since we find that the claims of the plaintiffs are without merit, it is unnecessary to resolve this claim of error. ↩
  2. Plaintiffs were denied a refund only for 1967 and 1969; the Commissioner inadvertently refunded the amount claimed for 1968. ↩
  3. 28 U.S.C. § 1346(a)(1). ↩
  4. Commissioner of Internal Revenue v. Jacobson(1949)336 U.S. 28,49,69 S.Ct. 358,93 L.Ed. 477;Helvering v. NorthwestSteel Mills(1940)311 U.S. 46,49,61 S.Ct. 109,85 L.Ed. 29. ↩
  5. Bingler v. Johnson,(1969)394 U.S. 741,751-2,89 S.Ct. 1439,22 L.Ed.2d 695;Trustees of Graceland Cem. Imp. F. v.United States(1975)515 F.2d 763,770,206 S.Ct. 609. ↩
  6. § 119, 26 U.S.C. ↩
  7. Kowalski v. Commissioner of Internal Revenue(3d Cir. 1976)544 F.2d 686;Jacob v. United States(3d Cir. 1974)493 F.2d 1294;Saunders v. Commissioner of Internal Revenue(3d Cir. 1954)215 F.2d 768. ↩
  8. United States v. Barrett(5th Cir. 1963)321 F.2d 911. ↩
  9. United States v. Morelan(8th Cir. 1966)356 F.2d 199. ↩
  10. United States v. Keeton(10th Cir. 1967)383 F.2d 429. ↩
  11. Wilson v. United States, supra,412 F.2d at 696. ↩
  12. Commissioner of Internal Revenue v. Sullivan(1958)356 U.S. 27,28,78 S.Ct. 512,2 L.Ed.2d 559;Harper v. UnitedStates(D.S.C. 1967)274 F. Supp. 809,813,aff'd(4th Cir.)396 F.2d 223;Harper Oil Company v. United States(10th Cir. 1970)425 F.2d 1335,1342. ↩