PROOF OF FACTS: Doubts about legislative construction must be resolved in favor of the Taxpayer
“The language of section 61(a) of the Internal Revenue Code of 1954, set forth above, might at first glance appear to have broadened the definition of gross income by the omission of any reference to gain. This, however, is not so, because the Supreme Court had before it the then recently enacted 1954 Code of Internal Revenue when it decided Commissioner v. Glenshaw Glass Co., supra. It noted that, although the definition of gross income had been simplified, “no effect on its present broad scope was intended.” 348 U.S. 432, 75 S.Ct. 477. In addition, the Court in General American Investors Co. v. Commissioner of Internal Revenue, 348 U.S. 434, 75 S.Ct. 478, 99 L.Ed. 504 (1955), decided the same day as Glenshaw Glass Company, supra, held that “insider profits” under the Securities and Exchange Act of 1934 were includable in the recipient corporation’s gross income.”
[Conner v. United States, 303 F. Supp. 1187, 1190 (S.D. Tex. 1969)]
“Whatever may constitute income, therefore, must have the essential feature of gain to the recipient. This was true when the sixteenth amendment became effective, it was true at the time of the decision in Eisner v. McComber, supra, it was true under section 22(a) of the Internal Revenue Code of 1939, and it is likewise true under section 61(a) of the Internal Revenue Code of 1954. If there is no gain, there is no income.”
[Conner v. United States, 303 F. Supp. 1187, 1191 (S.D. Tex. 1969)]
“[citing the 1913 statutory definition of “net income”]the net income of a taxable person shall include gains, profits, and income derived from ”)
[Gould v. Gould, 245 U.S. 151, 152 (1917)]
“As appears from the above quotations, the net income upon which subdivision 1 directs that an annual tax shall be assessed, levied, collected and paid is defined in division B. The use of the word itself in the definition of “income” causes some obscurity, ”
[Gould v. Gould, 245 U.S. 151, 153 (1917)]
“In the interpretation of statutes levying taxes it is the established rule not to extend their provisions, by implication, beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out. In case of doubt they are construed most strongly against the Government, and in favor of the citizen. United States v. Wigglesworth, 2 Story, 369; American Net Twine Co. v. Worthington, 141 U.S. 468, 474; Benziger v. United States, 192 U.S. 38, 55.”
[Gould v. Gould, 245 U.S. 151, 153 (1917)]
“On behalf of the Government it is urged that taxation is a practical matter and concerns itself with the substance of the thing upon which the tax is imposed rather than with legal forms or expressions. But in statutes levying taxes the literal meaning of the words employed is most important, for such statutes are not to be extended by implication beyond the clear import of the language used. If the words are doubtful, the doubt must be resolved against the Government and in favor of the taxpayer. Gould v. Gould, 245 U.S. 151, 153. The rule is stated by Lord Cairns in Partington v. Attorney-General, L.R. 4 H.L. 100, 122: “I am not at all sure that, in a case of this kind — a fiscal case — form is not amply sufficient; because, as I understand the principle of all fiscal legislation, it is this: If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitable construction, certainly such a construction is not admissible in a taxing statute, where you can simply adhere to the words of the statute.” And see Eidman v. Martinez, 184 U.S. 578, 583.”
[United States v. Merriam, 263 U.S. 179, 187-88 (1923)]
“a law is presumed, in the absence of clear expression to the contrary, to operate prospectively; that, if doubt exists as to the construction of a taxing statute, the doubt should be resolved in favor of the taxpayer,”
[Hassett v. Welch, 303 U.S. 303, 314 (1938)]
“I respectfully disagree with the dissent’s suggestion that, when a provision of the Code and the corresponding regulations are ambiguous, this Court should defer to the Government’s interpretation. See post, at 1-2 (opinion of STEVENS, J.). At a bare minimum, in cases such as this one, in which the complex statutory and regulatory scheme lends itself to any number of interpretations, we should be inclined to rely on the traditional canon that construes revenue-raising laws against their drafter. See Leavell v. Blades, 237 Mo. 695, 700-701, 141 S.W. 893, 894 (1911) (“When the tax gatherer puts his finger on the citizen, he must also put his finger on the law permitting it”); United States v. Merriam, 263 U.S. 179, 188 (1923) (“If the words are doubtful, the doubt must be resolved against the Government and in favor of the taxpayer”); Bowers v. New York Albany Lighterage Co., 273 U.S. 346, 350 (1927) (“The provision is part of a taxing statute; and such laws are to be interpreted liberally in favor of the taxpayers”). Accord, American Net Twine Co. v. Worthington, 141 U.S. 468, 474 (1891); Benziger v. United States, 192 U.S. 38, 55 (1904).”
[United Dominion Industries v. United States, 532 U.S. 822, 838-39 (2001)]
“The dissent also unnecessarily engages in an analysis of the legislative history of § 6901. In addition to the fact that § 6901 creates no substantive liability, § 6324(b)’s limitation is clear on its face, and there is no reason to consider § 6901’s legislative history. Reliance on legislative history is suspect even if a tax statute is ambiguous because, as noted above, there is a “longstanding canon of construction” that if “the words of a tax statute are doubtful, the doubt must be resolved against the government and in favor of the taxpayer.””
[United States v. Marshall, 798 F.3d 296, 319 (5th Cir. 2015)]
“If there were any doubt as to the intention of the states to make the grant of the right to impose indirect taxes subject to the condition that such taxes shall be in all respects uniform and impartial, that doubt, as said by counsel, should be resolved in the interest of justice, in favor of the taxpayer.’”
[Pollock v. Farmers’ Loan Trust Co., 157 U.S. 429, 595 (1895)]