Argued: February 2, 2017
from the United States Tax Court. No. 26476-12-Kathleen M.
J. Block, BAKER & MCKENZIE, LLP, Chicago, Illinois, for
Page DelSole, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Appellee.
J. Block, Robert S. Walton, BAKER & MCKENZIE, LLP,
Chicago, Illinois, J. Timothy Bender, ROTATORI BENDER CO.,
L.P.A., Cleveland, Ohio, for Appellant.
Page DelSole, Teresa E. McLaughlin, UNITED STATES DEPARTMENT
OF JUSTICE, Washington, D.C., for Appellee.
Before: SUHRHEINRICH, SUTTON, and McKEAGUE, Circuit Judges.
SUTTON, Circuit Judge.
Caligula posted the tax laws in such fine print and so high
that his subjects could not read them. Suetonius, The
Twelve Caesars, bk. 4, para. 41 (Robert Graves, trans.,
1957). That's not a good idea, we can all agree. How can
citizens comply with what they can't see? And how can
anyone assess the tax collector's exercise of power in
that setting? The Internal Revenue Code improves matters in
one sense, as it is accessible to everyone with the time and
patience to pore over its provisions.
today's case, however, the Commissioner of the Internal
Revenue Service denied relief to a set of taxpayers who
complied in full with the printed and accessible words of the
tax laws. The Benenson family, to its good fortune, had the
time and patience (and money) to understand how a complex set
of tax provisions could lower its taxes. Tax attorneys
advised the family to use a congressionally innovated
corporation-a "domestic international sales
corporation" (DISC) to be exact-to transfer money from
their family-owned company to their sons' Roth Individual
Retirement Accounts. When the family did just that, the
Commissioner balked. He acknowledged that the family had
complied with the relevant provisions. And he acknowledged
that the purpose of the relevant provisions was to lower
taxes. But he reasoned that the effect of these transactions
was to evade the contribution limits on Roth IRAs and applied
the "substance-over-form doctrine, " Appellee's
Br. 41, to recharacterize the transactions as dividends from
Summa Holdings to the Benensons followed by excess Roth IRA
contributions. The Tax Court upheld the Commissioner's
word of the "substance-over-form doctrine, " at
least as the Commissioner has used it here, should give
pause. If the government can undo transactions that the terms
of the Code expressly authorize, it's fair to ask what
the point of making these terms accessible to the taxpayer
and binding on the tax collector is. "Form"
is "substance" when it comes to law. The
words of law (its form) determine content (its substance).
How odd, then, to permit the tax collector to reverse the
sequence-to allow him to determine the substance of
a law and to make it govern "over" the written form
of the law-and to call it a "doctrine" no less.
turns out, the Commissioner does not have such sweeping
authority. And neither do we. Because Summa Holdings used the
DISC and Roth IRAs for their congressionally sanctioned
purposes-tax avoidance-the Commissioner had no basis for
recharacterizing the transactions and no basis for
recharacterizing the law's application to them. We
definitions are in order, as are a few explanations about how