Philippe v. Commissioner

D. L. Philippe, Petitioner, v. Commissioner of Internal Revenue, Respondent Philippe v. Commissioner Docket No. 36995 United States Tax Court 26 T.C. 984; 1956 U.S. Tax Ct. LEXIS 101; August 31, 1956, Filed *101 Decision will be entered under Rule 50. Petitioner, a merchant seaman and British subject, who resided in Belgium before the outbreak of World War II and sailed on British ships out of Antwerp, continued to sail on British ships after the war began and between voyages stayed with friends in England. In 1943 he began sailing on American ships with the consent of British authorities and for 7 months sailed on ships out of New York, staying between voyages at his father's apartment in that city. From 1944 to 1949 he served on American ships operating in European and Pacific waters stopping only once in New York between voyages. On occasion he used his father's address in New York as a mailing address. After his return to this country in 1949, he applied for American citizenship, and in his application at the suggestion of immigration authorities filled in the form to show he had resided since 1943 at his father's address in New York. Held, petitioner was a nonresident alien until 1949 when he became a resident alien. Luke F. Binetti, Esq., for the petitioner. Richard G. Maloney, Esq., for the respondent. Kern, Judge. KERN *984 The Commissioner determined deficiencies in the petitioner's income tax and additions as follows: Sec. 291 (a) Year Income tax addition — 1944 — $ 583.00 $ 60.86 — 1945 — 954.00 212.62 — 1946 — 756.00 189.00 — 1947 — 1,363.79 340.95 — 1948 — 1,256.93 41.43 — 1949 — 1,348.54 51.46 The issues for decision are whether the petitioner was a nonresident alien of the United States during the years 1944 to 1949, inclusive, and whether he is liable for the additions prescribed by section 291 (a) for failure to file returns for the tax years 1944, 1946, and 1947, and for failure to file timely returns for the tax years 1945, 1948, and 1949. *985 *103 FINDING OF FACT. Some of the facts have been stipulated by the parties and are incorporated herein by this reference. The petitioner is an individual residing at Fairlawn, New Jersey. He filed income tax returns, Form 1040-B, entitled "United States Nonresident Alien Income Tax Return" for the years 1945, 1948, and 1949 with the collector of internal revenue for the district of Maryland on April 4, 1950. The petitioner was born in Montreal, Canada, in 1917. In 1927 he came with his family to the United States and lived in New York for about 2 years. In 1929 his mother and father were separated and his mother decided to live in Europe. In that year petitioner accompanied his mother to Europe, together with his brother and sister. The petitioner and his brother were put into a boarding school in England while his mother and sister proceeded to Belgium where they had relatives. Due to the expense of the school, petitioner and his brother in 1931 were removed from England and sent to live with their aunt in Belgium. A year later, petitioner was sent to Antwerp where he lived for several years with his sister who had in the meantime married and established her home there. When the*104 petitioner was 17 he decided to go to sea as things had become difficult for the family. Having been born in Canada and therefore being a British citizen, he applied for jobs on British ships. In 1937 or 1938 he sailed aboard English ships out of Antwerp, and he continued this activity until the war broke out in 1939. Thereafter, since British ships no longer returned to Belgium or France, the ships he worked on returned to England and thereafter he sailed out of English ports. Petitioner had friends who lived in Manchester, England, and whom he frequently visited, staying with them between trips. During the period 1939 to 1943 petitioner visited his friends several times a year for periods lasting from a few days to a few weeks, depending on how long his ships were in port. He kept some of his personal effects in Manchester and considered Manchester, England, to be his home. His brother, sister, and mother continued to live in Belgium, where his mother died in 1946. In 1943 the petitioner while in Durban, South Africa, waiting to be returned to England after a voyage, went to the various allied consulates seeking a job. He obtained one aboard an American vessel called the*105 Swift Scout, which operated in the Indian Ocean and the Persian Gulf for about 6 months and then returned to New York. Upon his arrival in the United States in 1943, the petitioner received a landing pass together with instructions to register as an alien seaman with the Coast Guard, which he did at that time and on subsequent occasions. *986 After the petitioner had left for Europe with his mother, brother, and sister in 1929, his father continued to reside in New York City where he became a naturalized citizen of the United States in 1940. On his arrival in New York in 1943 on the Swift Scout the petitioner visited his father who lived in a 2-room apartment. He reported to the British Shipping Master in New York for service upon English ships, because he came under the authority of the British Government, and was put on a standby basis for repatriation to England. The petitioner discovered that he could sail aboard American flag ships if he received permission from the British Shipping Master, and he requested and received such permission. Thereupon, he began sailing aboard ships of the United States Line between New York and Liverpool, England, a trip which took*106 about 6 weeks. During the short intervals between these trips, petitioner usually stayed at his father's apartment. As an alien seaman he could stay in this country legally for only 30 days at a time. After sailing for 6 or 7 months with the United States Line, the petitioner decided to apply for a job with the Army Transportation Corps as it was troublesome to have to obtain his release from the British Shipping Master every 6 weeks at the end of each voyage. The job with the Army Transportation Corps was for a period of 1 year, called for service in the European Theater of Operations, and required the permission of the British Shipping Master. To qualify for this job, the petitioner was required to obtain 2 months' training with diesel engines at the Aviation Trade Center in Brooklyn, New York, and an additional 2 months' training at St. Petersburg, Florida. After this training, he was placed in charge of the engine room on a small oil tanker which was headed for England to participate in operations there in the middle of 1944. Thereafter, he sailed from Southampton, England, to various ports in France delivering gasoline supplies. During this period, petitioner went to *107 Manchester whenever possible to stay with his friends there. He still considered this to be his home due to the unsettled conditions of wartime. He was returned to New York in 1945 following the termination of his 1 year's employment. Sometime during the period 1943 to 1944 the petitioner received at his father's apartment a notice to register for the draft. He went to the draft board and after registering was deferred because he was a seaman. In registering for the draft he had used his father's address since "That was the place I was most likely to be reached." Upon returning to New York in 1945 petitioner was offered a 1-year contract with the Army Transportation Corps for duty in the Southwest Pacific Theater on ships sailing from Manila. The offer was dependent again upon his receiving a permit from the British Shipping Master which was granted. After this, as the war was over, *987 petitioner was never required to receive permission from British officials for sailing aboard United States flag ships. In December 1945 he was sent to Manila, from which port he served aboard various United States vessels in the Pacific until 1949, as his contract was extended from time*108 to time. During this period of 4 years he did not return to the United States, but when his contract was terminated in 1949 he returned to the United States, landing in San Francisco, and proceeded to New York where he stayed with his father and stepmother. In 1949 he learned that he had the necessary qualifications for United States citizenship under the so-called McCarran Seamen's Act because of his service for over 5 years on board American ships. He went to the immigration office and, upon request, received the necessary forms to be filled out. On November 7, 1949, petitioner filed Form N-400 with the Immigration and Naturalization Service, Department of Justice, New York, New York. This form, filled out with the aid of an employee of the Service at petitioner's request because of his doubts concerning the proper answers, reflected the following statements, questions, and answers, inter alia: I, Denis Louis Adrian Philippe, residing at 302 East 89 St. New York City, N. Y., desire to file a petition for naturalization * * * I submit herewith a statement of facts to be used in filing such petition, * * * (1) I arrived in the United States through the port of New York City*109 New York under the name of Denis Louis Adrian Philippe, on July 15-1943 on the vessel S/T Swiftscout * * * * * * * (10) My last foreign residence was Manchester England. * * * * (15) The person in the United States to whom I was coming was Jean Henri Philippe (Father). (16) The place in the United States to which I was going was New York City-N. Y. * * * * (18) In what places in the United States have you resided during the past five years? New York City, N. Y. From July-1943 to Present Date. Page 3 of this form contained the following statements made by the petitioner in answer to the questions propounded therein: (1) My full, true and correct name is Denis Louis Adrian Philippe. (2) My present place of residence is 302 East 89 St. New York City, N. Y. * * * * (9) My last place of foreign residence was Manchester - England. (10) I emigrated to the United States from Durban South Africa. (11) My lawful entry for permanent residence in the United States was at N.Y. N.Y. under the name of Denis Louis Adrian Philippe on July 15, 1943 on the Swiftscout. * * * * *988 (14) I have resided continuously in the United States of America since July 15, 1943, and continuously in the State*110 of NY where I now live since July 15, 1943. Petitioner was granted United States citizenship on February 20, 1950, under the so-called McCarran Seamen's Act because of his service on American ships for over 5 years. During the period November 7, 1949, to January 18, 1950, the petitioner and a friend shared a small place in a hotel in New York where they attended school and studied for an examination for a marine engineer's license. When he received his citizenship in February 1950, he was still living in the hotel. Petitioner was not a citizen of the United States during the years 1944 to 1949, inclusive. The petitioner during the said years had income only from sources without the United States. The petitioner was a nonresident alien of the United States during the years 1944 to 1948, inclusive, but became a resident alien in 1949. OPINION. The crucial question in this case is whether petitioner, during the taxable years, was a nonresident alien within the meaning of section 212(a), Internal Revenue Code of 1939, which provides that "In the case of a nonresident alien individual gross income includes only the gross income from sources within the United States." It is stipulated*111 that petitioner's income was only from sources without the United States and that he was not a citizen of the United States. Therefore, the validity of respondent's determination of deficiency must depend on the correctness of his contention that petitioner was a resident of the United States during the years in question. Petitioner was an alien seaman. Therefore, it is relevant to consider not only the general provisions of Regulations 111, sections 29.211-2 and 29.211-4, but also the specific provisions of Regulations 111, section 29.211-3, which read as follows: Sec. 29.211-3. Alien Seamen, When to be Regarded as Residents. -- In order to determine whether an alien seaman is a resident within the meaning of chapter 1, it is necessary to decide whether the presumption of nonresidence is overcome by facts showing that he has established a residence in the United States. Residence may be established on a vessel regularly engaged in coastwise trade, but the mere fact that a sailor makes his home on a vessel flying the United States flag and engaged in foreign trade is not sufficient to establish residence in the United States, even though the vessel, while carrying on foreign *112 trade, touches at American ports. An alien seaman may acquire an actual residence in the United States within the rules laid down in section 29.211-4, although the nature of his calling requires him to be absent for a long period from the place where his residence is established. An alien seaman may acquire such a residence at a sailors' boarding house or hotel, but such a claim should be *989 carefully scrutinized in order to make sure that such residence is bona fide. The filing of Form 1078 or taking out first citizenship papers is proof of residence in the United States from the time the form is filed or the papers taken out, unless rebutted by other evidence showing an intention to be a transient. The fact that a head tax has been paid on behalf of an alien seaman entering the United States is no evidence that he has acquired residence, because the head tax is payable unless the alien who is entering the country is merely in transit through the country. The question of residence under the quoted regulation is a mixed question of law and fact and its solution requires a determination of the subjective intent of the individual taxpayer ascertained from the careful consideration*113 of the objective facts peculiar to each case. Rolf Jamvold, 11 T. C. 122. Many evidentiary factors are pertinent to a consideration of the question. See L. E. L. Thomas, 33 B. T. A. 725; John Ernest Goldring, 36 B. T. A. 779; Walter J. Baer, 6 T. C. 1195; Herman F. Baehre, 15 T. C. 236; and Rolf Jamvold, supra. It should be further noted that the question is whether petitioner was a resident of the United States. A conclusion that he was not a resident of this country does not require that we determine in what other country, if any, was his residence. Such questions, during and immediately after the last World War, were difficult to answer with reference to an uncounted multitude of persons who had, before the war, peacefully and unquestionably resided in Western Europe. With regard to no group were the questions more difficult of solution than the merchant sailors exiled from countries overrun by Hitler's Germany. See Rolf Jamvold, supra. And of this group it is*114 difficult to conceive that many individuals could present a more complicated background for this problem than petitioner. He was born in Canada and his parents were obviously of either French or Belgian origin. At the age of 10 he was brought to this country and lived in New York for 2 years until his parents separated. His mother, who, as petitioner testified, was quite a sensitive person and felt a "loneliness towards Europe" went to Belgium where she had relatives and took all the children with her. However, for some reason she stopped by London on her way to Belgium and placed petitioner and his brother in an English school, St. Aloysius College, where they stayed for 2 years. After that petitioner went to Belgium, where he lived with an aunt in Liege and later with his sister in Antwerp, and attended Belgian schools. On account of straitened family circumstances, he left school and went to sea sailing on board British ships out of Antwerp on account of his British citizenship. When the war came and Hitler conquered the Low Countries, his ship could not return to Antwerp. His mother, brother, and sister remained in Belgium. His father, from whom he had been separated *990 *115 for some 10 years, lived in New York. War was engulfing the world and he was alone, a young sailor in his early twenties. He decided to keep to the sea and sail on British ships from English ports. Fortunately, he had friends living in Manchester, England, with whom he stayed between voyages and at whose houses he left his few personal belongings. In 1943, the course of the war found him stranded "due to lack of shipping" in Durban, South Africa, waiting for transport to England. He obtained a job on an American vessel which after operating in the Indian Ocean and Persian Gulf for some 6 months eventually brought him to New York. For some 6 to 7 months afterwards petitioner worked with the consent of the British Shipping Master on American ships sailing out of New York, and between voyages stayed with his father. He then obtained a position with the Army Transportation Corps, calling for 1 year's service in the European Theater of Operations and, after a period of training in diesel engines, became engineer on an oil tanker sailing out of Southampton, England, to various ports in France. Again, he stayed between voyages with his friends in Manchester. After this employment*116 (and the end of hostilities in Europe) petitioner returned to New York and immediately took up service in the Southwest Pacific Theater of Operations on ships sailing out of Manila. This service continued until 1949. We have set out this summary of petitioner's wartime service at sea to indicate how difficult it would be for petitioner to answer if he had been asked during this period: "Where is your residence?" It would be a difficult question for us to answer, if an answer were necessary in this proceeding. However, it is necessary for us only to answer the question whether petitioner was a resident of the United States. Our conclusion as to this question is that he was not a resident of the United States until 1949, when he returned to this country from the Pacific and decided to file his application for United States citizenship. Respondent, in his contention to the contrary, stresses petitioner's stays with his father between voyages, during the time petitioner was sailing out of New York and between the time he came to this country from South Africa in 1943 and the time he began to sail on the oil tanker out of an English port in 1944, and his giving his father's address *117 as his own when he registered for the draft and on other occasions when he might anticipate receiving communications from American officials. The fact that over the period of approximately 1 year (out of the 7 here involved) the circumstances of petitioner's service at sea permitted him to spend short periods of time between voyages at his father's apartment does not persuade us that he was a resident of this *991 country. On these occasions he had a "definite intention as to his stay." He knew that he was staying only until his boat sailed again. He also had a "definite intention as to his stay" while he was taking training in diesel engines as preparation for his service with the Army Transportation Corps in the European Theater of Operations. These limited periods of physical presence in the United States as incidents in his wartime service as a sailor do not, in our opinion, justify a conclusion that petitioner was a resident of this country. Nor do we think it persuasive of petitioner's residence in this country that he gave his father's address as his own mailing address on occasions when he might anticipate receiving communications from American officials. We are more*118 concerned by respondent's argument based upon the representations made by petitioner in the forms filled out and filed by him in 1949, in connection with his petition for naturalization. In these forms he stated that he had resided in New York since 1943. With regard to this matter, petitioner testified as follows: When a person becomes an American citizen, it is quite an occasion and when you are making up these forms, they appear pretty simple on the surface. However, you become somewhat nervous over them and there are sometimes possible answers to the -- different answers to the question. I knew that I was making application under the Seamens' Act and that my legal entry in the United States was when I arrived from the Pacific area for purposes of citizenship and that is what I put down on this form. However, I wasn't sure, it stated there, I believe it says, the first time you entered or when did you enter the United States. * * * I wasn't sure if they meant when I was a boy, of which I don't remember very much or if they required my arrival in 1943, at which time I started sailing American vessels and there are usually a lot of people there and I stood in line and when I got*119 to the lady that I could get this information from, I mentioned the fact that I was not sure what I should put in there and I mentioned the fact that I had come, I arrived at these shores in 1943 and that is the time I started sailing aboard American vessels. Well, sometimes there is a lot of people and they are very short with the people asking questions and she says, well, put that down, and I had another question about my address and I said, well, I usually use my father's address, usually on all forms. She said, well put that down. But I wasn't too clear in my mind -- I wanted to elicit a little information. She turned away from me and I began to feel somewhat stupid because it seemed simple but I had difficulty with the form. I figured, well, the lady knows what she is talking about, that is what she wants and those are the things that I put down. We were favorably impressed by the petitioner when he testified at the hearing herein. In our opinion he testified with candor and sincerity and his demeanor on the witness stand was that of a modest, sensitive, but capable young man. We accept his explanation of the statements made in these forms concerning his residence insofar*120 as they refer to his residence prior to 1949. However, his acts and declarations clearly indicate that in 1949 he had the full intent to be *992 a resident of the United States. After being out of this country for over 4 years, he returned in October 1949 and immediately filed his first citizenship papers, which is proof of residence in the United States from the time the papers are taken out unless that fact is rebutted by other evidence showing an intention to be a transient. Regs. 111, sec. 29.211-3. An additional factor which we considered in holding that Philippe was a resident in 1949 was that he commenced studying for his marine engineer's license shortly after his return to this country, with the thought that he would reside in New York City because it was a good shipping port. We conclude that the petitioner was a nonresident alien within the meaning of section 212 (a) of the Code during the taxable years 1944 to 1948, inclusive, but that he was a resident alien in the taxable year 1949. As we have not sustained the Commissioner's determination of deficiencies for 1944, 1945, 1946, 1947, and 1948, the petitioner is not liable for the additions for failure to file*121 timely returns for those years. The only remaining question is whether he is liable for the addition for his failure to file a timely income tax return for 1949. He filed a nonresident alien income tax return for 1949 on April 4, 1950. This should have been filed on March 15, 1950, as prescribed in section 53 (a) (1) of the 1939 Code. Philippe failed to show that this failure to timely file his 1949 return was due to reasonable cause and not due to willful neglect. He is, therefore, liable for the addition imposed by the provisions of section 291 (a) as determined by the Commissioner for 1949. Decision will be entered under Rule 50.