Opinion — United States v. Mitchell (No. 798)

NOTE: Where it is deemed desirable, a syllabus (headnote) will

be released, as is being done in connection with this case, at the time

the opinion is issued. The syllabus constitutes no part of the opinion

of the Court but has been —— by the Reporter of Decisions for

the convenience of the reader. See United States v. Detroit Lumber

Co., 200 U.S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

UNITED STATES et at. v. MITCHELL et At.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 798. Argued April 20, 1971—Decided June 7, 1971

A married woman domiciled in Louisiana, where under state law

the wife has a present vested interest in community property

equal to that of her husband, is personally liable for federal income

taxes on her one-half interest in community income realized during

the existence of the community, notwithstanding her subsequent

renunciation under state law of her community rights, since federal,

not state, law governs what is exempt from federal taxation. Pp.

4-16.

430 F. 2d 1 and 7, reversed.

BuacKMUN, J., delivered the opinion for a unanimous Court.

NOTICE : This opinion is subject to formal revision before ae

in the preliminary print of the United States Reports. Readers are re-

ted to notify the Reporter of Decisions, Supreme Court of the

nited States, Washington, D.C. 20543, of any a or other

formal errors, in order that corrections may be made before the pre-

liminary print goes to press.

SUPREME COURT OF THE UNITED STATES

No. 798.—OctToser TrerM, 1970

United States et al., On Writ of Certiorari to

Petitioners, the United States Court

v of Appeals for the Fifth

Anne Goyne Mitchell et al.} Circuit.

[June 7, 1971]

Mr. Justice BLacKMUN delivered the opinion of the

Court.

These two cases present the issue whether a married

woman domiciled in the community property State of

Louisiana is personally liable for federal income tax on

half the community income realized during the existence

of the community despite the exercise of her statutory

right of exoneration. The issue arises in the context,

in one case, of a divorce, and, in the other, of the hus-

band’s death.

I

Mrs. Mitchell and Mrs. Sims. The Commissioner of

Internal Revenue determined deficiencies against Anne

Goyne Mitchell and Jane Isabell Goyne Sims for the tax

years 1955-1959, inclusive. These were for federal in-

come tax and for additions to tax under § 6651 (a) (fail-

ure to file return), § 6653 (a) (underpayment due to

negligence or intentional disregard of rules and regula-

tious), and § 6654 (underpayment of estimated tax) of

ume Internal Revenue Code of 1954, 26 U. S. C.

§§ 6651 (a), 6653 (a), and 6654. Mrs. Sims is the sister

of Mrs. Mitchell. The determinations as to her were

made under § 6901 as Mrs. Mitchell’s transferee without

consideration.

TET See

ia ee ee

2 UNITED STATES v. MITCHELL

Anne Goyne and Emmett Bell Mitchell, Jr., were mar-

ried in 1946. They lived in Louisiana. In July 1960,

however, they began to live separately and apart. In

August 1961 Mrs. Mitchell sued her husband in state

court for separation. Upon his default, she was granted

this relief. A final decree of divorce was entered in

October 1962. In her separation suit Mrs. Mitchell

prayed that she be allowed to accept the community of

acquets and gains with benefit of inventory. However.

taking advantage of the privilege granted her by Article

2410 of the Louisiana Civil Code,* she formally renounced

the community on September 18, 1961. As a conse-

quence, she received neither a distribution of community

property nor a property settlement upon dissolution of

her marriage. This renunciation served to exonerate her

of “debts contracted during the marriage.”

Mrs. Mitchell earned $4,200 as a teacher during 1955

and 1956. From these earnings tax was withheld. Mr.

Mitchell enjoyed taxable income during the five years in

question. All income realized by both spouses during

this period was community income.

Mrs. Mitchell had little knowledge of her husband's

finances. She rarely knew the balance in the family

bank account. She possessed a withdrawal privilege on

that account, and occasionally exercised it. Her hus-

band was in charge of the couple’s financial affairs and

did not usually consult his wife about them. She was

aware of fiscal irresponsibility on his part. She ques-

tioned him each year about tax returns. She knew

returns were required, but relied on his assurances that

he was filing timely returns and paying the taxes due.

She signed no return herself and assumed that he had

* Art. 2410. “Both the wife and her heirs or assigns have the

privilege of being able to exonerate themselves from the debts con-

tracted during the marriage, by renouncing the partnership or com-

munity of gains.”

UNITED STATES v. 1aITCHELL 3

signed her name for her. In July 1960 she learned that,

in fact, no returns had ever been filed for 1955-1959.

The deficiencies determined against Mrs. Mitchell were

based upon half the community income. The Commis-

sioner sought to collect the deficiencies from property

Mrs. Mitchell inherited from her mother in 1964 and

immediately transferred, without consideration, to Mrs.

Sims.

Mrs. Mitchell sought redetermination in the Tax Court.

Judge Forrester held that under Louisiana community

property law Mrs. Mitchell possessed an immediate

vested ownership interest in half the community

property income and was personally responsible for the

tax on her share. He also ruled that this tax liability

was not affected by her Article 2410 renunciation.

Mitchell v. Commissioner, 51 T. C. 641 (1969).

On appeal, the Fifth Circuit reversed, holding that by

the renunciation Mrs. Mitchell avoided any federal in-

come tax liability on the community income. Mitchell

y. Commissioner, 430 F. 2d 1 (CA5 1970).* Judge

Simpson dissented on the basis of Judge Forrester’s opin-

ion in the Tax Court. 430 F. 2d, at 7.

Mrs. Angello. Throughout the calendar years 1959-

1961 Mrs. Angello, who was then Frances Sparacio, lived

with her husband, Jack Sparacio, in Louisiana. Com-

munity income was realized by the Sparacios during those

years, but neither the husband nor the wife filed any

returns. In 1965 the District Director made assessments

against them for taxes, penalties, and interest, filed a

notice of lien, and addressed a notice of levy to the Metro-

politan Life Insurance Company, which had a policy

outstanding on Mr. Sparacio’s life. The insured died

in March 1966 and the notice of levy (for that amount

of tax and interest resulting from imputing to Mrs.

? Accord, with respect to Texas law, Ramos v. Commissioner, 429

F. 2d 487 (CA5 1970).

a ee: by aS

4 UNITED STATES v. MITCHELL

Sparacio half the community’s income for the tax years

in question) attached to the proceeds of the policy, The

widow, who was the named beneficiary, sued the Metro-

politan in state court to recover the policy proceeds,

The United States intervened to assert and protect its

lien. The case was then removed to federal court. The

Metropolitan paid the proceeds into the court registry

and was dismissed from the case.

Each side then moved for summary judgment. Judge

Christenberry granted the Government’s motion and de-

nied Mrs. Angello’s. Despite the absence of any formal

renunciation by Mrs. Angello under Article 2410, the

Government did not contend that she had accepted any

benefits of the community. On appeal, the Court of

Appeals reversed, relying on the same panel’s decision

in the Mitchell case. Angello v. Metropolitan Life Ins.

Co., 480 F. 2d 7 (CA5 1970). Judge Simpson again

dissented.

We granted certiorari in both cases, 400 U. S. 1008

(1971), on a single petition filed under our Rule 23.5.

II

Sections 1 and 3 of the 1954 Code, 26 U.S. C. $$ 1 and

3, as have all of their predecessors since the Revenue Act

of 1917,° impose a tax on the taxable income “of every

individual.” The statutes, however, have not specified

what that phrase includes,

‘Internal Revenue Code of 1939, §§ 11 and 12; Revenue Act of

1938, §§ 11 and 12, 52 Stat. 452-453; Revenue Act of 1936, §§ 11

and 12, 49 Stat. 1653; Revenue Act of 1934, §§ 11 and 12, 48 Stat.

684; Revenue Act of 1932, §§ 11 and 12, 47 Stat. 174; Revenue Act

of 1928, §§ 11 and 12, 45 Stat. 795, 796; Revenue Act of 1926, §§ 210

and 211, 44 Stat. 21, 22; Revenue Act of 1924, §§ 210 and 211, 43

Stat. 264, 265; Act of March 4, 1923, 42 Stat. 1507; Revenue Act

of 1921, §§ 210 and 211, 42 Stat. 233; Revenue Act of 1918. §§ 210

and 211, 40 Stat. 1062; Revenue Act of 1917, §§ 1 and 201, 40 Stat.

300, 303.

UNITED STATES v. MITCHELL 5

Forty years ago this Court had occasion to consider

the phrase in the face of various state community property

laws and of $§ 210 and 211 of the Revenue Act of 1926.

A husband and wife, residents of the State of Washington,

had income in 1927 consisting of the husband’s salary

and of amounts realized from real and personal property

of the community. The spouses filed separate returns

for 1927 and each reported half the community income.

Mr. Justice Roberts, in speaking for a unanimous court

(two Justices not participating) upholding this tax treat-

ment, said:

“These sections lay a tax upon the net income of

every individual. The Act goes no farther, and

furnishes no other standard or definition of what

constitutes an individual’s income. The use of the

word ‘of’ denotes ownership. It would be a strained

construction, which, in the absence of further defini-

tion by Congress, should impute a broader signifi-

cance to the phrase.” Poe v. Seaborn, 282 U.S. 101,

109 (1930).

The Court thus emphasized ownership. It looked to

the law of the State as to the ownership of community

property and of community income. It concluded that

in Washington the wife has “a vested property right in

the community property, equal with that of her husband ;

and in the income of the community, including salaries

or wages of either husband or wife, or both.” /d., at 111.

It noted that, in contrast, in an earlier case, U nited

States v. Robbins, 269 U. S. 315 (1926), the opposite

result had been reached under the then California law.

But:

“In the Robbins case, we found that the law of

California, as construed by her own courts, gave the

wife a mere expectancy and that the property rights

of the husband during the life of the community

were so complete that he was in fact the owner.”

282 U.S., at 116.

t

“a

ee ee See ee we eee Hs

6 UNITED STATFS v. MITCHELL

In companion cases the Court came to the same eon.

clusion, as it had reached in Seaborn, with respect to the

community property laws of Arizona, Texas, and Louisi-

ana. Goodell v. Koch, 282 U.S. 118 (1930) ; Hopkins y,

Bacon, 282 U. S. 122 (1930); Bender v. Pfaff, 282 U.s

127 (1930).. In the Louisiana case it was said:

“Tf the test be, as we have held it is, ownership

of the community income, this case is probably the

strongest of those presented to us, in favor of the

wife’s ownership of one-half of that income.” 289

U. S., at 131.°

The Court then reviewed the relevant Louisiana statutes

and the power of disposition possessed by each spouse,

It noted that, while the husband is the manager of the

affairs of the marital partnership, the limitations upon

the wrongful exercise of his power over community prop-

erty are more stringent than in many other States. It

concluded:

“Inasmuch, therefore, as, in Louisiana, the wife has

a present vested interest in community property

equal to that of her husband, we hold that the

spouses are entitled to file separate returns, each

treating one-half of the community income as in-

come of each ‘of’ them as an ‘individual’ as those

words are used in §§210(a) and 211 (a) of the

Revenue Act of 1926.” 282 U.S., at 132.

Two months later the Court arrived at the same con-

clusion with respect to California community property

law and federal income tax under the 1928 Act. with

the Government conceding the effectiveness, in this re-

spect, of amendments made to the California statutes

since the Robbins decision. United States vy. Malcolm,

282 U. 8. 792 (1931). Significantly, the Court there

UNITED STATES v. MITCHELL 7

answered in the affirmative, citing Seaborn, Koch, and

Bacon, the following certified question:

“Has the wife under § 161 (a) of the Civil Code of

California such an interest in the community income

that she should separately report and pay tax on

one-half of such income?” 282 U. S., at 794.

This affirmative answer to a question phrased in terms

of “should,” not “may,” clearly indicates that the wife

had the obligation, not merely the right, to report half

the community income.

The federal courts since Malcolm consistently have

held that the wife is required to report half the com-

munity income and that the husband is taxable only on

the other half. Gilmore v. United States, 160 Ct. Cl. 777,

290 F. 2d 942 (1961), reversed on other grounds, 372

U. S. 39 (1963); Van Antwerp v. United States, 92 F.

2d 871 (CA9 1937) ; Simmons v. Cullen, 197 F: Supp. 179,

N. D. Cal. (1961); Dillon v. Commissioner, 56 T. C. No.

22 (1971); Kimes v. Commissioner, 55 T. C. No. 81

(1971); Hill v. Commissioner, 32 T. C. 254 (1959): Hunt

v. Commissioner, 22 T. C. 228 (1954); Freundlich v.

Commissioner, T. C. Memo. 1955-177 (1955) ; Cavanagh

v. Commissioner, 42 B. T. A.:1037, 1044 (1940), aff'd

125 F. 2d 366 (CA9 1942). There were holdings from

the Fifth Circuit to this apparent effect with respect to

Louisiana taxpayers. Commissioner v. Hyman, 135 F.

2d 49, 50 (CA5 1943) ; Saenger v. Commissioner, 69 F. 2d

633 (CA5 1934); Smith v. Donnelly, 65 F. Supp. 415

(ED La. 1946). See Henderson’s Estate v. Commis-

sioner, 155 F. 2d 310 (CA5 1946), and Gonzalez v. Na-

tional Surety Corp., 266 F. 2d 667, 669 (CA5 1959).

Thus, with respect to community income, as with re-

spect to other income, federal income tax liability follows

ownership. Blair v. Commissioner, 300 U. S. 5, 11-14

8 UNITED STATES v. MITCHELL

(1937). See Hoeper v. Tax Commission, 284 U. S. 206

(1931). In the determination of ownership, state law

controls. “The state law creates legal interests but the

federal statute determines when and how they shall be

taxed.” Burnet v. Harmel, 287 U. S. 103, 110 (1932):

Morgan v. Commissioner, 309 U. S. 78, 80-81 (1940):

Helvering v. Stuart, 317 U. S. 154, 162 (1942) ; Commis.

sioner v. Harmon, 323 U. S. 44, 50-51 (1944) (Doveras.

J., dissenting) ; see Commissioner v. Estate of Bosch, 387

U. S. 456 (1967). The dates of the cited cases indicate

that these principles are long-established in the law of

taxation.

III

This would appear to foreclose the issue for the pres-

ent cases. Nevertheless, because the petitioners and the

Court of Appeals stress the effervescent nature of the

wife’s interest in community property in Louisiana, a re-

view of the pertinent Louisiana statutes and decisions is

perhaps in order.

Every marriage contracted in Louisiana “superinduces

of right partnership or community of acquets or gains,

if there is no stipulation te the contrary.” L.S. A-C.C.

Art. 2399 (1971). “This partnership or community con-

sists of the profits of all the effects of which the husband

has the administration and enjoyment, either of right

or in fact, of the produce of the reciprocal industry and

labor of both husband and wife, and of the estate which

they may acquire during the marriage, either by dona-

tions made jointly to them both, or by purchase, or in

any other similar way, even although the purchase be

only in the name of one of the two and not of both,

because in that case the period of time when the pur-

chase is made is alone attended to, and not the person

who made the purchase. ...” Art. 2402. The debts

contracted during the marriage “enter into the partner-

UNITED STATES v. MITCHELL 9

ship or community of gains, and must be acquitted out

of the common fund... .” Art. 2403. “The husband

is the head and master of the partnership or community

of gains; he administers its effects, disposes of the reve-

nues which they produce, and may alienate them by an

onerous title, without the consent and permission of his

wife.’ Also “he may dispose of the movable effects by

a gratuitous and particular title, to the benefit of all

persons.” Art. 2404. The same article, however, de-

nies him the power of conveyance, “by a gratuitous title,”

of community immovables, or of the whole or a quota

of the movables, unless for the children; and if the hus-

band has sold or disposed of the common property in

fraud of the wife, she has an action against her husband’s

heirs. At the dissolution of a marriage “all effects which

both husband and wife reciprocally possess, are presumed

common effects or gains ... .” Art. 2405. At dissolu-

tion, “The effects which compose the partnership or com-

munity of gains, are divided into two equal portions

between the husband and the wife, or between their

heirs... .” Art. 2406. “It is understood that, in the

partition of the effects of the partnership or community

of gains, both husband and wife are to be equally liable

for their share of the debts contracted during the mar-

riage, and not acquitted at the time of its dissolution.”

Art. 2409. Then the wife and her heirs or assigns may

“exonerate themselves from the debts contracted during

the marriage, by renouncing the partnership or com-

munity of gains.” Art. 2410. And the wife “who re-

nounces, loses every sort of right to the effects of the

partnership or community of gains” except that “she

takes back all her effects, whether dotal or extradotal.”

Art. 2411.

The Louisiana court has described and forcefully stated

the nature of the community interest. In Phillips v.

10 UNITED STATES v. MITCHELL

Phillips, 160 La. 813, 825-826, 107 So. 584, 588 (1926),

it was said:

“. . . The wife’s half interest in the community

property is not a mere expectancy during the mar-

riage; it is not transmitted to her by or in conse-

quence of a dissolution of the community. The title

for half of the community property is vested in the

wife the moment it is acquired by the community

or by the spouses jointly, even though it be acquired

in the name of only one of them. ... There are

toose expressions, appearing in some of the opinions

rendered by this court, to the effect that the wife's

half interest in the community property is only an

expectancy, or a residuary interest, until the com-

munity is dissolved and liquidated. But that is

contrary to the provisions of the Civil Code...

and is contrary to the rule announced in every deci-

sion of this court since the «or was first

committed ... .”

Later, in Succession of Wiener, 203 La. 649, 14 So. 2d

475 (1943), a state inheritance tax case, the court, after

referring to §§ 2399 and 2402 of the Civil Code, said:

“That this community is a partnership in which

the husband and wife own equal shares, their title

thereto vesting at the very instant such property is

acquired, is well settled in this state ....

“The conclusion we have reached in this case is in

keeping with the decision of the United States Su-

preme Court in the case of Bender v. Pfaff, supra,

where that court recognized that under the law of

Louisiana the wife is not only vested with the own-

ership of half of the community property from the

moment it is acquired, but is likewise the owner of

half of the community income. ...” 203 La., at

657 and 662, 14 So. 2d, at 477 and 479.

UNITED STATES v. MITCHELL ll

After reviewing joint tenancy and tenancy by the entirety

known to the common law, the Court observed:

“In Louisiana, the situation is entirely different,

for here the civil law prevails, and the theory of the

civil law is that the acquisition of all property during

the marriage is due to the joint or common efforts,

Jabor, industry, economy, and sacrifices of the hus-

band and wife; in her station the wife is just as much

an agency in acquiring this property as is her hus-

band. In Louisiana, therefore, the wife’s rights in

and to the community property do not rest upon

the mere gratuity of her husband; they are just as

great as his and are entitled to equal dignity. .. .

She is the half-partner and owner of all acquisitions

made during the existence of the community,

whether they be property or income. . . .

“Tt is true that in weaving this harmonious com-

mercial partnership around the intimate and sacred

marital relationship, the framers of our law and its

codifiers saw fit, in their wisdom, to place the hus-

band at the head of the partnership, but this did not

in any way affect the status of the property or the

wife’s ownership of her half thereof .... And

the husband was made the managing partner of the

community and charged with the administration of

its effects, as well as with the alienation of its effects

and revenues by onerous title, because he was deemed

the best qualified to act.” 203 La., at 665-667, 14

So. 2d, at 480-481.

The court then outlined in detail the various protections

afforded by Louisiana law to the wife and concluded:

“Tt is obvious, therefore, that the wife’s interest

in the community property in Louisiana does not

spring from any fiction of the law or from any gift

or act of generosity on the part of her husband but,

12 UNITED STATES v. MITCHELL

instead, from an express legal contract of partnership

entered into at the time of the marriage. There js

no substantial difference between her interest therein

and the interest of an ordinary member of a limited

or ordinary partnership, the control and management

of whose affairs has, by agreement, been entrusted

to a managing partner. The only real difference

is that the limitations placed on the managing part-

ner in the community partnership are fixed by lav,

while those placed on the managing partner in an

ordinary or limited partnership are fixed by con-

vention or contract.” 203 La., at 669, 14 So. 2d. at

481-482.

The husband thus is the manager and agent of the Louisi-

ana community, but his powers as manager do not serve

to defeat the ownership rights of the wife.

These principles repeatedly have found expression in

Louisiana cases. United States Fidelity and Guaranty

Co. v. Green, 252 La. 227, 232-233, 210 So. 2d 328. 330

(1968); Gebbia v. City of New Orleans, 249 La. 409.

415-416, 187 So. 2d 423, 425 (1966); Azar v. Azar, 239

La. 941, 946, 120 So. 2d 485, 487 (1960) ; Messersmith vy.

Messersmith, 229 La. 495, 507, 86 So. 2d 169, 173 (1956):

Dizon y. Dizon’s Executors, 4 La. (0. S.) 188, 23 Am.

Dee. 478 (1832).

This Court recognized these Louisiana community

property principles in the Wiener estate’s federal estate

tax litigation. Fernandez v. Wiener, 326 U. S. 340

(1945). There the inclusion in the decedent’s gross

estate of the entire community property was upheld for

purposes of the federal estate tax which is an excise tax.

Mr. Chief Justice Stone noted the respective interests of

the spouses when, in the following language, he spoke of

the effect of deaths

“. . . As we have seen, the death of the husband

of the Louisiana marital community not only oper-

UNITED STATES v. MITCHELL 13

ates to transfer his rights in his share of the com-

munity to his heirs or those taking under his will.

It terminates his expansive and sometimes profitable

control over the wife’s share, and for the first time

brings her half of the property into her full and

exclusive possession, control and enjoyment. The

cessation of these extensive powers of the husband,

even though they were powers over property which

he never ‘owned,’ and the establishment in the wife

of new powers of control over her share, though it

was always hers, furnish appropriate occasions for

the imposition of an excise tax.

“Similarly, with the death of the wife, her title or

ownership in her share of the community property

ends, and passes to her heirs or other appointees.

More than this, her death, by ending the marital

community, liberates her husband’s share from the

restrictions which the existence of the community

had placed upon his control of it... .

“This redistribution of powers and restrictions

upon power is brought about by death notwithstand-

ing that the rights in the property subject to these

powers and restrictions were in every sense ‘vested’

from the moment the community began. . . .” 326

U. S., at 355-356.

Ti.us the Louisiana statutes and cases also seem to

foreclose the claims advanced by the petitioners.

IV

Despite all this, despite the concession that the wife’s

interest in the community property is not a mere ex-

pectancy,* and despite the further concession that she

has a vested title in, and is the owner of, a half share

of the community income,’ the petitioners take the posi-

* Angello brief, 2.

’ Angello brief, 2 and 9.

14 UNITED STATES v. MITCHELL

tion that somehow the wife’s interest is insufficient to

make her liable for federal income tax computed on that

half of the community income.

It is said that her right to renounce the community

and to place herself in the same position as if it had

never existed is substantive; that the wife is not per-

sonally liable for a community debt; that it is really the

community as an entity, not the husband or the wife,

that owns the property; and that Seaborn and its com-

panion cases were concerned only with the right to

split income, not with the obligation so to do. It is

also said that the wife’s dominion over the community

property is nonexistent in Louisiana; that the husband

administers the community’s affairs as he sees fit; that

he is not required to account to the wife, even for mis-

management, unless he enriches his estate at her expense

by fraud; that she has no way to terminate the com-

munity other than by suit for separation, and then only

by showing mismanagement on his part that threatens

her separate estate; that her status is imposed by law,

as contrasted with a commercial partnership where status

is consensual; that she has no legal right to obtain the

information necessary to file a tax return or to obtain the

funds with which to pay the tax; and that Robbins

authorizes taxing the whole of the community income to

the husband. The same arguments, however, were ad-

vanced in Seaborn, 282 U. S., at 103-105, and in its

companion cases, 282 U. S., at 119, 123, and 128, and

were unavailing there, 282 U. S., at 111-113. They do

not persuade us here. Specifically, the power to re-

nounce, granted by Article 2410, is of no comfort to the

wife-taxpayer. As Judge Forrester aptly expressed it,

51 T. C., at 646, Mrs. Mitchell’s renunciation “came

long after her liabilities for the annual income taxes here

in issue had attached.” Further, “. . . This right of

-_

UNITED STATES v. MITCHELL 15

the wife to renounce or repudiate must not be miscon-

strued as an indication that she had never owned and

her share, for that fact was not denied ; but she

did have, under the principles of community, the right

to revoke her ownership and possession... .” 1 W.

deFuniak, Principles of Community Property, § 218, p.

621 (1943).

The results urged by the petitioners might follow, of

course, in connection with a tax or other obligation the

collection of which is controlled by state law. But an

exempt status under state law does not bind the federal

collector. Federal law governs what is exempt from fed-

eral levy.

Section 6321 of the 1954 Code imposes a lien for the

income tax “upon all property and rights to property . - -

belonging to” the person liable for the tax. Section

6331 (a) authorizes levy “upon all property and rights

to property . . . belonging to such person... .” What

is exempt from levy is specified in § 6334 (a). Section

6334 (c) provides, “Notwithstanding any other law of the

United States, no property or rights to property shall be

exempt from levy other than the property specifically

made exempt by subsection(a).” This language is spe-

cific and it is clear and there is no room in it for automatic

exemption of property that happens to be exempt from

state levy under state law. United States v. Bess, 357

U.S. 51, 56-57 (1958) ; Shambaugh v. Scofield, 132 F. 2d

345 (CA5 1943); United States v. Heffron, 158 F. 2d 657

(CA9 1947), cert. denied, 331 U. S. 831; Treas. Regs.

§ 301.6334-1 (c). See Birch v. Dodt, 2 Ariz. App. 228,

407 P. 2d 417 (1965). As a consequence, state law which

exempts a husband’s interest in community property from

his premarital debts does not defeat collection of his

federal income tax liability for premarital tax years from

his interest in the community. United States v. Over-

16 UNITED STATES v. MITCHELL

man, 424 F. 2d 1142, 1145 (CA9 1970) ; In re Ackerman,

424 F. 2d 1148 (CA9 1970). The result as to Mrs.

Mitchell and Mrs. Angello is no different.

It must be conceded that these cases are “hard”’ cases

and exceedingly unfortunate for the two women tax-

payers.© Mrs. Mitchell loses the benefit of her inheri-

tance from her mother, an inheritance that ripened after

the dissolution of her marriage. Mrs. Angello loses her

beneficiary interest in her deceased husband’s life insur-

ance policy. This takes place with each wife not really

aware of the community tax situation, and not really in

a position to ascertain the details of the community in-

come. The law, however, is clear. The taxes were due.

They were not paid. Returns were not even filed. The

“fault,” if fault there be, lies with the four taxpayers and

flows from the settled principles of the community prop-

erty system. If the wives were to prevail here, they

would have the best of both worlds.

The remedy is in legislation. An example is P. L.

91-679 of January 12, 1971, 84 Stat. 2063, adding

to the Code subsection (e) of § 6013 and the final sen-

tence of § 6653 (b). These amendments afford relief to

an innocent spouse, who was a party to a joint return,

with respect to omitted income and fraudulent under-

payment. Relief of that kind is the answer to the peti-

tioners’ situation.

The judgment in each cass: is reversed.

It is so ordered.

® Of course, as Baron Rolfe long ago observed, hard cases “are apt

4o introduce bad law.” Winterbottom v. Wright, 10 M. & W. 109,

116, 152 Eng. Rep. 402, 406 (1842).