479 U. S. 442
January 20, 1987
Employers are responsible for withholding certain taxes from an employee’s paycheck, and making payments of these withheld taxes to the government. In a pinch, an arrangement may be set up where a lender rather than employer provides employees with their payments and the government with its taxes. One section of the tax code imposed liability on lenders who fail to pay withheld taxes in this situation. Another section of the tax code said that the government was required to give notice to employers before demanding unpaid taxes. Whether this notice provision also applied to lenders was the basis of the litigation.
In a unanimous decision, Rehnquist wrote that the notice provision does not apply to lenders. Using some careful textual parsing, he showed that the liabilities of lenders and employers were slightly different in some key respects. He found some evidence of Congressional intent too. Finally, he pointed out that notice was more critical for employers because, unlike lenders, they are subject to summary collection procedures. For lenders, a civil suit must be filed before the government can try to collect. While Rehnquist’s ruling is adequate, this is one of those decisions where I would have liked to have read a dissenting opinion. And regardless, I think Congress should have just allowed lenders the privilege of notice.