A civil service employee of the Coast Guard who was enrolled
temporarily during the war as an officer in the Coast Guard Reserve
under the Coast Guard Auxiliary and Reserve Act, 14 U.S.C. § 307,
but who served without compensation other than that of his civilian
position and who performed after enrollment duties identical with
those he had previously performed, is not entitled to the $1,500
exclusion from gross income provided by § 22(b)(13)(A) of the
Internal Revenue Code in the case of compensation received "for
active service as a commissioned officer" in the military or naval
forces. Pp.
338 U. S.
258-262.
84 U.S.App.D.C. 260, 172 F.2d 877, reversed.
The Tax Court sustained the Commissioner of Internal Revenue's
disallowance of a claim by a taxpayer for exclusion of $1,500 from
gross income provided by § 22(b)(13)(A) of the Internal Revenue
Code. 8 T.C. 848. The Court of Appeals reversed. 84 U.S.App.D.C.
260, 172 F.2d 877. This Court granted certiorari. 337 U.S. 924.
Reversed, p.
338 U. S.
262.
MR. JUSTICE MINTON delivered the opinion of the Court.
The question we have here is whether respondent William I.
Connelly, hereafter referred to as the taxpayer, is entitled to the
$1,500 exclusion from gross income provided
Page 338 U. S. 259
by § 22(b)(13)(A) of the Internal Revenue Code. [
Footnote 1] The taxpayer claimed this
additional allowance for the taxable years 1943 and 1944. The
Commissioner disallowed the sum deducted. The Tax Court sustained
the Commissioner, 8 T.C. 848, and the Court of Appeals reversed,
one judge dissenting. 84 U.S.App.D.C. 260, 172, F.2d 877. We
granted certiorari. 337 U.S. 924.
On February 19, 1943, taxpayer was a civil service employee in
the legal division of the Coast Guard. On that date, he was
enrolled as a lieutenant commander within one of the six
classifications which constituted the temporary members of the
Coast Guard Reserve. [
Footnote
2] His enrollment was under authority of the Coast Guard
Auxiliary and Reserve Act, which provided for the enrolling of
"persons (including Government employees without pay other than the
compensation of their civilian positions)." 55 Stat. 12, as
amended, 56 Stat. 1021, 14 U.S.C. § 307. On April 24, 1944, he was
reenrolled as a commander, and his class was described as "Coast
Guard Civil Service Employees."
After enrollment, taxpayer performed duties identical with those
which he had previously performed. At the time he was enrolled, his
civil service rating was P-5. Later this rating was raised to P-6,
and his rank was increased at the same time to that of commander.
He received the same pay after enrollment that he had received as a
civil service employee. He received overtime pay as a civil service
employee, deductions were made from
Page 338 U. S. 260
his pay for civil service retirement, and he was subject to
civil service regulations as to annual and sick leave. If he had
been injured or killed, he would have received benefits as a civil
employee of the United States. He was still subject to the
Selective Training and Service Act. In the case of sickness or
disease contracted while on active duty, taxpayer was entitled to
the same hospital and medical care as members of the regular Coast
Guard, but dental care was not included. While on active duty, he
was required to wear the uniform of, and he received the courtesies
due, his rank. He was subject to the laws, regulations, and orders
of the Coast Guard, and to disciplinary action.
It is apparent that taxpayer had a dual status. He had a limited
military status with the rank of lieutenant commander, and later
that of commander. He had also the status of a civil service
employee, carefully so limited and with all the privileges incident
to such status. He was given just enough military status to enable
him effectively to carry out his duties. All considerations of an
economic character pertaining to his employment by the Government
were related to his civil service status.
In
Mitchell v. Cohen, 333 U. S. 411, we
held that one employed in a department of the Federal Government as
a civil service employee who was enrolled temporarily in the
Volunteer Port Security Force of the Coast Guard Reserve and who
worked part-time as a reservist without pay was not an
"ex-serviceman" within the meaning of the Veterans' Preference Act.
Looking to the legislative history of that statute, we found that
the overshadowing purpose of the Act was to favor those who had a
real record of military service.
The Court of Appeals found in this case that, by the application
of "long established criteria -- oath of office, military duty, and
subjection to military discipline," taxpayer had acquired a
military status, and was thus entitled to the exclusion. We agree
that he had a military status
Page 338 U. S. 261
for some purposes. But the question for tax purposes is whether
he received his pay in that status. To come within § 22(b)(13)(A),
he must have received his compensation "for active service as a
commissioned officer." We understand this to mean that, if taxpayer
received his pay as a commissioned officer, he would be entitled to
the exclusion. It seems equally plain that, if he received his pay
as a civil service employee and served without military pay and
allowances, he is not entitled to the claimed exclusion. [
Footnote 3] As in the
Cohen
case, the emphasis of the statute is on a military, and not on a
civilian, status.
And it is clear that taxpayer received his compensation in a
civilian status. As noted, § 307 of the Coast Guard Auxiliary and
Reserve Act provided for the enrolling of "persons (including
Government employees without pay other than the compensation of
their civilian positions)." The Committee on Merchant Marine and
Fisheries referred to the amendment by which the parenthetical
phrase was added to the statute as being
"advisable to clarify this authority [enrollment of temporary
members without the pay of their military rank] and resolve any
doubt of its applicability to Government employees by specifically
providing for temporary membership in the Coast Guard Reserve of
Government employees without military pay but with continuance in
their civilian positions and the receipt of the compensation
thereof. [
Footnote 4]"
From the date of the enactment of the enrollment statute, there
seems to have been no deviation from the view
Page 338 U. S. 262
that the taxpayer was to be paid as a civil service employee,
and not as a commissioned officer. His pay came from congressional
appropriations allocated to civilian positions. His pay was at the
civil service scale for his grade, with overtime pay and
appropriate deductions for civil service retirement. His continuing
civilian status is underlined by his receipt of a civil service
promotion, from which his military promotion resulted. Indeed, the
taxpayer's certificate of disenrollment described the duty
performed as
"Chief of Admiralty and Maritime Section having civil service
status, receiving civilian but no military pay, and holding rank of
Commander as a Temporary Member of the Coast Guard Reserve."
The Court of Appeals ignored the status in which taxpayer was
compensated and gave effect to his military status which was
provided only to facilitate the performance of his duties in
wartime. [
Footnote 5]
Taxpayer's rank was for the purpose of getting the job done, and
not for the purpose of receiving compensation.
The judgment of the Court of Appeals is
Reversed.
MR. JUSTICE FRANKFURTER and MR. JUSTICE DOUGLAS took no part in
the consideration or decision of this case.
[
Footnote 1]
As amended by Revenue Act of 1945, § 141(a), 59 Stat. 571:
"(13) Additional allowance for military and naval
personnel."
"(A) In the case of compensation received . . . for active
service as a commissioned officer . . . in the military or naval
forces of the United States . . . , so much of such compensation as
does not exceed $1,500."
[
Footnote 2]
These classifications and the organization of the Coast Guard
Reserve are detailed in
Mitchell v. Cohen, 333 U.
S. 411,
333 U. S.
412-414.
[
Footnote 3]
See Judge Edgerton, dissenting in part, below:
". . . I would be unable, in view of the rule that tax
exemptions are strictly construed, to say that the compensation of
a man who did not receive a commissioned officer's pay, but served
'without pay other than the compensation of [his] civilian
positions' was 'received . . . for active service as a commissioned
officer.' 84 U.S.App.D.C. at 263, 172 F.2d at 880."
[
Footnote 4]
H.R.Rep. No. 2525, 77th Cong., 2d Sess., 3 (1942). The Committee
added that the amendment
"would obviate any possible impairment of the right of such
employees to continue to receive the compensation of their civilian
positions for the entire period of their performance of active
Coast Guard duty as such temporary members. There will be little,
if any, change in the nature of their duties after enrollment."
[
Footnote 5]
Office Memorandum No. 13-43 issued by the Commandant of the
Coast Guard on July 24, 1943, states:
"6. The attention of heads of offices and chiefs of divisions is
invited to the fact that one of the principal reasons for the
induction of civil service employees into the military
establishment as temporary members of the Reserve was to obtain a
homogeneous organization on a military basis and to eliminate
differences in procedure and practices applicable to military
personnel and civil service personnel engaged on exactly the same
duty. . . ."