In Uncategorized on 09/21/2016 at 18:03

A welcome back to Ory Eshel and Linda Coryell Eshel, Docket No. 8055-12, filed 9/21/16, from Ch J L. Paige (“Iron Fist”) Marvel, as USCADC bounced Judge Lauber’s dictionary-driven analysis of the French social security system. For the bounced opinion, see my blogpost “Va T’En, Enfants de la Patrie,”4/2/14.

You remember that Ory’s and Linda’s bœuf with IRS concerned the French la contribution sociale généralisée (general social contribution or CSG) and la contribution pour le remboursement de la dette sociale (contribution for the repayment of social debt or CRDS). Ory and Linda wanted the foreign tax credit, but IRS said no, check the Totalization Agreement (the “tote”) between France and the USA. Properly, the tote is the Agreement on Social Security Between the United States of America and the French Republic, March 2, 1987, 2260 U.N.T.S. 145, available at https://

There’s no foreign tax credit for social security payments or foreign equivalents. The CSG and the CRDS were adopted after the French and we inked the tote, so the question was whether either or both was legislation that amends or supplements the previous French social security regime.

Judge Lauber went to the dictionary, and Judge Millett throws the book at him.

“The tax court’s conclusion that CSG and CRDS ‘amend[] or supplement[]’ the designated French laws was the product of asking the wrong legal question.  Rather than looking to the text of the Totalization Agreement or the signatory countries’ shared understanding, the tax court asked only what ‘amends or supplements’ means in domestic dictionaries, as it might do if construing a purely domestic statute.

“But the Totalization Agreement is not a domestic statute.  It is an executive agreement with a foreign country:  initiated by the State Department, negotiated by the Social Security Administration, signed by the President and a foreign government, and effective only after submission to Congress.” Eshel v. Com’r, 14-1215, decided August 5, 2016, at pp. 10-11.

There’s a specified set of French laws in the tote that comprised the French social security system for purposes of the tote. Judge Lauber looked at the general system, but that isn’t what the tote says.

“The central problem in this case is that the tax court’s resort to American dictionary definitions pretermitted the critical inquiry into the Agreement’s text and the signatory countries’ shared understanding of the Agreement.  The text strongly suggests that the question whether CSG and CRDS amend or supplement the designated French laws—which is fundamentally an inquiry into the content and meaning of the textually enumerated French laws—should have involved reference to  French law.  Instead of heeding this instruction, the tax court consulted outside sources that were not reliable expressions of either textual construction or the signatories’ intent.” 14-1215, at pp. 18-19.

Judge Lauber refused to listen to Ory and Linda’s French law expert, and that’s OK. Tax Court Rule 146 says foreign law is a question of law, not fact.  But IRS’s take is pure ipse dixit, and Ory and Linda’s documents from the French went in without context.

So, Tax Court, do a full-dress takeout on what the French and Americans thought they were doing.


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