United States v. Fior D'Italia, Inc., 536 U.S. 238, 17 (2002)

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Souter, J., dissenting

the Government with a presumption of correctness. See United States v. Janis, 428 U. S. 433, 440 (1976).1 The practice of assessing FICA taxes against an employer on estimated aggregate tip income, however, raises anomaly after anomaly, to the point that one has to suspect that the Government's practice is wrong. An appreciation of these consequences, in fact, calls for a reading of the crucial provision, 26 U. S. C. 3121(q), in a straightforward way, which bars aggregate assessments and the anomalies that go with them.



The Social Security scheme of benefits and the FICA tax funding it have been characterized as a kind of "social insurance," Flemming v. Nestor, 363 U. S. 603, 609 (1960), in which employers and employees contribute matching amounts. Compare 26 U. S. C. 3101 with 3111. The payments that beneficiaries are entitled to receive are determined by the records of their wages earned. Nestor, supra, at 608.

Notwithstanding this basic structure, the IRS's aggregate estimation method creates a disjunction between amounts presumptively owed by an employer and those owed by an employee. It creates a comparable disproportion between the employer's tax and the employee's ultimate benefits, since an aggregate assessment does nothing to revise the earnings records of the individual employees for whose benefit the taxes are purportedly collected.2 Thus, from the outset, the aggregate assessment fits poorly with the design of the system.

1 In 1998, Congress altered the burdens of proof for tax cases, but the changes do not implicate FICA. See 26 U. S. C. 7491(a).

2 Although the scheme does not create a vested right to benefits in any employee, see Flemming v. Nestor, 363 U. S. 603, 608-611 (1960), the legislative choice to tie benefits to earnings history evinces a general intent to create a rough parity between taxes paid and benefits received.

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