Petition for Writ of Certiorari — Walter C. Lange, Petitioner v. Commissioner of Internal Revenue

In The

Supreme Court of the United States

FILED

JUL 0 8 2019

Walter C. Lange,

Petitioner

v.

Commissioner of Internal Revenue

Respondent

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Fifth Circuit

PETITION FOR A WRIT OF CERTIORARI

Walter C. Lange

1807 N. Shary Rd.

Mission, TX 78572

(956) 581-5559

Petitioner

received

SEP - 9 2019

§5p»fME

QUESTIONS PRESENTED

Whether the income tax under Title 26 of the

U.S. Code is an indirect tax and therefore exclusively an

excise, duty or impost arising from the exercise of a

federal privilege,

whether Petitioner’s adhering to this legal

precept and historical fact can be judicially considered

frivolous and sanctionable,

whether codifying a statute without repealing its

prior version leaves the prior statute controlling as a

matter of Fifth Amendment due process,

whether a Tax Court’s de novo review of a prior

IRS administrative ruling reached below that ruling

and redefined the objectionable conduct without prior

notice in violation of the due process clause of the Fifth

Amendment,

whether the final decision regarding frivolous

conduct was based on language that should be

considered void under the vagueness doctrine of the

Fifth Amendment, and

whether each Court’s monetary sanction is

excessive or inflicts cruel and unusual punishment in

violation either of the Eighth Amendment or

Petitioner’s good faith exercise of his valid beliefs and

his First Amendment rights to petition the government

for redress of grievance.

PARTIES TO THE PROCEEDING

Pursuant to Rule 14.1(b) the caption of this case

contains the names of all the parties.

TABLE OF CONTENTS

QUESTIONS PRESENTED........

1

PARTIES TO THE PROCEEDING

n

TABLE OF CONTENTS

n

TABLE OF AUTHORITIES

in

PETITION FOR A WRIT OF CERTIORARI

1

OPINIONS BELOW

1

JURISDICTION

1

RELEVANT STATUTORY PROVISIONS

1

INTRODUCTION

2

STATEMENT OF THE CASE

3

Act 1. The Filing . .

3

Act 2. The Betrayal

9

Act 3. The Overreach

11

REASONS FOR GRANTING THE PETITION

18

I. Decisions of the courts of appeals that enforce

Title 26 are divided and some are contrary to this

Court’s opinions on whether the income tax is direct or

18

indirect

II. The questions presented are exceptionally

li

19

important

III. This case offers an ideal vehicle to resolve

these critical issues of constitutional dimension. ... 19

20

CONCLUSION

APPENDICES

Appendix A, Final Opinion of the Fifth Circuit

Court of Appeals.................................................... 21

Appendix B, Order Denying Rehearing ......... 23

Appendix C, Order of the U.S. Tax Court .... 25

TABLE OF AUTHORITIES

Page(s)

Cases

Austin v. United States, 509 U.S. 602 (1993)

17

Brushaber v. Union Pacific R. Co., 240 U.S. 1 (1916) 3-8

Darby v. Cisneros, 509 U.S. 137 (1993)

14

Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990) . 17

Parker v. Comm'r, 724 F.2d 469 (5 th CA, 1984) . 3, 20

Pollock v. Farmer's Loan & Trust, 158 U.S. 601 (1895) 4

South Carolina v. Baker, 485 U.S. 505 (1988)

8

Stanton v. Baltic Mining Co., 240 U.S. 103 (1916) ... 7

Stephan u. United States, 319 U.S. 423 (1943) . . 11, 14

Steward Machine Co. v. Collector of Internal Revenue,

7

301 U.S. 548 (1937) ...............................

South Carolina v. Baker, 485 U.S. 505 (1988)

in

8

United States v. Francisco, 614 F.2d 617 (8th Cir.1980) 3

Statutes

26 U.S.C. S 6331

11

28 IJ.S.C. S 3002(15')

2

1939 I.R.C. $ 3310 .......................

11, 13-14

Revised Statues § 3185. ROA. 235

12-13

Title 1 U.S.C. preamble. June 30.1926. H.R.10000.14-16

Other

1 Cornell Law Quarterly pp. 298, 301 (1915-16) .... 6

29 Harvard Law Review, p.536, (1915-1916)............... 6

House Congressional Record. March 27, 1943, p. 2580,

testimony of Former Treasury Department

legislative draftsman F. Morse Hubbard .... 7-8

Internal Revenue Bulletin 2010-17

9

Peter Eric Hendrickson, Cracking the Code p.72 (15th

ed. 2016).............................................................. 14

Report No. 80-19A. “Some Constitutional Questions

Regarding the Federal Income Tax Laws” by

Howard M. Zaritsky, Legislative Attorney of the

American Law Division of the Library of

8

Congress (1979) ...........................

www.irs.gov/businesses/small-businesses

IV

18-19

PETITION FOR A WRIT OF CERTIORARI

Petitioner Walter C. Lange respectfully petitions

for a writ of certiorari to review the judgment of the

United States Court of Appeals for the Fifth Circuit.

OPINIONS BELOW

The opinion of the United States Court of

Appeals for the Fifth Circuit (Pet. App. 20) was ordered

not published. The Fifth Circuit’s order denying

rehearing (Pet. App. 22) in its case number 18-60582 is

also unpublished. The order of the United States Tax

Court (Pet. App. 24) in cause number 11492-17L is

unpublished.

JURISDICTION

The judgment of the court of the court of appeals

was entered on January 24, 2019. (Pet. App. 20) The

court of appeals denied a timely petition for rehearing

on April 8, 2019.

RELEVANT STATUTORY PROVISIONS

The United States Constitution Article 1, Section

9 defines a direct tax. The Sixteenth Amendment to the

United States Constitution did not create a new tax.

The Fifth Amendment to the United States Constitution

frames our due process rights.

1

INTRODUCTION

Petitioner relied on a line of cases by this Court

holding that the income tax is an indirect tax under the

Constitution and therefore an excise tax arising only

upon the exercise of a federal privilege. To activate this

reliance Petitioner rebutted all testimony of taxable

income in the form of the 1099-R by use of form 4852.

Receipts from entities “external” to the Federal

Corporation were adjusted to zero and then reported to

the “Internal” Revenue Service (the Service) on form

1040. Receipts from the Social Security Administration

were reported but were insufficient to be taxable.

The Service eventually responded by claiming

these 1040 reports were frivolous and assessing

penalties of $5,000 each assessment. Several, but not

all, were abated by the Tax Court for technical defects

leaving $10,000 in penalties as affirmed. An additional

sanction of $2,500 was assessed by the Tax Court and

$8,000 more was assessed by the 5th Circuit.

Petitioner’s basic claim was never addressed by

any opposing Counsel or any Court. Receipts of monies

not arising from the exercise of a federal privilege are

not taxable. Receipt of funds from the Employee

Retirement System of Texas (ERS of TX) is not the

exercise of a federal privilege. The ERS of TX is not

internal to the Federal Corporation.

The statute 28 U.S.C. 3002(15) clearly defines the

United States as a federal corporation and lists many of

its subdivisions and instrumentalities. The Several

2

States are not listed and Texas is not part of the

Federal Corporation.

STATEMENT OF THE CASE

Act 1. The filing: Each 1040 return of Petitioner

rebutted payer testimony as supplied on the 1099-R.

Form 4852 was included with each 1040 and the

“income” blank was reduced to zero since the

remuneration from the ERS of TX was not from the

exercise of a federal privilege and therefore not in the

nature of an excise taxable activity. The authority for

this position is extensive.

The 16th amendment did not create a new tax

that was neither a direct tax with apportionment nor an

indirect tax with uniformity. By affirming the present

case the Fifth Circuit Court of Appeals (5th CCA) has

violated the principle set out by this Court and other

authorities. The 16th amendment does not originate the

tax nor authorize a tax that is a “non-apportioned

direct tax.”

By affirming the present case the 5th CCA has

also affirmed this erroneous holding set out in Parker v.

Comm'r, 724 F.2d 469 (5 th CA, 1984). But the 5th CCA

is not the only court to fail to understand the Brushaber

ruling. Brushaber v. Union Pacific R. Co., 240 U.S. 1

(1916) The 8th CCA has also made a similar error in

United States v. Francisco, 614 F.2d 617, 619 (8th Cir.

1980).

The confusion caused by this divergence from the

Brushaber line of authorities is harmful to Petitioner

and others seeking to follow the rule of law.

3

The Brushaber court holds that the sole purpose

and effect of the 16th amendment is to undo and

overrule its conclusion in Pollock v. Farmer's Loan &

Trust, 158 U.S. 601 (1895) that a tax on otherwise

excise-taxable dividends and rent becomes a property

tax in those particular applications. The Pollock court

had reasoned that the linkage of dividends and rent to

their personal property sources- the stock or the real

estate from which they are derived- transforms the

income excise on those gains into a property tax on the

sources, which therefore required apportionment in its

imposition.

The 16th Amendment, says the Brushaber court,

severs (prohibits) the “source” linkage imagined by the

Pollock court. This overruling of Pollock allows the bythen 51-year-old income tax statute to be revived and to

resume application as the excise tax it always has been.

The Brushaber court very expressly rules that the

16th Amendment does not accomplish its task by

creating some kind of hybrid tax which can have the

character of a capitation or other direct tax and yet not

be subject to the apportionment rule- a “nonapportioned direct tax”. This was, in fact, the exact

contention of Frank Brushaber (against whom the court

ruled), who reasoned from this faulty notion the

confused conclusion that the post-amendment revival of

the income tax created a Constitutional conflict.

Here is what the unanimous Supreme Court says

(among much else in this very long, thoughtful and

comprehensive ruling):

4

"We are of opinion, however, that the confusion is

not inherent, but rather arises from the

conclusion that the 16th Amendment provides for

a hitherto unknown power of taxation; that is, a

power to levy an income tax which, although

direct, should not be subject to the regulation of

apportionment applicable to all other direct

taxes. And the far-reaching effect of this

erroneous assumption will be made clear by

generalizing the many contentions advanced in

argument to support it....” Brushaber v. Union

Pacific R. Co., 240 U.S. 1 (1916) (emphasis

added).

The court goes on to point out that the very

suggestion of a non-apportioned direct tax is completely

incoherent, because that would cause:

“...one provision of the Constitution [to] destroy

another; that is, [it] would result in bringing the

provisions of the Amendment [supposedly]

exempting a direct tax from apportionment into

irreconcilable conflict with the general

requirement that all direct taxes be apportioned.

... This result, instead of simplifying the

situation and making clear the limitations on the

taxing power, which obviously the Amendment

must have been intended to accomplish, would

create radical and destructive changes in our

constitutional system and multiply confusion."

...and re-iterates its repeated pre-16th

Amendment holdings that:

5

"[T]axation on income [is] in its nature an excise,

entitled to be enforced as such...."

The unanimous Brushaber court flatly holds that

the income tax was, is, and remains an excise tax, and

that the 16th Amendment in no way whatever

authorizes a “non-apportioned direct tax.” Every

possible authority agrees about what the Brushaber

court says:

"The Sixteenth Amendment does not permit

a new class of a direct tax... The

Amendment, the [Supreme] court said, judged

by the purpose for which it was passed, does not

treat income taxes as direct taxes but

simply removed the ground which led to

their being considered as such in the

Pollock case, namely, the source of the income.

Therefore, they are again to be classified in

the class of indirect taxes to which they by

nature belong." Cornell Law Quarterly. 1

Cornell L. Q. nn. 298, 301 (1915-16) (emphasis

added).

"In Brushaber v. Union Pacific Railroad Co., Mr.

C. J. White, upholding the income tax imposed by

the Tariff Act of 1913, construed the Amendment

as a declaration that an income tax is

"indirect," rather than ... an exception to the

rule that direct taxes must be apportioned."

Harvard Law Review. 29 Harv. L. Rev, p. 536,

(1915-1916) (emphasis added).

6

“[B]y the [Brushaber] ruling, it was settled that

the provisions of the Sixteenth Amendment

conferred no new power of taxation, but simply

prohibited the previous complete and plenary

power of income taxation possessed by

Congress from the beginning from being taken

out of the category of indirect taxation to

which it inherently belonged, and being

placed in the category of direct taxation subject to

apportionment by a consideration of the sources

from which the income was derived -- that is, by

testing the tax not by what it was, a tax on

income, but by a mistaken theory deduced from

the origin or source of the income taxed.”

Stanton v. Baltic Mining Co., 240 U.S. 103 (1916)

(emphasis added).

"If [a] tax is a direct one, it shall be

apportioned according to the census or

enumeration. If it is a duty, impost, or excise, it

shall be uniform throughout the United States.

Together, these classes include every form of tax

appropriate to sovereignty. Cf. Burnet v. Brooks,

288 U. S. 378, 288 U. S. 403, 288 U. S. 405;

Brushaber v. Union Pacific R. Co., 240 U. S. 1,

240 U. S. 12." Steward Machine Co. u. Collector

of Internal Revenue, 301 U.S. 548 (1937)

(emphasis added).

"The income tax ... is an excise tax with

respect to certain activities and privileges

which is measured by reference to the income

which they produce. The income is not the subject

7

of the tax; it is the basis for determining the

amount of tax.” ...

"[T]he amendment made it possible to bring

investment income within the scope of the

general income-tax law, but did not change the

character of the tax. It is still fundamentally an

excise or duty..." House Congressional Record.

March 27, 1943, p. 2580, testimony of Former

Treasury Department legislative draftsman F.

Morse Hubbard, (emphasis added).

"The Supreme Court, in a decision written by

Chief Justice White, first noted that the

Sixteenth Amendment did not authorize any new

type of tax, nor did it repeal or revoke the tax

clauses of Article I of the Constitution, quoted

above. Direct taxes were, notwithstanding the

advent of the Sixteenth Amendment, still

subject to the rule of apportionment....”

Report No. 80-19A. 'Some Constitutional

Questions Regarding the Federal Income Tax

Laws' bv Howard M. Zaritsky, Legislative

Attorney of the American Law Division of the

Library of Congress (1979) (emphasis added).

"[T]he sole purpose of the Sixteenth Amendment

was to remove the apportionment requirement

for whichever incomes were otherwise

taxable. 45 Cong. Rec. 2245-2246 (1910); id. at

2539; see also Brushaber v. Union Pacific R. Co.,

240 U. S. 1, 240 U. S. 17-18 (1916)" South

Carolina v. Baker, 485 U.S. 505 (1988), fn 13

(emphasis added).

8

As stated, the authorities agree, the income tax is

an excise tax subject to the rule of uniformity. The

present case stands on this rule of law and the prior

court should have so held.

Act 2. The betrayal: The due process clause of

the Fifth Amendment appears violated in at least 3

instances.

First, since the returns were valid under existing

law, it was error not to process them as submitted by

Petitioner.

Second, the assessment of a frivolous penalty

under Internal Revenue Bulletin 2010-17 III position

argument (44) (ARG 44) (claimed a religious

organization was involved) was clearly a false

assessment under a fraudulent scheme and therefore a

betrayal of the truth.

Third, during the hearing, Counsel for the

Service admitted the fact that Petitioner had never

claimed contact with a religious organization on any

form 1040 and abandoned that ARG 44 claim, but she

requested the Court re-assess the penalty under

something called the “flush language” of the same

bulletin. This request was without notice in any

pleading and beyond the scope of even a ‘de novo’ review

of the due process hearing by the Service.

Further due process issues exist within the “flush

language” of I. R. Bulletin 2010-17.

“Returns or submissions that contain positions

not listed above, which on their face have no

9

basis for validity in existing law, or which have

been deemed frivolous in a published opinion of

the United States Tax Court or other court of

competent jurisdiction, may be determined to

reflect a desire to delay or impede the

administration of Federal tax laws and thereby

subject to the $5,000 penalty.” Internal Revenue

Bulletin 2010-17 III

A second reading may be needed. It states that a

return with “no basis for validity in existing law, or...”.

So we must presume the converse must be possible. A

return that does have a basis for validity in existing law

can take the second choice following the conjunction

“or” to be a position deemed frivolous. A valid return

can be frivolous if a tax court so states. That could

mean any return could be frivolous, especially one that

used the appeal process since that causes delay.

To follow the “flush language” would permit a

return that was valid in existing law to be determined

to reflect a desire to delay or impede. This language

permits a valid return to be sanctioned. There is no

objective standard stated that can be measured and

applied uniformly. This abuse of legislature’s

delegation of authority to administrators has become so

extensive that it has lead to arbitrary prosecution. This

“flush language” should be stricken under the ‘void for

vagueness’ doctrine of the Fifth Amendment.

Further, to abandon the argument 44 language

that had been outlined in the FOIA requests in the

middle of the hearing in Tax Court and then

substituting another without notice to Petitioner is trial

10

by ambush. Petitioner had no opportunity to review

this claim in advance of the trial. No advance warning

was given that arg 44 would be abandoned and no

warning that another basis would be advanced. This is

yet another violation of due process standards.

Act 3. The Overreach: After failing to process

the returns as self-assessed, and after assessing

frivolous penalties that were fraudulently declared, the

Service sent “notice of intent to levy.” During the due

process hearing Petitioner attempted to explain that the

levy process was not available in this instance. The

implementing language of the original Internal

Revenue Code (IRC) made it clear that the codification

process did not change the existing law. Even further,

all conflict between the IRC and the Revised Statutes

must be resolved in favor of the Revised Statutes.

“By 1 U.S.C. 54(a), 1 U.S.C.A. 54(a) the Code

establishes 'prima facie' the laws of the United

States. But the very meaning of 'prima facie' is

that the Code cannot prevail over the Statutes at

Large when the two are inconsistent.” Stephan v.

United States, 319 U.S. 423 (1943). [The section 1

U.S.C. 54(a) to which the court refers is now 1

USC 204]

The power to levy is set out at 26 U.S.C. 6331

and employs language that seems expansive and

sweeping in scope. However, the derivation table for

section 6331 of the current code shows the source as

section 3310(a) of the 1939 IRC. Section 3310(a), in

turn, show the source as R S. 3185. The point of

interest is that Revised Statutes section 3185 limits the

11

power of restraint to monthly filers and “all returns for

which no provision is otherwise made.”

R. S. Sec. 3185. “All returns required to be

made monthly by any person liable to tax shall

be made on or before the tenth day of each

month, and the tax assessed or due thereon shall

be returned by the Commissioner of Internal

Revenue to the collector on or before the last day

of each month. All returns for which no

provision is otherwise made shall be made on or

before the tenth day of the month succeeding the

time when the tax is due and liable to be

assessed, and the tax thereon shall be returned

as herein provided for monthly returns, and shall

be due and payable on or before the last day of

the month in which the assessment is so made.

When the said tax is not paid on or before the last

day of the month, as aforesaid, the collector shall

add a penalty of five per centum, together with

interest at the rate of one per centum per month,

upon such tax from the time the same became

due; but no interest for a fraction of a month

shall be demanded: Provided, that notice of the

time when such tax becomes due and payable is

given in such manner as may be prescribed by

the Commissioner of Internal Revenue. It shall

then be the duty of the collector, in case of the

non-payment of said tax on or before the last day

of the month, as aforesaid, to demand payment

thereof, with five per centum added thereto, and

interest at the rate of one per centum per month,

as aforesaid, in the manner prescribed by law;

12

and if said tax, penalty, and interest, are not paid

within ten days after such demand, it shall be

lawful for the collector or his deputy to make

distraint therefor, as provided by law.” (The

interest rate established in this statute was

changed to 6% per annum by section 404 of the

Revenue Act of 1935.) (Emphasis added)

Persons required to file a 1040 return must do so

on an annual basis. No provision is provided for

distraint where returns are required annually. No

exception to this rule was found in the IRC. The levy

process does not extend to accruals from the 1040

returns. Any attempt to levy on deficiencies from a

1040 filing is a nullity under present law.

Section 3310 of the 1939 IRC states the areas

where restraint is granted more clearly. Please note

there is no separate subsection for annual returns. This

is further evidence that distraint was not contemplated

by legislature for persons filing on an annual basis. An

annual filer is not in the class to which the related

provisions apply.

SEC. 3310. RETURNS AND PAYMENT OF TAX.

(a) MONTHLY RETURNS.—All returns required

to be made monthly by any person liable to tax

shall be made on or before the 10th day of each

month, and the tax assessed or due thereon shall

be returned by the Commissioner to the collector

on or before the last day of each month.

(b) OTHER RETURNS.—All returns for which no

provision is otherwise made shall be made on or

13

before the 10th day of the month succeeding the

time when the tax is due and liable to be

assessed, and the tax thereon shall be returned

as herein provided for monthly returns, and shall

be due and payable on or before the last day of

the month in which the assessment is so made.

Section 3310(a), (b) of the 1939 IRC

Since we must exclude a widely held rule of law it

is important that statutory construction support this.

As one researcher stated, “The doctrine is simple and

standard in statutory construction: when an element of a

statute has once been promulgated, it remains the law,

whether spelled out in a future version or not, unless

explicitly repealed.” Peter Eric Hendrickson, Cracking

the Code p.72 (15th ed. 2016).

This interpretive stance is again affirmed by this

court in 1993.

"We note that the statute as codified in the

United States Code refers to "any form of

reconsiderations," with the last word being in the

plural. The version of 10(c) as currently enacted

however, uses the singular "reconsideration." See

this note supra, at 138. We quote the text as

enacted in the Statutes at Large. See Stephan v.

United States, 319 U.S. 423, 426 (1943) ("[T]he

Code cannot prevail over the Statutes at Large

when the two are inconsistent") Darby v.

Cisneros, 509 U.S. 137 (1993)

The Act of June 30, 1926, H.R. 10000, was in fact

the Act in which Congress authorized the "United

14

States Code", and this act is still in effect. The

preamble of this Act clearly states that the coding

process does not have the effect of “repealing or

amending any such law, or as enacting as new law any

matter contained in the Code.”

“AN ACT TO consolidate, codify, and set forth

the general and permanent laws of the United

States in force December seventh, one thousand

nine hundred and twenty-five

Be it enacted by the Senate and House of

Representatives of the United States of America

in Congress assembled, That the fifty titles

hereinafter set forth are intended to embrace the

laws of the United States, general and

permanent in their nature, in force on the 7th

day of December, 1925, compiled into a single

volume under the authority of Congress, and

designated "The Code of the Laws of the United

States of America."

Sec. 2. In all courts, tribunals, and public

offices of the United States, at home or abroad, of

the District of Columbia, and of each State,

Territory, or insular possession of the United

States -(a) The matter set forth in the Code, evidenced

as hereinafter in this section provided, shall

establish prima facie the laws of the United

States, general and permanent in their nature, in

force on the 7th day of December, 1925; but

nothing in this Act shall be construed as

15

repealing or amending any such law, or as

enacting as new law any matter contained in the

Code. In case of any inconsistency arising

through omission or otherwise between the

provisions of any section of this Code and the

corresponding portion of legislation heretofore

enacted effect shall be given for all purposes

whatsoever to such enactments.

(b) Copies of this Act printed at the

Government Printing Office and bearing its

imprint shall be conclusive evidence of the

original of the Code in the custody of the

Secretary of State.”

(c) The Code may be cited as "U.S.C." Title 1

U.S.C. preamble. June 30. 1926. H.R. 10000.

Petitioner asks the Court to find there is no

statutory authority to levy on Petitioner for any sums of

money arising from the filing the annual 1040 returns.

Any attempt to so levy is overreaching statutory

permissions.

Further overreach is each Court leveling

monetary sanctions on Petitioner as punishment for the

exercise of his First Amendment right to state his valid

beliefs and opinions and to petition the government for

redress of grievance. To punish this right is excessive

and/or inflicts cruel and unusual punishment in

violation of the Eighth Amendment.

This case is only about punishment! The Service

set about to punish Petitioner by leveling fines. These

fines were based on a deliberately falsified assessment

16

under argument 44. The Service may have realized

that Petitioner’s 1040 filing was correct and could only

retaliate with economic sanctions. The Tax Court, in

turn, fined Petitioner for some unnamed utterance

during trial. The Court granted relief from the offense

of an argument 44 claim and then went on to find

another claim.

In the chambers conference prior to trial the Tax

Court promised petitioner he would level sanctions if

frivolous arguments were raised. When asked what

those arguments were, he only asserted that Petitioner

would know. The Fifth Circuit then leveled another

fine without naming the specific offense and while

misstating Petitioners case and facts. These acts are

reminiscent of a Hamlet quote, to paraphrase, the

government “doth protest too much, methinks.”

Now the judicial fines total even more than the

remaining fines by the Service and are clearly excessive

and designed to be cruel. Whether they are called

sanctions or fines they are certainly intended to punish

and to limit the exercise of Petitioners right to free

speech and right to petition the government for redress

of grievance.

In Austin v. United States, 509 U.S. 602 (1993),

this Court noted that the application of the Excessive

Fines Clause to civil forfeiture did not depend on

whether it was in a civil or criminal procedure. In

Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990), the

Court states there is no constitutional distinction

between fact and opinion. Therefore, Petitioners

statements in Tax Court were opinions about the

17

statutes supporting the income tax. These opinions

were offered in an attempt to resolve differences of

opinion. The statements of fact were readily verifiable

by checking each statute. The statutes supporting these

fines are too vague to be constitutional.

REASONS FOR GRANTING THE PETITION

I. Decisions of the courts of appeals that

enforce Title 26 are divided and some are

contrary to this Court’s opinion on whether the

income tax is direct or indirect. As stated above,

the Fifth Circuit and the Eighth Circuit have entered

rulings holding that there is something called a direct

tax without apportionment. This has lead to misleading

information from the Service.

For example: on the website and in many of the

publications produced by the IRS this same false claim

is made, as in the example below:

The Law: The courts have both implicitly and

explicitly recognized that the Sixteenth

Amendment authorizes a non-apportioned direct

income tax on United States citizens and that the

federal tax laws as applied are valid. In United

States v. Collins, 920 F.2d 619, 629 (10th Cir.

1990), cert, denied, 500 U.S. 920 (1991), the court

cited Brushaber v. Union Pac. R.R., 240 U.S. 1,

12-19 (1916), and noted that the U.S. Supreme

Court has recognized that the "Sixteenth

Amendment authorizes a direct nonapportioned

tax upon United States citizens throughout the

nation."

18

https://www.irs.gov/businesses/small-businesses-s

elf-emnloved/anti-tax-law-evasion-schemes-law-a

nd-arguments-section-iv (last entry on the page).

II. The questions presented are

exceptionally important. It is impossible to measure

the total impact on the payment of this tax should these

questions be answered as requested. But the unfair

application of this tax is profoundly extensive.

Defending the Constitution against incorrect

interpretation is this Courts highest purpose. The right

to contract, firmly protected in the Constitution, is the

engine that drives the Federal Corporation called the

United States. Each and every contract carries with it

the Federal Privilege and is therefore subject to this

excise tax. The categories are extensive when

considering the legitimate and constitutionally sound

application of the income tax. Some examples could be

T-bill holders, railroad workers, federal employees and

many others. Of greater importance is the damage done

if this contradiction in the application of this legal

standard is left open and not resolved.

III. This case offers an ideal vehicle to

resolve these issues of Constitutional dimension.

As more individuals become aware of this conflict in the

law, more will challenge these false rulings and false

claims made by the Service. In this case both examples

exist. The Service made a false claim regarding the

argument 44 when the 1040 carried no such claim.

Should this writ be approved, the ensuing brief will

illustrate how this false claim was deliberately designed

in the Internal Revenue Manual (IRM). The burden to

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the Service to pursue false deficiencies is enormous. At

some point the return on this investment will diminish.

The false claims regarding the nature of the tax

and the false claims regarding the entries on the

returns will have to stop. This case has both. This case

can help clear up these legal issues.

The Fifth Circuit’s decision is wrong in this case

and in the Parker case. It takes a long time for a case

that is so clearly on point to get to this level. Please

accept this effort and contribution to greater clarity in

the Rule of Law.

CONCLUSION

For the foregoing reasons, the petition for a writ

of certiorari should be granted.

Respectfully Submitted

Walter C. Lange

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