Appendix — Evans v. United States

Supreme Court brief2002

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Text

f ~ oserme Court, U.S,

! FILED

No 2 18 6 aus 2- 2002

OF REEF THE CLERK

IN THE

Supreme Court of the United States

Kenneth A. Evans,

Petitioner

‘ United States of America,

Respondent

Appendix to

Petition For Writ of Certiorari

To The United States Court of Appeals

for the Third Circuit

Kenneth A. Evans, Pro Se

6 Parrish Court

Kennett Square, Pennsylvania

(610) 444-1214

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hae hast halts eal te Re Oe ei SoM

APPENDIX

Table of Contents

Appendix A. Ruling on Petition for Rehearing

of CEES PEE TET OT Tre

Appendix B. Petition for Rehearing En Banc........

Appendix C. Decision of the court of appeals........

Appendix D. Appellant’s Opening Brief on appeal

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Appendix E. Appellant’s Reply Brief on appeal

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Appendix F. Nether court ruling on Appellant’s

Motion for Reconsideration. .........

Appendix G. Appellant’s Motion for Re-

Consideration to the District

Appendix H. Decision of the nether court...........

Appendix I. Applicable Statutes and Regulations. ....

Appendix J. IRS “Referral Report”................

Appendix K. Relevant portions of “Lesson 23”

of the Internal Revenue Manual.......

APPENDIX A

Ruling on Petition for Rehearing En Banc

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 01-3161

(D.C. Civ. No. 01-cv-00457)

SUR PETITION FOR REHEARING

Kenneth A. Evans,

Plaintiff/ Appellant

United States of America,

Defendant/ Appellee

Present: BECKER, Chief Judge,

SLOVITER, SCIRICA, NYGAARD, ALITO,

ROTH, MckEE, RENDELL, BARRY, AMBRO

And FUENTES, Circuit Judges

The petition for rehearing filed by appellant in the

above-titled case having been submitted to the judges

who participated in the decision of this Court and to all

the other available circuit judges of the circuit in regular

active service, and no judge who concurred in the

decision having asked for rehearing, and a majority of the

circuit judges of the circuit in regular service not having

voted for rehearing, the petition for rehearing by the

panel and the Court en banc, is denied.

BY THE COURT,

“<s> A SCIRICA”

Dated: May 6, 2002

APPENDIX B

Petition for Rehearing En Banc

In the United States Court of Appeals

for the Third Circuit

No. 01-3161

Kenneth A. Evans,

Plaintiff/ Appellant

Vv.

United States of America,

Defendant/ Appellee

The proceeding involves one or more questions of

exceptional importance. This Court should grant the

appellant’s petition and reverse the Third Circuit Panel’s

(“panel”) decision and further reverse the District Court’s

(“Nether Court”) decision for the following reasons.

1. Jurisdiction / Lack of Liability - The appellant has

no liability for income tax, as the appellant has no

“taxable income” as defined in the Internal Revenue Code

(“IRC”) and related regulations.

a. The decision of this Court in United States v.

Connor, 898 F.2d 942 (3rd Cir. 1990), upon which the

Nether Court’s decision was based, delineates an un-

Constitutional Congressional authority to change the

definition of words within the Constitution, is therefore

void and must be overturned.

1. JURISDICTION / LACK OF LIABILITY - THE

APPELLANT HAS NO LIABILITY FOR INCOME TAX

AS THE APPELLANT HAS NO “TAXABLE INCOME”

AS DEFINED BY THE IRC AND APPLICABLE

REGULATIONS.

“It is elementary law that every statute is to be

read in the light of the constitution. However broad and

general its language, it cannot be interpreted as extending

beyond those matters which it was within the

constitutional power of the legislature to reach.”

McCullough v. Com. Of Virginia, 172 U.S. 102 (1898)

26 USC 1 imposes a tax upon “taxable income.” “Taxable

income” is defined generally as, “gross income minus the

deductions allowed by this chapter.” 26 USC 63. “Gross

income,” in turn, is defined generally as, “all income from

whatever source derived, including (but not limited to)

the following items: (1-15).” 26 USC 61(a). |

The statutes passed by Congress are implemented

by regulations published in the Code of Federal

Regulations (“CFR”) by the Secretary of the Treasury.

While the Index of the United States Code (“index”) is not

technically the law, the law does require that a “general

index to the entire Code of Federal Regulations shall be

separately printed and bound” 44 USC § 1510. The courts

have stated that publishing a regulation in the Federal

that without the “retrieval mechanism provided by an

adequate index,” individuals might not be able to find the

rules which apply to them, so Congress required the

index. The purpose for this requirement was to

“eliminate secret law,” and this Court has stated that “the

indexing obligation is a central and essential feature of

this congressional plan,” Cervase v. Office of Federal

The reason this is important is that the Index of

the CFR, under “Income taxes,” has an entry that reads

“Income from sources inside or outside U.S.,

determination of sources of income,” 26 CFR 1 (1.861-1--

1.864-8T)” This is the only entry in the Index relating to

income from sources within the United States. The Code

of Federal Regulations, including the Index, is the official

notification to the public of what the law requires of

them.

Regarding “determination of sources of income,”

and “income from sources inside or outside U.S.,” the

index refers the reader to 26 CFR § 1.861-1 and following,

which are the regulations corresponding to 26 USC 861.

These regulations fall under the heading “Determination

of sources of income.” “Sec. 1.861-1 Income from

sources within the United States. (a) Categories of

income. Part I (section 861 and following), subchapter N,

chapter 1 of the Code, and the regulations thereunder

determine the sources of income for purposes of the

income tax.” 26 CFR § 1.861-1. (emphasis added)

The meaning of this is unmistakable. The “income

tax” is imposed upon “income from whatever source

derived,” and 26 USC 861 and following, and the related

regulations, determine what is considered a “source” of

income “for purposes of the income tax.” The first

sentence of the regulations under 26 USC 861 has stated

this since 1954, when Section 861 first came into existence.

Note that these sections and regulations define “the”

sources of income subject to the income tax, meaning

there are no others. Inclusio unius est exlusio alterius.

Therefore, the meaning of “income from whatever source

derived” (the definition of “gross income” in Section 61)

is limited by 26 USC 861 and following sections, and the

related regulations. The meaning of the phrase

“whatever source” depends completely on the meaning

of the word “source” as it is used there.

In addition to the fact that 26 USC 861 and

following, and related regulations, determine what is

considered a “source” of income subject to the income

tax, the regulations also repeatedly state that these are

also the specific sections to be used to determine “gross

income” and “taxable income” from sources within

and/or without the United States.

“Rules are prescribed for determination of gross

income and taxable income derived from sources within

and without the United States, and for the allocation of

income derived partly from sources within the United

States and partly without the United States or within

United States possessions. §§ 1.861-1 through 1.864.

(Secs. 861-864; 54 Code.)” Treasury Decision 6258

As shown, 26 USC 861 and following (which make

up Part I of Subchapter N of the Code) are entirely

relevant to determining what is considered a “source of

income” for the purposes of the income tax, and Section

861 in particular deals with income from “sources” within

the United States. Clearly this is relevant to a tax on

“income from whatever source derived.” The sections

which are specifically for determining taxable income

from sources within the United States are 26 USC § 861(b)

and the corresponding regulations found at 26 CFR

§1.861-8. The regulations under 26 USC 63, the section

defining “taxable income,” do not explain how to

determine taxable income.

The regulations in 26 CFR §1.861-8 begin by

saying that 26 USC 861(b) describes “in general terms”

how to determine taxable income from sources within the

United States. These same regulations later specify that

26 USC 861 is about items of income derived from

“specific sources.”

“(ii) Relationship of sections 861, 862, 863(a), and

863(b). Sections 861, 862, 863(a), and 863(b) are the four

provisions applicable in determining taxable income from

specific sources.” 26 CFR § 1.861-8(f)(3)(ii).

In the first paragraph of 26 CFR §1.861-8 and in 26

CFR §1.861-8(a)(4), it is again made clear that the section

applies only to income derived from “specific sources.”

“The rules contained in this section apply in determining

taxable income of the taxpayer from specific sources and

activities...” 26 CFR § 1.861-8(a).

“...the term ‘statutory grouping’ means the gross

income from a specific source or activity which must first

be determined in order to arrive at ‘taxable income’ from

which specific source or activity...” 26 CFR § 1.861-8(a)(4)

In 26 CFR § 1.861-8(f)(1) it is again made clear that 26 CFR

§ 1.861-8, which is the section “for determining taxable

income from sources within the United States,” is

applicable only to income derived from “specific

sources.”

“...the determination of taxable income of the

taxpayer from specific sources or activities and which

gives rise to statutory groupings to which this section is

applicable include the sections described below...” 26

CFR § 1.861-8(f)(1)

From these sections it is clear that the term

“source” as used in 26 USC 61 and 26 USC 861 does not

simply mean any activity from which income is derived,

but only those specific sources outlined in the related

regulations. The definition of “statutory grouping” also

refers to “paragraph (f)(1)” as the list of “specific

sources.”

“[T]he term ‘statutory grouping’ means the gross

income from a specific source or activity which must first

be determined in order to arrive at ‘taxable income’ from

which specific source or activity under an operative

section. (See paragraph (f)(1) of this section.)” 26 CFR §

1.861-8(a)(4).

The regulations twice identify 26 CFR § 1.861-

8(f)(1) as the list of specific sources, which must first be

determined in order to arrive at ‘taxable income.’ Inclusio

untius est exlusio alterius.

In the instant case, irrespective of whether this

Court erroneously considers the compensation received

by the appellant, who lives, works and receives said

compensation within the several states of the Union, as

falling within the general definition of ‘income,’ or ‘gross

income,’ the appellant’s compensation did not arise from

any of the sources listed in 26 CFR § 1.861-8(f)(1).

Because the compensation at issue (Govt. Ex. A)

was not derived from any of the sources from which

taxable income or gross income is determined, for the

purposes of the income tax, according to Constitution,

federal law and the applicable regulations, the appellant

thusly has received nothing that can be considered

“taxable income” for the tax year 1999 and nothing upon

which 26 USC 1 has imposed a tax. Once again, the

appellant has no liability for income tax for the tax year

1999, and is entitled to a full refund as requested in the

appellant’s original request for refund and Complaint.

The appellant’s compensation is exempt from

federal income tax by the Constitution itself. Up to this

point in the instant case, the appellee, the Nether Court

and the panel have attempted to apply the general

language of 26 USC 61(a) and 26 USC 63 to the

appellant’s situation beyond the limitations of the

Constitution and in direct conflict with the United States

Supreme Court,

“It is elementary law that every statute is to

be read in the light of the constitution.

However broad and general its language, it

cannot be interpreted as extending beyond

those matters which it was within the

constitutional power of the legislature to

reach.” McCullough v. Com. Of Virginia, 172

U.S. 102 (1898).

TE OT BI

In obtaining his compensation, the activity in

which the appellant engaged does not fall within the

regulatory authority of the few and defined powers

possessed by Congress to exercise and is beyond

Congressional authority to tax. “No interference by

Congress with the business of citizens transacted within a

State is warranted by the Constitution, except such as is

strictly incidental to the exercise of powers clearly

granted to the legislature.” License Tax Cases, 72 U.S. 462

(1866)

2. UNITED STATES V. CONNOR, 898 F.2d 942 (3rd Cir.

1990) IS UN-CONSTITUTIONAL AND MUST BE

OVERTURNED

There can be no denying that, in the instant case,

the decision upon which the Nether Court based its

ruling, United States v. Connor, 898 F.2d 942 (3rd Cir.

1990), claims that Congress has defined the term ‘income.’

Specifically, this Court held, “Congress exercised its

power to tax income by defining income as, inter alia,

“compensation for services”, including fees, commissions,

fringe benefits and similar items ...see 26 USC 61(a).” Id.

This ruling directly contradicts the United States Supreme

Court.

“... it becomes essential to distinguish

between what is and what is not ‘income,’ and to

apply the distinction, as cases arise, according to

truth and substance, without regard to form.

Congress can not by any definition it may adopt

conclude the matter, since it cannot by legislation

alter the Constitution, from which alone it derives

its power to legislate, and within whose

limitations alone that power can be lawfully

exercised." Eisner v. Macomber, 252 US 189 at 206

(emphasis added).

Furthermore, the appellant has submitted

simultaneously with this Petition, a Motion to

Supplement the District Court record with a signed |

admission from an agent of the Internal Revenue Service, )

stating that Congress has not defined ‘income,’ as the

term ‘income’ is not defined within the Internal Revenue

Code. This evidence conclusively exposes the fallacious

reasoning in Connor.

For this Court to rationalize that Congress can

change, in any way, the definition of the commonly

understood meaning of words contained within the

Constitution, at the time those words were allegedly

added to the Constitution, not only opens the proverbial

door to unbridled tyranny, but equates to a direct assault

on the entire foundation of republican self-government.

ACTIONS REQUESTED BY THE APPELLANT

The appellant hereby moves this Court, to

reconsider and reverse the panel’s decision in the instant

case, to reverse this Court’s decision in United States v.

Connor, 898 F.2d 942 (3rd Cir. 1990), to reverse the

decision of the Nether Court in the instant case and to

order the Internal Revenue Service to refund the

appellant’s $12,322.58, along with interest, fees and

penalties, as this Court sees fit. Furthermore, the

appellant moves this Court to reverse the panel’s decision

to impose sanctions in the amount of $4000 upon the

appellart, as it has been proven beyond any doubt that

the appellant’s appeal was not frivolous due to the

appellant’s complete lack of liability for income tax in the

instant case.

<s> Kenneth A. Evans

Dated: April 22, 2002

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 01-3161

Kenneth A. Evans,

Plaintiff/ Appellant

United States of America

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

D.C. Civil Action No. 01-cv-00457

(Honorable James McGirr Kelly)

Submitted Pursuant To Third Circuit LAR 34.1(a)

March 15, 2002

Before: SCIRCA, BARRY and COWEN, Circuit Judges

JUDGMENT

This cause came to be considered on the record

from the United States District Court for the Eastern

District of Pennsylvania and was submitted pursuant to

Third Circuit LAR 34.1(a). On consideration whereof, it is

now hereby

ORDERED and ADJUDGED by this Court that the

_ judgment of the District Court entered June 27, 2001, and

the order entered August 6, 2001, be, and the same are

hereby affirmed. Costs taxed against the appellant.

Damages in the amount of $4,000 are awarded to

Appellee as sanctions pursuant to Rule 38 of the Federal

Rules of Appellate Procedure. All of the above in

accordance with the opinion of this Court.

ATTEST:

<s> Marcia M. Waldron, Clerk

DATED: March 26, 2002

Certified as a true copy and issued in lieu of a formal

mandate on 5.14.02

Teste: <s> Marcia M. Waldron

Clerk, U.S. Court of Appeals for Third Circuit.

APPENDIX D

IN THE UNITED STATES COURT GF APPEALS

FOR THE THIRD CIRCUIT

KENNETH A. EVANS,

Plaintiff

VS.

UNITED STATES OF AMERICA,

Defendant

No. 01-3161

PLAINTIFF’S INFORMAL BRIEF

IN SUPPORT OF APPEAL

I. JURISDICTION

This brief is in support of an appeal, filed in the

Eastern District of Pennsylvania (“Nether Court”) on

August 9, 2001 from an Order dated August 6, 2001,

denying plaintiff’s, Kenneth A. Evans (“plaintiff”),

Motion for Reconsideration and an Order, dated June 26,

2001, denying the plaintiffs Motion for Summary

Judgment and granting defendant's, United States of

America (“defendant”), Motion for Summary Judgment,

Civil Docket # 01-457.

II. PROCEDURAL HISTORY

On January 29, 2001, the plaintiff filed a complaint

in this proceeding. On February 26, 2001, plaintiff filed a

Motion for Summary Judgment. On April 3, 2001,

JONATHAN D. CARROL filed an appearance on behalf

of the defendant. On April 4, 2001, the defendant filed a

Motion for Enlargement of Time and supporting

Memorandum. On April 5, 2001, the plaintiff filed an

Addendum to plaintiff's Memorandum in support of

plaintiff's Motion for Summary Judgment. On April 9,

2001, the plaintiff filed a Motion to Deny or Reverse

defendant’s Motion for Enlargement of Time. On April

24, 2001, the Nether Court granted the defendant’s

Motion for Enlargement of Time until April 27, 2001. On

April 27, 2001, the defendant filed a Motion for Summary

Judgment and supporting brief. On May 2, 2001, the

plaintiff filed an Opposition Brief to defendant’s Motion

for Summary Judgment. On June 26, 2001, the Nether

Court issued a Memorandum and Order denying the

plaintiff's Motion for Summary Judgment and granting

the defendant’s Motion for Summary Judgment. On or

about July 2, 2001, the plaintiff filed a Motion for

Reconsideration and supporting brief. On or about July

24, 2001, the plaintiff filed an addendum to plaintiff's

Motion for Reconsideration and submitted new evidence

in support of the plaintiff’s claim. On July 25, 2001, the

Nether Court issued an Order requiring the plaintiff to

serve a copy of the plaintiff's Motion for Reconsideration

on Jonnathan D. Carrol, Esq. On July 26, 2001, the

defendant filed an Opposition Brief to the Plaintiff's

Motion for Reconsideration. On or about July 27, 2001,

the plaintiff filed a Certificate of Service declaring service

of plaintiff's Motion for Reconsideration, supporting brief

and Addendum to plaintiff's Motion for Reconsideration

on Jonnathan D. Carrol, Esq. On or about July 30, 2001,

the plaintiff filed a Reply to defendant’s Opposition Brief

to plaintiff’s Motion for Reconsideration. On or about

August 6, 2001, the Nether Court issued an Order and

Memorandum denying plaintiff's Motion for

Reconsideration. On or about August 9, 2001, plaintiff

filed an appeal to this Court in the Nether Court.

Ii. STATEMENT OF FACTS

Throughout the tax year of 1999, $9,422.58 was

withheld from plaintiff's total compensation of

approximately $62,000 (salary and bonus) and sent to the

IRS to be applied to any lawful assessment for federal

income tax for that year.

Prior to the tax year 1999, the plaintiff engaged in

extensive research into the Internal Revenue Code

(“IRC”), the application of the IRC by the Internal

Revenue Service (“IRS”), as well as the IRC’s

interpretation by federal courts. The plaintiff’s research

uncovered the current specific legal definition of the term

‘income’ and led the plaintiff to a conclusion best

summarized by the United States Supreme Court, “Our

system of taxation is based upon voluntary assessment

and payment, not upon distraint.” “Flora v. United States,

362 U.S. 145.

On April 17, 2000, the plaintiff mailed to the IRS, a

refund request (Plaintiff Ex.A), a bond in the amount of

$2,900 (Plaintiff Ex. B) and an opinion letter from a tax

attorney (Plaintiff Ex. C).

The request asked to have refunded all money

being held by the government less any federal taxes for

which the plaintiff had been made liable. To this date, no

assessment has been made, nor evidence of liability

provided. The IRS failed to respond, either by refunding

the money or by providing the legal standing for not

providing the refund. This action was initiated on

January, 29, 2001, in excess of nine months following the

date of the original claim for refund.

IV STATEMENT OF RELATED CASES

The plaintiff has not filed a prior appeal in this

case. As of the date of filing of this brief, there are no

related cases pending in the Nether Court nor in the

Court of Appeals.

V. NETHER COURT ERRORS OF FACT AND LAW

In the instant case, the Nether Court made

multiple errors of both fact and law, creating a cascade of

negative events.

The first error of fact, that the plaintiff had

received ‘gross income’ in excess of the 1999 exemption

amount, was a result of the Nether Court’s reliance on a

previous error of law by this very Court in United States

v. Connor, 898 F.2d 942, 943-44 (3rd Cir. 1990). This

resulted in several more errors of law - first, that the

plaintiff was required to file an income tax return for the

same year, second, that the plaintiff is required to provide

the government with information that the plaintiff knows

to be false. Information, admitted by the defendant,

which could be used against the plaintiff in a criminal

trial. Third, that the IRS has the authority to assess a

direct tax against the plaintiff's wages. Ultimately,

resulting in one final error of fact, by omission - some

_ unknown and undefined liability for federal income taxes

exists in the instant case.

_ The events of this case, the arguments put forth by

the defendant and the conclusions of the Nether Court

are not unlike the propositions put forth by Frank

Brushaber in the landmark ‘income tax’ case of 1916,

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

In Brushaber, the Supreme Court articulated statements

most appropriately repeated here,

“The various propositions are so

intermingled as to cause it to be difficult to

classify them. We are of the 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...” Id. at 10, 11 (emphasis added).

In ruling that the plaintiff is required to file an

income tax return for 1999 combined with a finding that

the plaintiff received ‘gross income’ in excess of the

exemption amount, the Nether Court has created a

unique problem in the history of American jurisprudence.

The Nether Court is attempting to compel the

plaintiff to provide information, on an income tax return,

which the Supreme Court has ruled, “for the purposes of

Fifth Amendment analysis, is the testimony of a

‘witness,” Garner v. United States, 424 U.S. 648, which the

plaintiff knows not to be true or correct — namely that the

plaintiff had received ‘gross income’ in excess of the

exemption amount.

In effect, the Nether Court is attempting to use the

force of law to compel the plaintiff to commit perjury.

In spite of the facts, that (1) the defendant has

made no argument, nor provided and evidence that

liability exists; (2), the plaintiff has provided specific IRS

documentation (Plaintiff’s Ex. D) showing that no

assessment has been made and that a refund is due; and

(3), while obtaining the evidence submitted as plaintiff's

Exhibit D, an IRS employee, Patricia Zouedet, confirmed

that no assessment has been made and that a refund is

due (see Addendum to plaintiff's Brief in Support of

Motion for Reconsideration).

In the instant case, the existence, or lack of liability

for federal income tax, related to the plaintiff for the tax

year 1999 is a question of fact. Liability either exists or it

does not. The defendant has made no argument that

liability exists and has, in fact, provided evidence that it

does not, by admitting in the United States’ brief in

Support of Summary Judgment and in Opposition to

plaintiff's Motion for Summary Judgment that no

assessment has been made.

The most serious error of law was the total

absence of judicial review given to the plaintiff's primary

argument ~ that the plaintiff has no liability for federal

income tax for 1999, as no assessment had been made in

the instant case. This omission appears to be due, both to

the defendant’s and the Nether Court’s misunderstanding

and misapplication of 26 U.S.C. §7422 and the ‘variance

doctrine.’

“No suit or proceeding shall be maintained

in any Court for the recovery of any internal

revenue tax alleged to have been erroneously

or illegally assessed or collected, or of any

penalty claimed to have been collected

without authority, or of any sum alleged to

have been excessive or in any manner

wrongfully collected, until a claim for refund:

or credit has been duly filed with the

Secretary, according to the provisions of law

in that regard, and the regulations of the

Secretary established in pursuance thereof.”

26 U.S.C. §7422.

The previous statute is quite clear. The

defendant's attempted application of the ‘variance

doctrine’ is at best, incorrect, at worst, purposefully

deceptive.

_ The aim of the ‘variance doctrine’ is to facilitate

administrative determination of refund claims and to

restrict litigation to issues which the IRS has considered

and is prepared to defend in Court. Real Estate-Land

Title & Trust Co. v. United States, 309 U.S. 13, 17-18

(1940); Bank of New York v. United States, 526 F.2d 1012,

1019 (3rd Cir. 1975); Scott Paper Co. v. United States, 943

F. Supp. 489, 493 (E.D. Pa. 1996). |

This doctrine is not meant as an excuse for the

defendant nor for the courts to ignore the facts of a case,

but simply to expedite the legal arguments put forth in a

claim. Even supposing the argument that no liability

exists, as no assessment has been made, was not raised in

the original claim for refund, which it clearly was

(Plaintiff Ex. A), it would not permit the Court to simply

disregard the existence or non-existence of liability, as

this fact would not, and has not changed.

It bears repeating that liability either exists or it

does not. The defendant has made no argument and

offered no evidence to this effect.

In the Brief in Support of defendant’s Motion for

Summary Judgment and in Opposition to plaintiff's

Motion for Summary Judgment, the defendant made the

following statement, “In plaintiff’s motion for summary

judgment he makes two new arguments. The first is that

because the IRS has not assessed him he is not liable for

any taxes,” therefore erroneously concluding, “...The

Court lacks jurisdiction to hear these arguments...”

(emphasis added). The most appropriate term in the

English language, to describe this statement is a ‘lie.’

The plaintiff's original claim for refund detailed,

in plain language, the basis for the requested refund,

repeated here ad nauseum, “I understand that unless and

until an assessment is made, making me liable for a tax,

that the money that has been withheld and sent in on my

behalf remains in a ‘pending’ file and cannot be used by

the government. Consider this to be an informal claim for

refund of all money, held by the government, less any

federal taxes for which I have been made liable for, for

the tax year 1999” (Plaintiff Ex. A)

The original claim made clear that, by filing a.

return the plaintiff understood that he would be

voluntarily waiving Constitutionally protected rights by

providing information, which could ultimately be used

against him in a criminal trial. IRS 1040 Instruction

Manual, Privacy Act and Paperwork Reduction Act .

Notice, pg. 53.

The plaintiff's fears have materialized due to the

Order by the Nether Court, which now attempts to

compel the plaintiff to commit perjury. This is the very

essence of the protections the Fifth Amendment was

created to protect.

However, it is worth restating here that the

plaintiff has NOT invoked the protections provided by

the Fifth Amendment. The plaintiff’s argument is that

such an invocation is not nec

The original claim also elucidated that the plaintiff

made multiple telephone calls to the IRS toll free hotline,

requesting an explanation of how to file an income tax

return without voluntarily waiving the plaintiff's

Constitutional rights. During one of these calls, an IRS

employee stated that it was, in fact, the plaintiffs choice

whether or not to file a return (Plaintiff Ex. A).

Taking into account that the plaintiff’s personal research

into the IRC indicated that the plaintiff was not required

to file a federal income tax return, combined with the

professional opinion of a tax attorney indicating the same,

an employee of the IRS confirmed this conclusion - that

the filing of an income tax return is voluntary.

All credible evidence available to the plaintiff

indicated that no filing requirement exists. Absent a

filing requirement, the IRC, and more specifically, 26

U.S.C. 6020(b) does not apply to the plaintiff's situation.

The Supreme Court is in agreement, “The legal right of a

taxpayer to decrease the amount of what otherwise

would be his taxes, or altogether avoid them, by means

which the law permits, cannot be doubted.” Gregory v.

Helvering, 293 U.S. 465 at 469.

This Court’s finding in United States v. Connor

898 F.2d 942, 943-44 and the Nether Court’s subsequent

reliance on Connor, both violate the rule of stare decisis et

quieta non movere, as established by the United States

Supreme Court.

The plaintiff will not engage in circular debates as

to whether the money received by the plaintiff during

1999 was ‘wages,’ ‘salary’ or some other term. Suffice to

say, that the money received by the plaintiff during 1999

and detailed on the plaintiff’s W-2 form (Defendant Ex.

A) is in fact, ‘compensation for services,’ and as such, can

correctly be considered as the item enumerated in 26

U.S.C. § 61(a)(1).

Herein, undeniably, lies the problem. The Nether

Court’s primary ruling, that the plaintiff is required to file

an income tax return, is predicated on the fallacious

conclusion that the items enumerated in 26 U.S.C. §

61(a)(1-15) are ‘income’ and as such, subject to direct

taxation, which is not subject to apportionment.

In coming to this conclusion, the Nether Court relied on

two decisions, United States v. Connor, 898 F.2d 942, 943-

44 (3rd Cir. 1990) and United States v. Rhodes, 921 F.

Supp. 261, 265 (M.D. Pa. 1996).

Specifically, the Nether Court held, “Federal

Courts have routinely rejected the argument that the

United States has no authority to place a direct tax on

wages. It is well established that wages are taxable

income within the meaning of the Sixteenth Amendment

and that the direct tax on wages is not subject to the

apportionment requirement according to the plain

language of the Amendment. United States v. Connor

898 F.2d 942, 943-44 (3rd Cir. 1990) (rejecting the

argument that wages are not taxable income); United

States v. Rhodes, 921 F. Supp. 261, 265 (M.D. Pa. 1996)

(“The Sixteenth Amendment was passed specifically to

eliminate the need to subject any income tax to the

requirement of apportionment.)” Evans v. United States,

(CV-01-457 E.D. Pa. 2001).

Note first, that the Nether Court claimed that

‘wages’ are ‘taxable income,’ and not that ‘wages’ are

‘income, as was the holding in Connor, nor ‘gross income’

as was argued by the defendant.

This appears to have been a simple error on the

part of the Nether Court. However, ‘income,’ ‘gross

income,’ and ‘taxable income’ are three distinct and

different legal terms of which, only the latter two are

defined by the IRC. Furthermore, although, the Sixteenth

Amendment does unequivocally authorize Congress to

tax all three, the IRC imposes a tax on only one, ‘taxable

income.’ 26 U.S.C. §1. If the Court is confused, imagine

how the average American feels.

This Court’s decision in Connor, held specifically,

“Congress exercised its power to tax income by defining

income as, inter alia, “compensation for services”,

including fees, commissions, fringe benefits and similar

items ... We take this opportunity to reiterate that wages

are income within the meaning of the Sixteenth

Amendment ... Unless subsequent Supreme Court

decisions throw any doubt on this conclusion, we will

. By

" aoe

= iy

view arguments to the contrary as frivolous...” United

States v. Connor, 898 F.2d 942, 943-44 (3rd Cir. 1990).

The reasoning stated in Connor, contains three

significant flaws. The first two errors are contained in the

clause, ”...by defining income as, inter alia, ‘compensation

for services, including fees, commissions, fringe benefits

and similar items. 26 U.S.C. §61(a)(1)” Id.

Error number one is the declaration that 26 U.S.C.

§61(a) defines the term ‘income.’ It does not. This section

of law defines the term ‘gross income.’ As previously

stated, these are two specifically distinct and different

legal terms. |

This holding is also contrary to settled law. “The

general term ‘income’ is not defined in the Internal

Revenue Code,” United States v. Ballard, 535 F.2d at 404.

The language of the statute is as follows: “gross

income means all income from whatever source derived,

including (but not limited to) the following items:

(1) Compensation for services, including fees,

commissions, fringe benefits, and similar

items;

(2) Gross income derived from business;

(3) Gains derived from dealings in property;

(4) Interest;

(5) Rents;

(6) Royalties;

(7) Dividends;

(8) Alimony and separate maintenance

payments;

(9) Annuities;

(10) Income from life insurance and

endowment contracts;

(11) Pensions; |

(12) Income from discharge of indebtedness;

(13) Distributive share of partnership gross

income;

(14) Income in respect of a decedent; and

(15) Income from an interest in an estate or

trust.” 26 U.S.C §61(a) (emphasis added)

In Connor, not only did this Court err in stating

what was defined (‘income’ instead of ‘gross income’),

but the Court also erred by expressing the actual

definition. This Court claimed that the items enumerated

, inter alia ‘compensation for services’ are examples of

what was actually being defined.’ Irrespective of

whether this Court meant ‘income’ or ‘gross income,’ this

is patently untrue.

“The phrase “including (but not

limited to) the following items” has been

misinterpreted to be a phrase modifying the

word “income” not the word “source” in its

sentence. The rules of English composition

govern the noun which is modified; these

rules are discussed below.

Participles are verbal adjectives which

modify nouns. “Including” is a participle. The

verb “include” was converted to a participle

by adding the suffix ‘ing’ for the purpose of

describing a noun. The use of the word

“including” in Section 61(a) creates a

participle phrase.

There are two types of participle

phrases: restrictive and non-restrictive. The

restrictive phrase appears following the noun

it modifies without commas. A restrictive

phrase is an inextricable part of the sentence

because there are no commas. The non-

restrictive phrase can be inserted or hooded

on to the sentence and is separated by

commas. It is parenthetical; it contributes to

but does not change the meaning of the basic

sentence. The non-restrictive phrase can be

eliminated without changing the basic

sentence; that is the purpose of setting it apart

with commas.

In examining the opening sentence of

Section 61(a), the preceding noun of the

participle phrase —“including (but not limited

to) the following items”—is the word

“source.” Adjectives always modify the noun

immediately preceding when the word or

phrase is placed with intervening commas.

Why No One is Required to File Tax Returns

(pg110-111), Davidson Press, Yorba Linda,

Conklin.

The items enumerated 26 U.S.C §61(a)(1-15) are

examples of a ‘source’ from which ‘income’ may or may

not be derived. If income is derived from one of the listed

sources (or some other source), the recipient would have

met the legal definition of having ‘gross income.’ If no

derivation of income occurs, the recipient would have no

‘gross income’ but still may very well be in possession of

a ‘source.’

Therefore, the plaintiff could only have received

‘gross income,’ in 1999, if the plaintiff derived ‘income’

from some ‘source,’ and not if the plaintiff had a ‘source,’

which derived no ‘income’.

This understanding of 26 U.S.C §61 is in perfect

harmony with the language of the Sixteenth Amendment.

The Amendment reads: “The Congress shall have power

to lay and collect taxes on incomes, from whatever source

derived, without apportionment among the several

States, and without regard to any census or

enumeration.” U.S. Constitution, Amendment XVI.

The word ‘incomes’ is the object of the preposition

‘on.’ The word ‘source’ is the object of the preposition

‘from.’ Inno way can the word ‘source’ be made the

object of the preposition ‘on.’ The language of the

Amendment clearly delegates to Congress the authority

to impose a tax, without apportionment among the

several States, and without regard to any census or

enumeration, on ‘incomes,’ and not on ‘sources’ from

which ‘income’ may or may not be derived.

Thus, the second fatal error in Connor is that this Court

claimed 26 U.S.C §61(a) enumerates items (1-15) of

‘income’ and not examples of ‘sources’ from which

‘income’ may or may not be derived.

The first two errors are, however, dwarfed in

severity by the third, which is contained in the clause,

“Congress exercised its power to tax income by defining

income ...” Id.

The ability to define ‘income’ does not now, nor

has it ever existed within the authority of Congress.

Irrefutable and undeniable evidence of this lack of

authority and clarification as to why the power does not

exist is illustrated most effectively by The United States

Supreme Court,

“..: it becomes essential to distinguish

between what is and what is not 'income,' and

to apply the distinction, as cases arise,

according to truth and substance, without

regard to form. Congress can not by any

definition it may adopt conclude the matter,

since it cannot by legislation alter the

Constitution, from which alone it derives its

power to legislate, and within whose

limitations alone that power can be lawfully

exercised." Eisner v. Macomber, 252 US 189

at 206. (emphasis added) |

The plaintiff is well aware that Eisner held that a

stock dividend made to shareholders in their

proportionate interests against profits accumulated by the

corporation was not income and that Eisner did not

specifically discuss wages.

However, the Eisner Court established the rule of

stare decisis et quieta non movere relating to the definition of

‘income’ and to the procedure for applying the definition

to future cases. The Supreme Court unequivocally held

_ that Congress does not have the authority to define

‘income,’ and neither Circuit, nor District Courts have the

authority to change this.

Such an unlimited power, to both tax ‘income’ and

to define ‘income’ would result in a legislative body of

totalitarian authority and would effectively emaciate our

Constitution.

In the tyrant’s fantasy described in Connor,

Congress could define income as anything it pleased,

providing limitless power to fund endless programs for

which no Constitutional authority exists; greatly

expanding the size and scope of the federal government

well beyond the limited scope envisioned by our

forefathers and limited by our Constitution.

Thus, it becomes evident, that Connor was

decided either per incuriam or malum en se. The plaintiff

prays for the former, but fears.the latter.

In reaching the doomed decision, this Court cited

other cases with similar findings. Coleman v.

Commissioner, 791 F.2d 68, 70 (7th Cir. 1986) also held

that ‘wages’ are ‘income’ for purpose of internal revenue.

The Coleman Court, unfortunately, makes the same fatal

errors as this Court in Connor, by misinterpreting the

definition of ‘gross income’ and presuming Congress

possessed an authority that has never existed.

The Seventh Circuit, in Coleman, not only erred in

equating the ‘sources’ enumerated in the definition of

‘gross income,’ with ‘income,’ but also erred in stating

upon what the code actually imposes a tax, “The code

imposes a tax on all income. See 26 U.S.C. § 61.” Coleman

v. Commissioner, 791 F.2d at 70. This is undeniably

inaccurate.

26 U.S.C. §61 is nothing more than the definition

of ‘gross income.’ This section of law imposes no tax

whatsoever. It only defines the broad category inclusive

of ‘all income.’

Relating to ‘income taxes,’ the IRC imposes a tax

only on what is defined as ‘taxable income’ in excess of

the exemption amount, not all income. See 26 U.S.C. §1.

‘Taxable income’ is defined as “gross income

minus the deductions allowed by this chapter,” 26 U.S.C.

§ 63. “Gross income’ means ‘all income from whatever

source derived, including but not limited to...’ 26 U.S.C. §

61(a)(1-15).

The language 26 U.S.C. §61(a) may or may not

have been designed specifically to obfuscate, creating the

illusion that ‘income’ can be defined as (including, but

not limited to) the items enumerated one through fifteen.

That conclusion is left to posterity, or if this Court is so

inclined, per curia. But, the simple fact remains that this

illusion has been perpetuated. The ruling in Connor, not

only sanctioned this un-Constitutional proposition, but

promoted it. The opportunity now presents itself, in the

instant case, to correct this grievous error.

As the plaintiff has clearly demonstrated that the

decision in United States v. Connor, 898 F.2d 942, 943-44

(3rd Cir. 1990), is fatally flawed, contrary to established

law and most severely contrary to the specific and limited

powers of the Constitution, creating a significant threat to

the liberty of this nation, this Court is compelled to

reverse its decision in Connor, rendering it null and void.

Because ‘income’ can not be defined by Congress,

as the Supreme Court has elucidated, the question arises

in the instant case, “Has income, in excess of the

exemption amount, been derived from the compensation

received by the plaintiff for his services?”

For the purposes of deciding this case, that issue is

moot. The Nether Court's ruling, that the plaintiff was

required to file a return was entirely dependent on faulty

case law. Furthermore, the defendant has admitted that

no assessment has been made and the defendant has

offered no evidence of liability. As such, judgment

should be immediately entered in favor of the plaintiff

and the IRS should be ordered to refund the $12,322.58,

plus interest, fees and penalties as allowed by law.

However, because the plaintiff is wholly in

support of the proposition that government exists to ©

protect the inherent rights of its citizens, the plaintiff does

sincerely wish to meet any and all legal tax obligations

that may exist.

To determine this, we look once more to the

Supreme Court, “... it becomes essential to distinguish

between what is and what is not ‘income,’ and to apply

the distinction, as cases arise, according to truth and

substance, without regard to form.” Eisner v. Macomber,

252 US 189.

Therefore, it is necessary to ‘apply the distinction

(of what is and what is not ‘income’) according to truth

and substance, without regard to form,” Id, in order to

apply “the proper definition of the term ‘gross income,’

Southern Pac. Co. v. Lowe, 247 U.S. 330 at 335 (1918), to

the plaintiff’s situation. To accomplish this task, the

specific and legal definition of the term ‘income’ is

necessary.

In stating here, the currently established definition

of the term ‘income,’ the plaintiff also fulfills this Court’s

clarification from the Connor holding which read,

“Unless subsequent Supreme Court decisions throw any

doubt on this conclusion (that wages are income), we will

view arguments to the contrary as frivolous...” Id.

Considering that all Supreme Court decisions are

subsequent (following in time or order, American

Heritage Dictionary, Second Ed.) to Circuit Court

decisions, and that the Supreme Court has, in fact,

provided a specific definition of the term ‘income’ which

does not include wages. By its own holding, this Court is

barred from a finding that the plaintiff's argument is

frivolous or from imposing sanctions for raising the

argument.

The genesis of the definition of ‘income’ began the

very year that the Sixteenth Amendment was adopted,

with the Supreme Court holding, “‘income' may be

defined as the gain derived from capital, from labor, or

from both combined,” Stratton’s Independence , Ltd. v.

Howbert, 231 U.S. 399 (1913)

The terms ‘capital and ‘labor’ were soon clarified

by the Supreme Court, “Whatever difficulty there may be

about a precise and scientific definition of ‘income,’ it

imports, as used here, something entirely distinct from

principal or capital either as a subject of taxation or as a

measure of tax; conveying rather the.idea of gain or

increase arising from corporate activities. As was said in

Stratton’s Independence v. Howbert, 231 U.S. 399, 415, 34

S. Sup.Ct. 136: ‘Income may be defined as the gain

derived from capital, from labor, or from both

combined.” Doyle v. Mitchell Bros. Co., 247 U.S. 179 at

185 (1918).

Capital is the means of production. Labor is the

workforce that operates the means of production. Both

are still clearly corporate activities, as described in Doyle

and a ‘gain’ derived from that activity would still be

nothing more than corporate profit. The use of the term

‘labor’ has been perverted into meaning the sweat of the

brow of the working class. This perversion is a grievous

insult not only to the same, but to every American that

gave their life to protect the freedoms outlined in and

protected by our Constitution.

The current and binding definition of

‘income’ is as follows: “a gain derived from capital, from

labor, or from both combined, provided it be understood

to include profit gained through sale or conversion of

capital assets.” Eisner v. Macomber, 252 U.S.189 (1920)

(emphasis added).

“There would seem to be no room to

doubt that the word (income) must be given

the same meaning in all of the Income Tax

Acts of Congress that was given to it in the

Corporation Excise Tax Act, and that what

that meaning is has now become definitely

_ settled by decisions of this Court. In

determining the definition of the word

‘income’ thus arrived at, this Court has

consistently refused to enter into the

refinements of lexicographers or economists,

and has approved, in the definitions quoted,

what it believed to be the commonly

understood meaning of the term which must

have been in the minds of the people when

they adopted the Sixteenth Amendment to

the Constitution.” Merchant's Loan & Trust

Company v. Smietanka, 255 U.S. 509 at 519

(1921), Doyle v. Mitchell Brothers Co., 247

U.S. 179, 185 (emphasis added).

The timeline is clear. The clarification of the

definition of the term ‘income’ and ultimately what the

Sixteenth Amendment authorizes Congress to tax, began

in 1913, the year the Sixteenth Amendment was adopted

and was “definitely settled” by 1921. Id.

An inherent problem in comprehending the

obligations created by the IRC, arises from the definition

of ‘gross income.’ 26 U.S.C. § 61. This definition is

nothing more than a comprehensive inclusion of all

income, from whatever source derived. Therefore, to

properly determine what is and what is not ‘gross

income,’ we need only substitute the accepted definition

of the term ‘income,’ which can not be defined by

Congress, nor altered by any court save the United States

Supreme Court. Eisner v. Macomber, 252 US 189, United

States v. Ballard, 535 F.2d at 404.

Therefore, the proper definition of ‘gross

income’ becomes: “...“gross income means all gain

derived from capital, from labor, or from both combined,

provided it be understood to include profit gained

through sale or conversion of capital assets, from

whatever source derived, including (but not limited to)

the following items: inter alia, compensation for services

The inclusion of the prepositional phrase ‘from

whatever source derived,’ and the non-restrictive

participle phrase ‘including but not limited to (items 1-

15),’ in the definition of ‘gross income,’ may very well be

an overreaching legislative attempt to expand the areas

from which a ‘gain’ can be derived; areas which were

“definitely settled by decisions of this Court.” Merchant's

Loan & Trust Company v. Smietanka 255 U.S. 509 at 519

(1921). But upon close scrutiny, the definition becomes

clear.

Once again, consider how the average American

feels. The following quote serves as a reminder of the

purpose of existence of the United States of America (as a

government entity) and consequently the existence of this

Court.

“It will be of little avail to the people that the laws

be made by men of their own choice, if those laws be so

voluminous that that can not be read, nor so incoherent

that they can not be understood.” Federalist Papers #62

Although ‘income’ can be derived from whatever

source, the ‘gain’ must be derived from capital, labor or

both combined. Taking into account ‘what it (the

Supreme Court) believed to be the commonly understood

meaning of the term (income) which must have been in

the minds of the people when they adopted the Sixteenth

Amendment to the Constitution.” Merchant's Loan &

Trust Company v. Smietanka, 255 U.S. 509 at 519 (1921),

and, “that what that meaning is has become definitely

settled by decisions of this Court.” Id. It becomes

undeniably clear that, in the instant case, none of these

events occurred. The defendant has offered no evidence

to the contrary.

Although it has been made clear that the ‘gain’

described in the definition of ‘income’ has specific and

limited areas from which it can arise, the plaintiff wishes

to eliminate any doubt. Should this Court choose to

ignore this asseveration and assume that the items

enumerated in 26 U.S.C. § 61(a)(1-5) were areas from

which a ‘gain’ could be derived; there is no evidence that

even this wild extension has occurred in the instant case.

The defendant’s spurious argument, in support of

its claim that the plaintiff received ‘gross income,’ in

excess of the exemption amount, is based on the lonely

facts that, during 1999, the pharmaceutical company for

which the plaintiff provided a service, compensated the

plaintiff in excess of $62,000 and withheld from that

compensation, an amount greater than the exemption

amount ($9,422.58 vs. $7,050, respectively) to be applied

to any lawful assessment.

Because the plaintiff has not voluntarily self-

assessed (IRS Publication #21, Flora v. United States, 362

U.S. 145 at 176) for the tax year 1999, the monies

withheld, along with the subsequent bond sent to the IRS,

remain currently, in limbo.

This argument proved nothing more than the

plaintiff has received compensation greater than the

exemption amount. It inno way demonstrates that a

‘gain,’ as required by the definition of “income,” has been

derived from the compensation. Eisner v. Macomber, 252

U.S. 189 at 207.

Subsequently, no ‘gross income’ was received,

resulting in no filing requirement under 26 U.S.C.

6012(a)(1)(A), ultimately the lack of any IRS assessment

authority under 26 U.S.C. 6020(b) and the plaintiff's

classification as a “non-taxpayer,” for the tax year 1999.

The defendant has made no argument

whatsoever, rational or irrational, to illustrate how a

‘gain’ was derived from the plaintiff’s wages. Therefore,

it is unclear whether the defendant maintains that only

the amount withheld from the plaintiff's compensation,

the entire amount of the plaintiff’s compensation or some

arbitrary amount between the two, is considered ‘gross

income.’

However, we need only look once again, to the

Supreme Court, “..that portion of the gross proceeds

which represents gain or increase acquired after the

taking effect of the act must be regarded as ‘gross

income’; and to this end it must be distinguished from

that portion which represents a return of the capital value

existing before.” Hays v. Gauley Mountain Coal Co., 247

US. 189 at 193 (1918).

There is only one way to determine ‘gain.’ It is

necessary to subtract from the ‘gross proceeds’ the

amount of the (x) value existing before. The (x)

representing one of the items expressed in the definition

of ‘income;’ namely, ‘capital,’ ‘labor’ or ‘capital assets.’

This can be accomplished by simply subtracting the

‘value existing before’ from the ‘gross proceeds.’ In doing

so, whatever is left must be regarded as ‘gross income.’

Id.

‘Gross proceeds’ - ‘value existing before’ = ‘gain’ or

‘income’

To make the appropriate calculation, the plaintiff's

situation must be examined. The plaintiff has negotiated

with the pharmaceutical company for which he provides

a service, an amount of compensation mutually agreeable

to both parties for the performance of those services. This

amount would be the ‘gross proceeds.’ Each year, the

plaintiff meets with a managerial representative of the

pharmaceutical company, to discuss the plaintiffs

performance and to determine subsequent increases (or

decreases) in the amount of compensation as determined

by the value of the service provided.

The ‘value existing before’ of the service provided

by the plaintiff to the pharmaceutical company, through

negotiation, is the sole determinant of the amount of

agreed upon compensation. Both parties must agree to

the ‘value existing before’ and the ‘gross proceeds’ or

compensation, or an agreement for employment ends or

never materializes.

The only possible way that ‘gain’ could be derived

from the plaintiff’s compensation, would be if the ‘value

existing before’ were less than the actual compensation

received by the plaintiff.

Close examination of the plaintiff's situation

illustrates that no rational argument can be made to

support the derivation of a ‘gain’ from the plaintiff's

compensation. If the amount of compensation (‘gross

proceeds’) were to exceed the ‘value existing before’ of

the service provided to the company, the company would

either decrease the compensation, or seek some other

individual to provide a service with higher value. If the

amount of compensation (‘gross proceeds’) decreased

below the ‘value existing before’ of the service, the

plaintiff would either ask for a raise or seek another

company for which to provide the service (according to

the defendant’s rational, the plaintiff could declare this as

a ‘loss’ on an income tax return, thus resulting in an

‘earned income credit,’ but I digress).

This is further illustrated by an expanded view the

pharmaceutical company’s situation. The same

pharmaceutical company, for which the plaintiff provides

a service, employs approximately one thousand five

hundred individuals across the country to promote the

exact same products and each has the exact same job

description. Yet, not one of these individuals receives

exactly the same amount of compensation. What

determines this?

There are three variables that determine the

amount of compensation a representative receives. First,

the negotiated amount of the base salary (or wages, if the

Court prefers) upon commencement of employment;

second, tenure with the company and incremental

increases (or decreases) in the annual salary based upon

personal developmental; and third, bonus based on

promoted product performance.

Because the company values each sales

representative differently, each receives a different

amount of compensation or ‘gross proceeds.’ In order to

ascertain a ‘gain,’ which is necessary for ‘income,’ and

therefore, ‘gross income’ to exist, some baseline of ‘value

existing before’ for the services provided, would have to

be established for each individual representative. To

claim, as this Court did in Connor, that all ‘wages’ are

‘income’ means that the entire amount of compensation

received by every representative would equate to a ‘gain.’

This would have to mean that the ‘value existing before,’

for each individual representative was zero.

To further illustrate the absolute lunacy of this

proposition, think once again of the sales force to which

the plaintiff belongs. If the ‘value existing before’ for

each sales representative is zero, what would possibly

motivate the pharmaceutical company to compensate

each sales representative differently, or anything at all,

_ for that matter? Nothing.

This proposition is wholly ludicrous and is

contrary to settled law. “We must reject in this case, as

we have rejected in cases arising under the Corporation

Excise Tax Act of 1909 (Doyle, Collector, v. Mitchell

Brothers Co., 247 U.S. 179 , 38 Sup. Ct. 467, 62 L. Ed. -,

and Hays, Collector, v. Gauley Mountain Coal Co., 247

U.S. 189 (1918), the broad content on submitted in behalf

of the government that all receipts-everything that comes

in-are income within the proper definition of the term

‘gross income,’ and that the entire proceeds of a

conversion of capital assets, in whatever form and under

whatever circumstances accomplished, should be treated

as gross income.” Southern Pac. Co. v. Lowe, 247 U.S. 330

at 335 (1918) (emphasis added).

Notice here, the Court makes reference to the

proper definition of the term ‘gross income.’ Id. Every

Court is required to apply the ‘proper definition of gross

income,’ which this Court failed to do in Connor. It

matters not, in which of the classifications of items

enumerated in the Supreme Court’s definition of

‘income,’ the defendant attempts to classify the plaintiff's

compensation for services. Whether ‘compensation for

services’ is considered ‘capital,’ ‘labor,’ ‘both,’ or ‘capital

assets,’ the same principle, in determining ‘gain,’ would

apply.

Substituting ‘labor’ for ‘capital assets,’ the ruling

would read, “We must reject ... the broad content on

submitted in behalf of the government that all receipts-

everything that comes in-are income within the proper

definition of the term ‘gross income,’ and that the entire

proceeds of a conversion of ‘labor’, in whatever form and

under whatever circumstances accomplished, should be

treated as gross income.”

Compensation for services is self-explanatory. A

service is provided and compensation is exchanged for

the service. There is no ‘gain.’

Ultimately, as no ‘income’ has been derived from

the plaintiff's compensation, the only possible way that 26

U.S.C. §1 would apply to the plaintiff, would be if the

plaintiff voluntarily (and erroneously) declared under

penalties of perjury that he had received ‘gross income’

greater than the exemption amount. The plaintiff has no

intention of doing this.

How is it possible then, that a ‘gain’ or ‘income’

could be derived from ‘compensation for services?’

Surely, Congress included this term within the definition

of ‘gross income’ for a reason other than to confuse

American citizens into self-assessing a tax for which they

would not otherwise be liable.

It is, in fact, possible to derive a ‘gain’ from

‘compensation from services’ and this is best illustrated

by example: A mining company compensates its labor

force to enter a mine and extract the precious metals for

which the mine was established. Adding the cost of the

mining equipment to the ‘compensation for services’ paid

to the labor force and subtracting both from the ‘gross

proceeds’ received for the sale of the mine’s extracts

would result in a ‘gain’ and therefore, income (or a loss,

and therefore a deduction.)

This is, in fact, the reasoning stated by the

Supreme Court in first establishing a legal definition for

the term ‘income,’ “The very process of mining is, in a

sense, equivalent in its results to a manufacturing

process. And, however the operation shall be described,

the transaction is indubitably ‘business’ within the fair

meaning of the act of 1909; and the gains derived from it

are properly and strictly the income from that business;

for ‘income’ may be defined as the gain derived from

capital, from labor, or from both combined, and here we

have combined operations of capital and labor. |

Stratton’s Independence , Ltd. v. Howbert, 231 U.S. 399

(1913)

Let us now return to the Nether Court’s decision

as it relates to the instant case. The erroneous conclusion

that the United States possesses the authority to place a

direct tax, not subject to apportionment, on the plaintiff's

wages is moot for the purposes of the instant case. Citing

United States v. Rhodes, 921 F. Supp. 261, 265 (M.D. Pa.

1996) (“The Sixteenth Amendment was passed

specifically to eliminate the need to subject any income

tax to the requirement of apportionment.).

The ruling in Rhodes, (relating to the lack of

requirement of apportionment of taxes laid on income) is

inapplicable to the instant case, because to date, no

attempt has been made, by the IRS, to impose a direct tax

on the plaintiff's wages.

The tax imposed by the IRC is on ‘taxable income.’

‘Taxable income’ is ultimately a derivative of ‘income.’

Because the tax imposed by the IRC is on ‘income’ and

not on the plaintiff or his property (either real or

personal), the tax is clearly an indirect tax and not subject

to apportionment.

It should be pointed out that the logic of Rhodes is

backwards, in that the Supreme Court has ruled the

Sixteenth Amendment simply prohibited income taxes

from being placed in the category of direct taxation,

Stanton v.Baltic Mining Co., 240 U.S. 103, the fact still

remains that taxes on ‘income’ are not subject to

apportionment and the decision in Rhodes is moot in the

instant case.

The issue would, however, again become relevant,

should the IRS attempt at some time in the future, to

make an assessment against the plaintiff’s wages, without

either apportionment or the plaintiff’s consent.

The Sixteenth Amendment makes no reference to either

of the two great classes of taxation, direct or indirect. The

Amendment only makes reference to taxes laid on

‘incomes.’

The United States Supreme Court has ruled

unequivocally that the Amendment prohibits taxes on

‘income’ from being placed in the category of direct

taxation. (See Brushaber v. Union Pacific R.R., 240 U.S. 1

at 10,12 and Stanton v. Baltic Mining Co., 240 U.S. 103 at

112,113) This is entirely consistent with the prohibition

placed on Congress from defining what is ‘income.’

The plaintiff continues to maintain, with support

from every decision by the Supreme Court on the subject,

as well as the United States Constitution itself, that all

direct taxes must be apportioned according to

representation.

As the proverbial fog lifts and the undeniable

difference between a ‘source’ and ‘income’ is elucidated,

this becomes a non-issue.

The greatest confusion surrounding the issue of

the voluntary or mandatory nature of the filing an income

tax return or liability for income tax rests solely on the

existence or non-existence of income in each individual’s

case. The existence of income rests solely on the definition

of income.

Considering that ‘income,’ is not automatically

derived from ‘compensation for services,’ logic would

dictate, that the overwhelming majority of American

citizens, making their livings by receiving compensation

for services, do not, in fact, derive income from that

compensation.

Such is the genesis of the ‘voluntary nature’ of the

personal federai income tax, eloquently elucidated by the

Supreme Court, “Our system of taxation is based upon

voluntary assessment and payment, not upon distraint.”

“Flora v. United States, 362 U.S. 145.

VI. | ACTIONS REQUESTED BY THE PLAINTIFF

The plaintiff requests that this Court reverse its

decision in United States v. Connor, 898 F.2d 942, 943-44

(3rd Cir. 1990) and reverse the decision of the Nether

Court in the instant case. Further, the plaintiff requests

this Court order the IRS to immediately refund the

$12,322.58 currently being held without assessment, along

with interest, penalties, fees and costs as allowed by law,

so that it may be forwarded to the Red Cross as soon as

possible.

<s> Kenneth A. Evans

Dated: September 18, 2001

APPENDIX E

IN THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

KENNETH A. EVANS

UNITED STATES OF AMERICA

No. 01-3161

APPELLANT’S INFORMAL REPLY

TO BRIEF FOR THE APPELLEE

At this point in the litigation, all of the arguments

are clear. There is no denying that a litany of Circuit

Court decisions have held that wages are income

(detailed ad naseum in the Brief for the Appellee). This

appears to be the issue from which all other arguments

stem. The majority of these decisions have been handed

down within the most recent score of years. This time

line is quite telling. Irrespective of the numerous

attempts at suppression, the people are learning the truth

and the truth will be known.

Each and every one of the aforementioned Circuit

Court decisions, declaring that wages are ‘income,’ is

repugnant to the United States Constitution, repugnant to

every Supreme Court decision dealing with the subject of

what is and what is not “income” and contrary to the

concept of a legitimate government in a free society.

The offending decisions either declare simply that

wages are income, supported only by previous decisions

with no rational argument or they demonstrate their

failing by stating their reasoning, as this Court did in U.S.

vs. Connor, 898 F.2d at 943, indicating beyond any doubt

just how hostile to freedom they are, by claiming that

Congress has the ability to define that which it has the

authority to tax. A proposition soundly and rightfully

rejected by the Supreme Court. Eisner v. Macomber, 252

US 189 at 206 (1920).

Does our Constitution form the rules for our

government? Does our government truly exist to protect

the inherent rights of Americans, which include life,

liberty and the pursuit of happiness or has the federal

government become, in the words of our founders,

“destructive of these ends?” This case could provide no

clearer a litmus test.

Deciding the fate of the greatest nation in the

history of the earth is no small task to be sure and the

implications truly affect us all. But, each judge on this

Court has taken an oath to uphold and defend the

Constitution against all enemies, foreign and domestic.

The plaintiff prays that those words were not empty °_

expressions and that this Court shows the courage to

speak what is undeniably the truth.

“Why does a judge swear to discharge his duties

agreeably to the constitution of the United States, if that

constitution forms no rule for his government? ... If such

be the real state of things, this is worse than solemn

mockery. To prescribe, or to take this oath, becomes

equally a crime. It is also not entirely unworthy of

observation, that in declaring what shall be the supreme

law of the land, the constitution itself is first mentioned;

and not the laws of the United States generally, but those

only which shall be made in pursuance of the

constitution, have that rank. Thus, the particular

phraseology of the constitution of the United States

confirms and strengthens the principle, supposed to be

essential to all written constitutions, that a law repugnant

to the constitution is void, and that courts, as well as

other departments, are bound by that instrument.”

Marbury vs. Madison, 5 U.S. 137, 180 (1803) (emphasis

added).

The invalid status of repugnant laws applies to all

laws, case and legislative, and as such, U.S. vs. Connor,

898 F.2d 942 (1990), and decisions with similar findings

that wages are ‘income,’ are void.

“A wise and frugal government, which shall

restrain men from injuring one another, which shall leave

them otherwise free to regulate their own pursuits of

industry and improvement, and shall not take from the

mouth of labor the bread it has earned. This is the sum of

good government, and this is necessary to close the circle

of our felicity.” United States President Thomas

Jefferson, First Inaugural Address, March 4, 1801

(emphasis added). |

“Our country has labored under a federal

income tax system that is inconsistent with the

liberty of a free people. Quite simply, the

government of a free people should not tax the

labor of its citizens, and it is imperative that the

federal tax system not be repugnant to the

Constitution and its laws. Most of Congress now

agrees.” — Congressman Roscoe Bartlett of

Maryland, in a letter to Robert Schultz, Chairman

of We The People Foundation for Constitutional

Education, Inc. October 12, 2001 (emphasis

added).

http:/ /www.bostonteaparty2.org /bartlett/bartle

tt.html -

“The existing tax information disclosure

provisions reflect the fact that Americans are

compelled to surrender the constitutional rights

guaranteed by the fourth and fifth

amendments, which are the right ‘to be secure

in their papers, and effects, against

unreasonable searches and seizures,’ and the

right against self-incrimination. In order to

facilitate the effective administration of our tax

laws, each American voluntarily surrenders

certain rights and assumes the duty of self-

investigation, fact finding and reporting.” --

U.S. Senator Lowell P. Weicher, Jr. from

Connecticut, June 20, 1980 during a Senate

Committee Hearing on the IRS and criminal

enforcement.

The appellant has made clear that he will never

voluntarily surrender these rights. Should these rights

ultimately be surrendered, it would only be done so by

superior physical force. Should this Court render a

decision that would authorize physical force requiring the

plaintiff to surrender rights guaranteed by the

Constitution, such an action would, by its very existence,

negate this Court’s otherwise legitimate authority.

"Unless the mass retains sufficient control over

those entrusted with the powers of their government,

these will be perverted to their own oppression, and to

the perpetuation of wealth and power in the individuals

and their families selected for the trust. Whether our

Constitution has hit on the exact degree of control

necessary, is yet under experiment." —-Thomas Jefferson to

M. van der Kemp, 1812.

In deciding the instant case, the following points

should be considered very carefully:

1. The United States Supreme Court has ruled that

Congress DOES NOT have the authority to define

‘income.’ Eisner v. Macomber, 252 US 189 at 206 (1920)

2. This Court has ruled that Congress does have and

has exercised the authority to define ‘income,’ and that

definition includes compensation for services, thus

wages, U.S. vs. Connor, 898 F.2d 942 (3rd Circuit)(1990).

The District Court’s (“Nether Court”) Order in the instant

case is based entirely on this decision.

3. The 8th Circuit has ruled that Congress has NOT

defined ‘income.’ United States v. Ballard, 535 F.2d at 404

(8th Circuit)(1976).

4. The Nether Court has ruled that the appellant was

required to file an income tax return for the tax year 1999.

5. The Supreme Court has ruled that our system of

taxation is based upon voluntary assessment and

payment, not distraint. Flora v. United States, 362 U.S. 145

at 176.

6. Multiple IRS employees have informed the

appellant that filing an income tax return is voluntary,

even as recent as October 18, 2001. (see Appellants ex. B,

ex. E).

‘if The Sixteenth Amendment to the United States

Constitution does NOT mention either of the two great

classes of taxation; neither Direct nor In-direct.

8. The Nether Court has ruled in the instant case that

the Sixteenth Amendment authorizes Congress to impose

a direct non-apportioned tax on income.

9. The Supreme Court has ruled that the Sixteenth

Amendment PROHIBITS Congress from imposing a _

direct non-apportioned tax on income. Brushaber v.

Union Pacific R.R., 240 U.S. 1 at 10,12 and Stanton v.

Baltic Mining Co., 240 U.S. 103 at 112,113, Eisner v.

Macomber, 252 U.S. 189.

})

All relevant documents in this case are posted on

the internet at www.reasons2vote.com and have already

been viewed by thousands of Americans. The appellant’s

conscience is clear that his arguments in the instant case

are genuine, truthful and correct. Let this Court’s actions

be the same, lest the liberty of future generations be

Respectfully submitted,

<s> Kenneth A. Evans

Dated: 10/24/01

APPENDIX F

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

KENNETH A. EVANS

UNITED STATES OF AMERICA

CIVIL ACTION — No. 01-457

FILED August 3, 2001

MEMORANDUM AND ORDER

J.M. KELLY, J.

Presently before the Court is a Motion for

Reconsideration filed by the Plaintiff, Kenneth A. Evans

(“Evans”). Evans filed suit in this Court against the

Defendant, United States of America (“United States”),

alleging that he is entitled to recover a tax refund in the

amount of $12,322.58. Both parties filed cross-motions for

summary judgment. In Memorandum and Order dated

June 26, 2001, the Court granted the United States’

Motion for Summary Judgment and denied Evans’

Motion for Summary Judgment. Evans now seeks

reconsideration of the Court’s decision. For the following

reasons, Evans’ Motion is denied.

I. BACKGROUND >

The parties are in general agreement regarding the

underlying facts of this case. Evans earned in excess of

$62,000 in wages during the 1999 tax year. In 1999,

Evans’ employer withheld from his salary a total of

$9422.58 and forwarded that sum to the Internal Revenue

Service (“IRS”). Evans also sent an additional $2,900 to

the IRS to be applied his 1999 income taxes. Along with

this additional payment, Evans enclosed a letter

requesting a refund of all money held by the IRS in

payment of his 1999 income taxes. In sum, the letter

stated that he was not required to file an income tax

return or pay income taxes for a variety of reasons. The

IRS did not respond to Evans’ requests and did not

refund any of his 1999 income taxes.

Proceeding pro se, Eyans filed suit in this Court

against the United States seeking judgment in the amount

of $12,322.58, the amount held by the United States in

payment of Evans’ 1999 income taxes. The Court denied

Evans’ Motion for Summary Judgment and granted the

United States’ Motion for Summary Judgment. Evans

filed a Motion for Reconsideration of that decision, which

the Court will now consider.

Il. STANDARD OF REVIEW

Federal Rule of Civil Procedure 59(e) and Local

Civil Rule 7.1(g) of the United States District Court for the

Eastern District of Pennsylvania allow parties to file

motions for reconsideration or amendment of a judgment.

Courts should grant these motions sparingly, reserving

them for instances when: (1) there has been an

intervening change in controlling law; (2) new evidence

has become available; or (3) there is a need to prevent

manifest injustice or correct a clear error of law or fact.

See, e.g., General Instrument Corp. v. Nu-Tek Electronics,

3 F. Supp.2d 602, 606 (E.D. Pa. 1998), aff'd, 197 F.3d 83 (3*

Cir. 1999); Environ Prods., Inc. v. Total Containment, Inc.,

951 F. Supp. 57, 62 n.1 (E.D. Pa. 1996). Dissatisfaction with

the Court'’s ruling is not a proper basis for

reconsideration. Burger King Corp. v. New England

Hood and Duct Cleaning Co., No. 98-3610, 2000 WL

133756 at *2 (E.D. Pa. Feb. 4, 2000).

III. DISCUSSION

Evans’ Motion for Reconsideration does not point

out any intervening change in the controlling law since

the Court’s Order of June 26, 2001. The Motion also fails

to identify any new relevant evidence that has since

become available that would necessitate a reconsideration

of the Court’s judgment. In addition, Evans does not

contend that there was any error of fact. Therefore, the

success of Evans’ Motion depends on whether the Court

committed a clear error of law or if denying the Motion

would result in a manifest injustice.

The arguments which Evans sets forth in the

Motion for Reconsideration are essentially recycled from

this Motion for Summary Judgment. In the instant

Motion, Evans contends: (1) he has no income tax

liability for 1999; (2) he is not required to file an income

tax return; and (3) the United States does not have the

authority to place a direct tax upon his wages because

_ such a tax would be an unconstitutional direct tax that

would need to be apportioned. The Court adequately

addressed these arguments in its Memorandum and

Order of June 26, 2001. Evans has not persuaded the

Court that it committed any errors of law. Moreover,

there is no evidence that manifest injustice would result if

the Motion were denied. Accordingly, the instant Motion

for Reconsideration is denied.

<s> James McGirr Kelly, J.

APPENDIX G

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

CIVIL NO: 01457

KENNETH A. EVANS

Plaintiff

VS.

bal

UNITED STATES OF AMERICA

Defendant

PLAINTIFF’S BRIEF IN SUPPORT OF MOTION FOR

RECONSIDERATION

I. HISTORY

The Plaintiff filed a claim for a refund with the

Internal Revenue Service on April 17, 2000 (Comp! Ex. B)

for all money held by the United States less any federal

income taxes for which the plaintiff had been made liable

for the tax year 1999. The IRS failed to respond. To this

date, no assessment has been made nor liability

established. The plaintiff filed this action on January 29,

2001. On June 26, 2001, this Court denied the plaintiff's

Motion for Summary Judgment and granted the

defendant's Motion for Summary Judgment. For the

reasons listed below, the plaintiff moves this Court to

reconsider both the denial of the plaintiff’s Motion for

Summary Judgment and the grant of the defendant's

Motion for Summary Judgment and further to reverse

both.

Il. ARGUMENT

Under Section III of the Court’s Memorandum in

Support of the Court’s Order (hereinafter referred to as

the Court’s Memorandum), the Court states in the first

paragraph, “Evans advances three arguments in support

of his position that he is entitled to an income tax refund.

First, Evans claims that no legal authority requires him to

pay income taxes on his wages. Second, Evans contends

that any requirement that he file an income tax return

would violate his rights under the Fifth Amendment to

the United States Constitution, which protects against

self-incrimination. Finally, Evans argues that the

Sixteenth Amendment to the United States Constitution

does not grant the United States the authority to place a

direct tax upon his wages because such a tax would be an

unconstitutional direct tax that would need to be

apportioned.”

This statement is inaccurate and incomplete.

There is one primary argument put forth by the piaintiff

which is clearly stated in the plaintiff's Memorandum of

Law in Support of Plaintiff's Motion for Summary

Judgment: (A) The plaintiff has no income tax liability for

the tax year 1999.

This primary argument is made clear by two

supporting arguments. First, (B) the plaintiff has made no

assessment by voluntarily filing an income tax return, nor

can the plaintiff be compelled by the United States to file

a return and second; (C) the United States lacks the

authority to place a direct non-apportioned tax on the

plaintiff's wages.

A. The Plaintiff Has No Income Tax Liability for the Tax

Year 1999

The United States Supreme Court and lower

federal courts agree with the plaintiffs primary argument

that an assessment is necessary to establish liability. “A

tax is an exaction by the sovereign, and necessarily the

sovereign has an enforceable claim against every one

within the taxable class for the amount lawfully due from

him. The statute prescribes the rule of taxation. Some

machinery must be provided for applying the rule to the

facts in each taxpayer’s case, in order to ascertain the

amount due. The chosen instrumentality for the purpose

is an administrative agency whose action is called an

assessment. The assessment may be a valuation of

property subject to taxation, which valuation is to be

multiplied by the statutory rate to ascertain the amount of

tax. Or it may include the ealculation and fix the amount

of tax payable, and assessments of federal estate and

income taxes are of this type. Once the tax is assessed,

the taxpayer will owe the sovereign the amount when the

date fixed by law for payment arrives.” Bull v. United

States, 295 U.S. 247 55 s. Ct. 695.

Spied “

i i i ee i a ee

"The revenue laws are a code or system in

regulation of tax assessment and collection. ” Long v.

Rasmussen, 281 F.236, at 238 (1922). Economy Plumbing

and Heating v. U.S., 470 F.2d 585, at 589 (1972).

In Botta v. Scanlon, 314 F. 2d 392 (2d Cir. 1963), the Court

made it clear that for purposes of Section 7421(a) the

assessment was sufficient to cause to plaintiffs to become

a taxpayer. Inversely, stated, without a formal

assessment on Form 23C, an individual is a non-taxpayer.

Federal regulations clarify this even further. 26 C.F.R.

Sec. 601.104(c) reads, “Under the law an assessment is

prima facie correct for all purposes. Generally, the

taxpayer bears the burden of disproving the correctness

of an assessment. Upon assessment, the district director is

required to effect collection of any amounts which remain

due and unpaid.”

Clearly, an assessment must first exist prior to the

district director’s collection efforts.

In Bauer v. Foley, 404 F.2d 1215 (2d Cir. 1968),

affd. on rehearing, 406 F.2d 1241 (1969), the Court

declared an IRS lien invalid because 26 U.S.C. 6303(a) was

not followed. The Court at page 1221 said: “...The statute

6303(a) requires, however, that the assessment notice be

given “to each person liable for the unpaid tax, stating

that amount and demanding payment thereof.” The

consequence of such a defect in the notice is that it

invalidates the lien subsequently filed.

26 U.S.C. 6203 authorizes the Secretary of the

Treasury or his delegate as the responsible person to

execute the Form 23C Assessment Certificate. In order to

effectuate this statutory mandate, Treasury Regulation

301.6203-1 was duly promulgated. Section 6203 specifies

that an assessment shall be made by recording the

liability of the taxpayer in the office of the Secretary or his

delegate. The Treasury Regulations set forth the

procedures governing the assessment process as follows:

“The District Director shall appoint one or more

assessment officers, and the assessment shall be made by

an assessment officer signing the summary record of

assessment. The summary record, through supporting

records, shall provide identification of the taxpayer, the

character of the liability assessed, the taxable period if

applicable, and the amount of the assessment. The

amount of the assessment shall in the case of tax shown

on a return by the taxpayer, be the amount so shown, and

in all other cases the amount of the assessment shall be

the amount shown on the supporting list or record. The

date of the assessment is the date the summary record is

signed by an assessment officer.” Treasury Regulation

301.6203-1.

These requirements were succinctly stated in

Brafman v. U.S., 384 F. 2d 863 (5th Cir. 1967), at 867, “It

appears to us that the requirement of the applicable

Treasury Regulation — that an assessment officer sign the

assessment certificate — is consistent with the literally

mechanical procedures for recording of liability. The

recordation is to be accomplished through machine

operations, but the actual and final assessment step, that

step which establishes prima facie case of taxpayer

liability (26 C.F.R. 601.104), can be taken only with the

approval of a responsible officer of the Internal Revenue

Service. (Emphasis added)

In Section IV, Article 1, 3, of the defendant’s Brief

in Support of its Motion for Summary Judgment and in

Opposition to Plaintiff's Motion for Summary Judgment

(hereinafter referred to as defendant's brief), the

defendant openly admits that the United States has not

assessed the plaintiff. Further, it is clear that the plaintiff

has not made a voluntary assessment against himself.

These facts are undisputed.

However, the defendant erroneously asserts that

this argument was not made in the plaintiff's original

claim for refund.

The defendant cites the “Variance Doctrine” in an

attempt to convince the Court not to address the issue.

This attempt was apparently successful in misleading the

Court, as evidenced by the Court’s erroneous conclusion

under Section III, Article A, 2 of the Court's

Memorandum which reads, “A strict application of the

variance doctrine would bar Evans from litigating new

grounds of recovery. Evans’ refund claim to the IRS only

explicitly set forth the arguments that he was not

required to file a tax return and that any requirement

would violate his Fifth Amendment rights.”

This conclusion is contrary to the facts of this case.

The plaintiff states quite clearly in the original claim for

refund, “I understand that unless and until an assessment

is made, making me liable for a tax, that the money that

has been withheld and sent in on my behalf remains in a

‘pending’ file and cannot be used by the government.”

(Compl. Ex.B.) (Emphasis added)

Because it is clear that an assessment is necessary

to establish liability and the plaintiff’s argument to that

effect was made in the original claim for refund, this

Court is compelled to address it.

The very fact that the term “assessment” is eerily

and entirely absent from the Court’s Memorandum is

unnervingly peculiar.

B. The Plaintiff Has No Requirement to Make An

Assessment By Voluntarily Filing An Income Tax Return

In relation to the Court's conclusion regarding the

uirement to make an assessment by filing an income

tax return, the Court ignores the argument set forth by

the plaintiff. The court states, “ According to the plain

language of Section 6012, Evans is required to file an

income tax return for the 1999 tax year.”

IRS Publication #21 states quite clearly, “You must

decide whether the law requires you to file a return.”

According to the IRS’ own publication, the plaintiff has

the responsibility to determine whether the law requires

the filing of a return. After extensive research, the

plaintiff has decided unequivocally that the law does not

require the plaintiff to file an income tax return.

The plaintiff bases this decision partly on the

language of 26 U.S.C. § 6012 (a)(1)(A) (1994), and the

appropriate legal definition of the word, “shall.”

When considering that according to Black's Law

Dictionary, the definition of the word “shall” requires

two hundred and one separate words to define it, and

Garner’s “A Dictionary of Modern Legal Usage,” requires

several times that amount, it is astonishing that this Court

considers the language of 26 U.S.C. 6012 to be “plain.”

Black’s Law Dictionary, Revised 4th ed., pp 1541-1542,

defines ‘shall’ as follows:

“As used in statutes, contracts or the

like, this word is generally imperative or

mandatory... In common ordinary parlance,

and in its ordinary signification, the term

"shall" is a word of command, and one

which has always or which must be given a

compulsory meaning; as denoting

obligation. It has a peremptory meaning,

and it is generally imperative or mandatory.

It has the invariable significance of

excluding the idea of discretion, and has the

significance of operating to impose a duty

which may be enforced, particularly if

public policy is in favor of this meaning, or

when addressed to public officials, or where

a public interest is involved, or where the

public or persons have rights which ought

to be exercised or enforced, unless a

contrary intent appears.... But it may be

construed as merely permissive or directory

(as equivalent to"may,") to carry out the

legislative intention and in cases where no

right or benefit to anyone depends on its

being taken in the imperative sense, and

where no public or private right is impaired

by its interpretation in the other sense...

Also, as against the government, it is to be

construed as*"may," unless-a contrary intent

is manifest. (Emphasis added)

Barron’s Law Dictionary, Fourth Ed., page 473, concurs:

“Often used to denote an obligation or direction to do

some act, 170 N.W. 2d 433, 440; however, it is sometimes

considered to be permissive where it is necessary to give

effect to the intent of the word, and to mean the same as

the word, “may,” 103 N.W. 2d 245, 254.” (Emphasis

added)

Garner’s, “A Dictionary of Modern Legal Usage,” Second

Edition, further elaborates on the problems associated

with interpreting ‘shall’ in the imperative tense:

“Few reforms would improve legal

DRAFTING more than if drafters were to

begin paying closer attention to the verbs by

which they set forth duties, rights,

prohibitions and entitlements. In the current

state of common-law drafting, these verbs

are a horrific muddle-and, what is even

more surprising; few drafters even

recognize this fact. The primary problem is

shall, to which we must immediately turn.

(Emphasis added)

This word runs afoul of several basic

principles of good drafting. The first is that

a word used repeatedly in context is

presumed to bear the same meaning

throughout. (Shall commonly shifts it’s

meaning even in midsentence.) The second

principle is strongly allied with the first:

when a word takes on too many senses and

cannot be confined to one sense in a given

document, it becomes useless to the drafter.

(Shall has as many as eight senses in drafted

documents.) The third principle has been

recognized in the literature on legal drafting ©

since the mid-19th century: good drafting

generally ought to be in the present tense,

not the future. (Shall is commonly used as a

future-tense modal verb.) In fact, the

selfsame quality in shall-the fact that it is a

CHAMELEON-HUED WORD-causes it to

violate each of those principles.

How can shall be so slippery, one may

ask, when every lawyer knows that it

denotes a mandatory action? Well, perhaps

every lawyer has heard that it’s mandatory,

but very few consistently use it in that way.

And, as a result, courts in virtually every

English-speaking jurisdiction have held-by

necessity-that shall means may in some

contexts, and vice-versa...

One solution is... the “ABC Rule,” so

called because, in the late 1980s, it was most

strongly advocated by certain Australian,

British, and Canadian drafters. The ABC

rule holds that legal drafters cannot be

trusted to use the word shall under any

circumstances. Under this view, lawyers are

not educable on the subject of shall, so the

only solution is complete abstinence. As a

result, the drafter must always choose a

more appropriate word: must, may, will, is

entitled to, or some other expression.

This view has much to be said for it.

American lawyers and judges who try to

restrict shall to the sense “has a duty to”

find it difficult to apply the convention

consistently. Indeed, few lawyers have the

semantic acuity to identify correct and

incorrect shalls even after a few hours of

study. That being so, there can hardly be

much hope of the profession’s using shall

consistently.

Small wonder, then, that the ABC rule

has fast been gaining ground in the U.S. For

example, the federal government's Style

Subcommittee - part of the Standing

Committee on Rules of Practice and

Procedure — a subcommittee that since 1991

has worked on all amendments to the

various sets of federal court rules, adopted

this approach, disallowing shall, in late

1992.”

Considering that the federal government's

Standing Committee on Rules of Practice and Procedure

has banned the usage of the word “shall,” it must

certainly be said that the language of 26 U.S.C. 6012 is

anything but “plain.” .

“ All the words used in the statute should be given

their proper signification and effect.” Washington Market

Co. v. Hoffman, 101 U.S. 112, 115 , 25 S. L.ed. 782, 783.

“We are not at liberty to construe any statute so as to

deny effect to any part of its language. It is a cardinal rule

of statutory construction that significance and effect shall,

if possible, be accorded to every word. ...a statute ought,

upon the whole, to be so construed that, if it can be

prevented, no clause, sentence, or word, shall be

superfluous, void, or insignificant.” U.S. v. Lexington

Mill & Elevator Co., 232 U.S. 399 at 409 (1914).

The United States Supreme Court is in agreement

with the plaintiff's permissive interpretation of the word

‘shall’ in 26 U.S.C. 6012, "As against the government, the

word ‘shall,’ when used in statutes, is to be construed as

‘may,’ unless a contrary intention is manifest.” Cairo &

Fulton R.R. v. Hecht, 95 U.S. 168 (1877)

Because the language of 26 U.S.C. 6012 (a)(1)(A) is

not mandatory, the plaintiff simply chooses not to self-

_ assess by voluntarily not filing an income tax return.

The defendant’s argument that 26 U.S.C. 6012

requires the plaintiff to make an assessment by requiring

the filing of an income tax return is predicated on the

belief that the plaintiff has earned “gross income” in

excess of the exemption amount for the tax year 1999.

This argument was not addressed in the plaintiff's

previous filings for two reasons; first, it is irrelevant due

to the language of 26 U.S.C. 6012 being permissive and

not mandatory, and second, because the plaintiff did not

raise the argument in the original claim for refund.

However, because this Court is willing to accept

the defendant’s argument that the plaintiff had “gross

income” in excess of the exemption amount, based on the

lack of a response by the plaintiff and without examining

the underlying legal definitions and qualifications of

“gross income” and “income,”.the plaintiff will address

the issue.

Federal law defines ‘gross income’ as, “except as

otherwise provided in this subtitle, gross income means

all income from whatever source derived, including (but

not limited to) the following items:

(1) Compensation for services, including fees,

commissions, fringe benefits, and similar items;

(2) Gross income derived from business;

(3) Gains derived from dealings in property;

(4) Interest;

(5) Rents;

(6) Royalties;

(7) Dividends; —

(8) Alimony and separate maintenance payments;

(9) Annuities;

(10) Income from life insurance and endowment

contracts;

—————eE DE eR

naam aaa tala aii ay,

(11) Pensions;

(12) Income from discharge of indebtedness;

(13) Distributive share of partnership gross income;

(14) Income in respect of a decedent; and

(15) Income from an interest in an estate or trust.”

26 U.S.C. § 61(a).

The word ‘source,’ as used in 26 U.S.C. § 61(a), is

the object of the preposition ‘from’ creating the

prepositional phrase, ‘from whatever source derived.’

Prepositional phrases are nothing more than modifiers of

a noun or subject in the English language. This statute

clearly indicates that ‘gross income’ is made up only of

‘income’ and not of the ‘sources’ themselves as listed in

the statute.

Accordingly, ‘gross income’ does not consist of

“sources,” but only income which may be derived from

any source. Therefore, the plaintiff can only have ‘gross

income’ if the plaintiff derives ‘income’ from some

‘source,’ and not if the plaintiff has a ‘source’ which

derives no ‘income’.

“The general term ‘income’ is not defined in the

Internal Revenue Code,” United States v. Ballard, 535

F.2d at 404.

“The definition of ‘income’ which was applied

was adopted from Stratton's Independence v. Howbert,

231 US. 399, 416, 417, arising under the Corporation

Excise Tax Act of 1909, with the addition that it should

include ‘profit gained through sale or conversion of

capital assets,’ there would seem to be no room to doubt

that the word must be given the same meaning in all of

the Income Tax Acts of Congress that was given to it in

the Corporation Excise Tax Act, and that what that

meaning is has now become definitely settled by

decisions of this Court.” Merchant's Loan & Trust

Company v. Smietanka, 255 U.S. 509 at 519 (1921)

(Emphasis added).

“Yet it is plain, we think, that by the true intent

and meaning of the act the entire proceeds of a mere

conversion of capital assets were not to be treated as

income. Whatever difficulty there may be about a precise

and scientific definition of ‘income,’ it imports, as used

here, something entirely distinct from principal or capital

either as a subject of taxation or as a measure of the tax;

conveying rather the idea of gain or increase arising from

corporate activities.” Doyle v. Mitchell Bros. Co., 247 U.S.

179 at 184- 185 (1918).

According to the United States Supreme Court,

the term “income” is now defined as, “a gain derived

from capital, from labor, or from both combined,

provided it be understood to include profit gained

through sale or conversion of capital assets.” Eisner v.

Macomber, 252 U.S. 189 (1920).

The plaintiff does not deny that his wages

exceeded $62,000 in 1999. However, because the

plaintiff’s wages did not arise from ‘corporate activity’

and because the plaintiff’s labor was exchanged for his

wages there was no ‘gain’ obtained by the plaintiff and

ultimately, no ‘income’ was derived.

“We must reject in this case, as we have rejected in

cases arising under the Corporation Excise Tax Act of

1909 (Doyle, Collector, v. Mitchell Brothers Co., 247 U.S.

179 , 38 Sup. Ct. 467, 62 L. Ed. --, and Hays, Collector, v.

Gauley Mountain Coal Co., 247 U.S. 189 , 38 Sup. Ct. 470,

62 L. Ed. —, decided May 20, 1918), the broad content on

submitted in behalf of the government that all receipts-

everything that comes in-are income within the proper

definition of the term 'gross income,’ and that the entire

proceeds of a conversion of capital assets, in whatever

form and under whatever circumstances accomplished,

should be treated as gross income. Certainly the term

‘income’ has no broader meaning in the 1913 act than in

that of 1909.” Southern Pac. Co. v. Lowe, 247 U.S. 330 at

335 (1918).

To assume that wages, in and of themselves, are

income is to assume that the labor supplied in obtaining

those wages has no inherent value or something less than

the total amount of wages received, thus resulting in a net

‘gain’ through the receipt of said wages. This is

absolutely and utterly ridiculous. The defendant is

attempting to classify the plaintiff's labor as a ‘capital

asset’ with absolutely no inherent value and the entire

amount of the plaintiff's ‘wages’ as profit from the

conversion of that capital asset.

If an individual's labor is to be considered a

capital asset, then wages can be considered nothing more

than a mere conversion without profit and, as the court

held in Doyle, “the entire proceeds of a mere conversion

of capital assets were not to be treated as income.”

To calculate profit from this conversion, it would

‘be necessary to establish some baseline of value for each

individual's labor and then subtract that value from the

wages received. Not only is this scenario impossible, it

beyond rational comprehension. The defendant’s answer

to this problem is to simply assume that every

individual's labor has absolutely no inherent value and

therefore the entire amount of wages received would be

considered ‘profit,’ and fall under the category of ‘gross

income.’

The United States Supreme Court concurs, “..that

portion of the gross proceeds which represents gain or

increase acquired after the taking effect of the act must be

regarded as ‘gross income’; and to this end it must be

distinguished from that portion which represents a return

of the capital value existing before.” Hays v. Gauley

Mountain Coal Co., 247 U.S. 189 at 193 (1918).

The plaintiff prays that this Court recognize the

absolute absurdity of this proposition.

Because no ‘income’ was derived from the

plaintiff's wages received for the tax year 1999, the

plaintiff has no ‘gross income’ for that year and is

therefore not required to file an income tax return under

26 U.S.C. 6012, even if the language of that statute was

mandatory, which it clearly is not.

To declare on an income tax return that the

plaintiff has received anything other than zero ‘gross

_income’ for the tax year 1999, would result in the plaintiff

committing perjury.

The Court’s Memorandum states on page 9 in

Section III (B), “In this case, Evans is making a blanket

invocation of his Fifth Amendment privilege in an

attempt to convince the Court that any legal authority

requiring him to file a tax return is unconstitutional.”

This is, once again, contrary to the facts of the case. The

Plaintiff's Brief in Opposition to the Defendant’s Motion

for Summary Judgment plainly states, “The plaintiff has

never claimed Fifth Amendment privilege. The plaintiff's

argument is that there exists no necessity to claim Fifth

Amendment privilege.”

C. The United States Lacks the Authority to Place a

Direct Non-Apportioned Tax The Plaintiff’s Wages

"The revenue laws are a code or system in

regulation of tax assessment and collection. They relate to

taxpayers, and not nontaxpayers. The latter are without

their scope. NO PROCEDURE IS PRESCRIBED FOR

NONTAXPAYERS, and NO attempt is made to annul any

of their rights and remedies in due course of law. With

them Congress does not assume to deal, and they are

neither of the subject nor of the object of the revenue

laws." [Emphasis added.] Long v. Rasmussen, 281 F.236,

at 238 (1922). Economy Plumbing and Heating v. U.S., 470

F.2d 585, at 589 (1972).

"The term ‘taxpayer’ means any person subject to

any internal revenue tax." 26 U.S.C. 7701(a)(14). Absent a

lawful assessment for the tax year 1999, the plaintiff has

no liability, is therefore not subject to any internal

revenue tax, does not meet the definition of a ‘taxpayer,’

and is ultimately not the subject nor the object of the

revenue laws. Id.

This Court states on Page 12 of the Court's

Memorandum, “Federal courts have routir -ly rejected

the argument that the United States has n authority to

place a direct tax on wages. It is well est blished that

wages are taxable income within the meaning of the

Sixteenth Amendment and that the direct tax on wages is

not subject to the apportionment requirement according

to the plain language of the Amendment.”

There are two distinct presumptions made in this

statement. One, that the plaintiff's wages are income and

two, that the Sixteenth Amendment authorizes a direct

tax. The plaintiff has disposed of the former presumption

in pages 7 through 13 of the instant brief and will now

The Supreme Court called the assumption that the

Sixteenth Amendment created the authority to assess a

direct non-apportioned tax on income “erroneous,”

Brushaber vs. Union Pacific R.R., 240 U.S. 1 at 11 (1916)

and that " taxation on income was in its nature an

excise...” Id. at 17. Excises fall under the category of

indirect taxation.

Frank Brushaber was the U.S. agent for a group of

foreigners who had stock in the Union Pacific Railroad.

Under the 16th Amendment, Brushaber and the Union

Pacific Railroad were both made withholding agents and

were both ordered by the government to deduct,

withhold and pay the income tax to the government, on

the foreigners’ income from the stock. The Court

determined that the U.S. government allows foreigners

the privilege of earning money in America, therefore; any

income that they earn under that extended privilege is

taxable income, and the citizen who acts as the foreigner's

agent has to withhold and pay the income tax to the

federal Government. In this case, the court told

Brushaber that he has to pay the tax because he was the

withholding agent for these foreigners upon whom the

income tax is imposed. Brushaber was the party putting

forth the argument that the tax was a direct non-

apportioned tax on income and the Supreme Court

correctly dispelled his claim, clarifying that the tax was

an indirect excise on foreign income.

The Supreme Court stated quite clearly, “The

contention that the Amendment treats a tax on

income as a direct tax although it is relieved from

apportionment and is necessarily therefore not

subject to the rule of uniformity as such rule only

applies to taxes which are not direct, thus

destroying the two great classifications which have

been recognized and enforced from the beginning,

is also wholly without foundation since the

command of the Amendment that all income taxes

shall not be subject to apportionment by a

consideration of the sources from which the taxed

income may be derived forbids the application to

such taxes of the rule applied in the Pollock Case

by which alone such taxes were removed from the

great class of excises, duties, and imposts subject to

the rule of uniformity, and were placed under the

other or direct class [Pollock was ruled un-

Constitutional for this reason.] This must be unless

it can be said that although the Constitution, as a

result of the Amendment, in express terms

excludes the criterion of source of income, that

criterion yet remains for the purpose of destroying

the classifications of the Constitution by taking an

excise out of the class to which it belongs and

transferring it to a class in which it cannot be

placed consistently with the requirements of the

Constitution. Indeed, from another point of view,

the Amendment demonstrates that no such

purpose was intended, and on the contrary shows

that it was drawn with the object of maintaining

the limitations of the Constitution and harmonizing

their operation.” Id. at 18-19.

The Court ruled quite clearly that the

Constitutional limitation that all direct taxes be

apportioned remairts in full force and effect and was, in

fact, emphasized by the Sixteenth Amendment not

undermined as this Court contends.

In Stanton v. Baltic Mining Co., 240 U.S.103

(1916), the Supreme Court held, ”...it was settled

that the provisions of the 16th 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...”

This Court’s Memorandum correctly states, and

the plaintiff AGREES that, “Stanton and Brushaber

indicate that the Sixteenth Amendment made clear that

income taxes, regardless of the source of income, are not

subject to an apportionment requirement.”

This is because Stanton and Brushaber also

specifically prohibit taxes on income from being placed in

the category of direct taxation. The United States

Supreme Court ruled very clearly that all income taxes

must be obtained through indirect taxation and as such,

the need for apportionment among the states has been

eliminated for taxes laid on income.

Accordingly, every lower court decision,

consistent with the presumption that the Sixteenth

Amendment authorizes a direct non-apportioned tax, is

in direct conflict with multiple decisions of the United

States Supreme Court, as well as the Sixteenth

Amendment itself and therefore without merit.

For lower courts, including this Court, to

purposefully defy these rulings sets a very dangerous

course for the liberty of this country. These lower court

actions bring immediately to mind the Supreme Court's

warnings of “radical and destructive changes to our

Constitutional system,” Brushaber vs. Union Pacific R.R.,

240 U.S. 1 at 12 (1916).

The authority of Congress, to create a direct non-

apportioned tax on income, or any other direct non-

apportioned tax, simply does not now, nor has it never

existed.

Finally, the pertinent federal regulation relating to

the computation of taxable income from sources within

the United States specifically excludes the plaintiff's

wages from the category of ‘not exempt:’

26 C.F.R. Sec. 1.861-8T Computation of taxable income

from sources within the United States and from other

sources and activities (temporary) reads:

“For purposes of this section, the term

exempt income means any income that is, in

whole or in part, exempt, excluded, or __

eliminated for federal income tax purposes.

(iii) Income that is not considered tax

exempt. The following items are not

considered to be exempt, eliminated, or

excluded income and, thus, may have

expenses, losses, or other deductions

allocated and apportioned to them:

(A) In the case of a foreign taxpayer

(including a foreign sales corporation (FSC))

computing its effectively connected income,

gross income (whether domestic or foreign

source) which is not effectively connected to

the conduct of a United States trade or

business;

(B) In computing the combined taxable

income of a DISC or FSC and its related

supplier, the gross income of a DISC or a

FSC;

of the Code, including the computation of

combined taxable income of a possessions

corporation and its affiliates under section

936(h), the gross income of a possessions

corporation for which a credit is allowed

under section 936(a); and

(D) Foreign earned income as defined in

section 911 and the regulations thereunder

(however, the rules of Sec. 1.911-6 do not

require the allocation and apportionment of

certain deductions, including home

mortgage interest, to foreign earned income

for purposes of determining the deductions

disallowed under section 911(d)(6)).”

Clearly, the only items of ‘income’ that are listed

as not exempt are “gross income in the case of a foreign

taxpayer which is not effectively connected to the conduct

of a United States trade or business,” “foreign earned

income,” “gross income of a DISC or a FSC,” and “the

gross income of a possessions corporation for which a

credit is allowed under section 936(a).” The federal

regulations determining ‘taxable income’ list specifically

those ‘sources’ of income that are ‘not exempt,’ and that

list does not contain the plaintiff’s wages.

Since the plaintiff has obtained no income from

the four categories of non-exempt sources, it necessarily

follows that the plaintiff’s wages are, indeed, exempt

from federal income tax.

This ultimately leads to the inarguable conclusion

that the personal federal income tax is reliant upon a

system of voluntary self-assessment. Once again, ihe

United States Supreme Court has previously decided the

plaintiff’s assertion. In Flora v. United States, 362 U.S. 145

(1960), the Supreme Court stated quite clearly, “Our

system of taxation is based upon voluntary assessment

and payment, not upon distraint.” (Emphasis added)

| This understanding of the law is admitted by the

Internal Revenue Service in it’s very own Publication # 21

which reads, "Two aspects of the Federal Income Tax

system, voluntary compliance with the law and self-

assessment of tax make it important for you to

understand your rights and responsibilities as a taxpayer.

Voluntary compliance places on the taxpayer the

responsibility for filing an income tax return. You must

decide whether the law requires you to file a return."

This publication is typical of the language associated with

the entire Internal Revenue Code and exemplifies why so

many Americans have come to distrust the government,

which was created for their protection. If an individual

determines that they are not required to file an income tax

return, that individual is then considered a “non-

taxpayer.” As such, Publication #21 would not even

apply to that individual.

In the instant case, the plaintiff has rightfully and

legally determined that the law does not require the

plaintiff to file a return and the IRS admits that it cannot

make that decision for the plaintiff.

Multiple IRS Commissioners and other federal

officials have reiterated this:

"Our tax system is based on individual self-

assessment and voluntary compliance," Mortimer Caplin,

IRS Commissioner, 1975.

“The IRS's primary task is to collect taxes under a

voluntary compliance system.” Jerome Kurtz, IRS

Commissioner, 1980 Internal Revenue Annual Report.

pen, Pee) Bn ot te

"We have a voluntary compliance system," Fred

Goldberg, IRS Commissioner, Nightline with Ted Koppel,

April 13, 1990.

“Let me point this out now: Your income tax is

100% voluntary tax,-and your liquor tax is 100% enforced

tax. Now, this situation is as different as day and night.

Consequently, your same rules just will not apply,” Mr.

Dwight E. Avis, head of the Alcohol and Tobacco Tax

Division of the Bureau of Internal Revenue, giving sworn

testimony at a hearing of a subcommittee of the House

Committee on Ways and Means (1953).

To continue to allow the United States to possess

the plaintiff’s $12,322.58, absent a lawful assessment, is to

violate the plaintiff's rights protecting against being

deprived of property without due process.

In the final paragraph of the Court’s

Memorandum, the Court states, “In summary, this Court

rejects all of Evans’ arguments concerning his income tax

liability for the 1999 tax year.”

The rhetorical question that begs to be asked is,

“What is the plaintiff's liability for income tax for the tax

year 1999?” This Court has made no clarification and the

defendant has made no argument, nor provided any

evidence that liability exists.

CONCLUSION

In the instant case, the plaintiff is not required by

law to self-assess an income tax according to 26 U.S.C.

6012, due to the voluntary nature of the statute, the

voluntary nature of the federal income tax as it relates to

the plaintiff and the fact that the plaintiff possessed no

‘gross income’ as defined by federal law. No lawful

assessment has been made against the plaintiff for federal

income tax, nor is authorized to be made by the

defendant, and no voluntary assessment has been, nor

will be made by the plaintiff. The plaintiff's liability for

federal income tax for the year 1999 is zero. Based on the

above arguments and authorities, the plaintiff’s Motion

for Reconsideration should be granted and the previous

Order in this case should be reversed.

<s> Kenneth A. Evans

Dated: 7/2/01

APPENDIX H

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

KENNETH A. EVANS

UNITED STATES OF AMERICA

CIVIL ACTION No. - 01-457

FILED JUNE 26, 20001

Presently before the Court are cross-motions for

Summary Judgment filed by the Plaintiff, Kenneth A.

Evans (“Evans”) and the Defendant, United States of

America (“United States”). Evans filed suit in this Court

alleging that he is entitled to recover from the United

States a tax refund of $12,322.58. Evans contends that he

overpaid his income taxes for the 1999 tax year. Evans

seeks return of his entire 1999 income tax payment

because he claims that no legal authority requires him to

file an income tax return or pay income taxes. The United

States, through the Internal Revenue Service (“IRS”)

refused to comply with Evans’ request for a full refund.

Both parties now seek summary judgment as a matter of

law pursuant to Federal Rule of Civil Procedure 56. For

the following reasons, the Defendant’s Motion for

Summary Judgment is granted and the Plaintiff's Motion

for Summary Judgment is denied.

I. BACKGROUND

The parties are in general agreement regarding the

underlying facts of this case. Because there are no issues

of material fact, judgment can be rendered as a matter of

law. The facts of this case are as follows.

Evans, a citizen of the United States and resident

of Pennsylvania, earned in excess of $62,000.00 in wages

during the 1999 tax year. In 1999, Evan’s employer

withheld from his salary a totai of $9,422.58 and

forwarded that sum to the IRS. In April of 2000, Evans

sent an additional $2,900.00 to the IRS to be applied to his

1999 income taxes. Along with this additional payment,

Evans enclosed a letter requesting a refund of all money

held by the IRS in payment of his 1999 income taxes.

Evans’ letter to the IRS claimed that the filing of

an income tax return constituted a voluntary waiver of

one’s Fifth Amendment right against self-incrimination.

Evans claimed he no longer wished to waive his Fifth

Amendment right by filing a return. He requested the

IRS provide him with instructions on how to file an

income tax return without voluntarily waiving his Fifth

Amendment right and to provide him with the specific

law that required the filing of an income tax return. Also,

Evans attached a letter from an attorney that explained

the “voluntary nature of filing an income tax return” and

made various arguments for the proposition that the

United States has no authority to tax the income of

individuals. The IRS did not respond to Evans’ requests

and did not refund any of this 1999 income taxes.

Proceeding pro se, Evans filed suit in this Court

against the United States seeking judgment in the amount

of $12,322.58, the amount held by the United States in

payment of Evans’ 1999 income taxes. Both parties filed

_ Motions for Summary Judgment, which this Court will

now consider.

Il. STANDARD OF REVIEW

Pursuant to Federal Rule of Civil Procedure 56, a

court must grant summary judgment “if the pleadings,

depositions, answers to interrogatories, and the

admissions on file, together with the affidavits, if any,

show that there is no genuine issue as to any material fact

and that the moving party is entitled to a judgment as a

matter of law.” Fed. R. Civ.P.56(c). The movant bears the

initial burden of showing the basis for its motion. Celotex

Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant

fails to meet this burden under Rule 56(c), its motion

must be denied. If the movant adequately supports its

motion, however, the burden shifts to the nonmoving

party to defend the motion. To satisfy this burden, the

nonmovant must go beyond the mere pleadings by

presenting evidence through affidavits, depositions or

admissions on file to show that a genuine issue of fact for

trial does exist. Id. at 324; Fed. R. Civ. P. 56(e). An issue

is considered genuine when, in light of the nonmovant’s

burden of proof at trial, the nonmovant produces

evidence such that a reasonable jury could return a

verdict against the moving party. Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986). When deciding

whether a genuine issue of fact exists, the court is to

believe the evidence of the nonmovant, and must draw all

reasonable infererices in light most favorable to the

nonmovant. Id. at 255. Moreover, a court must not

consider the credibility or weight of the evidence

presented, even if the quantity of the moving party’s

evidence far outweighs that of the nonmovant. Big Apple

AE PE,

BMW, Inc. v. BMW of N. AM., Inc., 974 F.2d 1358, 1363

(3d Cir. 1992). Nonetheless, a party opposing summary

judgment must do more than rest upon mere allegations,

general denials, or vague statements. Trap Rock Indus.,

Inc. v. Local 825, 982 F.2d 884, 890 (3d Cir. 1992).

If the nonmoving party meets this burden, the

motion must be denied. If the nonmoving party fails to

satisfy its burden, however, the court must enter

summary judgment against it on any issue on which that

party will bear the burden of proof at trial. Celotex, 477

US. at 322-23.

That the parties file cross-motions for summary

judgment under Rule 56(c) does not necessarily make

summary judgment appropriate. Reading Tube Corp. v.

Employers Ins. Of Wausau, 944 F. Supp. 398, 401 (E.D. Pa.

1996). In such a situation, “each side essentially contends

that there are no issues of material fact from the point of

view of that party.” Bencivenga v. Western Pa.

Teamsters, 763 F.2d 574, 576 n.2 (3d Cir. 1985). Because

each side therefore bears the burden of establishing that

no genuine issue of material fact exists, “the court must

consider the motions separately.” Id. (citing Rains v.

Cascade Indus., Inc., 402 F.2d 241, 245 (3"4 Cir. 1968).

Ill. DISCUSSION

Evans advances three arguments in support of his

position that he is entitled to an income tax refund. First,

Evans claims that no legal authority requires him to pay

income taxes on his wages. Second, Evans contends that

any requirement that he file an income tax return would

violate his rights under the Fifth Amendment to the

United States Constitution, which protects against self-

incrimination. Finally, Evans argues that the Sixteenth

Amendment to the United States Constitution does not

grant the United States the authority to place a direct tax

upon his wages because such a tax would be an

unconstitutional direct tax that would need to be

apportioned.

The United States claims that the “variance

doctrine” limits the arguments that Evans may litigate

before the Court. The United States contends that the

Court can only hear Evans’ arguments that were set forth

in his original refund claim. The Court will now discuss

the arguments of the parties. —

A. The Variance Doctrine

As a preliminary matter, the United States argues

that the Court is barred from hearing some of Evans’

arguments concerning his tax liability for 1999.

Specifically, the United States contends that the Court

may only hear Evans’ argument that lie is not required to

file a tax return. The United States bases its claim on the

“variance doctrine,” which bars a taxpayer from litigating

in the courts a basis for a refund that was not originally

identified in the taxpayer’s administrative claim. See Real

Estate-Land Titie & Trust Co. v. United States, 309 U.S.

13, 17-18 (1940); Bank of New York v. United States, 943

F.Supp. 489, 493 (E.D. Pa. 1996). The aim of the doctrine

is to facilitate administrative determination of refund

claims and to restrict litigation to issues which the IRS has

considered and is prepared to defend in court. Id.

A strict application of the variance doctrine would

bar Evans from litigating new grounds of recovery.

Evans’ refund claim to the IRS only explicitly set forth the

arguments that he was not required to file a tax return

and that any requirement would violate his Fifth

Amendment rights. .The Court will address Evans’

Sixteenth Amendment arguments, however, because they

were mentioned in the letter from the attorney that Evans

attached to his refund claim. In addition, the Court will a

give Evans some latitude because he is proceeding pro se J

and because many of his arguments are related. i

Moreover, the Court feels that because these types of tax .

protest claims have frequently arisen in recent yeais, a

comprehensive discussion of the law surrounding the

requirement to file income tax returns is needed.

B. The Requirement to File an Income Tax Return

Evans contends that no legal authority requires

him to file a tax return. The law requires, however, that

“returns with respect to income taxes under subtitle A

shall be made by ... every individual having for the

taxable year gross income which equals or exceeds the

exemption amount... .” 26 U.S.C. § 6012(a)(1)(A) (1994).

The language of this statute is not unconstitutionally

vague and clearly specifies who is to file tax returns.

United States v. Moore, 692 F.2d 95, 96 (10% Cir. 1979).

The statute undeniably requires that every individual

who earns a threshold level of gross income must file a

tax return. See United States v. Pottorf, 769 F.Supp. 1176,

1183 (D. Kan. 1991).

The United States has demonstrated that Evans

clearly met the exemption amount by earning wages in

excess of $62,000 during the 1999 tax year. Evans has not

argued to the contrary. Thus, Evans’ argument that he is

not required to file an income tax return lacks any merit.

According to the plain language of Section 6012, Evans is

required to file an income tax return for the 1999 tax year.

C. Evans’ Fifth Amendment Objection

Evans argues that any legal authority requiring

him to file an income tax return would violate his Fifth

Amendment protection against self-incrimination. This

contention has been uniformly rejected. The Fifth

Amendment states “no person shall be . .. compelled in

any criminal! case to be a witness against himself . . “ U.S.

Const. Amerid. V. Generally, this Amendment protects

individuals from giving compelled self-incriminating

testimony.

It is well established that requiring individuals to

file federal income tax returns does not violate their Fifth

Amendment rights against self-incrimination. See United

States v. Sullivan, 274 U.S. 259 (1927). “There is no Fifth

Amendment privilege negating one’s duty to file a tax

return.” United States v. Edelson, 604 F.2d 232, 234 (34

Cir. 1979). Evans’ argument is contrary to established

law. The requirement to file an income tax return and

pay income taxes does not infringe upon Evans’ Fifth

Amendment rights.

Evans relies on Garner v. United States, 424 U.S.

648 (1976), to support his contention that his Fifth

Amendment rights would be violated if he were required

to file an income tax return. Evans’ reliance on this case is

misguided. In Garner, a taxpayer disclosed his

occupation as a gambler on his tax return and was

prosecuted for crimes related to illegal gambling. The

Court recognized an individual's Fifth Amendment

privilege to refuse to answer certain questions on a tax

return if the objections are specifically made on the tax

return and each objection is justified by a fear of self-

incrimination. Id. The Garner Court emphasized that

their holding did not disturb the holding in Sullivan, that

found that the privilege against self-incrimination is not a

defense for failing to file a tax return. Id.

In this case, Evans is making a blanket invocation

of his Fifth Amendment privilege in an attempt to

convince the Court that any legal authority requiring him

to file a tax return is unconstitutional. This argument,

and Evans’ reliance on Garner to support it, is baseless.

The Fifth Amendment privilege may be invoked by a

taxpayer who refuses to respond to specific questions

included in a tax return. An individual who uses the

Fifth Amendment in this manner, however, should

confine that use to “specific objections to particular

questions on the return for which a valid claim of

privilege exists.” Edelson, 604 F.2d at 234. “The Fifth

Amendment may not be used to draw a ‘conjurer’s circle’

around the duty to file a tax return.” Id. In the present

case, Evans makes no objections to specific questions on

the tax return but claims any authority requiring him to

file would violate the Fifth Amendment. This assertion is

an over-extension of Garner. The statutory and legal

authority requiring Evans to file an income tax return and

pay income taxes does not violate his Fifth Amendment

rights.

C. The Power to Tax Wages

Evans argues that the Sixteenth Amendment does

not grant the United States the authority to place a direct

tax upon his wages because such a tax is an

unconstitutional direct tax that must be apportioned.

Although Evans relies on a number of Supreme Court

cases to support his position, he has misinterpreted their

meanings. The Sixteenth Amendment eliminated the

necessity for apportionment among states of taxes on

income. The language of the Amendment is clear and

specific: “The Congress shall have the power to lay and

collect taxes on incomes, from whatever source derived,

without apportionment among the several States, and

without regard to any census or enumeration.” U.S.

Const. Amend. XVI.

Evans relies upon Eisner v. Macomber, 252 U.S.

189 (19230), as support for his position that a direct tax on

wages would violate the requirement of apportionment.

To the contrary, Eisner held that only that a stock

dividend made to shareholders in their proportionate

interests against profits accumulated by the corporation

should not be considered income. Id. at 219. The Court

found that a tax on such dividends was a tax on capital

increase and not income. Id. at 213. Thus, the Court

found that the Sixteenth Amendment did not grant the

United States the authority to tax, without

apportionment, a stock dividend made lawfully and in

good faith. Id. at 219. Because the Eisner case only dealt

» eae

with the treatment of stock dividends as income, it is

inapposite to the instant case.

Evans also argues that Stanton v. Baltic Mining

Co., 240 U.S. 103 (1916) declares that the Sixteenth

Amendment does not permit the United States to place a

direct tax on wages because such a tax would violate the

requirement of apportionment. This reading of the

Stanton case is erroneous. In fact, the Stanton case did

clarify the purpose of the Sixteenth Amendment. The

Court simply found that the provisions of the Sixteenth

Amendment were not a new grant of power to tax but

merely a mechanism to eliminate the apportionment

requirement for income taxes, regardless of the source of

income. Id. at 112-13.

The position of the Stanton court is clarified in

Brushaber v. Union Pac. R.R. Co., 240 U.S. 1 (1916). The

Brushaber Court stated that “the authority conferred

upon Congress by § 8 of Article I to lay and collect taxes,

duties, imposts and excises is exhaustive and embraces

every conceivable power of taxation...” Id. at 12.

“[T]he whole purpose of the [Sixteenth] Amendment was

to relieve all income taxes when imposed from

apportionment from a consideration of the source whence

the income was derived.” Id. at 18. Stanton and

Brushaber indicate that the Sixteenth Amendment made

clear that income taxes, regardless of the source of the

income, are not subject to any apportionment

requiremer:t. Thus, Evans’ contention that the United

States does not have the authority to tax his wages is

meritless.

Federal courts have routinely rejected the

argument that the United States has no authority to place

a direct tax on wages. It is well established that wages

are taxable income within the meaning of the Sixteenth

Amendment and that the direct tax on wages is not

subject to the apportionment requirement according to

the plain language of the Amendment. United States v.

Connor, 898 F.2d 942, 943-44 (34 Cir. 1990) (rejecting the

argument that wages are not taxable income); United

States v. Rhodes, 921 F.Supp. 261, 265 (M.D. Pa. 1996)

(“The Sixteenth Amendment was passed specifically to

eliminate the need to subject any income tax to the

requirement of apportionment.”). It is quite clear that

Evans’ argument that the United States has no authority

to place a direct tax on his wages is contrary to settled law

and therefore without merit.

In summary, this Court rejects all of Evans’

arguments concerning his income tax liability for the 1999

tax year. Federal Law requires Evans file an income tax

return and pay income taxes, and these requirements are

not unconstitutional. Accordingly, the Court will enter

summary judgment against Evans and in favor of the

United States.

<s> James McGirr Kelly, J.

APPENDIX I

Applicable Statutes and Regulations as per

Supreme Court Rule 14.1(f)

26 USC 861(a) states, “The following items of gross

income shall be treated as income from sources within the

United States:

(1) Interest

(2) Dividends

(3) Personal services

(4) Rentals and royalties

(5) Disposition of United States real property

interest

(6) Sale or exchange of inventory property

(7) Amounts received as underwriting income (as

defined in section 832(b)(3)) derived from the

issuing (or reinsuring) of any insurance or

annuity contract —

(8) Social security benefits

26 USC 861(b) states in pertinent part, “From the

items of gross income specified in subsection (a) as being

income from sources within the United States there shall

be deducted the expenses, losses, and other deductions

properly apportioned or allocated thereto and a ratable

part of any expenses, losses, or other deductions which

cannot definitely be allocated to some item or class of

gross income. The remainder, if any, ‘shall be included in

full as taxable income from sources within the United

States. In the case of an individual who does not itemize

deductions, an amount equal to the standard deduction

shall be considered a deduction which cannot definitely

be allocated to some item or class of gross income.”

Sec. 1.861-1 Income from sources within the

United States. (a) Categories of income. Part I (section

861 and following), subchapter N, chapter 1 of the Code,

and the regulations thereunder determine the sources of

income for purposes of the income tax. These sections

explicitly allocate certain important sources of income to

the United States or to areas outside the United States, as

the case may be; and, with respect to the remaining

income (particularly that derived partly from sources

within and partly from sources without the United

States), authorize the Secretary or his delegate to

determine the income derived from sources within the

United States, either by rules of separate allocation or by

processes or formulas of general apportionment. The

statute provides for the following three categories of

income: (1) Within the United States. The gross income

from sources within the United States, consisting of the

items of gross income specified in section 861(a) plus the

items of gross income allocated or apportioned to such

sources in accordance with section 863(a). See Secs. 1.861-

2 to 1.861-7, inclusive, and Sec. 1.863-1. The taxable

income from sources within the United States, in the case

of such income, shall be determined by deducting

therefrom, in accordance with sections 861(b) and 863(a),

the expenses, losses, and other deductions properly

apportioned or allocated thereto and a ratable part of any

other expenses, losses, or deductions which cannot

definitely be allocated to some item or class of gross

income. See Secs. 1.861-8 and 1.863-1.

26 CFR 1.861-8(a) states, “In general--(1) Scope.

Sections 861(b) and 863(a) state in general terms how to

determine taxable income of a taxpayer from sources

within the United States after gross income from sources

within the United States has been determined. Sections

862(b) and 863(a) state in general terms how to determine

taxable income of a taxpayer from sources without the

United States after gross income from sources without the

United States has been determined. This section provides

specific guidance for applying the cited Code sections by

prescribing rules for the allocation and apportionment of

expenses, losses, and other deductions (referred to

collectively in this section as “‘deductions") of the

taxpayer. The rules contained in this section apply in

determining taxable income of the taxpayer from specific

sources and activities under other sections of the Code,

referred to in this section as operative sections. See

paragraph (f)(1) of this section for a list and description of

operative sections. The operative sections include, among

others, sections 871(b) and 882 (relating to taxable income

of a nonresident alien individual or a foreign corporation

which is effectively connected with the conduct of a trade

or business in the United States), section 904(a)(1) (as in

effect before enactment of the Tax Reform Act of 1976,

relating to taxable income from sources within specific

foreign countries), and section 904(a)(2) (as in effect

before enactment of the Tax Reform Act of 1976, or

section 904(a) after such enactment, relating to taxable

income from all sources without the United States).

26 CFR 1.861(f)(1) states in pertinent part, “(f)

Miscellaneous matters--(1) Operative sections. The

operative sections of the Code which require the

determination of taxable income of the taxpayer from

specific sources or activities and which give rise to

statutory groupings to which this section is applicable

include the sections described below.

(i) Overall limitation to the foreign tax credit.

(ii) [Reserved]

(iv) Effectively connected taxable income.

Nonresident alien individuals and foreign

corporations engaged in trade or business

within the United States, under sections

871(b)(1) and 882(a)(1), on taxable income

which is effectively connected with the conduct

of a trade or business within the United States.

(v) Foreign base company income.

(vi) | Other operative sections. The rules provided in

this section also apply in determining—

(A) The amount of foreign source items of :

tax preference under section 58(g) E

determined for purposes of the

minimum tax;

(B) The amount of foreign mineral income

under section 901(e);

(D) The amount of foreign oil and gas

extraction income and the amount of

foreign oil related income under

section 907;

(E) The tax base for citizens entitled to the

benefits of section 931 and the section

936 tax credit of a domestic

corporation which has an election in

effect under section 936;

(F) The exclusion for income from Puerto

Rico for residents of Puerto Rico under

section 933;

(G) The limitation under section 934 on the

maximum reduction in income tax

liability incurred to the Virgin Islands;

(H) The income derived from Guam by an

individual who is subject to section

935;

(I) The special deduction granted to

China Trade Act corporations under

section 941;

(J) The amount of certain U.S. source

‘income excluded from the subpart F

income of a controlled foreign

corporation under section 952(b);

(K) The amount of income from the

insurance of U.S. risks under section

953(b)(5);

(L) The international boycott factor and

the specifically attributable taxes and

income under section 999; and

(M) The taxable income attributable to the

operation of an agreement vessel

under section 607 of the Merchant

Marine Act of 1936, as amended, and

the Capital Construction Fund

Regulations thereunder (26 CFR, part

3). See 26 CFR 3.2(b)(3).

26 CFR 1.861-8T(d)(2)(ii)(A) states in pertinent

part, “For purposes of this section, the term exempt

income means any income that is, in whole or in part,

exempt, excluded, or eliminated for federal income tax

purposes.”

26 CFR 1.861-8T(d)(2)(ili) states in pertinent part,

“The following items are not considered to be exempt,

eliminated, or excluded income and, thus, may have

expenses, losses, or other deductions allocated and |

apportioned to them:

(A) In the case of a foreign taxpayer (including a

foreign sales corporation (FSC)) computing its effectively

connected income, gross income (whether domestic or

foreign source) which is not effectively connected to the

conduct of a United States trade or business;

(B) In computing the combined taxable income of a

DISC or FSC and its related supplier, the gross income of

a DISC or a FSC;

including the computation of combined taxable income

of a possessions corporation and its affiliates under

section 936(h), the gross income of a possessions

corporation for which a credit is allowed under section

936(a); and

(D) Foreign earned income as defined in section 911

and the regulations thereunder (however, the rules of

Sec. 1.911-6 do not require the allocation and

apportionment of certain deductions, including home

mortgage interest, to foreign earned income for purposes

of determining the deductions disallowed under section

911(d)(6)).

APPENDIX J

Referral Report To: (a.) Examination Division

Kenneth Evans

6 Parrish Court

Kennett Square, PA 19348

172-58-6802

Hoechst Marion Roussell, Inc.

East 10236 Marion Park Drive

Kansas City, MO 64137

Period and class of tax: 1040-1999

Last period for which return was filed: 1998

Referral Information: a. Refusal to file or sign

return

Additional Information that will assist the

receiving office:

The taxpayer has filed suit against the United

States in U.S. District Court to recover the

amount of Federal Income Tax withheld in the

amount of $9,422.58 along with a subsequent

payment in the amount of $2,900 for the 1999

tax year.

The case is currently being handled by Attorney

John Carroll in the Dept. of Justice (tele. No.

(202) 307-6669). Since the taxpayer believes that

only Service can prepare a return on behalf of

the taxpayer, the Justice attorney is requesting

us to get a return prepared pursuant to IRC

6020(b) so that it will enable him to successfully

defend the refund claims. The income tax

calculations should be based on the filing status

of married filing separately with on exemption

and the standard deduction.

Total Income: $73,890.00

Income Tax Withheld Including Payment:

$12,322.58

Tax Liabilty: $17,163.00 ——-<?>1

Tax Due: $4,840.50

See attached IRP documents for the 1999 tax

year.

Referring Employee's Signature

<s> Michail Stumpo

Post of Duty: Phila, PA

Telephone number: (215) 861-1932

Employee number: 20824

Date: 7/24/2001

Supervisor's Signature

<s> Eugene V. Batdorf

Telephone number (412) 395-5206

Date: 7/24/2001

Form 3449 (Rev. 1-93)

Part 1-Retained by Receiving Office

Department of the Treasury-Internal Revenue

Service

' . A Question mark was hand written with a line leading to this

amount by an IRS employee indicating confusion as to how this figure

was Calculated.

APPENDIX K

Figure 23-2

Order No. 182 (Rev. 3)

Effective date: 12-14-83 Authority to Execute

Returns

The authority granted to the Commissioner of

Internal Revenue by 26 CFR 301.6020-1(b) and

26 CFR 301.7701-9 to execute returns required

by any internal revenue law or regulation made

thereunder when the person required to file

such return fails to do so, is delegated to:

1. Revenue agents;

2. Tax auditors;

3. Revenue officers, GS-9 and above;

4. Collection Office function managers, GS-9

and above;

5. Automated Collection Branch Managers,

GS-9 and above; and

6. Service Center Collection Branch managers,

GS-9 and above.

The authority delegated herein may not be

redelegated. Delegation Order No. 182 (Rev. 2),

effective March 7, 1983, is superseded.

/s/ James I. Owens

Deputy Commissioner

The IRM restricts the broad delegation shown

in figure 23-2, for revenue officers, to

employment, excise, and partnership tax

returns because of constitutional issues. (You

have already studied audit referrals as a means

to enforce compliance on income tax returns).

Generally you can file the following returns,

using the authority granted by IRC section

6020(b):

1. Form 940, Employer’s Annual Federal

Unemployment Tax Return

2. Form 941, Employer’s Quarterly Federal

Tax Return

23-3 2280-02

3. Form 942, Employer’s Quarterly Tax Return

for Household Employees

4. Form 943, Employer’s Annual Tax Return

for Agricultural Employees

5. Form 720, Quarterly Federal Excise Tax

Return

6. Form 2290, Federal Use Tax Return on

Highway Motor Vehicles

7. Form CT-1, Employer’s Annual Railroad

Retirement Tax Return

8. Form 1065, U.S. Partnership Return of

Income.

» st er es

When you recommend an assessment under

IRC 6020(b), you will prepare all the necessary

returns for compliance. If a return will be due

during the IRC section 6020(b) processing time,

prepare it as well.

Respectfully submitted,

Kenneth A. Evans

Dated:

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.