October Term 2001 · Docket 01-463
Can the IRS assess FICA taxes on tips without a prior employer defense?
The dispute centers on whether the IRS can impose FICA taxes on tips without giving employers a chance to defend against the assessment.
Verified source milestones
- — An official oral-argument transcript was verified.
- — An official oral-argument transcript was verified.
The arguments, in order
This case may have been argued more than once. Each entry below uses that session's official transcript. Later arguments do not erase earlier ones.
Argument 1 ·
What happened at the argument
Ms. O'Connor argued the case involves the IRS authority to assess FICA taxes on tips.
Ms. Power argued Congress did not saddle employers with a tax while depriving them of a defense.
Ms. Power claimed the tax is not authorized because Congress did not require this action for thirty years.
Ms. O'Connor stated tips are deemed paid at a specific time under the statute.
Read the official transcript for this argument · Official argument details
Sources used for this argument breakdown
- Official Supreme Court Transcript — file page 27, lines 27-19 — Transcript, file page 27, lines 27-19
- Official Supreme Court Transcript — file page 3, lines 15-3 — Transcript, file page 3, lines 15-3
- Official Supreme Court Transcript — file page 3, lines 5-13 — Transcript, file page 3, lines 5-13
- Official Supreme Court Transcript — file page 52, lines 43-13 — Transcript, file page 52, lines 43-13
- Official Supreme Court Transcript — file page 54, lines 13-17 — Transcript, file page 54, lines 13-17
A citizen's guide to the whole case
What this case is about
The case involves the authority of the Commissioner of Internal Revenue to assess FICA taxes on tips. It also involves the principle of tax litigation regarding employer defenses.
Official sources for this section
- Official Supreme Court Transcript — file page 27, lines 27-19 — Transcript, file page 27, lines 27-19
- Official Supreme Court Transcript — file page 3, lines 15-3 — Transcript, file page 3, lines 15-3
- Official Supreme Court Transcript — file page 52, lines 43-13 — Transcript, file page 52, lines 43-13
How the case got here
The Supreme Court heard oral argument in this case on April 22, 2002.
Official sources for this section
- Official Supreme Court Transcript — file page 3, lines 5-13 — Transcript, file page 3, lines 5-13
- Official Supreme Court Transcript — file page 54, lines 13-17 — Transcript, file page 54, lines 13-17
What each side wants
the side that brought the case wants the Court to strike down the tax assessment as unauthorized.
the opposing side wants the Court to uphold the IRS authority to assess the taxes.
Official sources for this section
- Official Supreme Court Transcript — file page 27, lines 27-19 — Transcript, file page 27, lines 27-19
- Official Supreme Court Transcript — file page 3, lines 15-3 — Transcript, file page 3, lines 15-3
- Official Supreme Court Transcript — file page 52, lines 43-13 — Transcript, file page 52, lines 43-13
What each side says
the side that brought the case argues Congress did not require employers to pay this tax without a defense mechanism.
the opposing side argues the statute deems tips paid at a specific time, authorizing the assessment.
Official sources for this section
- Official Supreme Court Transcript — file page 27, lines 27-19 — Transcript, file page 27, lines 27-19
- Official Supreme Court Transcript — file page 3, lines 15-3 — Transcript, file page 3, lines 15-3
- Official Supreme Court Transcript — file page 52, lines 43-13 — Transcript, file page 52, lines 43-13
What the justices asked
Chief Justice Rehnquist asked if the advocate had answered the question regarding the lower court's statement.
Official sources for this section
- Official Supreme Court Transcript — file page 54, lines 13-17 — Transcript, file page 54, lines 13-17
Why it matters
Employers face financial liability for FICA taxes on tips. The outcome determines whether employers must pay these taxes without a prior legal defense. This affects how the IRS collects taxes from businesses.
Official sources for this section
- Official Supreme Court Transcript — file page 27, lines 27-19 — Transcript, file page 27, lines 27-19
- Official Supreme Court Transcript — file page 3, lines 15-3 — Transcript, file page 3, lines 15-3
- Official Supreme Court Transcript — file page 52, lines 43-13 — Transcript, file page 52, lines 43-13
What happens next
This article currently covers the argument record. Use the official docket link for later case activity.
Official sources for this section
- Official Supreme Court Transcript — file page 3, lines 5-13 — Transcript, file page 3, lines 5-13
- Official Supreme Court Transcript — file page 54, lines 13-17 — Transcript, file page 54, lines 13-17
Official Court provenance
Official docket and case history · Official Supreme Court oral-argument detail page
Title and summary sources
- Official Supreme Court Transcript — file page 27, lines 27-19 — Transcript, file page 27, lines 27-19
- Official Supreme Court Transcript — file page 3, lines 15-3 — Transcript, file page 3, lines 15-3
- Official Supreme Court Transcript — file page 52, lines 43-13 — Transcript, file page 52, lines 43-13
- Official Supreme Court Transcript — file page 27, lines 27-19 — Transcript, file page 27, lines 27-19
- Official Supreme Court Transcript — file page 3, lines 15-3 — Transcript, file page 3, lines 15-3
- Official Supreme Court Transcript — file page 52, lines 43-13 — Transcript, file page 52, lines 43-13
Revision history
- Revision 1 · Official Transcript ·
Correction: Rewritten to the concise citizen-facing editorial standard.
- Revision 2 · Official Transcript ·
Correction: Migrated to the dated official Court activity contract without model use.