Massachusetts v. United States, 333 U.S. 611 (1948)
Massachusetts v. United States
No. 157
Argued December 10, 1947
Decided April 19, 1948
333 U.S. 611
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE FIRST CIRCUIT
Syllabus
1. Under R.S. § 3466, the United States has priority for payment from an insolvent debtor’s estate of federal insurance contribution taxes under Title 8 and unemployment compensation taxes under Title 9 of the Social Security Act, as against a state’s claim for unemployment compensation taxes imposed by a state statute conforming to the federal act’s requirements, Illinois v. United States, 328 U.S. 8; Illinois v. Campbell, 329 U.S. 362 -- even though the fund available for distribution was more than sufficient to pay either the Title 8 or Title 9 taxes to the United States, but insufficient to pay both, and the debtor’s assignee had paid to the state the full amount of its claim. Pp. 612-623.
(a) Upon the intervention of an act of bankruptcy, R.S. § 3466 cut off the taxpayer’s right under Title 9 of the Social Security Act to pay the state 90% of the unemployment compensation tax and take federal credit therefor. Pp. 615-617.
2. Where the total assets of an insolvent debtor were not sufficient to pay all claims of the United States entitled to priority under R.S. § 3466, the part remaining for application to its claim under Title 9 of the Social Security Act after all other claims have been satisfied cannot be allocated between the United States and the state, but must be applied in settlement of the claim of the United States. Pp. 623-629.
(a) The effect of R.S. § 3466 depends on the fact of insolvency, not on the degree of it. P. 625.
(b) The priority given to the United States by R.S. § 3466 is absolute, not conditional; once attaching, it is final and conclusive, and not subject to defeasance. Pp. 625-628.
(c) Section 902 of the Social Security Act neither created an exception to R.S. § 3466 in favor of state claims for unemployment compensation taxes nor gives the state a claim prior to that of the United States for 90% of the amount of such taxes. Pp. 628-629.
3. Illinois v. United States, 328 U.S. 8, and Illinois v. Campbell, 329 U.S. 362, considered and reaffirmed. Pp. 629-635.
160 F.2d 614, affirmed.
In a suit by the United States to recover from an insolvent debtor’s estate federal insurance contribution taxes under Title 8 and unemployment compensation taxes under Title 9 of the Social Security Act, the District Court held that, under R.S. § 3466, the United States had priority as to the full amount of the Title 8 taxes due it and as to 10 of the Title 9 taxes due it. 65 F.Supp. 763. The Circuit Court of Appeals held that the United States was entitled to priority for the full amount of all its claims, including the Title 9 taxes. 160 F.2d 614. This Court granted certiorari. 332 U.S. 754. Affirmed, p. 635.