United States v. Fior D'Italia, Inc., 536 U.S. 238, 3 (2002)

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Opinion of the Court

Assistant Attorney General O'Connor argued the cause for the United States. With her on the briefs were Solicitor General Olson, Deputy Solicitor General Wallace, Kent L. Jones, Bruce R. Ellisen, and Jeffrey R. Meyer.

Tracy J. Power argued the cause for respondent. With her on the brief were Thomas W. Power, Donald B. Ayer, and Elizabeth Rees.*

Justice Breyer delivered the opinion of the Court.

Employers must pay Federal Insurance Contributions Act taxes (popularly known as Social Security taxes or FICA taxes), calculated as a percentage of the wages—including the tips—that their employees receive. 26 U. S. C. 3101, 3111, 3121(q). This case focuses upon the Government's efforts to assess a restaurant for FICA taxes based upon tips that its employees may have received but did not report. We must decide whether the law authorizes the Internal Revenue Service (IRS) to base that assessment upon its aggregate estimate of all the tips that the restaurant's customers paid its employees, or whether the law requires the IRS instead to determine total tip income by estimating each individual employee's tip income separately, then adding individual estimates together to create a total. In our view, the law authorizes the IRS to use the aggregate estimation method.


The tax law imposes, not only on employees, but also "on every employer," an "excise tax," i. e., a FICA tax, in an amount equal to a percentage "of the wages . . . paid by him with respect to employment." 3111(a) (setting forth basic Social Security tax); 3111(b) (using identical language to set

*Briefs of amici curiae urging affirmance were filed for the American Gaming Association by Robert H. Kapp, John G. Roberts, Jr., and Frank J. Fahrenkopf, Jr.; for the National Restaurant Association by Peter G. Kilgore; and for Patricia R. Guancial by Lawrence R. Jones, Jr.

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