Leo Louis Dubois, Jr. v. Commissioner of Revenue (September 10, 2004)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



LEO LOUIS DUBOIS, JR. 	   v.      COMMISSIONER OF REVENUE

Docket No. C265404			      Promulgated:
							 September 10, 2004

	This is an appeal under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39 from the refusal of the Commissioner of Revenue to abate personal income taxes assessed against the appellant for the tax year ending December 31, 2000.
The Commissioner of Revenue's Motion for Summary Judgment was heard by then-Chairman Burns.  Commissioners Scharaffa and Egan joined her in the decision for the appellee.  
These findings of fact and report are made at the request of the appellant pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

Leo Louis DuBois, pro se, for the appellant.

Laura S. Kershner, Esq., for the appellee.




FINDINGS OF FACT AND REPORT
On the basis of briefs and supporting documents submitted by both parties, the Appellate Tax Board ("Board") made the following findings of fact.
For calendar year 2000, ("the tax year at issue"), Leo L. DuBois, Jr. ("the appellant"), was a resident of, and was employed by, the Commonwealth of Massachusetts.  Mr. DuBois timely filed a Massachusetts resident personal income tax return ("Form 1") on which he reported zero gross income.   However, the appellant attached to Form 1 a copy of a Form W-2 from his employer listing $42,068.78 as wages in "Box 1."  The appellant alleged an over-payment of tax of $2,507.51, the amount of Massachusetts income tax withheld by his employer.
On May 12, 2001, the Commissioner of Revenue ("Commissioner") issued a refund check to the appellant for $157.57.  The Commissioner had adjusted the appellant's taxable income to include the wages shown on the Form W-2 and issued the appellant a "Notice of Change in Tax / Notice of Assessment" dated May 14, 2001.
On or about May 29, 2001, the appellant submitted a letter to the Commissioner, together with a lengthy brief, protesting the denial of the full amount of the refund requested on his Form 1.  A hearing on the matter was held before the Department's Office of Appeals.  On June 5, 2002, the Commissioner issued a Notice of Abatement Determination to the appellant denying his request for an abatement of taxes.  On July 16, 2002, the appellant seasonably filed a Petition under the Formal Procedure with the Board.  On the basis of these facts, the Board found that it had jurisdiction to hear this appeal.  
The appellant contended that the monies that he had received from his employer for services provided during the course of his employment were not "profit proceeding from capital" and thus were not includible as "gross income" as defined by the Internal Revenue Code ("Code") and as incorporated into the Massachusetts tax statutes.  On August 14, 2003, the Commissioner filed a motion for summary judgment.  For the reasons stated in the following Opinion, the Board allowed the Commissioner's motion and entered a decision for the appellee.
	

OPINION
The term "gross income" is defined to "mean[] all income from whatever source derived, including but not limited to (1) compensation for services . . . ."  26 U.S.C. § 61(a)(1) (emphasis added).  This provision of the Code is incorporated into the Massachusetts tax statutes at G.L. c. 62, § 2(a).  The Form W-2 submitted into evidence reflects the appellant's receipt of wages from his employer as "compensation for services" provided by the appellant.  
The appellant argued that his wages are not includible as "gross income" as that term is defined in § 61 of the Code.  In support of this contention, the appellant relied upon a myriad of Code sections and federal case law, not one of which provides actual support for his contention.
The appellant first argued that the adjective "gross" somehow restricted or limited the scope of income subject to tax.  He claimed that income must somehow be "sourced" per 26 U.S.C. § 861 before it qualifies as "gross income" taxable under Code § 61.  However, Code § 861 provides income-sourcing rules for identifying items of income that must be treated as income from sources within, as opposed to outside, the United States.  That provision is irrelevant here, because all of the appellant's income was earned domestically.  The Supreme Judicial Court has previously found that income-sourcing rules do not apply to the current version of Code § 61.  See Ingraham v. State Tax Commission, 368 Mass. 242, 244 (1975) (finding that the definition of "gross income" for state purposes does not require income-sourcing but instead "embraces 'all income from whatever source derived.'"), quoting 26 U.S.C. § 61(a).
The appellant next claimed that "gross income" as included in the Sixteenth Amendment of the United States Constitution and as defined by Supreme Court cases, including Commissioner of Internal Revenue v. Glenshaw Glass Co., 348 U.S. 426 (1955) and Eisner v. Macomber, 252 U.S. 189 (1920), is somehow restricted to gains from corporate activities or gains derived from capital.  However, the appellant selected only portions of federal cases to find a definition of "income" that does not specifically mention wages.  For example, the appellant ignored the portion of Eisner v. Macomber which held that income may be derived "from labor."  Id. at 207 ("`Income may be defined as the gain derived from capital, from labor, or from both combined.'") (quoting Stratton's Independence v. Howbert, 231 U.S. 399, 415 (1913)); Doyle v. Mitchell Bros. Co., 247 U.S. 179, 185 (1918).  Moreover, the Supreme Court has held that Code § 61 was intended by Congress to exert "the full measure of its taxing power" over all income from whatever source derived.  Glenshaw Glass, 348 U.S. at 429 (citations omitted).
Code § 61 defines "gross income" as specifically including "compensation for services."  Citing select Code sections and out-of-context phrases from Supreme Court and other federal court opinions cannot limit the scope of "gross income."  The appellant's contention that because compensation for services is not described in these certain provisions, then it is not included in "gross income," is without merit.  Code § 61, the relevant statute governing the definition of "gross income" for Massachusetts personal income taxation, provides no such limitation when it defines the term as including "all income from whatever source derived."  On the contrary, the phrase "gross income" is intended to be comprehensive, and necessarily includes compensation for services; there is no ambiguity or room for "semantic maneuvers."  See Olson v. Commissioner of Revenue, 26 Mass. App. Tax Bd. Rep. 477, 478 (2001), Rossi v. Commissioner of Revenue, 2003 ATB Adv. Sh. 473, 476-77, Ganong v. Commissioner of Revenue, 2003 ATB Adv. Sh. 616, 626.  The Board noted that the absence of a case that specifically states that wages are taxable is immaterial when Code § 61 is clear in its directive that wages are includible as "gross income."  "Where the language of a statute is clear and unambiguous, it is conclusive as to legislative intent."  Pyle v. School Commission, 423 Mass. 283, 285 (1996), citing Allen v. Commissioner of Corps. & Taxation, 272 Mass. 502, 508 (1930).  See also New England Medical Center Hospital, Inc. v. Commissioner of Revenue, 381 Mass. 748, 750 (1980) (stating that where the statutory language is sufficiently clear, a court need not seek further guidance from other sources).
The Massachusetts Supreme Judicial Court has previously rejected the argument that income must be sourced when the federal definition of "gross income" clearly "embraces 'all income from whatever source derived.'"  Ingraham v. State Tax Commission, 368 Mass. 242, 244 (1975), quoting 26 U.S.C., § 61(a).  The Board has also consistently rejected the claims of taxpayers raising essentially the identical arguments raised here, that their wages are not subject to Massachusetts income tax.  See Olson v. Commissioner of Revenue, 26 Mass. App. Tax Bd. Rep. 477, 478 (2001); Rossi v. Commissioner of Revenue, 2003 ATB Adv. Sh. 473, 476-77, Ganong v. Commissioner of Revenue, 2003 ATB Adv. Sh. 616, 626.  Accordingly, the Board ruled that the appellant's wages were taxable income for Massachusetts income tax purposes. 
For all of the foregoing reasons, the Board granted the appellee's motion for summary judgment and entered a decision in favor of the appellee.

					    APPELLATE TAX BOARD




					By:_______________________________
					    Frank J. Scharaffa, Member

A true copy, 


Attest:________________________
	     Clerk of the Board

ATB 2004-306