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Quatloos! > Tax Scams > Tax Protestors > EXHIBIT: Tax Protestor Dummies > Cases

Tax Protestor Cases Exhibit
("Damn, We Lost Again! And why is it that people who sell
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their tax returns anyway . . .")

Not Reported in F.Supp.

John A. VALLDEJULI, Plaintiff,
SOCIAL SECURITY ADMINISTRATION and Internal Revenue Service, Defendants.
No. GCA 94-10051-MMP.
United States District Court, N.D. Florida, Gainesville Division.
Dec. 20, 1994.


PAUL, Chief Judge.

This cause is before the Court upon the Magistrate Judge's report and recommendation dated October 26, 1994. All parties have been furnished copies of the report and recommendation and have been afforded an opportunity to file objections pursuant to 28 U.S.C. s 636(B)(1). Having considered the report and recommendation and all objections thereto timely filed by the parties, the Court has determined that the recommendation should be adopted.


Plaintiff states in his complaint that he does not want to participate in the social security system or have a social security number [FN1]. Plaintiff claims he was fraudulently induced into signing a "contract" with the Social Security Administration when he was eleven years old, and now he seeks to void that contract. Plaintiff also makes several additional allegations in his complaint, including the following: that he is not a citizen of the Federal United States, but a natural sovereign citizen of the United States not subject to the Social Security system; that it is unlawful for anyone to issue anything identifying him by his social security number; and that requiring Plaintiff to have a social security number denies him the right to work. Plaintiff therefore is seeking a declaratory judgment pursuant to Federal Rules of Civil Procedure Rule 57 that would require Defendants to respond to Plaintiff's service of a "declaration, codicil, statement and revocation" (attachment A to complaint, doc. 1) that would effectively take Plaintiff out of the Social Security system.

FN1. Such claims have frequently been the subject of suits in federal court. See generally United States v. Kaun, 633 F. Supp. 406, 411-18 (E.D.Wis. 1986) (tax protest organization enjoined from promoting plans to avoid payment of income and social security taxes because such payments were "voluntary" in nature).


Plaintiff has made several objections (doc. 35) to the Magistrate's report and recommendation. Defendants have filed a response to these objections (doc. 37). For the reasons noted below, none of Plaintiff's objections have any merit.

Plaintiff first objects to the title of the Magistrate's recommendation, on the grounds that the IRS was excused as a defendant to this action. According to Plaintiff, he dismissed the IRS as a party in his response (doc. 16 at 5) to Defendants' joint motion to dismiss (docs. 9-10). However, Plaintiff is not free to drop parties to this action on his own. The Federal Rules of Civil Procedure provide that "[p]arties may be dropped or added by order of the court on motion of any party..." Fed. R. Civ. P. R. 21 (emphasis added). As the explicit language of this rule makes clear, parties may therefore only be dropped from an action by court order. See Age of Majority Educ. Corp. v. Preller, 512 F.2d 1241, 1245-46 (4th Cir. 1975); 3A Jeremy C. Moore at al., Moore's Federal Practice P 21.05[1] (2d ed. 1993).

Accordingly, it is appropriate for this Court to treat Plaintiff's purported dismissal of the IRS as a motion to drop a party under Rule 21. The decision of whether to grant or deny a motion to drop a party lies within the sound discretion of the trial judge. Williams v. Hoyt, 556 F.2d 1336, 1341 (5th Cir. 1977), cert. denied, 435 U.S. 946 (1978) [FN2]. Since Plaintiff is seeking a declaratory judgment that would impact Defendant IRS, it would be inappropriate to drop the IRS as a party. It is therefore ordered that Plaintiff's motion to drop the IRS as a party be DENIED.

FN2. In Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981), the Eleventh Circuit adopted as precedent the decisions of the Fifth Circuit rendered prior to October 1, 1981.

Plaintiff next objects on the grounds that he has not revoked "his right" to participate in the Social Security system, but rather has revoked his signature and what Plaintiff characterizes as his "contract" with the Social Security Administration. Plaintiff further claims the Magistrate's recommendation "totally ignores the operation of Florida law when discussing validity of signature and contract" (doc. 35 at 9) (emphasis in original). Plaintiff's arguments fail for three reasons. First, contrary to Plaintiff's view of the Social Security system, the Supreme Court has clearly indicated the system is not contractual in nature [FN3]. Second, the Supreme Court has concluded that the system is not voluntary because

FN3. In Flemming v. Nestor, the Supreme Court specifically noted that each worker's benefits, though flowing from the contributions he made to the national economy while actively employed, are not dependent on the degree to which he was called upon to support the system by taxation. It is apparent that the noncontractual interest of an employee covered by the act cannot be soundly analogized to that of a holder of an annuity, whose right to benefits is bottomed on his contractual premium payments. 363 U.S. 603, 609-10 (1960) (emphasis added).voluntary participation would be almost a contradiction in terms and difficult, if not impossible, to administer,... [since] mandatory participation is indispensable to the fiscal vitality of the Social Security system. United States v. Lee, 455 U.S. 252, 258 (1982). Third, with regard to Plaintiff's claims that the Social Security system is not binding on the fifty states or "sovereign citizens" like himself, the Supreme Court has expressly permitted Congress to prevent states, like Florida, from withdrawing from the system if they were participating on the effective date of the Congressional modification of the system. Bowen v. Public Agencies Opposed to Social Security Entrapment, 477 U.S. 41, 51-56 (1986). Consequentially, Plaintiff's contractual arguments on why he should be permitted to avoid participation in the Social Security system have no legal basis [FN4].

FN4. It is worth noting that even if Plaintiff was correct in his assertion that he entered into a contract to participate in the Social Security system -- which he clearly is not -- his revocation and fraudulent inducement arguments would fail under Florida law. Agreements entered into by minors are voidable because minors do not have capacity to contract. See e.g., Orange Motors of Miami, Inc. v. Miami Nat'l Bank, 227 So. 2d 717, 718 (Fla. 3d DCA 1969). However, it is basic hornbook law that a minor can ratify an otherwise voidable contract upon reaching the age of majority through either an affirmative act, or failure to disaffirm the contract within the period of the statute of limitations. 25 Fla. Jur. 2d ss 445-446. In this case, Plaintiff's birth certificate indicates he is forty years old (see exhibit B to doc. 1). Plaintiff therefore reached the age of majority over twenty years ago -- clearly beyond the statute of limitations -- thereby ratifying what Plaintiff claims is an otherwise voidable contract. Fraudulent inducement to enter into a contract similarly makes the contract voidable. 17 Am. Jur. 2d, Contracts s 151. However, where the defrauded party is guilty of laches -- or negligence or an unexcused delay in raising the fraudulent inducement -- the contract will still be effective. 11 Fla. Jur. 2d s 35. Since Plaintiff is bringing his claim of fraudulent inducement more than twenty-five years after the fact, the doctrine of laches would apply and thereby validate what Plaintiff claims is a void contract.

Finally, Plaintiff makes several other objections, including the following: the applicability of the case law cited in the recommendation to this case; that "sovereign citizens" are not covered by Social Security until they apply for and obtain a social security number; and that Plaintiff is being denied the right to work because he has no social security number. The Magistrate accurately points out case law demonstrating that none of these objections has any merit.


The facts and case law cited by the Magistrate in his recommendation show Plaintiff's complaint is meritless. The Magistrate recommends Defendants' motion to dismiss be granted with prejudice, and this Court sees no reason to depart from the Magistrate's recommendation. It is therefore hereby


1. The Magistrate Judge's report and recommendation is adopted and incorporated by reference in this order of the Court.

2. Defendants' motion to dismiss (doc. 9) is GRANTED, and this cause DISMISSED WITH PREJUDICE.

3. All of Plaintiff's pending motions (docs. 17, 22, and 36) are accordingly DENIED AS MOOT.

4. This cause is remanded to the Magistrate Judge for the purpose of determining if sanctions should be imposed upon Plaintiff for filing a frivolous lawsuit, and if so, the amount of those sanctions.


This cause is before the court on Defendants' motion to dismiss and supporting memorandum. Docs. 9 and 10. Plaintiff has responded to the motion. Doc. 16.

The gravamen of the complaint is that Plaintiff does not wish to participate in the social security system or have a social security number. Doc. 1. He alleges that he was fraudulently induced into signing an application for a social security number when he was 11 years old and that it was an unlawful, voidable contract. He alleges that he identified himself on the application as a citizen of the Federal United States, which has power and jurisdiction only over the District of Columbia. Plaintiff clearly states in the complaint that he is not asking the court to decide any alleged tax liability, but to issue a declaratory judgment relating to the Defendants' failure to respond to Plaintiff's service of a "declaration, codicil, statement and revocation" (exhibit A to complaint). Plaintiff seeks a declaratory judgment declaring that he is not a citizen of the Federal United States but a natural sovereign citizen of the United States of America; that he is not a territory or property of the United States; that he is a non-resident alien of the federal United States; that he has revoked his right to participate in the social security system and no longer has or is required to have a social security number; that it is unlawful for anyone to issue anything, or to use the United States Mail to send anything, which identifies him by the revoked social security number; and that he cannot be denied the right to work based on his lack of a social security number. Docs. 1 (complaint) and 13 (motion to amend and add to relief requested).

Defendants set forth a number of arguments in support of dismissal, all of which appear to have merit. Doc. 10. In response, Plaintiff argues that he was made in the image of God and is a sovereign, and is not a subject of Government. He argues that this court has jurisdiction to declare the relations between two sovereigns (the United States and himself) where the validity of a federal contract (his social security application) is at issue, citing 28 U.S.C. ss 1331 and 1333(1). He claims that his standing derives from the fraudulent inducement to sign and participate in a contract which waived his God-given sovereignty, and that he is currently being denied his right to work.

Defendants argue that the issue raised here has not been exhausted, is not subject to the administrative process, and therefore is not subject to this court's review under 42 U.S.C. s 405(g), "which is the only avenue for a plaintiff to request a federal court to review an action of the Secretary, [so] this court has no jurisdiction to review the Secretary's refusal to allow the plaintiff to withdraw from the Social Security system." Doc. 10, p. 7. Defendants also argue that they are agencies which have not consented to suit and therefore have sovereign immunity.

These claims of Defendants may have merit, but could conceivably be cured by amendment. In United States v. Lee, 455 U.S. 252, 102 S.Ct. 1051, 71 L.Ed.2d 127 (1982), the Supreme Court reviewed a claim similar to the one here, brought against the Commissioner of the IRS seeking refund of social security taxes and an injunction to prevent collection of remaining payments. [FN1] This Plaintiff similarly could seek a refund or injunctive relief against the Commissioner of the IRS. [FN2]

FN1. It is not clear who had been named as defendant, but the court noted that injunctive relief sought against the Commissioner had been denied under 26 U.S.C. s 7421(a), which allows injunctive relief only "sparingly and only in exceptional circumstances." 455 U.S. 252, 255, n. 2, 102 S.Ct. 1051, n. 2.

FN2. Although Plaintiff expressly states that he is not seeking any relief with regard to tax liability, that is the practical result of the relief sought. He wants to disown his social security number, and opt out of the social security system. Opting out of that system would necessarily mean he would no longer be required to pay into that system.

Amendment would not result in any relief for this Plaintiff, however. In United States v. Lee, the Supreme Court held that although compulsory participation in the social security system interfered with the free exercise of religion of an Amish employer, the burden was justified as essential to the accomplishment of an overriding Government interest. Because the social security system is nationwide, the governmental interest is apparent. The social security system in the United States serves the public interest by providing a comprehensive insurance system with a variety of benefits available to all participants, with costs shared by employers and employees.... This mandatory participation is indispensable to the fiscal vitality of the social security system. "[W]idespread individual voluntary coverage under social security ... would undermine the soundness of the social security program." Moreover, a comprehensive national social security system providing for voluntary participation would be almost a contradiction in terms and difficult, if not impossible, to administer. Id. at 258, 102 S.Ct. at 1055-56 (citation and footnote omitted).

Contrary to Plaintiff's assertion, therefore, social security is not a voluntary system, and he did not become a participant in it by contract. His arguments regarding fraudulent inducement or the fact that he may have been a minor when he obtained his social security number, therefore, are not persuasive.

Plaintiff argues that, by requiring him to obtain a social security number and participate in the social security program, the Government is denying him the right to work. This argument is meritless. In 1937 the Supreme Court rejected the argument, made in a challenge to the Social Security Act of 1935, that "the relation of employment is one so essential to the pursuit of happiness that it may not be burdened with a tax." Steward Machine Co. v. Davis, 301 U.S. 548, 578, 57 S.Ct. 883, 887, 81 L.Ed. 1279 (1937) (challenge by corporation required to pay tax under the Act). The Court found that "natural rights, so called, are as much subject to taxation as rights of less importance," and that Congress has the power to tax business and employment. Id. at 580, 57 S.Ct. 887 (footnote omitted).

Finally, Plaintiff's argument that the social security system constitutes involuntary servitude is without merit. The former Fifth Circuit [FN3] rejected as "far-fetched, indeed frivolous" an involuntary servitude challenge made to the Social Security Act when it was amended to include domestic employees:

FN3. The Eleventh Circuit adopted as precedent decisions of the former Fifth Circuit rendered prior to October 1, 1981. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981).

There is no servitude, there is merely a requirement that as to the tax due by domestic employees on account of the wages paid by them by their employer, the employer must withhold the amount fixed by law and account it to the United States. The enforcement of the act is not the imposition of a servitude. It is the collection of a tax and the enforcement of an obligation, which under settled federal law appellants may be and are lawfully subjected to. From our holding that the taxes and burdens imposed are valid, it must follow that the enforcement of the law imposing them is not, it cannot be, a violation of the Thirteenth Amendment. *5 Abney v. Campbell, 206 F.2d 836, 841 (5th Cir. 1953). It is therefore respectfully RECOMMENDED that the motion to dismiss, doc. 9, be GRANTED and this cause DISMISSED with prejudice. IN CHAMBERS at Tallahassee, Florida, this 26th day of October, 1994.

Return to Tax Protestor Exhibit

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