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AUERBACH v. UNITED STATES

November 20, 1968

Richard D. Auerbach and Muriel A. Auerbach, his wife, Plaintiffs,
v.
United States of America, Defendant


Von Der Heydt, District Judge.


The opinion of the court was delivered by: VON DER HEYDT

VON DER HEYDT, District Judge.

 This is an action under 28 U.S.C. § 1346(a)(1)(1964) to recover federal income taxes which plaintiffs allege were erroneously collected. Plaintiffs are husband and wife, who filed joint returns during the years in question. The memorandum, however, refers to the husband alone as plaintiff taxpayer, since it is his retirement annuity which is in question. Plaintiff taxpayer is a retired federal law enforcement officer. He joined the Federal Bureau of Investigation on August 5, 1940, and after initial training served as a Special Agent, as an administrative assistant to the Director, and finally as a Special Agent in Charge. Then, in August, 1961, having achieved 21 years service and the age of 50 years, he requested retirement under the provisions of Section 6(c) of the Civil Service Retirement Act of 1930, now codified as 5 U.S.C. § 8336(c) (Supp. II 1965-66).

 This statute provides, in pertinent part:

 
(c) An employee, the duties of whose position are primarily the investigation, apprehension, or detention of individuals suspected or convicted of offenses against the criminal laws of the United States, including an employee engaged in this activity who is transferred to a supervisory or administrative position, who is separated from the service after becoming 50 years of age and completing 20 years of service in the performance of these duties is entitled to an annuity if the head of his agency recommends his retirement and the Civil Service Commission approves that recommendation. The head of the agency and the Commission shall consider fully the degree of hazard to which the employee is subjected in the performance of his duties, instead of the general duties of the class of the position held by the employee.

 Taxpayer's application for retirement under this provision was approved on August 18, 1961, and accordingly he retired. It is agreed that he is, and has been, in good health, and that his retirement was not the result of any physical disability.

 Taxpayer paid income tax on the full amount of his annuity or pension for several years after his retirement. He now contends, however, that he is entitled to a refund because Int. Rev. Code of 1954 § 105(d) permits him to exclude up to $100 per week of his annuity from gross income until he reaches the normal retirement age for federal employees.

 Section 105(d) provides in part:

 
(d) Wage continuation plans.
 
Gross income does not include amounts referred to in subsection (a) if such amounts constitute wages or payments in lieu of wages for a period during which the employee is absent from work on account of personal injuries or sickness; but this subsection shall not apply to the extent that such amounts exceed a weekly rate of $100.

 Subsection (a), to which subsection (d) refers, provides:

 
(a) Amounts attributable to employer contributions.
 
Except as otherwise provided in this section, amounts received by an employee through accident or health insurance for personal injuries or sickness shall be included in gross income to the extent such amounts (1) are attributable to contributions by the employer which were not ...

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