United States v. Home Concrete & Supply, LLC

Opinion Summary:

Ordinarily, the Government must assess a deficiency against a taxpayer within "3 years after the return was filed." 26 U.S.C. 6501(a). The 3-year period was extended to 6 years, however, when a taxpayer "omits from gross income an amount properly includible therein which is in excess of 25 percent of the amount of gross income stated in the return." Section 6501(e)(1)(A). At issue was whether this latter provision applied when the taxpayer overstated his basis in property that he has sold, thereby understating the gain that he received from the sale. Following Colony, Inc. v. Commissioner, the Court held that the provision did not apply to an overstatement of basis. Therefore, the 6-year period did not apply. Accordingly, the Court affirmed the judgment of the Fourth Circuit.

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .




certiorari to the united states court of appeals for the fourth circuit

No. 11–139. Argued January 17, 2012—Decided April 25, 2012

Ordinarily, the Government must assess a deficiency against a tax- payer within “3 years after the return was filed,” 26 U. S. C. §6501(a), but that period is extended to 6 years when a taxpayer “omits from gross income an amount properly includible therein which is in excess of 25 percent of the amount of gross income stated in the return,” §6501(e)(1)(A). Respondent taxpayers overstated the basis of certain property that they had sold. As a result, their returns understated the gross income they received from the sale by an amount in excess of 25%. The Commissioner asserted the deficiency outside the 3-year limitations period but within the 6-year period. The Fourth Circuit concluded that the taxpayers’ overstatements of basis, and resulting understatements of gross income, did not trigger the extended limitations period:chanrobles.com-red

Held: The judgment is affirmed:chanrobles.com-red

634 F. 3d 249, affirmed:chanrobles.com-red

Justice Breyer delivered the opinion of the Court, except as to Part IV–C, concluding that §6501(e)(1)(A) does not apply to an overstatement of basis. Pp. 2–8:chanrobles.com-red

(a) In Colony, Inc. v. Commissioner, 357 U. S. 28 , the Court interpreted a provision of the Internal Revenue Code of 1939 containing language materially indistinguishable from the language at issue here, holding that taxpayer misstatements that overstate the basis in property do not fall within the statute’s scope. The Court recognized that such an overstatement wrongly understates a taxpayer’s income, but concluded that the phrase “omits . . . an amount” limited the statute’s scope to situations in which specific receipts are left out of the computation of gross income. The Court also noted that while the statute’s language was not “unambiguous,” id., at 33, the statutory history showed that Congress intended to restrict the extended limitations period to situations that did not include overstatements of basis. Finally, the Court found its conclusion “in harmony with the unambiguous language of §6501(e)(1)(A),” id., at 37, the provision enacted as part of the Internal Revenue Code of 1954 and applicable here. Pp. 2–4:chanrobles.com-red

(b) Colony determines the outcome of this case. The operative language of the 1939 provision and the provision at issue is identical. It would be difficult to give the same language here a different interpretation without overruling Colony, a course of action stare decisis counsels against. John R. Sand & Gravel Co. v. United States, 552 U. S. 130 . The Government suggests that differences in other nearby parts of the 1954 Code favor a different interpretation than the one adopted in Colony. However, its arguments are too fragile to bear the significant weight it seeks to place upon them. Pp. 4–7:chanrobles.com-red

(c) The Court also rejects the Government’s argument that a recently promulgated Treasury Regulation interpreting the statute’s operative language in its favor should be granted deference under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 . See National Cable & Telecommunications Assn. v. Brand X Internet Services, 545 U. S. 967 . Colony has already interpreted the statute, and there is no longer any different construction that is consistent with Colony and available for adoption by the agency. Pp. 7–8:chanrobles.com-red

Breyer, J. delivered the opinion of the Court, except as to Part IV–C. Roberts, C.J., and Thomas and Alito, JJ., joined that opinion in full, and Scalia, J., joined except for Part IV–C. Scalia, J., filed an opinion concurring in part and concurring in the judgment. Kennedy, J., filed a dissenting opinion, in which Ginsburg, Sotomayor, and Kagan, JJ., joined.


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