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The General Welfare Exclusion

Posted on Oct. 19, 2020
[Editor's Note:

This article originally appeared in the October 19, 2020, issue of Tax Notes Federal.

]
Jasper L. Cummings, Jr.
Jasper L. Cummings, Jr.

Jasper L. “Jack” Cummings, Jr., is of counsel with Alston & Bird LLP in Raleigh, North Carolina.

In this article, Cummings considers what the IRS was thinking when it invented and then wholly repurposed a little-noticed exclusion from gross income, and he discusses how the general welfare exclusion has become more prominent as the coronavirus pandemic produces many recipients of free money from all levels of government.

I. General Welfare or Insurance?

A. Headline

The counterintuitive conclusions of this report require a bold headline. First, if you haven’t heard of section 139 you probably will: Someone will say section 139(b)(4) codified the general welfare exclusion (or exception or doctrine). It didn’t, and Congress has no better idea what it means than does the IRS.

Second, the IRS’s application of the general welfare exclusion for at least the past 20 years to new fact patterns has nothing to do with the promotion of the general welfare as normally understood.1 Although the doctrine started with subsistence payments to the elderly, unemployed, blind, widows, and orphans — in the interests of the general welfare — that concept has waned over the past 40 years as government payments in the nature of insurance to middle- and upper-income individuals have increased.

The general welfare exclusion functions as an adjunct to payments for any property loss or unexpected expenses that are incurred by an individual and that a government chooses to reimburse. The best income tax policy justification for the new approach is that the payees may not have enjoyed a net gain in wealth. But the IRS has never justified the exclusion on that basis.

The IRS created the exclusion to avoid taxing the various subsistence payments to individuals under the Social Security Act of 1935. The IRS probably construed the tax exemption into the act because Congress intended for payees to enjoy the gross payments. The act stated that all those payments were “to provide for the general welfare.” Later the IRS expanded the exclusion, but only to cases of subsistence payments to individuals with absolute need, usually caused by some loss. Those rulings are still “the law.”

But the September 11, 2001, World Trade Center disaster either caused or accelerated an IRS shift to an insurance model for the exclusion. In that crisis, governments and nongovernmental organizations found it impolitic to parse between relatively wealthy and poor victims, and paid money to all. The IRS followed suit by repurposing the doctrine to exclude government payments to replace losses or expenses of individuals suffering situational need, without regard to their absolute need.

So now millionaires can exclude payments from government to replace losses or expenses. The government decision to “insure” has become the meaning of the promotion of general welfare for purposes of section 61. On the flip side, payments that are demonstrably for the promotion of the general welfare — for example, environmental and historic preservation or mitigation of future government outlays — will be taxable unless they are timed to coincide with a loss to the individual payee.

B. COVID-19 Tax Relief

1. Latest explanation.

The IRS’s most recent general welfare letter ruling is LTR 202016001 dated January 15 and released April 17. It might seem perfectly timed for guidance on the massive coronavirus depression spending, but the IRS was no more prescient than the rest of us. Rather, this report will use it to illustrate the IRS’s repurposing of the general welfare exclusion. It refused to exclude a city’s payments to help homeowners construct some sort of new systems at their primary residences to replace old systems for the purpose of reducing A, probably some sort of environmental pollution.

The ruling found the payments taxable because the homeowners didn’t “need” them. Note that fact carefully. Presumably, the municipality thought the general welfare needed them, just as the United States needed a Social Security system and an unemployment security system in 1935. But because the homeowner did not have an immediate need to replace her system — for example, her home had a well-operating coal-fired furnace — the payments were taxable.

If you think that reasoning does not make sense, you might want to keep reading. It turns out that the IRS has dispensed with promoting general welfare as normally understood.

If the city instead had paid cash to the homeowner to replace a broken system, the logic of the IRS’s current position should exclude the payment. If the system had been damaged in a “disaster” the exclusion will be a slam-dunk. But that makes no sense if the principle behind the exclusion also requires a public welfare interest such as reducing pollution.

2. Real reason.

There are two practical explanations for the IRS’s conversion of the exclusion. First is administrative convenience: The IRS can fairly easily administer a rule based on finding property loss and abnormal expenses, but it can’t identify the promotion of general welfare. Second, in 2001 Congress enacted section 139 using a property/expense insurance model limited to disaster relief for (1) excluding similar payments by nongovernmental payors, and (2) semi-codifying the general welfare exclusion for governmental payors, but not supplanting the off-code exclusion. The Joint Committee on Taxation explanation of the general welfare exclusion in connection with that statute has become the “official” source of the insurance model explanation.

3. COVID-19 FAQ.

LTR 202016001 isn’t significant by itself, but folks are already suggesting that the doctrine it refused to apply might exempt some coronavirus damage mitigation payments.2 It won’t be needed to exclude the “economic impact payments” under the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136)3 because the CARES Act characterizes the payments as tax rebates, which are refundable credits payable to the taxpayers in all events.4 But those are far from the only payments persons have received from federal, state, and local governments to mitigate the damages of the coronavirus depression. The taxation of at least some of those payments may have to be analyzed under the general welfare exclusion, as occurred for the 2008 depression.5

Indeed, the IRS has already done so in its FAQs for both nongovernmental6 and governmental payments. FAQ 1 under Higher Education Emergency Relief Fund and Emergency Financial Aid grants under the CARES Act states that higher education grants to students experiencing unexpected expenses because of COVID-19 are excluded under section 139 as disaster relief. The statement doesn’t distinguish between public and private colleges and presumably applies to both. Evidently, for that reason it doesn’t distinguish between the methods of finding a disaster, which differ based on the payor.7 Evidently, it can cover grants not based on need for unexpected expenses.8 Notice that the COVID-19 “disaster” is not a “natural” disaster.

Increased use of the exclusion could bring it under scrutiny, which it cannot withstand, unless courts (1) continue to do what they have done so far: just recite the latest revenue rulings on the exclusion as the law; or (2) interpret section 139(b)(4) to adopt the JCT’s gloss on the exclusion. Neither of those legal grounds is appropriate because both simply reflect IRS fiats not to tax. Anyone who worries about the “deep state” should be worried here.

C. A Tangle of Issues

1. Takeaway.

The IRS created the general welfare exclusion in the 1930s first to avoid taxing Social Security payments and then unemployment compensation payments to individuals. It did not base the exclusion on any reasoned analysis. There is reason to believe that upper-level Treasury officials knew that Congress didn’t intend for the subsistence-level payments to be taxed because Congress expected the recipients to enjoy the full amounts paid to them.

So the IRS construed the original exclusion into the Social Security Act. Despite the unique nature of that act and those rulings, all the IRS’s later expansions of the exclusion can be traced, directly or indirectly, to them.

It took 25 years for the IRS to label the exclusion as for “promotion of the general welfare.” But again that term derived from the Social Security Act: Congress relied on the general welfare clause of the Constitution in enacting Social Security.9 In a frequently cited 1963 revenue ruling based on the original Social Security Act exclusions, the IRS distinguished excludable payments for job training from payments for services; the ruling analogized the training payments to unemployment compensation at subsistence levels, “in the interest of the general welfare.”10 However, finding that payments were not compensatory was only a necessary but not a sufficient reason to exclude a payment for general welfare. And today, the IRS would say that any wage replacement payments are includable, reflecting a total about-face from the doctrine’s origins.

The next major chapter in the tale came with the 1974 Disaster Relief Act, later named the Stafford Disaster Relief Act,11 which the president is using in the coronavirus emergency. The act originally authorized payments to disaster victims based on absolute need: The payees had no other means to pay the disaster-related expenses. When the IRS ruled that the recipients could exclude such payments as for the general welfare, it referred to the payees’ inability to meet their needs through other means.12 While it was true that the 1974 act required absolute need, and unemployment security recipients had an absolute need, Social Security recipients arguably didn’t because the program was made available without regard to income. Therefore, absolute need was not necessarily a general condition for a general welfare exclusion, but the transition to situational need at least should have been examined (it never has been).

Rather, the need requirement became more confused when the 9/11 disaster presented a situation like the coronavirus: Many persons had immediate situational needs but not necessarily absolute needs. In a 2003 ruling the IRS first asserted that need was a prerequisite of the exclusion, but defined need as situational rather than absolute.13 The shift in the meaning of need was based on newly enacted section 139, which might appear to partly supplant the general welfare exclusion (but see below).14

On a parallel track were payments to or for the benefit of property owners to improve their properties, such as discussed in LTR 202016001. That track included the disaster cases, but also other cases of housing aid to what were presumably low-income persons. But when it came to cosmetic improvements, including community redevelopment as well as historic preservation and environmental improvements, the IRS refused to apply the general welfare exclusion because the payments weren’t based on need of the individual. Rather, they were based on the need of the general welfare, which logically should be enough, but wasn’t. To further confuse the situation, the IRS created a different exclusion for these cases, to apply only if the governmental payments weren’t within the dominion and control of the landowners (discussed briefly below).

2. Comprehensive tax base?

The history of the general welfare exclusion shows there is no firm basis either to apply it to cases of situational need, or to limit it to situational need, at least not up to the 2001 enactment of section 139. Professor Boris I. Bittker in effect proved the one-off nature of the exclusion in his seminal 1967 article on the then-popular idea of a comprehensive tax base.15

Bittker refuted the idea that the Haig-Simons economic definition of income could be substituted for the federal definition of taxable income. When he considered Social Security, he assumed without citation that it was excluded, and he didn’t cite a general welfare doctrine. But he explained the illogic of including governmental transfer payments (the Haig-Simons result) while excluding the value of a host of less direct governmental programs such as police and fire protection and public education. He admitted that valuing indirect benefits would be a quagmire, but he argued that taxing the direct and not the indirect benefits proved that the comprehensive tax base proponents were like the emperor with no clothes.

Bittker also observed that indirect benefits like public schools likely were excluded because they were for the protection of society and not its individual members. He thought direct payments to individuals, like Social Security, could also be for the general welfare.16 The Supreme Court agrees, confirming that public welfare payments to the needy aren’t charity but a benefit to a few that promotes the general welfare,17 and aren’t taxed. So Bittker and the Supreme Court agreed with the original purpose of the general welfare exclusion, to exclude subsistence-level payments to those with absolute need because that was good for the general welfare.

Proving again that he was the rare practical academic, Bittker stated:

It might be better to decide, program by program, which should be taxed and which should be exempt.18

He meant for Congress to decide, not the IRS. Unfortunately, the die was cast with the silence of the Social Security Act on taxation of benefits, and Congress kept punting to the IRS until the 9/11 legislation. Sections 139 (discussed below) and 139D and 139E are post-9/11 partial codifications and expansions of a general welfare exclusion for payments to individuals by governmental and nongovernmental sources in connection with disasters and to Indians.19

3. Not fair to IRS.

Rev. Rul. 2003-12, 2003-1 C.B. 283, uses the term “administrative general welfare exclusion.”20 The IRS has never used that term to describe any other exclusion from gross income (or deduction). So the IRS realizes that it made up the exclusion (although it inferred the intent of Congress).

In 2012 Sarah H. Ingram, the Tax-Exempt and Government Entities Division commissioner, explained the general welfare exclusion in testimony to Congress:

To qualify under the general welfare exclusion, payments must: (1) be made under a governmental program, (2) be for the promotion of general welfare (i.e., be based generally on individual, family or other needs), and (3) not represent compensation for services.21 . . . Some have expressed a concern that guidance on the general welfare exclusion lacks clarity because it is not found in the Code but in these other forms of administrative guidance and court decisions that stretch over five decades.22

Ingram was reciting the definition that was stated but not applied in Rev. Rul. 2005-46, 2005-2 C.B. 120, which appears to have been cribbed from the 2001 JCT explanation discussed below. Notice that her definition conflates the promotion of general welfare with situational need: That is the core error of the current IRS explanation for the exclusion. It makes no sense unless the doctrine has two elements, not one: (1) a loss-replacement insurance element, and (2) a way to tell which losses qualify. The IRS has cut off its ability to analyze which losses qualify by ignoring the meaning of general welfare, and has conflated the general welfare with situational need. Now the IRS assumes the payment must be for the general welfare because a government chooses to pay money to an individual who incurred some property loss or unexpected expense.

That is an unstable tax rule, as Ingram admitted. The IRS has gotten away with it because (1) the IRS generally errs on the side of exclusion, and (2) who is to complain but the few who don’t get the exclusion but still got free money and may be entitled to a deduction?

D. The Recent Environmental Ruling

1. Facts.

The city that received LTR 202016001 planned to give grants to homeowners to pay for replacement of some sort of systems at their primary residences with better systems that may require “more maintenance.” The systems might be HVAC systems or septic systems or water wells. The city is interested because the existing systems are producing something the city does not like, presumably some sort of environmental pollution. So the city’s interest clearly is related to the general welfare. However, a homeowner can receive help with the system only if she falls below specific income limits.

2. Analysis.

Based on the early general welfare rulings, you would expect the cost of the system to be excludable because only low-income taxpayers qualified, but the IRS has become uninterested in absolute need in new rulings. Oddly, the ruling contrasted Rev. Rul. 76-395, 1976-2 C.B. 16, which excluded payments made to low-income individuals primarily to subsidize home improvements necessary to correct building code violations and thereby provide safe and decent housing. Even though both involved low-income recipients, the earlier ruling involved a sort of loss of minimum property standards, which fits in with the IRS current views.

So the new ruling was like Rev. Rul. 80-330, 1980-2 C.B. 29, which refused to exclude payments for historic preservation of a house because:

the purpose of the payments is to preserve historically significant structures. Thus, the payments are not made under a social benefit program for the promotion of general welfare.

If preserving historically significant structures isn’t for the promotion of general welfare, what is it for?

3. Bailey miscite.

The letter ruling relied heavily on one of the few court decisions in the area, Bailey.23 It simply applied the IRS’s own standards applied up to that time. Because the IRS limited the general welfare exclusion to grants based on the absolute financial need of the payee, the court found that wouldn’t include building a historic preservation façade for a homeowner who wasn’t low-income. So Bailey is more in line with the pre-2001 rulings that mostly allowed the exclusion to various payments to low-income persons.

Bailey relied on two revenue rulings dealing with programs for the low-income and the Stafford Act disaster ruling, which is limited to payments in disasters to individuals with absolute need. Bailey contrasted two rulings denying the exclusion for general distributions such as the distributions to all Alaskans. It refused to consider the general welfare interest of the city in historic façade preservation because it thought the only requirement was absolute need, which was lacking.

Therefore, Bailey only partly supported the new letter ruling by being disinterested in the city’s concern for historic preservation. The letter ruling shifted to situational need, in contrast with Bailey, because in between Bailey and 2020 Congress enacted section 139, which emphasized situational need. The ruling’s failure to exclude a benefit in kind is particularly troubling because, as one commentator suggested, benefits in kind should more easily qualify for exclusion because they always depend on the government’s determination that a particular kind of spending is needed for the general welfare.24 The subject of government payments for rehabilitating historic structures is discussed in an IRS training guide.25

LTR 202016001 cited three revenue rulings applying the general welfare exclusion to subsidies for low-income home improvements, to the disabled, and for disaster relief, but not to bonuses for residents not based on situational need. It deduced from these rulings that only payments based on situational need for disaster relief were excludable. The three rulings, in turn, were based on the following:

  • Rev. Rul. 76-395, which cited (1) Rev. Rul. 74-205, 1974-1 C.B. 20, which cited Rev. Rul. 63-136, 1963-2 C.B. 19 (which cited the unemployment compensation ruling), and (2) Rev. Rul. 75-271, 1975-2 C.B. 23, which cited nothing;

  • Rev. Rul. 57-102, 1957-1 C.B. 26, which cited I.T. 3447, C.B. 1941-1, 191 (Social Security); and

  • Rev. Rul. 76-144, 1976-1 C.B. 17, which was a disaster relief ruling citing among other rulings Rev. Rul. 74-205 and Rev. Rul. 75-271.

Therefore, aside from the disaster relief rulings,26 which have shifted from absolute to situational need, the citations rest either on no authority or on two rulings excluding Social Security and unemployment compensation benefits, as discussed below (which are all for subsistence payments).

4. Observations.

A 2018 ruling reached a similar conclusion on what sounded like moving houses out of a flood zone in advance of a flood.27 These recent letter rulings reflect the transposition of the 9/11 approach to exclusions into cases having nothing to do with disaster relief. It matters not that the city concluded reducing pollution or preserving history or avoiding future damages was sufficiently important to pay homeowners to replace working systems or improve foundations or façades. Such governmental choices might easily be viewed as for the promotion of the general welfare, but the rulings didn’t even call that a necessary but insufficient ground for exclusion. Rather they disregard any evaluation of the general purpose or value of the program and focus entirely on situational need: The homeowner didn’t at that moment have a personal need to replace the system or façade, so the insurance model for exclusion cannot apply.

LTR 202016001 doesn’t involve a disaster, even of the medical or economic sort as is currently being experienced. That makes it a good subject for this report’s general welfare analysis. Section 139 has made it easy to assume that the doctrine applies only to disasters under some sort of definition, but it doesn’t. Therefore, the meaning for the doctrine generated for section 139(b)(4) probably needs to work for cases like this letter ruling, too.

II. Disasters

A. Section 139

1. Legislate in haste; repent at leisure.

It took the Roosevelt administration two years to come up with Social Security. It took the Bush White House, a Republican House, and a narrowly Democratic Senate three months to come up with the Victims of Terrorism Tax Relief Act of 2001, which includes section 139 and which excludes various governmental and nongovernmental payments to individuals as disaster relief. And of course the governmental payments had already flowed in 2001, as they did even more quickly in the current coronavirus disaster.

On March 13, 2020, the president declared a national emergency as defined in 42 U.S.C. section 5122(1), but not a “major disaster.”28 However, that doesn’t preclude application of section 139. The variety of disasters for purposes of nongovernmental relief exclusion aren’t limited to presidentially declared Stafford Act disasters.29 However, section 139(b)(4) has a special definition for disasters for governmental payments: If the Treasury secretary determines that a federal, state, or local authority has determined the coronavirus to be a “disaster” (undefined), section 139 can exclude payments to individuals made by those governments in connection with the disaster to promote the general welfare. And the same is true for a disaster of the natural variety, which also can lead to excluded payments for “hazard mitigation,” being structural changes to reduce the risk of future property damage.30

The requirements of section 139(b)(4) for exclusion of government disaster payments to individuals are (1) a disaster, (2) in connection with which the payment is made, (3) to promote the general welfare, (4) not otherwise compensated by insurance. Section 139(b)(4) doesn’t require that the individual have incurred any expense, or suffered any loss. If there is such a requirement, it will have to be interpreted into the promotion of general welfare. The payee cannot deduct an excluded receipt.31

What does section 139(b)(4) mean? It implies that the requirement of a disaster doesn’t supplant the requirement of general welfare, but it doesn’t define general welfare, unless it is to replace loss incurred in disasters. Section 139(b)(4) seems to function sort of like section 7701(o): Congress isn’t telling you what the general welfare exclusion is, but if it applies to disaster relief, here are some additional rules for its application.

2. One doctrine or two?

The JCT and the IRS have stated that section 139(b)(4) does not supplant the general welfare exclusion, and indeed it cannot because the statute is limited to disasters, even as broadly defined; the letter ruling discussed above didn’t involve a disaster but still considered the exclusion.32 So does this exclusion operate the same inside and out of section 139(b)(4), except for the disaster connection required by section 139(b)(4)? The IRS has not given any indication that meanings differ. Let us hope that is so because there is confusion enough as it is.

3. The JCT explanation.

a. No inference.

There were no committee reports on the Victims of Terrorism Tax Relief Act. The JCT published an explanation.33 It vaguely equated general welfare with individualized need, which was picked up both by later revenue rulings and by the TE/GE commissioner in 2012. It also states, “The exclusion generally applies to payments for food, medical, housing, personal property, transportation, and funeral expenses,” which is not in section 139(b)(4). It states that no inference is intended about the taxability of similar payments under present law, and that section 139 does not preclude application of the general welfare exception.

b. No proof.

It states the statutory exclusion does not require proof of loss. Then Rev. Rul. 2003-12 dutifully picked up that concept and applied it to the general welfare exclusion, even though it does not appear in any code section, regulation, or other revenue ruling: The payees won’t be required to account for actual expenses, if the payment amount can be “reasonably expected to be commensurate with” the expenses incurred. It is sort of like a Cohan rule finessing substantiation, albeit this time created by the IRS and not a court.34 The explanation must be a desire, not nickel-and-dime “disaster” victims, but is a dangerous precedent.

c. Income replacement.

The JCT stated that the general welfare exception did not apply to replacement of lost income such as “lost wages and unemployment compensation.” That is an astounding conclusion in light of the history of the exclusion. Although that view reflects standard income tax policy of taxing substitutes for gross income, it wholly overlooks and rejects the original IRS rulings that excluded unemployment compensation payments as well as all other Social Security Act payments that were substitutes for some form of subsistence income, and on which all the later rulings are based.

Many years after their original enactment Congress made unemployment compensation and Social Security wholly or partly taxable, but that does not change the original rulings that started the general welfare doctrine. The most logical explanation for the shift is that the early rulings were based on excluding subsistence payments to poor individuals, while the new IRS position reflecting 9/11 considerations is not. But there is no evidence anyone reasoned that out.

The JCT report cited for this point revenue rulings that included forgiven government loans to farmers who either did or did not deduct a crop loss.35 Those rulings apply the general tax policy of taxing substitutes for earned income and did not even consider the general welfare doctrine.36 But the Office of Chief Counsel in an in-depth general counsel memorandum, GCM 37920 (1979), explained that the difference between excludable subsistence income payments to individuals who did not have other sources of income and replacement of lost income by farmers was based on absolute versus situational need.37

d. The expense deduction issue.

It may seem obvious that an excluded reimbursement should not be linked with a deduction claimed by the reimbursed person, but there is more to it. Section 139(h) denies deduction for an expense or loss whose reimbursement is excluded by section 139. However, that does not apply to general welfare exclusions outside of the section. GCM 37920 (1979) contains a much more elegant explanation of the deduction issue in the context of disaster grants to farmers under federal farm programs. If the farmer can reasonably expect federal reimbursement for a deductible expense when incurred, the expense isn’t deductible and the reimbursement is not includable for that reason (without applying the general welfare exclusion). When the reimbursement is unexpected the expense is deductible and the reimbursement included (without any possibility of general welfare exclusion). The general welfare exclusion applies only when the payment is not reimbursing a deductible expense, at least as the exclusion was applied at that time, when it was limited to subsistence payments to individuals.

e. The fund requirement.

The JCT explanation added a requirement of a “governmental general welfare fund.” It likely derived that requirement from a reference to a general welfare fund in a ruling it cited, Rev. Rul. 76-144, which cited another ruling that did not involve a fund. Nevertheless, some letter rulings have recited the fund requirement.38 The actual origin of that supposed requirement was in the original 1938 ruling exempting unemployment compensation benefits, which were funded.39 But other excludable payments have not been funded.40 Therefore, the general welfare exclusion should not be limited to payments from a dedicated fund.

f. Personal expense.

The JCT said that the general welfare exclusion generally applied to food, medical, housing, personal property, transportation, and funeral expenses. That is very similar to section 139(b)(1), which does not apply to the doctrine, but refers to “personal, family, living, or funeral expenses.” The unstated point of both lists is that generally the IRS has not applied the exclusion to reimbursements to businesses, even sole proprietorships. That is why the rulings on expense reimbursements to farmers discussed above were not excluded.

B. Disasters Before 9/11

1. The 1974 act.

Disasters became linked to the general welfare exclusion after Congress enacted the Disaster Relief Act of 1974.41 Section 408 authorized payments to individuals to meet needs caused by disasters that they are “unable to meet . . . from other means.” Therefore, payments under the act required absolute and not situational need.

Someone other than a taxpayer, possibly a congressman, requested and received a letter ruling that payments under the act would not be included in gross income because they were made for the general welfare.42 The ruling reasoned that the payments were not made for services and cited the pivotal Rev. Rul. 63-136 (not a disaster ruling). The letter ruling turned into Rev. Rul. 76-144, which said “as a result of a major disaster [the payees] are unable to meet necessary expenses or serious needs.”

2. Disasters’ history in America.

But the 1974 Disaster Relief Act wasn’t the beginning of U.S. federal disaster relief. A historian has detailed how Congress had frequently bailed out victims of a wide variety of natural and economic disasters, beginning in the 1790s.43 To make a long story short, the author explained the great advantage of disaster relief: It usually enabled Congress to avoid all considerations of the moral faults of the payees. In contrast, the New Deal relief payments were hotly opposed precisely because they weren’t disaster related, assuming you don’t view the Depression as a disaster not caused by the unemployed. The Social Security Act raised the perpetual Republican bogeyman of “moral hazard”: Poor people won’t work if you give them money.

By shifting the general welfare doctrine to a property loss insurance model, the IRS has extracted itself from making judgments about when welfare programs are for the promotion of the general welfare.

III. The Unemployment Compensation Model

A. Like Insurance

The Social Security Act of 1935 created programs for old age payments, unemployment compensation, payments for dependent children, grants to the blind, and various public health programs to provide services. In separate rulings the IRS excluded all the direct payments from the recipient’s income. Therefore, it is fairly obvious the IRS inferred that Congress didn’t intend to tax any of the direct payments to individuals authorized by the Social Security Act. But in hindsight, a sort of loss insurance model combined with a subsistence income limit can be discerned in most if not all the excluded programs as they originally operated. Unemployment compensation looks most like job loss insurance.

GCM 34424 (1971) reviewed the unemployment payments and observed that the original 1938 ruling, I.T. 3230, was based on the payments being subsistence payments.44 Obviously, the need for unemployment compensation was triggered by a loss (of employment). Obviously, unemployment compensation was a form of insurance. Therefore, the memorandum described the exclusion for those payments as like insurance for a loss (of income) but limited to payees with an absolute need.

Then the memorandum explained how the government programs for the unemployed had become more sophisticated since 1938, sometimes involving programs in which individuals were paid to work and be trained. It explained the important Rev. Rul. 63-136 as based on an analogy to I.T. 3230 because the work-study payments were limited to what could have been received as unemployment compensation. It advised that that was the dividing line, and if the payments were more than such subsistence amounts, the entire payment should be taxable compensation. In GCM 39228 (1984) chief counsel actually explained the general welfare exclusion in relation to disaster relief as based on the fact that the payments were “in the nature of insurance.”

B. The Transition to General Welfare

Rev. Rul. 63-136 cited all those prior rulings to explain why benefit payments made to individuals undergoing training or retraining under either the Area Redevelopment Act or the Manpower Development and Training Act of 1962 were not includable in the gross incomes of the recipients. It added that they “fall in the same category as other unemployment relief payments made for the promotion of the general welfare.” That was the origin of that phrase and concept in the IRS rulings. A 1957 ruling had excluded state payments to the blind, calling them “disbursement from a general welfare fund in the interest of the general public.”45 They both make the point that helping the needy and blind is in the interests of the public, a concept lost from the doctrine as applied to new situations today. They weren’t concerned with the fact that the payments replaced wages that would have been taxable.

C. The Search for Loss

Roughly coinciding with the disaster relief exclusions of the 1970s, the IRS general welfare rulings have stretched to find insurable losses to fit the insurance model for exclusion, but until recently the recipients were mostly low-income individuals. Loss categories included the cost of fuel in winter for poor people;46 police officers’ death benefits;47 displacement by urban renewal;48 unemployment because of trade policy;49 crime victims;50 and blindness.51 The risk of loss of homes justified excluding loan assistance payments after the 2008 depression.52 But before the first disaster rulings, absolute need was enough, without a current loss.53

IV. Social Security Model

A. The Foundational Citation

Even though the Social Security Act payment exclusions came in a set, the first was for old age benefits, and it has remained the foundational citation for all later general welfare exclusions. That reliance compounds the confusion of the exclusion not only because the IRS implicitly based it on inferred congressional intent but also because Social Security old age benefits aren’t typical of other general welfare payments: (1) They aren’t based in law on absolute need, although in 1935 probably almost all recipients were needy; and (2) they aren’t based on loss of a job or property, unless you view old age as loss of ability to work.

The often-cited Rev. Rul. 63-136 also cited Rev. Rul. 131, 1953-2 C.B. 112, and I.T. 3447, 1941-1 C.B. 191. I.T. 3447 stated without explanation that the original 1940 Social Security payments weren’t taxable. Rev. Rul. 57-102 also cited I.T. 3447. But even earlier, I.T. 3194, 1938-1 C.B. 114, ruled as nontaxable lump sum payments made to specific individuals who didn’t qualify for regular Social Security payments at age 65 because they hadn’t received enough wages. That ruling preceded its twin on unemployment compensation. It stated no explanation, but it may be relevant that this apparently first ruling in the line involved the most impecunious recipients of Social Security, which otherwise wasn’t needs-based. The Social Security Administration history discussed below, and other commentators, agree that this was the earliest IRS exclusion ruling for Social Security benefits.54 It was restated in Rev. Rul. 70-217, without explanation, also calling the benefits insurance.

B. Even SSA Does Not Know

The Social Security Administration’s agency history section contains research note No. 12: Taxation of Social Security Benefits, which reveals even the administration does not know why social security was excluded. It identifies the early IRS rulings cited above and explains how the exclusion contrasted with the taxation of private pensions. It implies that a reason for the exclusion might be the difficulty of quantifying the beneficiary’s contributions to his own benefits (said to approximate 15 percent), which should be excluded, and the quandary of whether to tax to a beneficiary the earnings on the Social Security Trust Fund, a governmental trust.

It stated that the IRS’s reason was that the benefit was a “gratuity,” which it equated with a “gift.” The history copied the gratuity idea from the report of the 1979 Advisory Council on Social Security, which stated:

The council believes that this ruling [excluding Social Security benefits] was wrong when made and is wrong today. The right to social security benefits is derived from earnings in covered employment just as is the case with private pensions. The council believes that the current tax treatment of private pensions is a more appropriate model for the tax treatment of social security.

Eventually, the 1983 rewrite of the Social Security laws made benefits taxable beginning in 1984. The history said that change encountered strong opposition in Congress,55 and was passed only because of the dire need of the trust fund for the tax revenue and because of an income threshold and 50 percent limit on the taxed benefit. The former was intended to exempt lower-income persons and the latter was intended as a rough approximation of the person’s contribution.

C. The Variety of Explanations

1. Legislative intent.

The practical explanation why the IRS excluded Social Security benefits is that Congress wouldn’t have stood for taxing the benefits in 1938. That explanation is supported by the failure of the IRS Social Security rulings to provide any justification or analysis. Moreover, the IRS eventually said so in Rev. Rul. 57-1, 1957-1 C.B. 15: “because it was believed that Congress intended that such benefits be not subject to tax.”56 One person who testified on the 1954 code believed that Congress wanted the gross benefits to be fully available to help the indigent recipients in the Depression, which was consistent with Congress simply not intending them to be taxed.57 The IRS has stated that Social Security payments aren’t paid for annuity benefits or additional compensation, but rather are general welfare payments.58

Moreover, who would complain?59 The general welfare doctrine becomes problematic only when the IRS denies the exclusion to a taxpayer. Such denial presents the IRS with the problem of how to explain the exclusions themselves. Indeed, it appears that the IRS made up the standards for the exclusion on the fly, as it gradually has been forced to explain some negative rulings.

And the reason that the IRS eventually labeled the exclusion “general welfare” likely was that the original Social Security Act preamble stated: “To provide for the general welfare by establishing a system of Federal old age benefits.”60 Also, the Roosevelt administration defended it as a general welfare spending program and won in Davis.

2. Other explanations.

Along the way, many have proposed explanations for the exclusion of Social Security benefits. As noted above, when the 1979 commission, made up of supposedly knowledgeable senators and representatives, studied Social Security it speculated that the IRS analogized the benefits to nontaxable gifts but was wrong in doing so.

Second, the IRS might have struggled with whether Social Security beneficiaries had a basis in their benefits because Social Security was partly contributory. It would have been difficult to calculate how much of the benefit should be excluded as a return of contribution; moreover, someone would have had to decide that the income earned by a government trust fund could be taxable to a beneficiary when paid out.

Third, when the term “insurance” was introduced in a 1940 ruling, it is possible that the nontaxable aura of some insurance benefits attached to Social Security as it likely had to unemployment benefits.

Fourth, Charlotte Crane suggested that the IRS might have been influenced to exclude federal benefits because of the intergovernmental immunity doctrine that might have made it difficult to tax state-provided benefits.61

Fifth, there is an obvious analogy to the exclusion for contributions to corporate capital in section 118, which originated in a now discredited and more circumscribed definition of gross income.62

And sixth, the 1979 commission determined the original exclusion had simply been wrong (which also may be wrong if it was based on statutory construction).

Many writers have explored the Social Security exclusion. The first article analyzed the government payments as fringe benefits, which had their own history of exemptions.63 Another article attributed the concept to a concurrence of Justice Felix Frankfurter analyzing the rulings.64 That case upheld a jury verdict that determined that strike benefits were excludable as gifts. The concurrence extensively discussed the Social Security exclusion, saying the rulings could be explained by the commissioner’s interpretation of Social Security policy and not as a view on “subsistence relief.” Other writers who explored the exclusions for disability benefits speculated that the best general explanation for the various exclusions may be based on the ability-to-pay principle.65

In sum, the takeaway from the various explanations is that they tend to prove that no one really knew why the IRS decided to exclude Social Security benefits. Nevertheless, the IRS has treated the Social Security exclusion as foundational and expanded the exclusion, which forced it to come up with explanations that now appear to not make sense.

V. The Deep Meaning of General Welfare

A. The Constitution

1. Contentious clause.

When the IRS invoked the promotion of general welfare in the exclusion rulings, it imprudently tripped into a phrase with deep and important constitutional roots, which creates a partisan divide because it is most associated with the New Deal.

The U.S. Constitution’s preamble refers to the general welfare and Article I, section 8, clause 1 of the Constitution states:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.

The scope and meaning of providing for taxing and spending for the general welfare of the United States has been heavily debated in the courts and the question dominated the Supreme Court decisions on New Deal legislation.66 Surprisingly, an anti-New Deal opinion, Butler, held for the first time in 1936 that the general welfare purposes for which Congress may spend aren’t a cumulation of the enumerated powers of Congress but an independent ground for spending. Then the Court switched its tune and upheld the Social Security taxes in Helvering v. Davis, also heavily discussing the meaning of general welfare.67

2. School vouchers.

There could be many important consequences of the general welfare doctrine to highly contentious political issues, such as issuing vouchers to parents for sending their children to private schools in lieu of attending public schools. For example, if public schools’ value to students is excluded under the general welfare doctrine, vouchers provided to students who don’t want to go to public schools should be excluded. Robert W. Wood reached the same conclusion by analyzing the payments to students as based on need, which the IRS views as the talisman of the general welfare exclusion.68

B. The Statutes

The close connection of general welfare concepts and Social Security is supported by the sparse use of the term before 1935. The earliest reference to general welfare in a federal statute occurred in 1864 in reference to the general welfare of former slaves in the southern states occupied by U.S. forces.69 Then in 1866 Congress incorporated the soldiers and sailors home for the promotion of their general welfare.70 Then the Wyandottes Treaty promised to purchase agricultural implements for the general welfare of the Shawnees.71 Indeed Indian General Welfare Funds and other provisions became a minor standard usage of general welfare.72

Then, another small group of statutes referred to the interests of the general welfare of the United States, as in a standard for handling the funds of the postal savings system.73 Alternately, a few statutes referred to the general welfare of the people of the United States.74

However, the federal government’s reliance on its general welfare powers experienced a big bang in the New Deal, which is mostly forgotten today, except by Republican intelligentsia. For example, even the statute creating the SEC in 1934 stated:

National emergencies, which produce widespread unemployment and the dislocation of trade, transportation, and industry, and which burden interstate commerce and adversely affect the general welfare, are precipitated.75

This culminated in 1935 when the preamble to the Social Security Act stated Congress was providing for the general welfare by establishing a system of federal old age benefits.76

C. The Religious Connection

The Supreme Court has held that the establishment clause doesn’t prevent the government from providing general welfare benefits to churches, such as police and fire protection.77 The explanation is that they don’t count as aid for religion, regardless of whether they in fact provide aid. Bittker noted the same direct and indirect divide as illogical in deciding whether transfer payments should be in the comprehensive tax base.

D. The Exempt Organization Connection

Section 501(c)(4) organizations are supposed to promote social welfare, which the regulation explains means general welfare.78 While the IRS has been fairly adept at distinguishing between private financial benefit and general welfare, it has had to abandon any effort to parse between organizations’ differing conceptions of the general welfare for purposes of the exemption.

E. Contributions to Capital

The exclusion provided by section 118 has been likened to payments by a government for the general welfare.79

F. Role of Courts

1. Followers not leaders.

The general welfare doctrine isn’t a common law exclusion. Unlike the economic substance doctrine, the IRS created the general welfare exclusion. The few court opinions that have evaluated it have uniformly depended on revenue rulings to define the doctrine, and so don’t really add anything to the understanding of the issue.80

2. The dominion and control theory.

After finding the general welfare exclusion inapplicable because the homeowners didn’t need the facades, the Bailey opinion found another way to help the taxpayers: Because the city paid the contractors who replaced the façades and the homeowners were subject to restrictions on changing the façades, neither the funds nor the improvements to their homes came into the control and dominion of the taxpayers, so they didn’t receive gross income.

Surely Bailey erred in implying that paying the contractors rather than paying the homeowners could change the gross income inclusion. Giving the opinion the benefit of the doubt, presumably it focused on the façade being built to the city’s specifications and the limit on the homeowner’s ability to change the façade rather than who paid for the façade. But that still is a weak ground for exclusion of an actual and direct value increase to property.

It is true that Glenshaw Glass contains this statement, with one reference to dominion and no references to control:

Here we have instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.81

Neither control nor dominion were at issue in Glenshaw Glass, so those words were dicta and probably referred to timing. It is true that the timing of receipt of income sometimes depends on when it is in the control of the taxpayer. But the IRS should want to be very careful about implying that lack of full control over a “free” improvement to a person’s property can prevent inclusion. If that works, a lot of boat docks will be built on executives’ property on the condition that their companies can use the docks.

VI. Conclusion

More than 50 years ago, Bittker suggested that Congress just say which government payments to individuals should be excluded, which would excuse the IRS from having to keep reinventing its general welfare doctrine (which had not then been named). Congress came close in section 139 but punted back to the IRS to figure out the meaning of promoting the general welfare by government payments.

This report has tried to put some interpretation on the 75 years of the IRS general welfare doctrine rulings. Anyone who disagrees with that interpretation should try it him or herself; no one else has.

The current status quo works for everyone but those individuals being paid to promote the general welfare who haven’t incurred a property loss or abnormal expense. It appears that the IRS is on a mission to use FAQs to tell most recipients of government payments for COVID-19 losses that section 139 will protect them from taxation. The website refers vaguely to section 139 and moves on. If anyone is left out, they might complain, and a court might have to define this messy doctrine.

FOOTNOTES

1 See generally Jasper. L. Cummings, Jr., The Supreme Court’s Federal Tax Jurisprudence 256 (2d ed. 2016). See also Boris I. Bittker and Lawrence Lokken, Federal Taxation of Income, Estates, and Gifts, para. 16.4; and Robert W. Wood, “The Evergreen General Welfare Exception,” Tax Notes, Mar. 8, 2010, p. 1271. See also IRS, “ITG FAQ #6 Answer — What Is the General Welfare Doctrine?

2 Ken Brewer, “Global Tax Planning for Strange Days,” Tax Notes Federal, Apr. 6, 2020, p. 65.

3 Q&A 20 on coronavirus on IRS website.

4 New section 6428. Absent any legislative history we don’t know why this method was chosen, but it seems to work.

5 See Rev. Rul. 2009-19, 2009-28 IRB 111.

6 See IRS FAQ 84 and FAQ 58, which state that qualified sick leave wages and qualified family leave wages aren’t excluded from gross income as “qualified disaster relief payments.” Those FAQs don’t relate to the subject of this report, governmental payments, but they do define disasters for purposes of private payments. IRS, “COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs” (Mar. 31, 2020).

7 Section 139(c).

8 But see Department of Education, Higher Education Emergency Relief Fund.

9 Helvering v. Davis, 301 U.S. 619 (1937).

10 Rev. Rul. 63-136, 1963-2 C.B. 19.

11 42 U.S.C. section 5121.

12 Rev. Rul. 76-144, 1976-1 C.B. 17.

13 Rev. Rul. 2003-12, 2003-1 C.B. 283.

14 Rev. Rul. 2003-12 said both the general welfare exclusion and section 139 applied, and relied on Rev. Rul. 98-19, 1998-1 C.B. 840, which did forecast the shift because it applied to moving flood-damaged residences based on situational, not absolute, need. However, it in turn was based on earlier rulings that paid minimum costs of moving low- and moderate-income persons out of urban renewal areas, which were more like the earlier absolute need rulings.

15 Bittker, “A ‘Comprehensive Tax Base’ as a Goal of Income Tax Reform,” 80 Harv. L. Rev. 925 (1967).

16 Id. at n.23.

17 Goldberg v. Kelly, 397 U.S. 254 (1970).

18 Bittker, supra note 15, at 937.

19 The Indian General Welfare Doctrine runs parallel to the general welfare exclusion and has even more law and lore not addressed here. See Rev. Proc. 2014-35, 2014-1 C.B. 1110 (the Indian welfare authorities rely heavily on the general welfare exclusion); Notice 2012-75, 2012-2 C.B. 715.

20 See also Rev. Rul. 2005-46, 2005-2 C.B. 120 (doctrine limited to individuals); testimony of Sarah H. Ingram, commissioner, Tax Exempt and Government Entities Division (May 15, 2012).

21 The exclusion of compensation is obvious, but not as easy to apply as it seems. See discussion of unemployment programs below. See also Bannon v. Commissioner, 99 T.C. 59 (1992) (payments to parent to care for disabled child are compensation, although benefits to the child might not be taxable).

22 Testimony, supra note 20.

23 Bailey v. Commissioner, 88 T.C. 1293 (1987), acq. 1989-2 C.B. 1 (“There was no requirement that the recipient of a facade grant be an underprivileged individual or have a low income.” The opinion contrasted exclusion rulings for low-income persons.).

24 Theodore P. Seto and Sande L. Buhai, “Tax and Disability: Ability to Pay and the Taxation of Difference,” 154 U. Pa. L. Rev. 1053, 1114 (2006).

25 MSSP Training Guide, “Tax Effect of Grant Money,” ch. 20. It assumes without explanation that most such grants are includable and are not in the nature of general welfare spending, but states the lack of control route to exclusion, based on the Bailey opinion. The guide’s analysis is mostly based on Rev. Rul. 80-330, 1980-2 C.B. 29, which required inclusion of historic preservation grants on the grounds that they did not depend on any financial characteristic of the property owner. Bailey did not cite that ruling.

26 Other disaster relief rulings include Rev. Rul. 98-19 (moving from flood-damaged home). The disaster exclusion is addressed further below.

28 Letter from President Donald J. Trump on Emergency Determination Under the Stafford Act (Mar. 13, 2020).

29 See IRS, “COVID-19-Related Tax Credits: Special Issues for Employees and Additional Questions FAQs,” FAQ 58; section 139(b)(1), (2), and (3); Notice 2014-65, 2014-47 IRB 842. See also American Bar Association Section on Taxation, “COVID-19 Response” (Apr. 3, 2020), contending that the emergency declaration is a disaster declaration.

30 42 U.S.C. section 5170c(f). However, the 2018 letter rulings mentioned above, supra note 27, didn’t qualify for the mitigation exclusion because it said exclusions are to be “narrowly construed.”

31 See also Notice 2020-32; 2020-21 IRB 837. Cf. Graff v. Commissioner, 673 F.2d 784 (5th Cir. 1982), aff’g per curiam 74 T.C. 743 (1980) (interest assistance payments to landlords includable and deductible).

32 Rev. Rul. 2003-12.

34 Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930).

35 Rev. Rul. 91-55, 1991-2 C.B. 321; Rev. Rul. 73-408, 1973-2 C.B. 15, which cited Rev. Rul. 71-160, 1971-1 C.B. 75.

36 Rev. Rul. 75-36, 1975-1 C.B. 143, had ruled that crop disaster payments to a farmer from the federal government were taxable because they were like guaranteed income. The ruling did not consider the general welfare doctrine or cite any authority. The later rulings the JCT cited reversed that approach and found crop insurance payments to be insurance and interpreted section 451(d) to require inclusion; because they were insurance the farmer could elect under that section to defer inclusion to the next year when the crops normally would have been sold. Another ruling the JCT cited taxed the forgiveness of a government loan to a farmer as a substitute for future profits.

37 E.g., Rev. Rul. 63-136; Rev. Rul. 71-425, 1971-2 C.B. 76.

39 See explanation referring to a general welfare fund in GCM 34424 (1971).

40 E.g., Rev. Rul. 2009-19.

41 The Disaster Relief Act Amendments of 1974, P.L. 93-288. There had been rulings on farm disaster relief that preceded 1974.

42 LTR 7502260870A.

43 Michele L. Landis, “Let Me Next Time Be ‘Tried by Fire’: Disaster Relief and the Origins of the American Welfare State 1789-1874,” 92 Nw. U. L. Rev. 967 (1997-1998).

44 Rev. Rul. 55-652, C.B. 1955-2, at 21, and I.T. 3230, 1938-2 C.B. 136, ruled that unemployment compensation payments made by a state or federal agency aren’t subject to federal income tax. I.T. 3230 stated without explanation that the original 1938 unemployment compensation was exempt from tax. Rev. Rul. 55-652 updated the ruling for the 1954 revision of the program, without explanation.

45 Rev. Rul. 57-102.

46 Rev. Rul. 78-170, 1978-1 C.B. 24.

47 Rev. Rul. 78-46, 1978-1 C.B. 22.

48 Rev. Rul. 76-373, 1976-2 C.B. 16; Rev. Rul. 74-205.

49 Rev. Rul. 76-229, 1976-1 C.B. 19.

50 Rev. Rul. 74-74, 1974-1 C.B. 18.

51 Rev. Rul. 57-102.

52 Rev. Rul. 2009-19.

53 Rev. Rul. 75-271 (interest assistance for low-income persons to buy homes); Rev. Rul. 74-153, 1974-1 C.B. 20 (low-income foster parents); Rev. Rul. 73-87, 1973-1 C.B. 39 (anti-poverty program); Rev. Rul. 72-340, 1972-2 C.B. 31 (probationers); Rev. Rul. 71-425 (training for welfare recipients); Rev. Rul. 68-133, 1968-1 C.B. 36 (dropouts); Rev. Rul. 67-144, 1967-1 C.B. 12 (welfare not for services).

54 And it was the earliest IRS ruling that Frankfurter cited in the appendix to his concurrence in United States v. Kaiser, 363 U.S. 299 (1960). But E.T. 10, 1937-2 C.B. 469, ruled that Social Security taxes paid to the worker’s estate were includable for estate tax purposes, there being no exclusion.

55 See also Martha A. McSteen, “Planning for the Taxation of Social Security Benefits,” 63 Taxes 3, 4 (1985) (both Houses approved resolutions declaring that Social Security should remain nontaxable).

56 See also Seto and Buhai, supra note 24, at 1053 n.238 (“The argument most often given is that Congress simply did not intend to tax this kind of receipt.”).

57 Included in the testimony on the 1954 code is the statement of John C. McCart, representing the American Federation of Government Employees; Bernard D. Reams Jr., ed., Internal Revenue Acts of the United States: The Revenue Act of 1954 With Legislative Histories and Congressional Documents 2139 (1954). He explained the current exclusion of Social Security benefits as an attempt to ensure that the small amounts paid out during a depression would be fully available for use by the recipients and not reduced by taxes.

58 Rev. Rul. 63-167, 1963-2 C.B. 17.

59 See Charlotte Crane, “Government Transfer Payments and Assistance: A Challenge for the Design of Broad-Based Taxes,” 59 S.M.U. L. Rev. 589 n.9 (2006).

60 49 Stat. 620 (1935).

61 Crane, supra note 59, at 589 n.14.

62 See Seto and Buhai, supra note 24, at 1111.

63 John F. Costelloe, “A Sophisticated View of Fringe Benefits,” 43 Taxes 36 (1965).

64 Keith A. Christiansen, “The Exclusion of Job-Training Benefits From Gross Income,” 1967 Wis. L. Rev. 474 (1967). Kaiser, 363 U.S. 299.

65 Seto and Buhai, supra note 24.

66 United States v. Butler, 297 U.S. 1 (1936). See Cummings, The Supreme Court, Federal Taxation, and the Constitution, ch. III.D.8 (2013).

67 Davis, 301 U.S. 619.

68 See Wood, supra note 1.

69 In addition to the several acts concerning commercial intercourse between loyal and insurrectionary states, and to provide for the collection of captured and abandoned property, and the prevention of frauds, in states declared in insurrection, ch. 225, 38 Congress, P.L. 38-225. 13 Stat. 376 (1864).

70 To incorporate “The Soldiers’ and Sailors’ Union,” of Washington, District of Columbia, ch. 239, 39 Congress, P.L. 39-239. 14 Stat. 235 (1866).

71 15 Stat. 513 (1867).

72 E.g., to ratify and amend an agreement with the Indians residing on the Shoshone or Wind River Indian Reservation in Wyoming and to make appropriations for carrying the same into effect, ch. 1452, 58 Congress, P.L. 58-185. 33 Stat. 1016, 1018 (1905); the Tribal General Welfare Exclusion Act enacted section 139E.

73 36 Stat. 817 (1910).

74 42 Stat. 1025 (1922) (promotion of coal).

75 48 Stat. 882 (1934).

76 49 Stat. 620 (1935).

77 See dissent of Justice Souter in Mitchell v. Helms, 530 U.S. 793 (2000).

78 Reg. section 1.501(c)(4)-1.

80 E.g., Maines v. Commissioner, 144 T.C. 123 (2015); and Ginsburg v. United States, 136 Fed. Cl. 1 (2018), aff’d, 922 F.3d 1320 (Fed. Cir. 2019).

81 Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955).

END FOOTNOTES

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