revenue laws are a code or system in regulation of tax assessment
and collection. They relate
to taxpayers, and not to 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..."
[Long v. Rasmussen,
281 F. 236 (1922)]
"A reasonable construction
of the taxing statutes does not include vesting any tax official with
absolute power of assessment against individuals not specified in the
states as a person liable for the tax without an opportunity for judicial
review of this status before the appellation of 'taxpayer' is bestowed
upon them and their property is seized..."
[Botta v. Scanlon,
288 F.2d. 504, 508 (1961)]
“Revenue Laws relate
to taxpayers [officers, employees, and elected officials of the Federal
Government] and not to non-taxpayers [American Citizens/American Nationals
not subject to the exclusive jurisdiction of the Federal Government].
The latter are without their scope. No procedures are prescribed
for non-taxpayers and no attempt is made to annul any of their Rights
or Remedies in due course of law. With them [non-taxpayers] Congress
does not assume to deal and they are neither of the subject nor of the
object of federal revenue laws.”
& Heating v. U.S., 470 F2d. 585 (1972)]
When enacted in 1867, the forerunner of the current Anti-Injunction
Act provided that "no suit for the purpose of restraining the assessment
or collection of tax shall be maintained in any court." Act of Mar.
2, 1867, 10, 14 Stat. 475. 10 Although
the Act apparently has no recorded legislative history, Bob Jones
University v. Simon,
416 U.S. 725, 736 (1974),
the circumstances of
its enactment strongly suggest that Congress intended the Act to
bar a suit only in situations in which Congress had provided the
aggrieved party with an alternative legal avenue by which to contest
the legality of a particular tax.
The Act originated as an amendment to a statute that provided
"[n]o suit shall be maintained in any court for the recovery
of any tax alleged to have been erroneously or illegally assessed
or collected, until appeal shall have been duly made to the
commissioner of internal revenue . . . and a decision of said
commissioner shall be had thereon, unless such suit shall be
brought within six months from the time of said decision . .
. ." Internal Revenue Act of July 13, 1866, 19, 14 Stat. 152.
The Anti-Injunction Act amended this statute by adding the prohibition
against injunctions. Act of Mar. 2, 1867, 10, 14 [465 U.S. 367,
374] Stat. 475. The Act, therefore, prohibited injunctions
in the context of a statutory scheme that provided an alternative
remedy. As we explained in Snyder v. Marks,
109 U.S. 189, 193 (1883), "[t]he remedy of a suit to recover
back the tax after it is paid is provided by statute, and a suit
to restrain its collection is forbidden."
This is cogent evidence
that the 1867 amendment was merely intended to require taxpayers
to litigate their claims in a designated proceeding.
The Secretary argues that, regardless of whether other remedies
are available, a plaintiff may only sue to restrain the collection
of taxes if it satisfies the narrow exception to the Act enunciated
in Williams Packing, supra.
Williams Packing did
not, however, ever address, let alone decide, the question whether
the Act applies when Congress has provided no alternative remedy.
Indeed, as we shall see, a careful reading of Williams Packing and
its progeny supports our conclusion that the Act was not intended
to apply in the absence of such a remedy.
Williams Packing was a taxpayer's suit to enjoin the District
Director of the Internal Revenue Service from collecting allegedly
past-due social security and unemployment taxes. The Court concluded
that the Anti-Injunction Act would not apply if the taxpayer (1)
was certain to succeed on the merits, and (2) could demonstrate
that collection would cause him irreparable harm.
370 U.S., at 6 -7. Finding that the first condition had not
been met, the Court concluded that the Act barred the suit. Significantly,
however, Congress had provided the plaintiff in Williams Packing
with the alternative remedy of a suit for a refund. Id., at 7.
In each of this Court's subsequent cases that have applied the
Williams Packing rule, the plaintiff had the option of paying the
tax and bringing a suit for a refund. Moreover,
these cases make clear
that the Court in Williams Packing and its progeny did not intend
to decide whether the Act would apply to an aggrieved party who
could not bring a suit for a refund. [465 U.S. 367, 375]
For example, in Bob Jones, supra, the taxpayer sought to prevent
the Service from revoking its tax-exempt status under IRC 501(c)(3).
Because the suit would have restrained the collection of income
taxes from the taxpayer and its contributors, as well as the collection
of federal social security and unemployment taxes from the taxpayer,
the Court concluded that the suit was an action to restrain "the
assessment or collection of any tax" within the meaning of the Anti-Injunction
416 U.S., at 738 -739. Applying the Williams Packing test, the
Court found that the Act barred the suit because the taxpayer failed
to demonstrate that it was certain to succeed on the merits.
416 U.S., at 749 . In rejecting the taxpayer's challenge to
the Act on due process grounds, however, the Court relied on the
availability of a refund suit, noting that "our conclusion might
well be different" if the aggrieved party had no access to judicial
review. Id., at 746. Similarly, the Court left open the question
whether the Due Process Clause would be satisfied if an organization
had to rely on a "friendly donor" to obtain judicial review of the
Service's revocation of its tax exemption. Id., at 747, n. 21.
In addition, in Alexander v. "Americans United" Inc.,
416 U.S. 752 (1974), decided the same day as Bob Jones, the
Court considered a taxpayer's action to require the Service to reinstate
its tax-exempt status. 12 The Court
applied the Williams Packing test and held that the action was barred
[465 U.S. 367, 376] by the Act. Finally, in United States
v. American Friends Service Committee,
419 U.S. 7 (1974) (per curiam), the taxpayers sought to enjoin
the Government from requiring that a portion of their wages be withheld.
The taxpayers argued that the withholding provisions violated their
First Amendment right to bear witness to their religious beliefs.
The Court again applied the Williams Packing rule and found that
the suit was barred by the Anti-Injunction Act. In both of these
cases, the taxpayers argued that the Williams Packing test was irrelevant
and the Act inapplicable because they did not have adequate alternative
remedies. In rejecting this argument, the Court expressly relied
on the availability of refund suits.
416 U.S., at 761 ;
419 U.S., at 11 . This emphasis on alternative remedies would
have been irrelevant had the Court meant to decide that the Act
applied in the absence of such remedies. We therefore turn to that
The analysis in Williams Packing and its progeny of the purposes
of the Act provides significant support for our holding today. Williams
Packing expressly stated that the Act was intended to protect tax
revenues from judicial interference "and to require that the legal
right to the disputed sums be determined in a suit for refund."
370 U.S., at 7 (emphasis added). Similarly, the Court concluded
that the Act was also designed as "protection of the collector from
litigation pending a suit for refund," id., at 7-8 (emphasis added).
The Court's concerns with protecting the expeditious collection
of revenue and protecting the collector from litigation were expressed
in the context of a procedure that afforded the taxpayer the remedy
of a refund suit. 13
Nor is our conclusion inconsistent with the 1966 amendment to
the Anti-Injunction Act. In 1966, in 110(c) of the Federal Tax Lien
Act, Pub. L. 89-719, 80 Stat. 1144, Congress amended the Anti-Injunction
Act to read, in pertinent [465 U.S. 367, 377]
part, that "no suit for the purpose of restraining the assessment
or collection of any tax shall be maintained in any court by any
person, whether or not such person is the person against whom such
tax was assessed." Ibid. The central focus of the added phrase,
"by any person, whether or not such person is the person against
whom such tax was assessed," was on third parties whose property
rights competed with federal tax liens. Bob Jones,
416 U.S., at 732 , n. 6. Prior to the adoption of the Tax Lien
Act, such parties were often unable to protect their property interests.
Ibid.; H. R. Rep. No. 1884, 89th Cong., 2d Sess., 27-28 (1966).
14 Section 110(a) of the Tax Lien
Act gave such third parties a right of action against the United
States. 15 The amendment to the Anti-Injunction
Act was primarily designed to insure that the right of action granted
by 110(a) of the Federal Tax Lien Act was exclusive.
416 U.S., at 732 , n. 6. The language added to the Anti-Injunction
Act by the 1966 amendment is, therefore, largely irrelevant to the
issue before us today. 16
[465 U.S. 367, 378]
In sum, the Anti-Injunction
Act's purpose and the circumstances of its enactment indicate that
Congress did not intend the Act to apply to actions brought by aggrieved
parties for whom it has not provided an alternative remedy [such
as NONTAXPAYERS]. 17 In
this [465 U.S. 367, 379] case, if the plaintiff
South Carolina issues bearer bonds, its bondholders will, by virtue
of 103(j)(1), be liable for the tax on the interest earned on those
bonds. South Carolina will [465 U.S. 367, 380]
incur no tax liability. Under these circumstances, the State will
be unable to utilize any statutory procedure to contest the constitutionality
of 103(j)(1). Accordingly, the Act cannot bar this action.
Carolina v. Regan, 465 U.S. 367 (1984)]
Young v. IRS, 596
F.Supp. 141 (N.D. Ind 09/25/1984)
1. Application of Tax Laws to the Plaintiff
that the Internal Revenue Code does not apply to him [nontaxpayer].
The basis for this claim is not easily found in the complaint. According
to "plaintiff's answer to the court in re of defendant's pleadings,"
"It is a Fact that the Internal Revenue Code is NOT Postive [sic]
Law. That U.S.C. Title 26 has NEVER been passed by Congress." (Emphasis
The only support that the court can find for this argument amongst
plaintiff's numerous filings is a letter dated May 7, 1981 from
the American Law Division of the Congressional Research Service
(plaintiff's Exhibit 7). That letter does say that the Internal
Revenue Code of 1954 "was not enacted by Congress as a title of
the U.S. Code." But this does not in any way support plaintiff's
argument that the Internal Revenue Code is not positive law. First,
that very same letter, in the very same sentence, states that "the
Internal Revenue Code of 1954 is positive law. . . ." Second, although
Congress did not pass the Code as a title, it did enact the Internal
Revenue Code as a separate Code, see Act of August 16, 1954, 68A
Stat. 1, which was then denominated as Title 26 by the House Judiciary
Committee pursuant to 1 U.S.C. § 202(a). Finally, even if Title
26 was not itself enacted into positive law, that does not mean
that the laws under that title are null and void. A law listed in
the current edition of the United States Code is prima facie evidence
of the law of the United States. See 1 U.S.C. § 204(a). As the letter
offered by the plaintiff points out, "The courts could require proof
of the underlying statutes when a law is in a title of the code
which has not been enacted into positive law." In short, this court
has the discretion to recognize the Internal Revenue Code as the
applicable law, or require proof of the underlying statute.
Consistent with that discretion, this court recognizes that the
Internal Revenue Code is positive law applicable to disputes concerning
whether taxes are owed by someone like the plaintiff. This court
refuses to embrace the plaintiff's position that the tax laws of
the United States are some kind of hoax designed by the IRS to violate
the constitutional rights of United States citizens. Quite simply,
the court finds plaintiff's position preposterous.
The plaintiff's argument that the tax laws do not apply or pertain
to him thus cannot be based on a "positive law" argument. The only
other basis for the argument that this court can perceive is the
possibility that the IRS assessed taxes against the plaintiff which
he was not required to pay. An examination of the documents in this
case, however, reveals that the plaintiff cannot rely on this argument
either. The notices of deficiency attached to plaintiff's complaint
indicate that the kind of taxes assessed against the plaintiff are
"1040", or income taxes for wages received. The Internal Revenue
Code makes clear that wages are gross income for taxation purposes
when it states: "gross income means all income from whatever source
derived, including . . . compensation for services. . . ." 26 U.S.C.
§ 61(a). In the clearest language possible, the Seventh Circuit
has stated that "WAGES ARE INCOME." United States v. Koliboski,
732 F.2d 1328, 1329 n. 1 (7th Cir. 1984). Many other courts have
reached the same conclusion. See, e.g., Granzow v. Commissioner,
739 F.2d 265 at 267 (7th Cir. 1984); Lively v. Commissioner, 705
F.2d 1017 (8th Cir. 1983); Knighten v. Commissioner, 702 F.2d 59,
60 (6th Cir.), cert. denied, ___ U.S. ___, 104 S.Ct. 249, 78 L.Ed.2d
237 (1983); United States v. Romero, 640 F.2d 1014, 1016 (9th Cir.
1981). It is thus clear that plaintiff should have been assessed
the taxes sought from him.
The actions of the IRS in assessing civil penalties against the
plaintiff were also proper. Section 6653(a) of the Internal Revenue
Code provides for the imposition of an addition to tax where underpayment
or non-payment of taxes is caused by "negligence or intentional
disregard of rules or regulations." The plaintiff here has filed
no tax returns for the years in question. Such actions could have
been perceived by the IRS as intentional disregard of the tax laws,
as courts have consistently held that "even good faith reliance
on misguided constitutional beliefs does not relieve a taxpayer
of liability for such civil penalties." Granzow, at 267 n. 3; Edwards
v. Commissioner, 680 F.2d 1268, 1271 n. 2 (9th Cir. 1982). Although
the court does not now rule that plaintiff in fact intentionally
disregarded the rules, it does find that the IRS was not unjustified
in assessing these penalties.
[Young v. IRS, 596 F.Supp. 141 (N.D. Ind 09/25/1984)]