United States v. Fior D'italia, Inc. (536 U.S. 238)
U.S. Supreme Court · decided June 17, 2002 · Supreme Court Database (Spaeth)
- Citation
- 536 U.S. 238 · 122 S. Ct. 2117
- Decided
- June 17, 2002
- Term
- October Term 2001
- Vote
- 6–3
- Majority author
- Justice Breyer
- Issue area
- Federal Taxation
- Disposition
- Reversed
- Outcome
- Petitioning party won
- Ideological direction
- Liberal
Opinion excerpt
Justice Breyer delivered the opinion of the Court. Employers must pay Federal Insurance Contributions Act taxes (popularly known as Social Security taxes or FICA taxes), calculated as a percentage of the wages — including the tips — that their employees receive. 26 U. S. C. §§ 3101, 3111, 3121(q). This case focuses upon the Government’s efforts to assess a restaurant for FICA taxes based upon tips that its employees may have received but did not report. We must decide whether the law authorizes the Internal Revenue Service (IRS) to base that assessment upon its aggregate estimate of all the tips that the restaurant’s customers paid its employees, or whether the law requires the IRS instead to determine total tip income by estimating each individual employee’s tip income separately, then adding individual estimates together to create a total. In our view, the law authorizes the IRS to use the aggregate estimation method. I The tax law imposes, not only on employees, but also “on every employer,” an “excise tax,” i. e., a FICA tax, in an amount equal to a percentage “of the wages ... paid by him with respect to employment.” § 3111(a) (setting forth basic Social Security tax); § 3111(b) (using identical language to set forth additional hospital insurance tax). It specifies that “tips received by an employee in the course of his employment shall be considered remuneration” and…
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