Commissioner v. Kowalski facts for kids
Quick facts for kids Commissioner v. Kowalski |
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| Argued October 12, 1977 Decided November 29, 1977 |
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| Full case name | Commissioner of Internal Revenue v. Kowalski, et ux. |
| Citations | 434 U.S. 77 (more)
98 S. Ct. 315; 54 L. Ed. 2d 252
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| Holding | |
| §119 was intended to exclude meals received "in kind," and so does not exclude cash reimbursements for meals like the one in question. | |
| Court membership | |
| Case opinions | |
| Majority | Brennan, joined by Stewart, White, Marshall, Powell, Rehnquist, Stevens |
| Dissent | Blackmun, joined by Burger |
| Laws applied | |
| Internal Revenue Code § 119 | |
Commissioner v. Kowalski was an important case decided by the Supreme Court of the United States in 1977. It was all about whether money given to employees for meals should be taxed. The Court looked closely at a tax rule called Internal Revenue Code Section 119.
The main thing the Court decided was that tax rule Section 119 only applies to meals given directly, like food itself. It does not apply to cash given to buy meals.
Contents
What Happened?
The State of New Jersey started giving its state police officers cash for meals in 1949. Before this, troopers ate at special meal stations. But this meant they had to leave their patrol areas.
The new system gave officers money to buy meals in their patrol areas. This way, they could stay on duty.
The meal money was paid every two weeks, along with their regular salary. The money was kept separate in the State's records. Troopers did not have to prove how they spent the money. They could even eat at home if it was in their patrol area.
A state trooper named Kowalski did not include all of his meal money on his tax report for 1970. The tax office, called the Commissioner, thought this money should have been taxed. They said he owed more taxes.
Kowalski argued that the meal money was not regular income. He said it was given for the convenience of his employer, the State. He also argued it should not be taxed under tax rule Section 119.
The Big Question
The Supreme Court had to answer two main questions:
- Was the cash meal payment not considered income under tax rule Section 61(a)?
- If it was income, could it be excluded (not taxed) under tax rule Section 119?
The Court's Decision
Justice Brennan wrote the main opinion for the Court. He quickly said that the meal allowances were income. He explained that income includes almost all money or wealth a person receives.
Then, the Court rejected Kowalski's arguments about tax rule Section 119.
Why the Court Decided That Way
The Court gave two main reasons for its decision:
Only Meals Given Directly Are Excluded
The Court found that Congress meant for Section 119 to only exclude meals given directly, like actual food.
- The tax rule itself talks about "meals" being "furnished." It does not mention "cash" for meals.
- A report from the Senate in 1954 also said that Section 119 applies only to "meals... in kind." It also said that "cash allowances for meals... will continue to be includable" as income.
Ending Old Tax Confusion
The Court also said that Section 119 was created to make tax rules clearer. Before this rule, there was a lot of confusion about when meals or lodging provided by an employer were taxed. Congress wanted to end this confusion with Section 119. So, the Court said the rule should be understood as a clear replacement for the old, confusing laws.
The Disagreement
Justice Blackmun, joined by Chief Justice Burger, disagreed with the Court's decision. He thought the payments should fall under the exception in Section 119.
Justice Blackmun argued that the tax rule was not as clear as the majority said. He also believed that a state trooper's "business premises" (where they work) was anywhere they were on duty in New Jersey.
He felt that state troopers, who are not paid a lot, would not understand the decision. He doubted they would find the situation as clear as the Court did.
