United States v. Berlin & Russell Aircraft Machine & Manufacturing Co.

This is an appeal from an order of the district court holding the partner appellees, hereinafter called taxpayer, not liable for federal unemployment taxes on their payrolls for the period extending from January 1, 1941, to May 16, 1941. Appellees had *756 filed their petition in the district court for proceedings under the amendment of June 22, 1938, of the Bankruptcy Act. Ch. 572, 52 Stat. 840 , 11 U.S.C.A. § 1 et seq. The petition was granted and the appellees remained in possession. The United States filed an amended claim for the taxes which the district court’s order disallowed.

The district court held that the appellant had failed to show that the taxpayer was an employer liable for the tax within the provisions of Sec. 1607 (a) of the Internal Revenue Code as amended. It is conceded that if taxpayer is such an employer, it is liable for the tax and the order must be reversed.

The Act provides

Ҥ 1607. Definitions

“When used in this subchapter — ■

“(a) Employer. The term ‘employer’ does not include any person unless on each of some twenty days during the taxable year, each day being in a different calendar week [which week is entirely within the taxable year], the…