United States v. Fior D'Italia, Inc., 536 U.S. 238, 11 (2002)

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248

UNITED STATES v. FIOR D'ITALIA, INC.

Opinion of the Court

not accept Fior D'Italia's claim that restaurants are unable to do so—that they "simply do not have the information to dispute" the IRS assessment. Tr. of Oral Arg. 36. Why does a restaurant owner not know, or why is that owner unable to find out: how many busboys or other personnel work for only a day or two—thereby likely earning less than $20 in tips; how many employees were likely to have earned more than $55,000 or so in 1992; how much less cash-paying customers tip; how often they "stiff" waiters or ask for a cash refund; and whether the restaurant owner deducts a credit card charge of, say 3%, from employee tips? After all, the restaurant need not prove these matters with precision. It need only demonstrate that use of the aggregate method in the particular case has likely produced an inaccurate result. And in doing so, it may well be able to convince a judge to insist upon a more accurate formula. See, e. g., Erickson, 937 F. 2d, at 1551 ("Some reasonable foundation for the assessment is necessary to preserve the presumption of correctness" (emphasis in original)).

Nor has Fior D'Italia convinced us that individualized employee assessments will inevitably lead to a more "reasonable" assessment of employer liability than an aggregate estimate. After all, individual audits will be plagued by some of the same inaccuracies Fior D'Italia attributes to the aggregate estimation method, because they are, of course, based on estimates themselves. See, e. g., Mendelson, 305 F. 2d, at 521-522; McQuatters v. Commissioner, 32 TCM 1122 (1973), ¶ 73,240 P-H Memo TC. Consequently, we cannot find that the aggregate method is, as a general matter, so unreasonable as to violate the law.

D

Fior D'Italia also mentions an IRS regulation that it believes creates a special problem of fairness when taken together with the "aggregate" assessment method. That regulation says that an employer, when calculating its FICA

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