UNITED STATES TAX COURT
ELAINE S. BENNETT, Petitioner v
.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8545-96. Filed November 7, 1996.
Vernon E. Robbins
, for petitioner.
Alan R. Peregoy
, for respondent.
MEMORANDUM OPINION
DAWSON, Judge
: This case was assigned to Special Trial Judge Robert N. Armen, Jr., pursuant to the provisions of section 7443A(b)(4) of the Internal Revenue Code of 1986, as amended, and Further, in computing her income tax liability for 1991, petitioner did not attempt to income average pursuant to section 402(e)(1); rather, she computed such liability by reference to the tax rate schedule applicable to her filing status. In the notice of deficiency, respondent characterized the taxable portion of petitioner's reported retirement distributions the Transfer Refund constitutes a "retirement distribution" within the meaning of section 4980A(e)(1)(A). Cf. sec. 4980A(c)(2)(C).
In view of the foregoing, it necessarily follows that the taxable portion of the Transfer Refund that exceeds $150,000; i.e., $327,655.59 less $150,000, or $177,655.59, constitutes an "excess distribution" within the meaning of section 4980A(c)(1)(A). Accordingly, petitioner is liable for the 15percent excise tax on excess distributions under section 4980A(a). See Emmons v. Commissioner , T.C. Memo. 1996-265;
Powell v. Commissioner
, T.C. Memo. 1996-264; Montgomery v.
Commissioner
, T.C. Memo. 1996-263; see also O'Connor v.
Commissioner
, T.C. Memo. 1994-170 (regarding section 4974).
B. Petitioner's Contention
Notwithstanding the foregoing, petitioner argues that she is not liable for the excise tax under section 4980A(a) because the Transfer Refund was not paid to her on account of her retirement but rather as an inducement for her to transfer from the Retirement System to the Pension System. In this regard, petitioner relies heavily on the fact that she remained an active employee of the State of Maryland at the time that she received the Transfer Refund and continuously thereafter. Thus, in petitioner's view, the Transfer Refund did not constitute a retirement distribution because "petitioner has not retired from her position or occupation and is still employed." We accept as a fact that the Transfer Refund was not paid to petitioner on account of her retirement but rather as an inducement for her to transfer from the Retirement System to the Pension System. We also accept as a fact that petitioner has not retired and is still employed. However, we reject petitioner's argument that the Transfer Refund did not constitute a retirement distribution within the meaning of section 4980A.
The fatal flaw in petitioner's argument is that the term
"retirement distribution" is statutorily defined. Thus, petitioner's reliance on Webster's Dictionary definition of "retirement", as a "withdrawal from one's position or occupation", is to no avail. Our analysis is necessarily governed by the meaning of the operative term as it is specifically defined by Congress and not as it may be more popularly construed. 2A Singer, Sutherland Statutory Construction sec. 47.07, at 151, (5th ed. 1992).
As we have already discussed, section 4980A(e)(1)(A) defines the term "retirement distribution" to mean the amount distributed during the taxable year under a qualified employer plan with respect to which the individual is or was the employee. Petitioner's Transfer Refund fits squarely within this definition. Indeed, petitioner admits that she "received a distribution [the Transfer Refund] from her qualified plan [the (...continued)
2085, 2481-2483. It was subsequently renumbered by sec. 1011A(g)(1)(A) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat. 3342, 3479. Because the applicable regulation does not reflect the statutory renumbering, the regulation appears as sec. 54.4981A-1T, Temporary Qualified Pension Plan Excise Tax Regs., 52 Fed. Reg. 46750 (Dec 10, 1987). regulation that suggests that an individual must be retired in order to receive a "retirement distribution". In other words, there is nothing in the regulation to suggest that "all" means "some".
D. Case Law
We also take note of the fact that petitioner's argument is contrary to several decisions of this Court. Thus, in Rodoni v. Commissioner , 105 T.C. 29, 40 (1995), the Court had little difficulty in holding that the taxpayer was liable for the excise tax under section 4980A, even though the taxpayer received a lump-sum distribution from his corporation's profit sharing plan in 1988 but continued to be employed by his corporation "until the present". Rodoni v. Commissioner , supra at 30.
In Montgomery v. Commissioner
, T.C. Memo. 1996-263, the Court also held that the taxpayer was liable for the excise tax under section 4980A. There the taxpayer, a teacher employed by the Hagerstown, Maryland Community College, received a distribution (in the form of a transfer refund from the Maryland State Teachers' Retirement System) in 1990. However, the taxpayer remained so employed at least through the time that the case was submitted for decision in April 1995.
In Powell v. Commissioner
, T.C. Memo. 1996-264, the Court also held that the taxpayer was liable for the excise tax under section 4980A. There the taxpayer, a teacher employed in the Baltimore and Hagerstown Public Schools until his retirement in 1992, received a distribution (in the form of a transfer refund from the Maryland State Teachers' Retirement System) in 1990. We acknowledge that the argument advanced by petitioner in the present case was not expressly addressed by the Court in Rodoni v. Commissioner , supra ; Montgomery v. Commissioner , supra ;
or Powell v. Commissioner , supra . Nevertheless, we think that the latter three cases are significant because the analysis therein represents an application of the statutory language of section 4980A that applies straightforwardly to the present case. E. Legislative Intent Petitioner also argues that Congress did not intend for the excise tax under section 4980A to apply to amounts distributed under a qualified employer plan to an individual who is not retired. Here, however, we are reminded of the admonition of the Supreme Court that "There is * * * no more persuasive evidence of the purpose of a statute than the words by which the legislature undertook to give expression to its wishes." United States v. American Trucking Associations , 310 U.S. 534, 543 (1940). Thus, where a statute appears to be clear on its face, unequivocal evidence of legislative purpose must be demonstrable if we are to construe the statute so as to override the plain meaning of the words used therein. Estate of Owen v. Commissioner , 104 T.C.
498, 507-508 (1995), and cases cited therein. Petitioner has made no such showing. Indeed, the legislative history of section 4980A is harmonious with the plain meaning of the statute. Section 4980A originated in section 1133 of H.R. 3838, as reported by the House Committee on Ways and Means on December 7, 1985. H. Rept. 99-426, at 745-746 (1985), 1986-3 C.B. (Vol. 2) 745-746, on H.R. 3838 provides in pertinent part as follows: In addition, the bill imposes a new excise tax on excess distributions from qualified retirement plans * * * . To the extent that aggregate annual distributions paid to a participant from such tax-favored retirement savings arrangements are excess distributions, the bill generally imposes an excise tax equal to 15 percent of the excess.
* * * * * * * In applying the additional tax, all distributions made with respect to any individual during a calendar year will be aggregated, regardless of the form of the distribution or the number of recipients. Thus, for example, all distributions received during a year, whether paid under a life annuity, a term certain, or any other benefit form (including an ad hoc distribution)
generally will be aggregated in applying the tax. [Emphasis added.]
The conference report on H.R. 3838 is equally instructive. It provides in relevant part as follows:
The conference agreement generally follows the
House bill with respect to the 15-percent excise tax on benefit payments * * * . The conference agreement also clarifies that distributions attributable to after-tax employee contributions and distributions not includible in income by reason of a rollover contribution are not taken into account in applying the tax. All other amounts not specifically exempted are taken into account. [H. Conf. Rept. 99-841, 1986-3 C.B. (Vol. 4) 477; emphasis added.]
See also Staff of Joint Comm. on Taxation, General Explanation of the Tax Reform Act of 1986, 754-760 (J. Comm. Print 1987). The above quoted passages from the congressional reports regarding section 4980A demonstrate that Congress intended to include, within the statutory definition of "retirement distributions", all distributions from qualified plans, except those specifically excluded by the statute. Because the taxable portion of petitioner's Transfer Refund is not a type of distribution that is specifically excluded by the statute, it therefore follows that the taxable portion of such Refund was intended by Congress to come within the definition of a "retirement distribution" for purposes of section 4980A. F. Section 4980A(f)
To the extent that petitioner may rely on section 4980A(f), it is clear that such section does not serve to relieve petitioner from liability for the excise tax under section 4980A(a). Here we observe that section 4980A(f) is a "grandfather" provision that authorizes an exemption of accrued benefits in excess of $562,500 on August 1, 1986. Subsection (f) of such section requires that an election be made with respect to an eligible individual in order to have the subsection apply. See sec. 4980A(f)(1), (5). However, petitioner has not made the Decision will be entered under Rule 155 .