United States v. Fior D'Italia, Inc., 536 U.S. 238, 5 (2002)

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242

UNITED STATES v. FIOR D'ITALIA, INC.

Opinion of the Court

After paying a portion of the taxes assessed, the restaurant brought this refund suit, while the IRS filed a counter-claim for the remainder. The restaurant argued that the tax statutes did not authorize the IRS to use its "aggregate estimation" method; rather, they required the IRS first to determine the tips that each individual employee received and then to use that information to calculate the employer's total FICA tax liability. Simplifying the case, the restaurant agreed that "[f]or purpose[s] of this litigation," it would "not dispute the facts, estimates and/or determinations" that the IRS had "used . . . as a basis for its calculation" of the employees' "aggregate unreported tip income." App. 35. And the District Court decided the sole remaining legal question—the question of the statutory authority to estimate tip income in the aggregate—in Fior D'Italia's favor.

The Court of Appeals affirmed the District Court by a vote of 2 to 1, the majority concluding that the IRS is not legally authorized to use its aggregate estimation method, at least not without first adopting its own authorizing regulation. In light of differences among the Circuits, compare 242 F. 3d 844 (CA9 2001) (case below) with 330 West Hubbard Restaurant Corp. v. United States, 203 F. 3d 990, 997 (CA7 2000), Bubble Room, Inc. v. United States, 159 F. 3d 553, 568 (CA Fed. 1998), and Morrison Restaurants, Inc. v. United States, 118 F. 3d 1526, 1530 (CA11 1997), we granted the Government's petition for certiorari. We now reverse.

II

An "assessment" amounts to an IRS determination that a taxpayer owes the Federal Government a certain amount of unpaid taxes. It is well established in the tax law that an assessment is entitled to a legal presumption of correct-ness—a presumption that can help the Government prove its case against a taxpayer in court. See, e. g., United States v. Janis, 428 U. S. 433, 440 (1976); Palmer v. IRS, 116 F. 3d 1309, 1312 (CA9 1997); Psaty v. United States, 442 F. 2d 1154,

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