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Fictions of Law & taxes

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  • Legalbear
    I believe that fictions are being used against us on tax issues. There are some places in the Title 26 U.S.C. where it is clearly stated that levies and
    Message 1 of 1 , Oct 6, 2007
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      I believe that fictions are being used against us on tax issues.  There are some places in the Title 26 U.S.C. where it is clearly stated that levies and withholding apply to federal employees.  Respecting that I came across this:  


      A fiction of law may not be used to defeat the manifest will of congress.  Weyerhaeuser v. Hoyt, 1911.SCT.48 <http://www.versuslaw.com> ¶ 89; 219 U.S. 380 (1911).


      The legislature has authority to modify or abolish fictions, though they may have been judicially created.  Rhode Island Hospital Trust Company v. Doughton, Commissioner of Revenue of North Carolina, 1926.SCT.134 <http://www.versuslaw.com> ¶ 18-19; 270 U.S.  69 (1926).




      In Lawder v. Stone, 1902.SCT.331 <http://www.versuslaw.com>, 187 U.S. 281, 47 L. Ed. 178, 23 S.Ct. 79 (1902), an importer had a ship full of pineapples go bad. When the ship reached port in America at the bottom of the hold was what the Court called "slush." After the dutiful tax collectors made an estimate of the number of pineapples that had gone bad and had assessed an import tax, the "slush" was loaded in a scow, taken down river, and dumped in the ocean. The importer challenged the assessment of the tax. The Court held:


      On looking a little further into the principles of the case, it will be seen that a deduction must be made from the quantity shipped abroad, whenever it does not all reach the United States, or we shall in truth assess here what does not exist here. The collection of revenue on an article not existing, and never coming into the country, would be an anomaly, a mere fiction of law, and is not to be countenanced where not expressed in acts of Congress, nor required to enforce just rights. Id. @ para. 27.


      Another example of taxation via a fiction was set forth in the dissenting opinion of this case:


      As we said in Safe Deposit & Trust Co. v. Virginia, 280 U.S. 83, 92, the fiction of mobilia sequuntur personam "must yield to established fact of legal ownership, actual presence and control elsewhere, and ought not to be applied if so to do would result in inescapable and patent injustice, whether through double taxation or otherwise." In that case, a resident of Virginia had transferred certain securities to the Safe Deposit & Trust Company of Baltimore in trust for his minor sons. The donor reserved to himself a power of revocation. He died without having exercised it. Virginia undertook to impose an ad valorem tax upon the entire corpus of the trust estate and this Court held that as the securities were subject to taxation in Mary land, where they were in the actual possession of the trustee, the holder of the legal title, they had no legal situs for taxation in Virginia "unless the legal fiction mobilia sequuntur personam was applicable and controlling." The Virginia court had held that the two beneficiaries in conjunction with the administrator of the father's estate really owned the trust fund and that by reason of the fiction its taxable situs followed them. This Court refused to accept that view and denied the right of taxation to Virginia, saying: "It would be unfortunate, perhaps amazing, if a legal fiction originally invented to prevent personalty from escaping just taxation, should compel us to accept the irrational view that the same securities were within two States at the same instant and because of this to uphold a double and oppressive assessment." Graves v. Elliott, 1939.SCT.539 <http://www.versuslaw.com> ¶ 32; 307 U.S. 383 (1939); Mr. Chief Justice Hughes dissenting.



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