- 4 - The latter method requires taxpayers to maintain adequate records substantiating their investment in the retirement plan and the amounts previously excluded from income. Apparently, because Social Security covers a substantially larger population, Congress eliminated this record-keeping requirement, simplifying the task of reporting for the vast majority of taxpayers. Thus, except as provided in section 86(f), there is no provision in section 86 for treating Social Security benefits as an annuity or pension subject to section 72.2 In essence, petitioners question the fairness of section 86. However, this is not the proper forum to question the policy considerations that impelled the enactment of this legislation. “Normally, a legislative classification will not be set aside if any state of facts rationally justifying it is demonstrated to or perceived by the courts.” United States v. Maryland Savings- Share Ins. Corp., 400 U.S. 4, 6 (1970). The legislative history of section 86, as enacted in 1983, demonstrates that Congress had a valid and rational basis for the distinctions made in the statute: By taxing only a portion of social security and railroad retirement benefits (that is, up to one-half 2 Sec. 86(f) provides the Social Security benefits may be treated for Federal tax purposes as a pension or annuity only for purposes of sec. 22(c)(3)(A), relating to the credit for the elderly and the permanently and totally disabled; sec. 32(c)(2), relating to the earned income credit; sec. 219(f)(1), relating to the deduction for retirement savings; and sec. 911(b)(1), relating to the foreign earned income exclusion.Page: Previous 1 2 3 4 5 6 Next
Last modified: May 25, 2011