United States v. Correll
389 U.S. 299, 19 L. Ed. 2d 537, 1967 U.S. LEXIS 2957 (1967)
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Rule of Law:
For federal income tax purposes, a taxpayer traveling on business may deduct the cost of meals under § 162(a)(2) only if the business trip requires them to stop for sleep or rest, as per the Commissioner of Internal Revenue's long-standing 'sleep or rest' rule.
Facts:
- Mr. Correll was a traveling salesman for a wholesale grocery company in Tennessee.
- He customarily left home early in the morning, ate breakfast and lunch on the road, and returned home in time for dinner the same day.
- In his income tax returns for 1960 and 1961, Mr. Correll deducted the cost of his morning and noon meals as 'traveling expenses' incurred 'while away from home.'
- Mr. Correll's daily business trips required neither sleep nor rest.
- The Commissioner of Internal Revenue disallowed these meal deductions, applying the 'sleep or rest' rule.
- The Commissioner ruled that the cost of Mr. Correll's meals was a 'personal, living' expense under § 262, not a deductible travel expense under § 162(a)(2).
Procedural Posture:
- Mr. Correll paid the disallowed tax and sued the United States for a refund in the District Court.
- The District Court received a favorable jury verdict for Mr. Correll.
- The District Court denied the Government's motion for judgment notwithstanding the verdict.
- The United States (appellant) appealed the District Court's decision to the Court of Appeals for the Sixth Circuit.
- The Court of Appeals for the Sixth Circuit affirmed the District Court's judgment, holding that the Commissioner’s 'sleep or rest' rule was not a valid regulation.
- The Supreme Court granted certiorari to resolve a conflict among the circuits on this issue.
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Issue:
Does the Commissioner of Internal Revenue's 'sleep or rest' rule, which allows taxpayers to deduct the cost of business meals only if their trip requires an overnight stay, constitute a valid interpretation of 'traveling . . . away from home' under § 162(a)(2) of the Internal Revenue Code of 1954?
Opinions:
Majority - Mr. Justice Stewart
Yes, the Commissioner of Internal Revenue's 'sleep or rest' rule is a valid interpretation of 'traveling . . . away from home' under § 162(a)(2), and meal expenses are only deductible if the business trip requires the taxpayer to stop for sleep or rest. The Court recognized that § 162(a)(2) provides a deduction for 'meals and lodging' while 'away from home' in pursuit of business, but meal expenses contain an inherent personal living component. The Commissioner's 'sleep or rest' rule provides ease and certainty of application, avoiding wasteful litigation and highly individualized, case-by-case determinations. This rule also ensures substantial fairness by placing all one-day travelers on a similar tax footing, preventing an inequitable advantage over commuters or intracity travelers who cannot deduct their daily meals. The statutory language, speaking of 'meals and lodging' as a unit, arguably suggests that Congress contemplated meal deductions only when the travel also involves lodging, which typically necessitates an overnight stay for sleep or rest. More importantly, the Commissioner's interpretation has been long-standing, consistently applied since 1940, and Congress, despite being aware of the rule and proposals for change, has reenacted or unamended the relevant statutory language. Under the principle of legislative reenactment, such long-continued Treasury regulations and interpretations are deemed to have received congressional approval and have the effect of law. The judiciary's role is limited to ensuring that the Commissioner’s regulations are within his authority and implemented in a reasonable manner, which the 'sleep or rest' rule satisfies.
Dissenting - Mr. Justice Douglas
No, the Commissioner of Internal Revenue's 'sleep or rest' rule is not a valid interpretation of 'traveling . . . away from home' because it arbitrarily shrinks the statutory phrase 'while away from home' to 'overnight,' injecting a time element where the statute speaks only in terms of geography. The statutory words 'while away from home' may not be narrowed to 'overnight' through administrative construction or regulations. The dissenting justices argued that injecting a time element into deductibility, as the 'overnight' rule does, is irrelevant to the question of whether travel and meal expenses are related to the taxpayer’s business, particularly in an era of modern, supersonic travel. The focus should remain on the geographical aspect of being 'away from home,' not on whether a taxpayer stops for sleep or rest.
Analysis:
This case solidified the IRS’s long-standing 'sleep or rest' rule, providing a clear and administrable standard for deducting meal expenses under § 162(a)(2), thereby reducing litigation and ensuring tax uniformity for similar types of business travel. The Court's deference to the Commissioner's long-standing administrative interpretation reinforces the principle of implied congressional approval when statutory language is reenacted without change. The decision balances the plain language of the statute against the practicalities of tax administration, emphasizing the importance of certainty and fairness in the application of tax laws. This rule continues to be a foundational principle governing business meal deductions, particularly distinguishing between one-day business trips and those requiring an overnight stay.
