United States v. Fior D'Italia, Inc., 536 U.S. 238, 8 (2002)

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

Opinion of the Court

nitional section, shall include the tips that each individual employee earns. It is as if a tax were imposed on "all of a restaurant's dishes," with a definitional section specifying that "dishes" shall "include each customer's silverware." We simply do not see how this kind of language, taken as a whole, argues against use of an aggregate estimation method that seeks to determine the restaurant's total FICA tax liability.


The Ninth Circuit relied in part upon two other statutory provisions. The first, 26 U. S. C. 446(b), has been interpreted to authorize the IRS to use methods of estimation for determining income tax liability. See, e. g., Mendelson, supra, at 521-522 (authorizing estimate of waitress' gross receipts). The court felt this provision negatively implies a lack of IRS authority to use the aggregate estimation method in respect to other taxes, such as employer FICA taxes, where no such provision applies. 242 F. 3d, at 849. The second, 26 U. S. C. 6205(a)(1), authorizes the Secretary to adopt regulations that prescribe mechanisms for employers to adjust FICA tax liability. The court felt this provision negatively implies a lack of IRS authority to use an aggregate estimation method in the absence of a regulation. 242 F. 3d, at 851.

After examining the statutes, however, we cannot find any negative implication. The first says that, where a taxpayer has used "a method of accounting" that "does not clearly reflect income," or has used "no method of accounting" at all, "the computation of taxable income shall be made under such method as, in the opinion of the Secretary, does clearly reflect income." 446(b). This provision applies to only one corner of income tax law, and even within that corner it says nothing about any particular method of calculation. To read it negatively would significantly limit IRS authority in that respect both within and outside the field of income tax law.


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