                         T.C. Memo. 1997-500



                       UNITED STATES TAX COURT



               RICHARD A. McDOWELL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 22560-95.                 Filed November 6, 1997.



     Gene M. Carlino, for petitioner.

     Carmino J. Santaniello, Jr. and Bradford A. Johnson, for

 respondent.


               MEMORANDUM FINDINGS OF FACT AND OPINION

     DEAN, Special Trial Judge:    This case was heard pursuant to

the provisions of section 7443A(b) of the Code and Rules 180,

181, and 182.1


     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable year in
issue. All Rule references are to the Tax Court Rules of
Practice and Procedure.
                                - 2 -

     Respondent determined a deficiency in petitioner's 1992

Federal income tax of $2,224.   The sole issue for decision,

petitioner having conceded receiving unreported interest income

of $18, is whether certain disability pension payments that he

received in 1992 are includable in his gross income for that

year.

     The facts in this case have been fully stipulated and are so

found.   The stipulation of facts and the exhibits received into

evidence are incorporated herein by reference.   Petitioner

resided in Pawtucket, Rhode Island, at the time the petition was

filed in this case.

                         FINDINGS OF FACT

     Petitioner commenced employment as a firefighter with the

city of Pawtucket, Rhode Island (City), in March of 1982.     For

the years 1982 through 1990, petitioner was a member of the

International Association of Firefighters, Local No. 1261

(Union).   In September of 1989, having responded to a chemical

spill at a local jewelry manufacturer, petitioner was exposed to

anhydrous ammonia leaking from a defective storage tank.    The

incident rendered petitioner totally disabled.

     On August 1, 1990, pursuant to City of Pawtucket City

Ordinance Chapter 1406, petitioner was awarded a disability

pension.   In effect at the time of the award of the pension to

petitioner was a collective bargaining agreement (agreement)

between the City and the Union containing disability provisions
                              - 3 -

providing the same benefits as the City ordinance.    In accordance

with the provisions of the collective bargaining agreement,

petitioner received annual disability pension payments equal to

66 2/3 percent of his salary at the time of his retirement.

     The disability pension ordinance of the City has been

consistently applied to allow only those firefighters injured in

the line of duty to receive a disability pension.

     During the year 1992, petitioner received disability pension

payments in the total amount of $20,691, none of which was

reported as gross income on his Federal income tax return for the

year.

                             OPINION

     Respondent contends that petitioner may not exclude from

gross income amounts received under the disability pension plan

of the City because the City ordinance implementing the plan is

neither a worker's compensation act nor in the nature of a

worker's compensation act as required by statute.    It does not

meet statutory requirements, argues respondent, because the

wording of the ordinance does not specifically limit benefits to

those who are disabled due to work-related injury or sickness.

Respondent also argues that if petitioner received his disability

payments pursuant to the agreement between the City and the

Union, they are not excludable because the agreement is not a

"statute" in the nature of a worker's compensation act.
                                - 4 -

     Petitioner counters respondent's contentions by maintaining

that:

     (a) Petitioner does not rely on the agreement as a basis for

excluding the pension disability payments from income; (b) the

City ordinance has been interpreted by the Rhode Island Supreme

Court as in the nature of a worker's compensation act; (c) the

ordinance has been applied in a manner that is in the nature of a

worker's compensation act; and (d) the ordinance has been

retroactively amended to "clarify" that it is in the nature of a

worker's compensation act.

     Respondent's determinations are presumed correct, and

petitioner has the burden of proving otherwise.    Rule 142(a);

Welch v. Helvering, 290 U.S. 111, 115 (1933).     Furthermore, every

item of a person's gross income is subject to Federal income tax

unless there is a statute or some rule of law that exempts the

person or the item from gross income.   HCSC-Laundry v. United

States, 450 U.S. 1, 5 (1981).

Exemption Under Section 104(a)(1)

     An exclusion from gross income can be found at section

104(a)(1) for "amounts received under workmen's compensation acts

as compensation for personal injuries or sickness".    Section

1.104-1(b), Income Tax Regs., interprets section 104(a)(1) to

exempt amounts received under a worker's compensation act, "or

under a statute in the nature of a workmen's compensation act

which provides compensation to employees for personal injuries or
                               - 5 -

sickness incurred in the course of employment."   This exclusion

has been strictly construed so as to conform with the general

rule that all income is taxable unless it is specifically

excluded.   See Kane v. United States, 43 F.3d 1446, 1449, 1451

(Fed. Cir. 1994); Take v. Commissioner, 804 F.2d 553, 558 (9th

Cir. 1986), affg. 82 T.C. 630 (1984).

     In the Nature of Workmen's Compensation

     Petitioner does not here argue that section 11 of the City

ordinance is actually a worker's compensation statute.

Petitioner instead contends that the ordinance is "in the nature

of" a worker's compensation statute.    Petitioner seems to agree

with respondent that for an ordinance to be in the nature of a

worker's compensation statute, it must provide that only

injuries that are work-related may be compensated.   Petitioner

and respondent are correct.   "A statute will not be considered

akin to a workers' compensation act if it allows for disability

payments for any reason other than on-the-job injuries."     Haar v.

Commissioner, 78 T.C. 864, 868 (1982), affd. 709 F.2d 1206 (8th

Cir. 1983); accord Take v. Commissioner, supra; Clausse v.

Commissioner, T.C. Memo. 1995-198.

     Section 11 of the City ordinance, "Total and Permanent

Disability", provides in pertinent part that "In addition to the

foregoing retirement benefits any member who becomes totally and

permanently disabled shall receive a benefit equal to sixty-six

and two-thirds percent (66 2/3%) of the members [sic] pay at the
                                 - 6 -

time of his total and permanent disability".   Section 11A(a) of

the City ordinance, "Administration of Disability Payments",

provides that "The determination of the disability from any cause

shall be made upon the basis of reports on examinations made by

three physicians".

     Interpretation of the Ordinance

     Petitioner argues that the Rhode Island Supreme Court has

interpreted the ordinance as providing benefits only to those

firefighters incurring "duty-connected" disabilities.    Petitioner

cites St. Germain v. City of Pawtucket, 382 A.2d 180 (R.I. 1978),

as the basis for his position.    The issue in the case was whether

a disabled City firefighter was covered by the general State

statute that provides full pay for work-related injuries or by

the state authorized, but specific City ordinance providing for

reduced pay for disabled firefighters.   In proceeding to decide

that the general statute applied only to those "various cities

and towns that do not have their own pension plans", the State

Supreme Court described the City ordinance as follows:

     In 1973 defendant passed chapter 1406, an ordinance
     that revised the existing pension plan and provided in
     part that upon incurring a duty-connected disability, a
     firefighter would receive a percentage of his pay for
     the duration of the disability or until he reached
     normal retirement age, at which time he would be
     transferred to the retirement list and receive normal
     retirement benefits. [Id., at 181; emphasis added.]

          It is this language that petitioner apparently relies

upon for his characterization of the court's "interpretation" of

the City ordinance.
                                - 7 -

     While we find no basis upon which to disagree with the

quoted description, we disagree that it has the effect ascribed

to it by petitioner.    The quoted description merely states that

the ordinance covers duty-connected disability.   As we understand

it, there is no dispute between the parties that the City

ordinance covers, "in part", duty-connected disabilities.   The

difficulty, from petitioner's standpoint, is that the language of

the ordinance does not exclude from coverage non duty-connected

injuries or sickness.   We find, therefore, that St. Germain v.

City of Pawtucket, id., is not authority for determining that the

City ordinance is in the nature of a worker's compensation act.

     Consistent Application of the Ordinance

     The parties have vaguely stipulated that the City ordinance

has been consistently applied to grant benefits to firefighters

only for disability due to work-related injury or sickness.

Petitioner argues that the ordinance, as applied in practice, is

therefore in the nature of a workmen's compensation act.

     We also note that the parties have entered into two other

ambiguous stipulations, agreeing at the same time that petitioner

"was awarded a pension" under the City's "municipal pension plan"

(attaching a copy of the City ordinance), and that he received

pension payments "In accordance with the provisions of a

collective bargaining agreement between the City and the Union".

Petitioner argues in his brief that the agreement "has no bearing
                                - 8 -

on the determination of the present controversy."    We disagree

with petitioner's assertion.

     If petitioner received his disability benefits under the

agreement rather than under the City ordinance, it is clear that

the payments were not received under a statute in the nature of a

worker's compensation act.     Rutter v. Commissioner, 760 F.2d 466,

468 (2d Cir. 1985) (labor contract does not qualify as a

"statute" within the meaning of sec. 1.104-1(b), Income Tax

Regs.), affg. T.C. Memo. 1984-525; Covert v. Commissioner, T.C.

Memo. 1990-598.

     Whether petitioner received his payments under the City

ordinance or under the Union agreement is a question that also

renders more doubtful the meaning of the parties' stipulation

that the ordinance has been "applied in practice" to grant

benefits only for work-related injuries or sickness.    We cannot

be sure by whom the ordinance has been so applied, Union

officials or City officials (and if so which ones), or in what

manner such officials may have carried out the referred to

"practice".

     Assuming, arguendo, that the "consistent" application of the

City ordinance was by an administrative body of the City, the

record is insufficient for us to determine whether such an

"application" had the force and effect of law.    See Dyer v.

Commissioner, 71 T.C. 560, 562 (1979); Beisler v Commissioner,

T.C. Memo. 1985-25, affd. 787 F.2d 1325 (9th Cir. 1986), affd. en
                               - 9 -

banc 814 F.2d 1304 (9th Cir. 1987).    Where administrative rules

or regulations have "the force and effect of law" they will be

found to be the equivalent of a statute for purposes of section

1.104-1(b), Income Tax Regs. interpreting   section 104(a)(1).    As

explained in Rutter v. Commissioner, supra at 468:

     A regulation, like a statute, is a rule of general
     applicability promulgated by a public agency to govern
     conduct within the agency's jurisdiction. A labor
     contract, unlike a statute, is an agreement between
     union and employer, modifiable at any time. * * *

     We find the facts of this case similar to those of Clemens

v. Commissioner, T.C. Memo. 1989-205.    There the taxpayer argued

that his employer had a policy of paying benefits for work-

related injuries and that he had received payments pursuant to

the policy.   Along with his own testimony, the taxpayer offered

as evidence statements of a witness who testified that the policy

was outlined in a handbook and was included in the relevant

collective bargaining agreement.   The Court found the evidence

insufficient to show that the "past practice" amounted to actions

having the "force and effect of law".   We find the record in this

case insufficient to show that "application" or "practice" here

arose to a level having the force and effect of law.

     Retroactive "Clarification" of the City Ordinance

     Petitioner urges that our examination of the wording of the

City ordinance include language added to the ordinance2 by an


     2
      Pawtucket City Ordinance Chapter 1406 has been renumbered.
The ordinance provisions with which we are concerned were Chapter
                                                   (continued...)
                              - 10 -

amendment, City Ordinance Chapter No. 2391, approved on June 22,

1995, entitled "An Ordinance and Amendment Establishing a Tax

Exempt Plan for Firefighters and Policemen" (amendment).   The

amendment adds to the "Total and Permanent Disability" provision

of the City ordinance the following language:   "(C.) The benefits

established herein are in lieu of worker's compensation benefits,

which have not been available to the participants herein since

the inception of the Plan."   The amendment to the ordinance was

made retroactive from June 29, 1973 [the date of enactment of the

ordinance] by City Ordinance Chapter No. 2401, approved

November 27, 1995.

     Petitioner argues that the amendment clarifies that the

benefits of the ordinance are "intended only for those injured in

the line of duty as in the case of a workmen's compensation act."

Respondent argues that petitioner's assertion is misplaced, and

in any event, the amendment should not be given retroactive

effect.

     We need not decide here whether the retroactive amendment is

permissible.   Even if the amendment were to be given

retrospective effect, it would not cause the ordinance to be a

statute in the nature of a worker's compensation act.

     The title of the amendment suggests that its purpose is to

make City disability benefits tax exempt, but it does not control


     2
      (...continued)
1406, sections 11 and 11A. These provisions are now found at
Chapter 59 of the City ordinance, secs. 59-24 and 59-25.
                              - 11 -

the interpretation of the provision.    The title of an act may

only aid interpretation by the court if there is doubt about the

meaning of the text of the provision.    Town of East Greenwich v.

O'Neil, 617 A.2d 104, 109 (R.I. 1992).    The title does not

control when a court analyzes the plain meaning of a provision.

Fiske v. MacGregor, Div. of Brunswick, 464 A.2d 719, 727 (R.I.

1983).   We find that the plain meaning of the amendment is that

for disability claims of City firefighters and police, the City

ordinance applies "in lieu" of, in place of, or instead of

worker's compensation benefits.   That workers injured while on

duty must claim benefits under the ordinance and not worker's

compensation is not the critical issue here, however.    That

workers injured or rendered ill for reasons unrelated to their

work may, on the face of the provision as written (even with the

amendment), claim benefits under the ordinance is critical, and

fatal to any exemption under section 104(a).    See Craft v. United

States, 879 F. Supp. 925, 932 (S.D. Ind. 1995)("in lieu of"

language of State disability statute cannot change its nature).

Conclusion

     Although injured while on duty as a firefighter, petitioner

has failed to carry his burden of proof to show that he received

disability payments under a worker's compensation statute or a

statute in the nature of a worker's compensation statute.      We are

unable to find erroneous respondent's determination that the
                             - 12 -

disability payments received by petitioner are includable in

gross income in the year 1992.

                                      Decision will be entered

                                 for respondent.
