Sorry Charlie! Wages are taxable; your argument frivolous

[jcolvin2]

CHARLES W. BARRETT, JR., PRO SE,
Plaintiff,
v.
UNITED STATES OF AMERICA,
Defendant.

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

ORDER

THIS CAUSE comes before the Court upon Defendant's Motion to Dismiss Plaintiff's Amended Complaint (Dkt. 12), Plaintiff's Opposition and Cross Motion for Summary Judgment and Memorandum in Support (Dkt. 14), and Opposition by United States to Plaintiff's Motion for Summary Judgment (Dkt. 16). The Court, having reviewed the motions, responses, and being otherwise advised in the premises finds that Defendant's Motion to Dismiss should be granted and this action should be dismissed with prejudice.

BACKGROUND

Plaintiff Charles W. Barrett, Jr.'s First Amended Complaint is a civil action for refunds against Defendant United States of America for Plaintiff's alleged overpayment of income taxes for the years 2003 through 2007. (Dkt. 7). Plaintiff alleges that he should not owe any income taxes on compensation he earned while employed at BAE Systems, a private sector company, which is not owned or operated on behalf of the United States. Plaintiff worked as a project program manager for BAE Systems. Plaintiff alleges that money BAE Systems paid to him for his services was "non-federally-connected private sector pay" and not "wages."
Defendant the United States of America ("Defendant") filed a Motion to Dismiss Plaintiff's Amended Complaint. (Dkt. 12). Defendant argues, in part, that Plaintiff's First Amended Complaint must be dismissed, with prejudice, for its failure to state a claim upon which relief can be granted. In sum, Defendant argues that every court has unequivocally rejected the argument, as set forth in Plaintiff's First Amended Complaint, that wages received from "non-federally-connected private sector pay" are not income subject to the federal income tax. As set forth in more detail herein, the Court agrees that Plaintiff's First Amended Complaint is frivolous and must be dismissed with prejudice for failure to state a claim.


DISCUSSION

I. Motion to Dismiss Standard


Determining the propriety of granting a motion to dismiss requires courts to accept all the factual allegations in the complaint as true and evaluate all inferences derived from those facts in the light most favorable to the plaintiff. See Hunnings v. Texaco, Inc., 29 F.3d 1480, 1483 (11th Cir. 1994). Nonetheless, "conclusory allegations, unwarranted factual deductions or legal conclusions masquerading as facts will not prevent dismissal." Davila v. Delta Air Lines, Inc., 326 F.3d 1183, 1185 (11th Cir. 2003). To survive a motion to dismiss, a plaintiff's complaint must include "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1960 (2007). While in the ordinary case a plaintiff may find the bar exceedingly low to plead only more than "a statement of facts that merely creates a suspicion [of] a legally cognizable right of action," it is clear that "a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 1959, 1965; see also Davis v. Coca-Cola Bottling Co. Consol., 516 F.3d 955, 974, n.43 (11th Cir. 2008) (noting the abrogation of the "no set of facts" standard and holding Twombly "as a further articulation of the standard by which to evaluate the sufficiency of all claims"). Absent the necessary factual allegations, "unadorned, the-defendant-unlawfully-harmed-me accusation[s]" will not suffice. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).

II. Analysis


With respect to Plaintiff's claim, the court notes that the Eleventh Circuit has consistently held that wages are subject to income taxes, regardless of whether they are from a non-federally-connected private entity. Motes v. United States, 785 F.2d 928 (11th Cir. 1986); Hyslep v. United States, 765 F.2d 1083, 1084 (11th Cir. 1985); Simanonok v. Commissioner of Internal Revenue, 731 F.2d 743, 744 (11th Cir. 1984). Under the Constitution, Congress has the power to tax income from whatever source, and has defined income to include compensation received for services. Hyslep, 765 F.2d at 1084. There is no exception for income received from a private source and any argument to the contrary lacks "colorable merit." See Crain v. Commissioner, 737 F.2d 1417, 1418 (5th Cir. 1984); Worst v. Hart, 1995 WL 431357, *6 (N.D. Fla. 1995).

In his First Amended Complaint, Plaintiff admits that the taxes which he is disputing were levied upon his income, and that they constituted pay for services he rendered to BAE Systems. Because the Government clearly has the authority to tax income which includes compensation for services, the Plaintiff admits the frivolity of his claim through his own complaint. Accordingly, it is evident that Plaintiff can prove no set of facts that would entitle him to relief. Therefore, this claim should be dismissed with prejudice. Moreover, because the Court finds Plaintiff's claim to be groundless, Plaintiff is certainly not entitled to summary judgment on his claim.

It is therefore ORDERED AND ADJUDGED that:


1. Defendant's Motion to Dismiss Plaintiff's Amended Complaint (Dkt. 12) is hereby GRANTED and this action shall be dismissed with prejudice.
2. Plaintiff's Motion for Summary Judgment (Dkt. 14) is hereby DENIED.

3. The Clerk is directed to enter final judgment in favor of Defendant United States of America, close this case, and terminate any pending motions as moot.


DONE and ORDERED in Tampa, Florida on September 15, 2009.
James S. Moody, Jr.
United States District Judge

Copies furnished to:
Counsel/Parties of Record

[LPC]

The dismissal by the District Court was affirmed by the 11th Circuit.

But NO SANCTIONS!

Charles W. Barrett Jr. v. United States, 2010 TNT 46-11, No. 09-15159 (11th Cir. 3/9/2010).

CHARLES W. BARRETT, JR.,
Petitioner-Appellant,
v.
UNITED STATES OF AMERICA,
Respondent-Appellee.

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT

Non-Argument Calendar

D. C. Docket No. 09-00936-CV-T-30MAP

Appeal from the United States District Court
for the Middle District of Florida

(March 9, 2010)

Before BARKETT, HULL and WILSON, Circuit Judges.

PER CURIAM:

Charles W. Barrett, Jr., pro se, appeals the district court's dismissal, with prejudice, of his amended complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). On appeal, Barrett argues that his wages from a non-federally-connected private sector job are not subject to federal taxation. The government has filed a motion for sanctions, pursuant to Federal Rule of Appellate Procedure 38.

According to his amended complaint, Barrett worked as a project program manager for BAE Systems, a private sector company. BAE Systems reported Barrett's pay as "wages" to the IRS on a W-2 form each year from 2003 to 2007. Barrett filed a Form 4852 each year disputing BAE Systems' third party reporting to the IRS through the W-2 forms. Barrett alleges that the plain language of the Internal Revenue Code ("I.R.C."), particularly I.R.C. §§ 3401(a), (c) and 3121(a), (b), demonstrates that the definition of "wages" does not apply to private sector jobs that are unconnected to the federal government. Therefore, he asks for a refund of the taxes levied on his earnings from BAE Systems, pursuant to I.R.C. § 6402(a).1

We review a district court's grant of a motion to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim de novo, "accepting the factual allegations in the complaint as true and construing them in the light most favorable to the plaintiff." Glover v. Liggett Group, Inc., 459 F.3d 1304, 1308 (11th Cir. 2006) (per curiam) (citation omitted). It is appropriate to grant a motion to dismiss "where it is clear the plaintiff can prove no set of facts in support of the claims in the complaint." Id. (citation omitted). "Dismissal is therefore permitted when on the basis of a dispositive issue of law, no construction of the factual allegations will support the cause of action." Id. (citation and internal quotation marks omitted).

Barrett complains of a tax that is imposed on the "taxable income" of every individual. I.R.C. § 1(a)-(d). "Taxable income" is defined as "gross income minus the deductions allowed by this chapter." Id. § 63(a). "[G]ross income means all income from whatever source derived, including . . . [c]ompensation for services . . . ." Id. § 61(a)(1). Barrett concedes in his amended complaint that BAE Systems paid him in exchange for his work as a project program manager.

Instead of relying on these sections, however, Barrett's argument is grounded in I.R.C. § 6051, which requires an employer "engaged in a trade or business" to furnish to its employees a written statement that includes "the total amount of wages as defined in [I.R.C. §§ ] 3401(a) . . . [and] 3121(a)." Id. § 6051(a), (a)(3)-(4). "Wages" are defined in I.R.C. § 3401(a) as "all remuneration . . . for services performed by an employee for his employer." An "'employee' includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia." Id. § 3401(c); see also id. § 3121(b) (stating that "employment" includes any service performed "within the United States"). Barrett argues that these sections demonstrate that Congress intended that "includes" be read narrowly to cover only federal employees. However, I.R.C. § 6051 does not impose a tax on Barrett, and instead spells out the reporting requirements of employers. Therefore, Barrett has not asserted any legal cause of action that would entitle him to relief. Further, Barrett's argument concerning these sections is without merit. See, e.g., Sullivan v. United States, 788 F.2d 813, 815 (1st Cir. 1986) (per curiam) ("To the extent [Appellant] argues that he received no 'wages' . . . because he was not an 'employee' within the meaning of [I.R.C.] § 3401(c), that contention is meritless. . . . The statute does not purport to limit withholding to the persons listed therein.").

We have held that the argument that an individual's income is not subject to federal taxation because his income "was derived from employment in the private sector" is "utterly without merit" and "frivolous." United States v. Morse, 532 F.3d 1130, 1132-33 (11th Cir. 2008) (per curiam). Therefore, in this case, the district court did not err by dismissing Barrett's amended complaint for failure to state a claim. Even after accepting Barrett's factual allegations as true, he has not asserted a legal cause of action. As such, we affirm.

We have held that individuals who sue for a refund of income taxes and assert "that their wages are not income subject to tax," or "that only public servants are subject to tax liability," are subject to sanctions for advancing frivolous claims. Motes v. United States, 785 F.2d 928, 928 (11th Cir. 1986) (per curiam). Pursuant to Federal Rule of Appellate Procedure 38, "f a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice from the court and reasonable opportunity to respond, award just damages and single or double costs to the appellee." There is no doubt that Barrett's claim is frivolous; however, in an exercise of discretion, we deny the government's motion for sanctions due to Barrett's pro se status. See Woods v. I.R.S., 3 F.3d 403, 404 (11th Cir.1993); Pollinger v. I.R.S. Oversight Bd., 11th Cir. 2010, __ F.3d __, at *9 (No. 09-12295, Jan. 15, 2010) (per curiam). However, Barrett is strongly cautioned against bringing further frivolous claims.

AFFIRMED.

FOOTNOTE

1 Section 6402(a) states that "n the case of any overpayment, the Secretary, within the applicable period of limitations, may credit the amount of such overpayment, including any interest allowed thereon, against any liability in respect of an internal revenue tax on the part of the person who made the overpayment and shall . . . refund any balance to such person."

END OF FOOTNOTE

[Gregg]

Okay, to those of us with more common sense than our hand tools, that should make it plain that CTC is just wrong. But of course, they'll trot out "he admitted to "compensation for services" and those magic words made his pay taxable. I wish that just one time a court would say "if you recieved money or anything else to do something for yourself or anyone else, that is money subject to income tax"

But they'd still find a way to explain it away...

[Noah]

I wish that just one time a court would say "if you recieved money or anything else to do something for yourself or anyone else, that is money subject to income tax"

I believe you would have to look a long time to find a Court ignorant enough to make a such statement. Just my opinion.

[Pottapaug1938]

I wish that just one time a court would say "if you recieved money or anything else to do something for yourself or anyone else, that is money subject to income tax"

I believe you would have to look a long time to find a Court ignorant enough to make a such statement. Just my opinion.

It wouldn't be an ignorant court; it would be a court that was tired of TP/TD idiocies and decided to spell out the law in third-grader English in the hope that at least some of these fools would finally be able to understand what the law really is.

[Prof]

I wish that just one time a court would say "if you recieved money or anything else to do something for yourself or anyone else, that is money subject to income tax"

I believe you would have to look a long time to find a Court ignorant enough to make a such statement. Just my opinion.

But Congress has already said exactly that:

"Wages" are defined in I.R.C. § 3401(a) as "all remuneration . . . for services performed by an employee for his employer."

See Barrett v. U.S., above. This court makes exactly the statment you say that no court would ever be ingnorant enough to make. The basic argument CTC makes, which is beyond silly, is that the portion of the statute that says "includes" government employees limits the scope of the statement to government employees. That is an analysis no court has every accepted. But, to go back, the statue says that wages include all payment for services. Nothing could be clearer.

[Judge Roy Bean]

... I wish that just one time a court would say "if you recieved money or anything else to do something for yourself or anyone else, that is money subject to income tax"

But they'd still find a way to explain it away...

OK. I'll say it: "Hey stoopid, you gets the pay, you pays the taxes."

[Noah]

See Barrett v. U.S., above. This court makes exactly the statment you say that no court would ever be ingnorant enough to make. The basic argument CTC makes, which is beyond silly, is that the portion of the statute that says "includes" government employees limits the scope of the statement to government employees. That is an analysis no court has every accepted. But, to go back, the statue says that wages include all payment for services. Nothing could be clearer.

Exactly ? not quite or not even close. It seems to me your brush is way too wide. I cannot find the "exact" same statement in the Barrett case above. What statement in the Barrett case makes you "assume" it is precisely the same as Gregg's statement?

[Prof]

Your reading comprehension is challenged. I did not reference Gregg's statement but pointed out that the statute and the courts have said exactly what YOU say they never would/could say. To quote myself:

Prof wrote:
See Barrett v. U.S., above. This court makes exactly the statment you [the refernce is to you, Noah] say that no court would ever be ingnorant enough to make. The basic argument CTC makes, which is beyond silly, is that the portion of the statute that says "includes" government employees limits the scope of the statement to government employees. That is an analysis no court has every accepted. But, to go back, the statue says that wages include all payment for services. Nothing could be clearer.

And, here is the quote from Barrett, which is a quote from the statute:

"Wages" are defined in I.R.C. § 3401(a) as "all remuneration . . . for services performed by an employee for his employer."

Gregg's paraphrase was close enough, however:

I wish that just one time a court would say "if you recieved money or anything else to do something for yourself or anyone else, that is money subject to income tax"

[Noah]

Gregg's paraphrase was close enough, however:

I wish that just one time a court would say "if you recieved money or anything else to do something for yourself or anyone else, that is money subject to income tax"

Close enough ? Yeah right. If your using a wide brush, playing horseshoes or hand grenades.

[Famspear]

Gregg's paraphrase was close enough, however:

I wish that just one time a court would say "if you recieved money or anything else to do something for yourself or anyone else, that is money subject to income tax"

Close enough ? Yeah right. If your using a wide brush, playing horseshoes or hand grenades.

Noah, we're not playing horse shoes or hand grenades, but we certainly are using a wide brush. That's the law. Under the U.S. federal tax law, the term "gross income" is an extremely "wide brush." The term takes in virtually everything that could be considered income, except where the internal revenue laws provide an exclusion or exemption.

Many of the exclusions/exemptions are found in sections 101 through 140 of the Code (the statutory exclusions). Also tax law does not impose the tax on certain receipts that are just not considered "income" at all. For example, loan proceeds (the receipts of funds you have borrowed) are generally not considered part of "gross income" at the time of receipt.

But yes, we're using a "wide brush," because that's what the U.S. federal income tax law is with respect to the definition of gross income: a very, very wide brush.

[Gregg]

I've got a question for you, Noah. Just exactly what way can you receive money that is

Paid to a person who lives in one of the 50 States
Is not a loan made to that person
is not specifically exempted from tax by the Tax Code

AND

IS NOT TAXABLE?


(and no "Some guru says" evidence, I want a court cite, in case you haven't noticed lately, most of the people who have been selling "answers" to that question are in or heading for prison)

[Optimus Prime]

I wish that just one time a court would say "if you recieved money or anything else to do something for yourself or anyone else, that is money subject to income tax"

I believe you would have to look a long time to find a Court ignorant enough to make a such statement. Just my opinion.

But Congress has already said exactly that:

"Wages" are defined in I.R.C. § 3401(a) as "all remuneration . . . for services performed by an employee for his employer."

See Barrett v. U.S., above. This court makes exactly the statment you say that no court would ever be ingnorant enough to make. The basic argument CTC makes, which is beyond silly, is that the portion of the statute that says "includes" government employees limits the scope of the statement to government employees. That is an analysis no court has every accepted. But, to go back, the statue says that wages include all payment for services. Nothing could be clearer.

Prof, you are correct that Congress has indeed said that, but you reference the wrong definition.

Congress made that statement in I.R.C. § 3121(a) "Wages" are all remuneration for employment. . .(including benefits).

What you and the Courts are presuming is that employment is a service.

[Thule]

What you and the Courts are presuming is that employment is a service.

You're not getting paid because you are employed. You're getting paid because you perform services for your employer.

[The Observer]

What you and the Courts are presuming is that employment is a service.

You're not getting paid because you are employed. You're getting paid because you perform services for your employer.

And I wonder if this is another indicator of how TPs are born: an overdeveloped sense of entitlement. Do TPs really think that they are getting paid because the employer should be grateful that they show up everyday for work?

[The Operative]

What you and the Courts are presuming is that employment is a service.

You're not getting paid because you are employed. You're getting paid because you perform services for your employer.

And I wonder if this is another indicator of how TPs are born: an overdeveloped sense of entitlement. Do TPs really think that they are getting paid because the employer should be grateful that they show up everyday for work?

Even if all a person does is to make their employer happy, that is still a service.

[Optimus Prime]

What you and the Courts are presuming is that employment is a service.

You're not getting paid because you are employed. You're getting paid because you perform services for your employer.

Thule, Let's get this straight.

Are you saying that employment does not mean performing services for your employer?

Especially in light of the following from section 3121

(b) Employment
For purposes of this chapter, the term “employment” means any service, of whatever nature, performed
(A) by an employee for the person employing him,


If you are not saying that, then what you posted above is illogical.

[Famspear]

Prof, you are correct that Congress has indeed said that, but you reference the wrong definition.

Congress made that statement in I.R.C. § 3121(a) "Wages" are all remuneration for employment. . .(including benefits).

No, actually, the section 3121(a) definition is the wrong definition.

Section 3121 applies only to the employer's obligation to withhold. For the definition of compensation for services with respect to the employee's obligation to pay federal income tax, you look at the case law under section 61 of the Code. The court's discussion in the above posted case may not have made that clear.

One of the things I learned in law school is that a party in court cannot depend on the court to "practice law" for that party. If you argue the wrong argument, the court will not always necessarily disabuse you of the fallacy underpinning your error.

As has been noted before in the Quatloos forum, Peter Hendrickson and his followers have repeatedly made this error: arguing about the definition of "wages" in the employer withholding provisions of the Code, instead of focusing on what is gross income for purposes of section 61 and related provisions for the tax liability of the compensated person, the recipient, whether "employee" or not. Of course, Hendrickson is wrong about the definition of "wages" for purposes of the withholding provisions, and he's wrong about the definition of wages (or, to use the more general term, "compensation for services") for purposes of section 61. He and others like him are batting exactly .000 in the federal courts on this issue.

Hendrickson goes on and on and on and on about how words (such as person, wage, employer, employee, includes, including) in these statutes have specialized, technical meanings. The problem for Hendrickson is that he is wrong about the meanings. He is an amateur in a game best played by professionals, and he is further handicapped by the fact that his hatred of the federal income tax has adversely affected his ability to reason clearly. He is intelligent, but his intellect is wasted in a fruitless, quixotic, seemingly never-ending battle. He is a "warrior" using imaginary weapons. Imaginary weapons are ineffective, and Hendrickson's life bears testimony; he is a two-time loser in federal criminal tax matters, and his family and friends are suffering as a result.

[Harvester]

Ha! You're not fooling all of us Fambozo, I mean Famspire.
Yes of course "Wages" are remuneration for employment, the statutes make that clear as "wages" is custom-defined. And as such they qualify as "income" and of course income under the Revenue Acts is taxable. Fortunately for me, and millions of other patriotic Americans, our coffers are full of money that does not qualify as income. AND WE LEGALLY PAY NO INCOME TAX !

Even if all a person does is to make their employer happy, that is still a service.

But is it a statutory "service?"

The basic argument CTC makes, which is beyond silly, is that the portion of the statute that says "includes" government employees limits the scope of the statement to government employees.

No, that's incorrect. Have you read CTC? It argues that the term "employee" itself is custom defined to a very limited subset of workers. Why custom define such a commonly used word as employee? If all common-term employees make income there's no need to custom define it. Quite simply, they do it to limit the statute to that which Congress can legally tax (it's own stuff/workers). And, to avoid the risk of having the statute stuck down for overreach by the courts (like the taxing provisions of The Revenue Act of 1894 was).

CTC is correct. But please, continue to argue your losing loyalist proposition which advocates an unconstitutional taking of property rightfully mine. It's fun to watch y'all. And we rebels are taking notes.

[Cathulhu]

Sure thing pal. How's that working out for your God, I mean Pete Hendrickson?