Federal Income Tax and the Constitution

Thanks for sharing!

Howard Chandler Christy [Public domain], via Wikimedia CommonsImage source:
Howard Chandler Christy
[Public domain]
via Wikimedia Commons

What amendment to the constitution of the United States comes to mind when you think of federal income taxes? The sixteenth? That’s no surprise, since the thirty words of the sixteenth amendment authorize a federal income tax.

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.

The taxpayer in T.C. Memo. 2013-111 (Field) has a different amendment in mind—the fifth. No, not the part about not having to be a witness against yourself. The fifth amendment also forbids discrimination that is “so unjustifiable as to be violative of due process”—in other words, it provides for equal protection under the law.

What’s the definition of equal protection? Look to yet another amendment to find out. According to the US Supreme Court, fifth amendment equal protection claims are the same as equal protection claims under the fourteenth amendment, which assures “equal application” of law.

Equal application of law—equal protection—means the result of a law is not relevant as long as there is no discrimination in its application.

In Field, the taxpayer believes she is being discriminated against because she cannot claim a $10,144 adoption credit on her federal income tax return. The problem? She claimed the filing status of married filing separately instead of choosing to file a joint return with her spouse, and the rules for claiming the adoption credit require a married couple to file a joint return. (While there are exceptions to the general rule, none of them applied.)

The tax court labels this rule a “tax classification”, and, following Supreme Court opinions, says such a classification is constitutional if it has a rational basis to a legitimate purpose.

And what about the fact that the IRS allowed the deduction in prior years under the same circumstances? Does lack of consistency equal discrimination?

No, because each tax year stands on its own.

The result: No discrimination means no credit.

***

Other posts you might enjoy

Decisions — Point of Interest Image source: wpclipart.com   What's the point? In 149 T.C. No. 17 (CreditGuard of America, Inc.), the court answers the question of when a corporation has to start paying interest on a tax liability. The taxpayer, a credit counseling organization, was incorporated in Florida in 19...
Decisions — Which came first? Image source: openclipart.org   What came first, tax law or exclusions from tax law? In a situation involving the taxation of self-employment income, the exclusion from self-employment tax for rentals from real estate and from personal property leased with the real estate came about at t...
Decisions — Form matters Image source: ©Stevies ID 1869706 Dreamstime Stock Photos   Currently, the IRS website has about 900 forms that can be downloaded for filing purposes. Using the right form can make a difference when you're seeking a refund as an innocent spouse (Palomares) or trying to convince the IRS t...
Decisions — Canine silence Image source: wpclipart.com   In the Arthur Conan Doyle short story, Silver Blaze, fictional detective Sherlock Holmes solved the case by inferring intent from silence—the significance of a dog who didn't bark. In a tax court case this week (149 T.C. No. 2, Gregory), internal revenue ...
Posted in Taxing Lessons From Court Decisions Tagged with: , ,