Iselin v. United States
Headline: Court limits IRS power to tax resale of private opera stockholders’ boxes, blocks a special surtax on a shareholder who sold her reserved parterre box tickets, and requires a narrower reading of the tax law.
Holding:
- Prevents IRS from using paragraph 3 to tax private stockholders’ box resales.
- Clarifies that ticket-office ‘‘established prices’’ cannot be assumed where none exist.
- Limits reliance on administrative practice when statute language is clear.
Summary
Background
A New York opera house was owned by a company that reserved all parterre (stockholders’) boxes and gave owners six free admissions each performance. Georgine Iselin, a shareholder who held a license for one parterre box, sold the right to use her box for 47 of 70 performances in a season and received $9,525. The Internal Revenue Service assessed a large tax under paragraph 3 of §800(a) of the Revenue Act of 1918; Iselin paid under protest and sued after the Commissioner denied her refund claim. The Court of Claims dismissed her case and the matter came to this Court on appeal.
Reasoning
The Court examined whether paragraph 3 — which taxes tickets sold at newsstands, hotels, and other places above the ticket-office price — reaches private sales of reserved stockholders’ boxes that were never sold at a ticket office and had no established ticket-office price. The Court held the statute’s language was specific and unambiguous, and it did not cover this special category. The Court rejected the lower court’s reasoning that an ‘‘established price’’ could be imputed and refused to extend the statute by judicial construction. It also said longstanding administrative practice could not override clear statutory text. The result was reversal of the Court of Claims’ judgment.
Real world impact
The decision means the particular resale receipts from private stockholders’ boxes cannot be taxed under paragraph 3 as the Government argued. The ruling narrows the scope of that provision and limits the IRS’s ability to treat private box sales like ordinary ticket resales, giving relief to the shareholder and similar sellers.
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