Commissioner v. Flowers

Mr. Justice Rutledge,

dissenting.

I think the judgment of the Court of Appeals should be affirmed. When Congress used the word “home” in § 23 of the Code, I do not believe it meant “business headquarters.” And in my opinion this case presents no other question.

Congress allowed the deduction for “traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business.” Treasury Regulations 103, § 19.23 (a)-l, are to the same effect, with the word “solely” added after “home.” Section 19.23 (a)-2 also provides: “Commuters’ fares are not considered as business expenses and are not deductible.” By this decision, the latter regulation is *475 allowed, in effect, to swallow up the deduction for many situations where the regulation has no fit application.

Respondent's home was in Jackson, Mississippi, in every sense, unless for applying § 23. There he maintained his family, with his personal, political and religious connections; schooled his children; paid taxes, voted, and resided over many years. There too he kept hold upon his place as a lawyer, though not substantially active in practice otherwise than to perform his work as general counsel for the railroad. This required his presence in Mobile, Alabama, for roughly a third of his time. The remainder he spent in Jackson at the same work, except for the time he was required to travel to points other than Mobile.

The company’s principal offices were there, including one set aside for respondent’s use. But the bulk of its trackage was in Mississippi and much of its legal work, with which he was concerned, was done there. His choice to keep his home in Jackson must have been affected by this fact, although it was motivated chiefly by more purely personal considerations. It is doubtful indeed, though perhaps not material, whether by not moving to Mobile he did not save the Government from larger deductions on account of traveling expense than those he claimed.

There is no question therefore but that respondent’s home was in Jackson for every purpose, unless for the single one of applying § 23. Nor is it in doubt that he traveled from Jackson to Mobile and return, as he claimed, or that he spent the sums deducted for that purpose, including meals and lodging. Neither is it denied, as matter of fact, that his sole reason for going to Mobile was to perform his work as it required his presence or that he returned to his home in Jackson periodically when his duties no longer required him to be in Mobile.

I think this makes a case squarely within the statute and the regulations. But the Tax Court ruled that the claimed deductions were “personal, living, or family ex *476 penses.” Because the taxpayer elected to keep his home in Jackson, rather than move to Mobile, and because his employer did not undertake to pay these expenses, it viewed the case as being the same as if he had moved to Mobile. In that event, it said, he would have been required to bear the expenses of his own meals and lodging. This is obvious, even though the “as if” conclusion does not follow. The court went on, however, to give the further reason for it: “The situation ... is, in principle, no different from that in which a taxpayer’s place of employment is in one city and for reasons satisfactory to himself he resides in another.” It seems questionable whether, in so ruling, the Tax Court has not confused the taxpayer’s principal place of employment with his employer’s. Eor on the facts Jackson rather than Mobile would seem more appropriately to be found his business headquarters. But, regardless of that, the authorities cited 1 and the Government’s supporting argument show that the case was regarded as in essence the commuter’s, excepted by the regulations.

Apart from this ruling, the Tax Court made no finding, of fact or law, that respondent was not engaged “in the pursuit of a trade or business”; that he was not “away *477 from home”; that the expenses were not “business expenses” or “business traveling expenses”; or that they were not “ordinary and necessary.” Yet by a merry-go-round argument, 2 which always comes back to rest on the idea that “home” means “business headquarters,” the Government seeks to inject such issues and findings, including a Dobson ( 320 U. S. 489 ) contention, into the Tax . Court’s determination. I think there was only one issue, a question of law requiring construction of the statute as to the meaning of the word “home” and, if that is resolved against the Government, the Tax Court’s judgment has no other foundation on which to stand. Every other contention falls when this one does. All stand if it is valid.

1 agree with the Court of Appeals that if Congress had meant “business headquarters,” and not “home,” it would have said “business headquarters.” When it used “home” instead, I think it meant home in everyday parlance, not in some twisted special meaning of “tax home” or “tax headquarters.” 3 I find no purpose stated or implied in the Act, the regulations or the legislative history to support such a distortion or to use § 23 as a lever to force people to move their homes to the locality where their *478 employer’s chief business headquarters may be, although their own work may be done as well in major part at home. The only stated purpose, and it is clearly stated, not in words of art, is to relieve the tax burden when one is away from home on business.

The Government relies on administrative construction, by the Commissioner and the Tax Court, and says that unless this is accepted the Act creates tax inequality. If so, it is inequality created by Congress, and it is not for the Commissioner or the Tax Court, by administrative reconstruction, to rewrite what Congress has written or to correct its views of equality. Moreover, in my opinion, the inequity, if any, comes not from the statute or the regulation but from the construction which identifies petitioner with a commuter.

That word too has limitations unless it also is made a tool for rewriting the Act. The ordinary, usual connotation, cf. 21 I. C. C. 428; Pennsylvania R. Co. v. Towers, 245 U. S. 6, 12 , does not include irregular, although frequent journeys of 350 miles, requiring Pullman accommodations and some twelve to' fifteen hours, one way.

Congress gave the deduction for traveling away from home on business. The commuter’s case, rightly confined, does not fall in this class. One who lives in an adjacent suburb or city and by usual modes of commutation can work within a distance permitting the daily journey and return, with time for the day’s work and a period at home, clearly can be excluded from the deduction on the basis of the section’s terms equally with its obvious purpose. But that is not true if “commuter” is to swallow up the deduction by the same sort of construction which makes “home” mean “business headquarters” of one’s employer. If the line may be extended somewhat to cover doubtful cases, it need not be lengthened to infinity or to cover cases as far removed from the prevailing connotation of *479 commuter as this one. Including it pushes “commuting” too far, even for these times of rapid transit. 4

Administrative construction should have some bounds. It exceeds what are legitimate when it reconstructs the statute to nullify or contradict the plain meaning of nontechnical terms not artfully employed. Moreover, in this case the matter has been held in suspension by litigation with varying results 5 and apparent qualification by the Tax Court consequent upon some of the decisions. 6

By construing “home” as “business headquarters”; by reading “temporarily” as “very temporarily” into § 23; by bringing down “ordinary and necessary” from its first sentence into its second; 7 by finding “inequity” where Congress has said none exists; by construing “commuter” to cover long-distance, irregular travel; and by conjuring *480 from the “statutory setting” a meaning at odds with the plain wording of the clause, the Government makes over understandable ordinary English into highly technical tax jargon; There is enough of this in the tax laws inescapably, without adding more in the absence of either compulsion or authority. The arm of the tax-gatherer reaches far. In my judgment it should not go the length of this case. Congress has revised § 23 once to overcome niggardly construction. 8 It should not have to do so again.

Frank H. Sullivan, 1 B. T. A. 93; Mort L. Bixler, 5 B. T. A. 1181; Jennie A. Peters, 19 B. T. A. 901; Walter M. Priddy, 43 B. T. A. 18.

The Sullivan case illustrates the typical commuter situation. The Peters case illustrates the extension of that ruling to greater distances and irregular travel.

Recent decisions, however, where the traveling distance is great, appear to go on the theory, presented in the instant case, that the word “home” within the meaning of § 23 (a) (1) means “principal place of business.” See Tax Court Memorandum Opinion, Dec. 13,853 (M), 1 C. C. H. Tax Serv. 1945, p. 1268. Thus, Mertens says that the disallowance of traveling expenses to one’s place of business “is based primarily on the requirement that the traveling expenses include only amounts expended 'while away from home.’ ” 4 Mertens, Law of Federal Income Taxation, 478.

Thus, the assertion that the deductions were “not even 'business’ expenses” is brought back to the meaning of “home” by the given reason that “the maintenance of more than one dwelling place manifestly is not essential to the prosecution of a business.” And this, in turn, completes the circle by resting on the conclusion that the taxpayer had two dwelling places, one in Mobile (presumably the hotel or hotels where he stopped) “where he resided during the periods the living expenses in question were incurred,” the other in Jackson “where he resided during other periods.” Likewise, the conclusion that the deductions were not “ordinary and necessary expenses,” see note 8, depends on the view that Jackson was not “home” but Mobile was. So with the assertion that the “Mobile living expenses” were not “business traveling expenses.”'

Cf. Cox v. Collector, 12 Wall. 204 ; Addison v. Holly Hill Co., 322 U. S. 607, 617-618 .

The Treasury Regulations in force in 1920 allowed deduction of only the excess of the cost of meals and lodging away from home over the cost at home; and under earlier regulations none of this expense was allowed. Congress inserted the words “all” and “entire” in the 1921 Act to overcome this ruling.

Conceivably men soon may live in Florida or California and fly daily to work in New York and back. Possibly they will be regarded as commuters when that day comes. But, if so, that is not this case and, in any event, neither situation was comprehended by Congress when § 23 was enacted.

See Wallace v. Commissioner, 144 F. 2d 407 (C. C. A. 9); Coburn v. Commissioner, 138 F. 2d 763 (C. C. A. 2); and the decision now in review, 148 F. 2d 163 (C. C. A. 5), with which compare Barnhill v. Commissioner and Winborne v. Commissioner, 148 F. 2d 913 (C. C. A. 4).

See Harry F. Schurer, 3 T. C. 544 ; Charles G. Gustafson, 3 T. C. 998 ; Mortimer M. Mahony, C. C. H. Tax Ct. Serv., Dec. 14, 508 (M), April 10, 1945; Charles J. McLennan, C. C. H. Tax Ct. Serv., Dec. 14, 644 (M), June 25, 1945; Robert S. Shelley, C. C. H. Tax Ct. Serv., Dec. 14,642 (M), June 25,1945.

The language is: “All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered; traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business; ...” § 23 (a) (1) (A), Internal Revenue Code.