United States v. Fior D'Italia, Inc., 536 U.S. 238, 6 (2002)

Page:   Index   Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Cite as: 536 U. S. 238 (2002)

Opinion of the Court

1160 (CA3 1971); United States v. Lease, 346 F. 2d 696, 700 (CA2 1965). We consider here the Government's authority to make an assessment in a particular way, namely, by directly estimating the aggregate tips that a restaurant's employees have received rather than estimating (and then summing) the tips received by each individual employee.

The Internal Revenue Code says that the IRS, as delegate of the Secretary of Treasury,

"is authorized and required to make the inquiries, determinations, and assessments of all taxes . . . which have not been duly paid . . . ." 26 U. S. C. 6201(a) (emphasis added).

This provision, by granting the IRS assessment authority, must simultaneously grant the IRS power to decide how to make that assessment—at least within certain limits. And the courts have consistently held that those limits are not exceeded when the IRS estimates an individual's tax liability—as long as the method used to make the estimate is a "reasonable" one. See, e. g., Erickson v. Commissioner, 937 F. 2d 1548, 1551 (CA10 1991) (estimate made with reference to taxpayer's purchasing record was "presumptively correct" when based on "reasonable foundation"). See also Janis, supra, at 437 (upholding estimate of tax liability over 77-day period made by extrapolating information based on gross proceeds from 5-day period); Dodge v. Commissioner, 981 F. 2d 350, 353-354 (CA8 1992) (upholding estimate using bank deposits by taxpayer); Pollard v. Commissioner, 786 F. 2d 1063, 1066 (CA11 1986) (upholding estimate using statistical tables reflecting cost of living where taxpayer lived); Gerardo v. Commissioner, 552 F. 2d 549, 551-552 (CA3 1977) (upholding estimate using extrapolation of income over 1-year period based on gross receipts from two days); Mendelson v. Commissioner, 305 F. 2d 519, 521-522 (CA7 1962) (upholding estimate of waitress' tip income based on restaurant's gross receipts and average tips earned by all wait-

243

Page:   Index   Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: October 4, 2007