Pulver Roofing Co. v. Commissioner

Wilbur, J., dissenting: In view of the impact of unforeseen changes on petitioner’s work force shortly before the years in issue, the similarity of the coverage in 1959 and the years before us, and the virtually identical circumstances existing in 1972 and 1959, I believe it was an abuse of respondent’s discretion to retroactively revoke his ruling. I note with interest that the majority resorts to Greek mythology to explain away the virtually identical circumstances existing in 1972 and 1959. This identity of circumstances is described in unmistakably clear language in the majority’s opinion.

During that year [1972], four of the eight plan participants were members of the prohibited group and four were not members, out of a total of 51 employees. At the time the plan was adopted, there were a total of 76 employees, and of the nine plan participants, four were in the prohibited group. As we have previously noted, the percentage of covered employees in the non-prohibited group actually increased from slightly less than 7 percent to approximately 8.5 percent. Based solely on the naked figures, there does not appear tobe a great deal of difference in the effect of the coverage provisions in 1972 and at the time the plan was adopted. * * * [Fn. ref. omitted. Emphasis added.]

That statement is unduly cautious; candor requires the concession that, for purposes of the relevant criteria, the 2 years are virtually identical. 1

Respondent is not estopped to correct what he determines to be a prior error, and in doing so he is entitled to reach opposite conclusions as to identical situations. But when the opposite result is incorporated in a prior ruling to the same taxpayer, acquired in good faith without any misrepresentation of any kind, he must do it prospectively. Otherwise a ruling means nothing and respondent can exercise his discretion without any bounds.

Respondent has assured all taxpayers that under these circumstances rulings will not be revoked retroactively “except in rare or unusual circumstances.” Rev. Proc. 67-1, 1967- 1 C.B. 544 , 553. If respondent can ignore his own ruling and is not held to account even for a flagrant abuse of discretion, he has no incentive to properly evaluate the original request for a ruling, and predictability evaporates in the fog of an inordinately complex law. This is particularly unfortunate since the Employee Retirement Income Security Act of 1974 (ERISA) has introduced enormous complexity in the pension trust area, both conceptually and administratively, magnifying the need for certainty.

Drennen, Fay, Goffe, Hall, and Wiles, JJ., agree with this dissenting opinion. Apparently, if 1972 were the first year before the Court, the majority would conclude that the revocation was an abuse of discretion as to that year. Additionally, if 2 of the 4 years were identical to 1959, the majority opinion implies that a different result might be in order. And clearly, if 3 of the 4 years were identical, the taxpayer would win, since, to use the majority’s mythological metaphor, the fourth year could not “rise phoenix-like from the ashes” and contaminate the others. I see no point in playing a numbers game that makes a 2 to 2 as opposed to a 3 to 1 split among the years (or the sequence of their occurrence) dispositive. When viewed in light of the relevant statutory criteria, none of the years before the Court are markedly dissimilar from 1959, and 1972 is virtually identical with 1959.