# Appendix — Evans v. United States

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_0204%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 2002
- **Citation:** 537 U.S. 887

## Text

a)
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
v.
‘ 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

EBeas |

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
ee eee ee

Appendix E. Appellant’s Reply Brief on appeal
oe te. ee ee

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

V.

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

3

voted for rehearing, the petition for rehearing by the
panel and the Court en banc, is denied.

BY THE COURT,
“ 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

4

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
Register “makes it effective against the world,” but added
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

5

this congressional plan,” Cervase v. Office of Federal
Register, 580 F.2d 1166 (3rd Cir., 1978).

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.

6

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).

7

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.

8

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

9

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, )

10

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.

Kenneth A. Evans
Dated: April 22, 2002

11

APPENDIX C

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 01-3161

Kenneth A. Evans,
Plaintiff/ Appellant

V.

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

12

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:
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: 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

14

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

15

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,

16

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

17

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

18

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

19

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

20

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-

21

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

22

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

23
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

24

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,
Ca. Copyright © 1996, 2000 William T.
Conklin.

M4

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

f

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.

26

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.

27

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

28

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

29

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).

30

“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.

31

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

32

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,

33

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.

34

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

35

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).

36

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

37

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

38

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

39

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.

Kenneth A. Evans
Dated: September 18, 2001

40

APPENDIX E

IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

KENNETH A. EVANS
V.
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.

41

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

42

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

43

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

44

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.

})

45

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,

Kenneth A. Evans
Dated: 10/24/01

APPENDIX F
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
KENNETH A. EVANS
v.

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

47

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

48

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.

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

49

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.”

50

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

51

"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:

52

“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.

53

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

54

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

55

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

56

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”

57

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

58

‘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,

59

(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).

60

“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).

61

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

62

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,’

63

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
dispose the latter. ©

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

65

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.

66

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;

67

(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;

(C) For all purposes under subchapter N
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

68
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

69

"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

70

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.

Kenneth A. Evans
Dated: 7/2/01

APPENDIX H

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

KENNETH A. EVANS
V.

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

71

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.

72

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,

73

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_0204%3A2. Public record. Not legal advice.