1947 U.S. Tax Ct. LEXIS 291">*291
Petitioner is the widow of a retired fireman of the District of Columbia. Pursuant to the provisions of the Code of the District of Columbia and an order of the Board of Commissioners of the District, effective on and after April 9, 1938, she received a monthly relief allowance of $ 60 from the Policemen and Firemen's Relief Fund, District of Columbia. Decedent paid $ 558.69 into the fund for the benefit of himself and his widow through monthly deductions of 3 1/2 per cent from his salary, as required by section 4-503 of the said code. During each of the taxable years 1942 and 1943 petitioner received $ 720 from the fund.
8 T.C. 266">*266 The respondent determined an aggregate income tax deficiency for 1942 and 1943 of $ 173.38 by increasing petitioner's taxable income for each year by $ 720 which she received as a widow's pension from the Policemen and Firemen's Relief Fund, District of Columbia. Petitioner omitted the $ 720 from each year's return and denies that it is taxable income.
In determining the deficiency the respondent added the unforgiven portion of petitioner's 1942 tax liability, determined to be $ 66.71, to her 1943 tax liability under and pursuant to the provisions of the Current Tax Payment Act of 1943.
8 T.C. 266">*267 FINDINGS OF FACT.
The petitioner is an individual presently residing at 1502 Trinidad Avenue, Washington, D. C. Her 1942 and 1943 tax returns were filed with the collector of internal revenue for the district of Maryland.
In 1942 and 1943 petitioner was the widow of Joseph T. McGlynn, a former employee1947 U.S. Tax Ct. LEXIS 291">*293 of the District of Columbia, who died in 1938. Prior to 1942 petitioner applied to the Commissioners of the District of Columbia for relief under title 4,
Title 4,
§ 4-503.
The said fund shall consist of all fines imposed by the commissioners of the District of Columbia upon members of the police and fire departments of said District by way of discipline; all rewards, proceeds of gifts, and emoluments that may be received by any member of said departments (for extraordinary services), except such part thereof as the said commissioners may allow to 1947 U.S. Tax Ct. LEXIS 291">*294 be retained by members of said departments; a deduction of three and one-half per centum of the monthly salary of each member of said departments; donations; and the net proceeds of sales of unclaimed property in the custody of the property clerk of the police department; all of which shall be paid into the treasury of the United States to the credit of the "Policemen and firemen's relief fund, District of Columbia," herein provided for; and should the said fund at any time be insufficient to defray the expenditures hereafter provided for, the commissioners of the District of Columbia, in that event, are authorized and it shall be their duty, to direct the collector of taxes of said District, and it shall be the duty of the said collector, pursuant to such direction, to pay into the treasury of the United States, out of the general revenue of the District of Columbia collected by him, to the credit of the said "Policemen and firemen's relief fund, District of Columbia," such sums as may be necessary from time to time to meet deficiencies in said fund. The moneys to the credit of the said fund shall be available for appropriation by Congress annually only for expenditure on requisitions1947 U.S. Tax Ct. LEXIS 291">*295 of the said commissioners for the purposes set forth in sections 4-501, 4-503, 4-506 to 4-510, 4-512 to 4-514 inclusive, of this title, and all expenditures from said fund shall be made and accounted for in the same manner as other expenditures of the government of the District of Columbia are made and accounted for.
§ 4-504. * * *
There shall be deducted for the benefit of the policemen and firemen's relief fund 3 1/2 per centum of the monthly pay of each member of the Metropolitan Police force, the fire department, the United States Park police, and the White 8 T.C. 266">*268 House police force. Upon the separation from the service of any such member, except for retirement as authorized by law, he shall be refunded the deductions made from his salary for said fund, and should any such member subsequently be reappointed to any of such police forces or the fire department he shall be required to redeposit to the credit of the policemen and firemen's fund the amount of deductions refunded to him. In the case of the death of any such member while in the service the amount of his deductions shall be paid to the legal representative of his estate, provided he leaves no widow or child or 1947 U.S. Tax Ct. LEXIS 291">*296 children entitled to and granted relief payable from said fund.
§ 4-505. * * *
The commissioners of the District of Columbia are hereby empowered to determine and fix the amount of the pension relief allowance heretofore and hereafter granted to any person under and in accordance with the provisions of sections 4-501, 4-503, 4-506 to 4-510, 4-512 to 4-514.
* * * *
§ 4-507.
Whenever any member of the police department or the fire department of the District of Columbia shall become so permanently disabled through injury received or disease contracted in the line of duty as to incapacitate him for the performance of duty, or, having served not less than twenty-five years and having reached the age of fifty-five years shall, for any cause, become so permanently disabled, as to incapacitate him for the performance of duty and shall make written application therefor and said application shall be approved by the commissioners of said District, or, having reached the age of sixty years, in the discretion of the said commissioners, he shall in either event be retired from the service thereof and be entitled to receive relief from the said policemen and firemen's relief fund, District of1947 U.S. Tax Ct. LEXIS 291">*297 Columbia, in an amount not to exceed 50 per centum per year of the salary received by him at the date of retirement. In case of the death of any member of the police department or the fire department of the District of Columbia, before or after retirement from the service thereof, leaving a widow, or a child or children under sixteen years of age, the widow shall be entitled to receive relief from the said policemen and firemen's relief fund, District of Columbia, in an amount not exceeding $ 60 per month, and each child under the age of sixteen years in an amount not exceeding $ 10.00 per month:
The omitted sections of title 4,
Joseph T. McGlynn was employed by the District Fire Department on or about November 17, 1930, retired on or about April 1, 1938, and died on or about April 8, 1938. Under date of April 29, 1938, the Board of Commissioners of the District of Columbia issued the following order:
Ordered: That Anna E. McGlynn, widow of the late J. T. McGlynn, a pensioner of the Fire Department of the District of Columbia, is hereby granted relief in the amount of $ 60.00 per month, during widowhood, payable from the Policemen and Firemen's Relief Fund for the District of Columbia, effective on and after April 9, 1938.
8 T.C. 266">*270 The sum of $ 558.69 was deducted from the salary of Joseph1947 U.S. Tax Ct. LEXIS 291">*301 T. McGlynn during his service with the Fire Department and credited to the Policemen and Firemen's Relief Fund, District of Columbia. From April 9, 1938, until February 17, 1945, the date of petitioner's remarriage, the fund paid $ 4,936 to her pursuant to the above order.
The following tabulation reflects the direct appropriations made by Congress to the Policemen and Firemen's Relief Fund, District of Columbia, the aggregate amount received by the fund through the withholding of 3 1/2 per cent of the monthly pay of each member of the Metropolitan Police Force and Fire Department, and the other sums contributed to the fund under and in accordance with title 4,
Fiscal year | Appropriation | Receipts of | Fines, etc. |
3 1/2% | |||
1941 | $ 1,165,000 | $ 219,181.06 | $ 6,673.37 |
1942 | 1,250,000 | 212,258.45 | 4,394.48 |
1943 | 1,355,000 | 226,280.39 | 9,475.80 |
1944 | 1,450,000 | 223,828.14 | 8,499.50 |
During the taxable years petitioner was employed as a secretary by the National Hospital Service Society, Inc. Her tax returns for 1942 and 1943 reported income from her salary as $ 1,532.50 and $ 1,687.50, 1947 U.S. Tax Ct. LEXIS 291">*302 respectively. At no time during the taxable years, or at any other time, did petitioner herself render any service to the District of Columbia.
OPINION.
The petitioner contends that the sum paid her each month is relief, that it constitutes a gift or gratuity, and that it is not taxable. She asserts that she had no vested right to the relief granted by the Board of Commissioners of the District of Columbia, that the commissioners possessed discretionary authority to grant or withhold the requested relief, and that the relief involved nothing in the nature of an annuity.
The respondent contends that the amounts paid to petitioner from the Policemen and Firemen's Relief Fund, District of Columbia, are to be treated as amounts received pursuant to an annuity contract and subject to tax in the manner provided in
We agree with respondent that the sums in question constitute taxable income to the petitioner. Our analysis of the applicable provisions 8 T.C. 266">*271 of the District of Columbia Code convinces us that Congress did not intend to provide for the making of gifts or gratuities. The statutory plan required the decedent to contribute a fixed percentage of his salary toward the fund from which the payments were made. In return the employee was entitled to retirement under certain conditions and, upon reaching a specified age, "shall * * * be entitled to receive relief from the said policemen and firemen's relief fund, District of Columbia, in an amount not to exceed 50 per centum per year of the salary received by him at the date of retirement." Sec. 4-507,
In our opinion, Congress vested no discretion in the Board of Commissioners to deny relief to the widow of a retired fireman. Their discretion in the matter of relief was limited to the
The facts show that petitioner received payments from a fund to which her deceased husband contributed as an employee of the District of Columbia. By virtue of his services to the District and by virtue of his contributions to the fund he became entitled, upon fulfilling certain conditions and qualifications, to retirement benefits from the fund, or if he died his widow and children under sixteen became entitled to certain benefits from the fund. There is no doubt in our minds that retirement pay, disability1947 U.S. Tax Ct. LEXIS 291">*305 benefits, funeral expenses, and benefits to widows and children under sixteen were inducements held out to decedent and others to become employees of the District of Columbia. Having accepted employment, rendered personal services to the District of Columbia, and contributed to the fund until his retirement, the decedent became entitled to receive from the fund an amount not to exceed 50 per cent of his salary at the date of his retirement. But for his death a week after his retirement, the payments from the fund in recognition of his services and his contributions would probably have been larger. Upon his death his widow became entitled to benefit by monthly payments from the fund. Her right to receive 8 T.C. 266">*272 was fixed by statute, section 4-507. She did in fact receive monthly payments from the fund, and the situation is sufficiently akin to an annuity contract and the treatment of retired employees under the Civil Service Retirement Act to justify a similar treatment. See