Citizen vs. Utah State Tax Commission

Article I, Section 27

Fundamental Principles

“Say  not that  this  is revenge, call  it rather the soft resentment  of  a  suffering  people, who, having no object in view but  the good of  all, have  staked their own all upon a seemingly doubtful event.  Yet it is folly to argue against determined hardness; eloquence may  strike  the ear, and the language of sorrow draw forth  the tear of  compassion, but nothing can reach the heart that is steeled with prejudice.”


Thomas Paine,

Author of “Common Sense”

The Question Stands Unanswered:

“Can the State of Utah give us a ‘constitutional’ definition of ‘Theft’?


A  State constitutional question has been presented by the audit division, which will be examined by “fundamental principles”.  It is important to understand when discussing the statutes and authorities about taxation, not only how they relate to fundamental principles, but also the form of government in which we operate, whether it be a ‘democracy’ or a ‘republic’.   “The only security against the abuse of this (taxing) power, is found in the structure of the government itself.” 1  Although the State of Utah, among other states, and the federal government do not resemble it, it is in Article IV, Section 4 of the United States Constitution in the guarantee clause, that the States are to provide a “republican” form of government for its citizens.

The importance of a republican form for State governments was pointed out early (1748) by Montesquieu from his publication The Spirit of The Laws.  In Book II, chapter 16, the author points out that: “It is natural for a republic to have a small territory; otherwise it cannot long subsist.”  This Union can exist as the republic only if the individual States exist as republics.  The federal government by itself is not a republic and its authority is extremely limited within the boarders of the States.In his opinion in Chisholm v. Georgia, Justice James Iredell remarked: “The people of the State created, the people of the State can only change, its Constitution. Upon this power there is no other limitation but that imposed by the Constitution of the United States; that it must be of the Republican form.” In the reported opinions of the five justices in this decision, they all refer to the constitutional form of government for the Nation and the states to be republican, which the Utah State legislature has abandoned by passing 76-1-105 abolishing the common law and substituting a “jurisdiction foreign to our State Constitution,” and our republican form of government.

Justice Iredell continues:  “The only principles of law, then, that can be regarded, are those common to all the States. I know of none such, which can affect this case, but those that are derived from what is properly termed ‘the common law,’ a law which I presume is the ground-work of the laws in every State in the Union, . . .”   Except Utah!

“At this time there were no states in the union, the basis of whose jurisprudence was not essentially that of the common law in its widest meaning; and probably no states were contemplated, in which it would not exist.

“The phrase ‘common law,’ found in this clause, is used in contradistinction to equity, and admiralty, and maritime jurisprudence.” 3  George Mason, delegate from Virginia to the Constitutional Convention, stated reasons for his objection to the proposed constitution, some of which were:  “. . .  Nor are the people secured even in the enjoyment of the benefit of the common law, which stands here upon no other foundation than its having been adopted by the respective acts forming the constitutions of the several states.”  (Sept. 15, 1787)  It is plain and simple, you cannot understand the constitutions without an understanding of the common law. 4

As one writer points out, and it is applicable here: “It is important to keep in mind the difference between a Democracy and a Republic, as dissimilar forms of government. Understanding the difference is essential to comprehension of the fundamentals involved. . . . .  These two forms of government: Democracy and Republic, are not only dissimilar but antithetical, reflecting the sharp contrast between (a) The Majority Unlimited, in a Democracy, lacking any legal safeguard of the rights of The Individual and The Minority, and (b) The Majority Limited, in a Republic under a written Constitution safeguarding the rights of The Individual and The Minority; . . . ” 5

Former attorney general for the State of Illinois and noted speaker, Harry F. Atwood publish a paper back (1918) identifying some of the important distinctions between a democracy and a republic.  “In a democracy authority is derived through mass-meeting, the initiative, the referendum, instructed delegates, or any other form of direct popular expression.

“In a republic authority is derived through the election by the people of public officials to represent them. . . . .

“The attitude of democracy toward property is communistic or socialistic. This negates property rights and results in chaos, mobmindedness and riot, finally terminating in destruction of the very property itself.

“The attitude of the republic toward property is that of individual ownership, resulting in thrift, respect for law, individual rights, and orderly, sensible, economic procedure. . . . .

The attitude of democracy toward law is that the will of the majority shall prevail, regardless of whether it be based upon deliberation or is governed by passion, prejudice and impulse, without restraint or regard to consequences.

“The attitude of the republic toward law is the administration of justice in accord with fixed principles and established evidence and with strict regard to consequences.” These “fixed principles” Mr. Atwood speaks of are “fundamental principles.”  Alexander Hamilton refers to them as “elementary principles.”  Mr. Atwood’s essay should be a reader for all people, especially the Utah State legislature.

As have others, James Madison warned:  “Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths.” 7

“The United States is a republic rather than a democracy.” 8  “. . . and to the republic for which it stands, . . .”; (pledge of alliance).  The audit division appears to accept truth only from “legal” sources which will be shown to be inconsistent and riddled with error.  Any other source is of no relevance to them.  The legal profession appears to be interested in legal precedent, not of fundamental truths.  This is unfortunate as it limits their access to knowledge.  Even so,  Ezra Taft Benson, former secretary of agriculture during the Eisenhower years observed: “To all who have discerning eyes.  It is apparent that the republican form of government established by our noble forefathers cannot long endure once the fundamental principles are abandoned. . . .  The issue is the same . . .  will men be free to determine their own course of action, or must they be coerced?” 9

Some years ago, I addressed a concern about federal taxation to Patsy Mink, then a Representative to Congress from Hawaii.  She wrote back, explaining that: “The inherently coercive nature of taxation cannot be fairly examined in a vacuum.”  It is time to take this abused authority out of the vacuum and look at it from a republican platform and the fundamental principles of taxation.  The audit division in this instance should do the same when citing Article XIII, section 4, as we will now do, relying on Supreme Court opinions, and other legal, and respected authors on the subject.  This administrative proceeding, like is customary with the legal profession, cry “out of context,” without realizing that I am not looking to the statute or legislative law, but to the fundamental principles that conform to the Utah State Constitution, Article I.


I start with the fundamental principle of due process because this process flows through everything that will be pointed out, as will the principles of ‘sovereignty’ and ‘delegation of authority.’  From the Congressional Research Service’s publication on the Constitution: 10  “Standing by itself, the phrase ‘due process of law’ would seem to refer solely and simply to procedure, to process in court, and therefore to be so limited that ‘due process of law’ would be what the legislative branch enacted it to be.  But this is not the interpretation which has been placed on the term. ‘It is manifest that it was not left to the legislative power to enact any process which might be devised.  The article is a restraint on the legislative as well as on the executive and judicial powers of the government, and cannot be so construed as to leave congress (or the state) free to make any process ‘due process of law’ by its mere will.'” Justice Benjamin Curtis, in this opinion, asks the question: “That the warrant now in question is legal process, is not denied. It was issued in conformity with an act of Congress. But is it ‘due process of law?'” 11   Amendment five pertains to the federal government while the fourteenth amendment, containing the same language, imposes that requirement upon the States. 12 The Utah State Constitution echos that same responsibility to State agencies in the Declaration of Rights.

It is observed that the legal community has a weird understanding of just what constitutes due process and this administrative proceeding is not it.  The essential guide-line of due process (Utah Constitution, Article I, Section 7), requires the common law principle of fairness to all parties, in this setting it is not possible.  The legal profession’s own union has simply stated that “[d]ue process means that everyone is entitled to a fair and impartial hearing to determine their legal rights.” 13  “The central aim of due process doctrine is to assure fair procedure when the government imposes a burden on an individual.” (Oxford Companion to the Supreme Court of the United States).  Aside from the procedure, fairness, is the substance in due process.

If the “adjudication” deals principally with the correctness of the accounting method, then there might be some reason to accept the principle of due process in the actions of the audit division, however, if the “adjudication” moves into the arena of threatening the liberty and property of the citizen, then the actions of the Tax Commission are no longer due process.  Fairness is no longer a consideration in this process.

In his article for Law Day 2015, James Gilson, President of the Utah State Bar emphasized this separation:  “Keeping the judiciary independent of political . . . pressure . . . helps ensure that every person has a fair opportunity to make his or her case in court before an impartial judge, and ensures constitutional and other legal rights.”  The source of the term “due process of law” comes from the Magna Carta (1215) and is remembered during Law Day 2015 by the Utah Bar Association. 14  Jane Phan, by her own admission, is not an impartial judge.  “I am an Administrative Law Judge employed by the Utah State Tax Commission.”  “Control of one’s substance, . . . ”

The audit division’s false claim to their position as respondent has no merit.  As justification for their claim, Ms. Phan states in her letter to me that:  “Your letter, dated May 30, 2014, to Ben McAfee of the Auditing Division was treated as an appeal of the Notices of Deficiency to protect your right to file an appeal.” 15  That is completely false!  A review of the letter to Mr. McAfee shows that no where in the contexts of the letter can be found the language contesting the accounting or amounts presented by the Audit Department.  The letter does not “invoke the jurisdiction of the agency,” as required by Title 59-1-2 Section 210, General powers and duties, (27), and Title 63G – 4 – Part 2, Section 201 (3)(a). Commencement of adjudicative proceedings.  The challenge of the letter deals strictly with the strength and applicability of  UCS 59-10-502, and nothing else. 16  Ms. Phan has usurped that authority by her own actions.

The audit division has made a presumptive attempt to show a violation of the law and it is incumbent upon the audit division to factually demonstrate that violation.   Burden of proof is on the audit division.  “The burden of proof is often associated with the Latin maxim semper necessitas probandi incumbit ei qui agit, the best translation of which seems to be: ‘the necessity of proof always lies with the person who lays charges.'”  17  The Utah audit division has clearly laid the charges, and is now in the process of judging them.  A clear violation not only of due process, and fairness, but also separation of powers.  This is what Supreme Court Justice Samuel Chase condemned in Calder v. Bull saying;  “. . . a law that makes a man a Judge in his own cause; . . . It is against all reason and justice, for a people to entrust a Legislature with such powers; and, therefore, it cannot be presumed that they have done it.” 18  The Audit division has laid the charge, yet has failed to support it.

Going into this, I know that the prosecuting parties, all of which are employees of the Tax Commission, employed by the executive department of the State of Utah, and have a common interest in the outcome of this hearing, and cannot allow a decision to go against the audit division.  “In the general course of human nature, a power over man’s substance amounts to a power over his will.” 19

What should have been a discussion on the accounting, has turned into a discussion on the law, implying that various State laws have been violated.  According to UCS 76-1-105: “. . . no conduct is a crime unless made so by this code, other applicable statute or ordinance.”  The audit division has only determined that, in their opinion, I had income subject to a state tax.  So that there is no confusion, I have never stated that I had “taxable income” for state tax purposes.  Because a person accumulates income in a given period of time, does not mean that it falls within the category of “taxable income.”  In order to identify the class in which “income” falls within, is determined by the effect it has on the subject-matter of the tax.

The audit division, under the direction of Jane Phan, have conspired in this unlawful action in order to place the burden of proof on me, over my objection.  They realize, as do I, that in any action, the burden of proof is a heavy one.  One which they do not want.  The audit division is, and always has been, the moving party in this action.  Their jurisdiction is only over the accounting and not the law as evidenced by the errors in their paper work.  They have worked hard in an attempt to over-come this burden, however, this one is to high, and thus far they have been unable to achieve it.  Following Article I, the Declaration of Rights, the audit division has failed to cite a Utah statute that I have violated.  Jurisdiction of this proceeding, over the person, is still on the table.  “There is no presumption in favor of jurisdiction, and the basis for jurisdiction must be affirmatively shown.” 20

Although having pointed out some of the basic fundamentals in tax law to the audit division, they have only responded with frivolous platitudes.  The audit division completely ignores fundamental principles using lower court decisions that are either immaterial or are flawed on the subject of tax law.  It is pointless to travel over this road as the audit division shows no interest in these legal principles.  In fact the employees of the Tax Commission would never concede to this position, even if they could see the accuracy in the findings.  And, by her silence, Ms. Phan has acknowledged, she is not interested in the truth.  The audit division knows what this would do to the administration of the taxing system of the State of Utah.  Some in the audit division would quite possibly would lose their employment.  The truth is not found in legislative fiat, only in adherence to fundamental principles.  It has been said that “honesty dies where interest lies.”

Over-arching the afore mentioned points of due process, the Utah State Constitutional mandates in Article 5, the Distribution of Powers, Section 1, quoting in the pertinent part:  ” . . . [N]o person charged with the exercise of powers properly belonging to one of these departments, shall exercise any functions appertaining to either of the others, except in the cases herein expressly directed or permitted.”  (Herein, meaning in the body of the Utah State Constitution).  The delegation of judicial authority must originate with the Judicial branch.  It cannot be assumed by the Legislative branch.  A review of Article 8, Judicial Powers, Sections 1 thru 16 of the State Constitution, manifests no language that “expressly” delegates to the executive department judicial powers, or to delegate the same to the Utah State Tax Commission.  That commission is recorded at Article 13, Section 6, (4). 21  There is a lot to be said on this commission as it violates a few fundamentals.  One of which was expressed by Supreme Court Justice Curtis, cited earlier: “But is it ‘due process of law?'”  The most obvious, the separation of powers doctrine itself.  On the one hand it manifests the importance of a separation, and turns around and violates that command in section 6(4).  Powers delegated by the State Constitution to the judicial division cannot be re-delegated to either of the two division.  Neither can the State Constitution split judicial authority among the other branches of government.

Until the audit division can honestly follow the principles of due process as outlined in both the Utah State and United States Constitutions, they have no lawful right to threaten my life, liberty, or property.  This proceeding is a violation of the “separation of powers” doctrine.  It has been set up by the Utah State Constitution, exercising both executive and judicial powers.

I would admonish all concerned to review their responsibility to “protect” the natural rights, liberty and property of the citizens of Utah.  This protection of our rights is a common interest of all, however, the audit division is only interested in taking our property, negating the responsibility of the State of Utah’s duty to protect said property.   Republican governments are not established to provide charity or circuses.  The sole responsibility of a republican form of government is to protect the inalienable rights of the people.  “That to secure these rights, governments are instituted among men, . . . . ”

A review of the abuse of our natural right protected by the Utah State Constitution, Article I, should be sufficient to have this proceeding dismissed.  In addition to the fundamentals outlined in Article I, Declaration of Rights of the State of Utah Constitution, there are those in the United States Constitution addressed by the Supreme Court.  It is necessary to consider these other principles that have been introduced to the audit division and have never, by law or fact, been authoritatively refuted by the audit division.  Legal counsel for the audit division has made some serious flaws in her arguments, some of which will be touched upon.


 “(1) Nothing in this Constitution may be construed to prevent the Legislature from providing by statute for taxes other than the property tax . . .”

If anything is clear, it is that in Article XIII, section 4 are two elements.  The phrase, “other than” separates “property” taxes from the general command of the article for taxes.  In as much as “income” from labor is property, the administration of the “income” tax puts it in the class of a property tax.  It is the substance, or how the tax operates that determines its class.  Income is “intangible” property and in reality, controlled under Article XIII, Section 2 (6)

The audit division has gone to great lengths to show that “income” was made, therefore this responding party had a liability to file.  Yet it has failed to show what Utah Supreme Court Justice Durrant, in admonishing the Tax Commission, citing State v. Eyre, 179 P. 3d 792, that to support a charge of tax evasion, the audit division must first show that: “The tax was, in fact, due and owing; merely establishing income does not suffice.”  22  This is the “condition precedent” to the audit division to then determine the accuracy of the return. Based upon their accounting findings they proceed, and in this case they “get the cart before the horse.” The only jurisdiction the Tax Commission has is over the accuracy of the accounting.  That is easy enough to understand, yet why does the audit division have such difficulty.

The audit division as the moving party in this action has built its case upon Article XIII, Section 4, and instead of continuing with their constitutional foundation, they immediately forget it. Their demands rest upon their accounting generated from various State statutes.  The audit division fails to examine the “condition precedent” to the demand.  As the courts have warned taxing agencies: “. . . [T]he taxpayer must be liable for the tax. Tax liability is a condition precedent to the demand. Merely demanding payment, even repeatedly, does not cause liability.” 23  Liability is not found in the accounting, remembering again the point raised by Judge Durrant, “. . . merely establishing income does not suffice.”

The audit division is incapable of enforcing a federal liability pursuant to the requirements of federal law.  On the books, for the State, there appears to be conflicting statutes:  UCS 59-10-502.  Persons required to file returns. “An income tax return with respect to the tax imposed by this chapter shall be filed by:  (1) every resident individual, . . . required to file a federal income tax return . . . .”  According to Judge Durrant, this law is;  “The general filing requirement is found in Utah Code section 59-10-502 (part of Title 59), which requires that ‘every resident individual’ file a state tax return in any year they are required to file a federal return.”  The Judge also calls attention to the fact that the Tax Commission’s own publication, TC-40 Forms and Instructions, repeats the requirement of UCS 59-10-502.  24

According to  UCS 59-10-104.  Tax basis — Tax rate — Exemption.  “For taxable years beginning on or after January 1, 2008, a tax is imposed on the state taxable income of a resident individual as provided in this section.”  Notwithstanding the “general requirement” that Judge Durrant explained, he does a ‘turnaround’ and states that the “a tax return is triggered by a threshold level of gross income, . . .”  The facts presented demonstrate that gross income does not “trigger” a tax liability.  It has only led the audit division to make a presumption of liability which is not accepted as evidence.  25

Judge Durrant, without citing the law,  then states that the same “threshold” applies to a federal return.  And just WHO makes that decision of federal liability?  “Our system of taxation is based upon voluntary compliance and self assessment, and not upon distraint [force].” 26  The “trigger” for a State return is one’s liability as stated by the Utah Supreme Court in State v. Eyre, quoted by Judge Durrant.  As to a federal liability, some researchers have raised the point the there is no liability statute for Subtitle A income taxes in the federal Revenue Code.  I won’t take the space to delve into this because it is not a position that I rely upon for my status.

One cannot have a tax liability (an amount owed) unless he is first liable for and/or is subject to the tax.  Attaching the appellation of “taxpayer” to identify a citizen, exhibits a misunderstanding of the law.  According to the IRC definition of “taxpayer” (26 USC §1313(b): “Notwithstanding section 7701(a)(14), the term ”taxpayer” means any person subject to a tax under the applicable revenue law.”  The other take on this statute is that those who are ‘not subject to a tax’ are . . .  nontaxpayers.

The Audit division should take judicial notice that the title for UCS 59-10-104(1) presents the “Tax basis – Tax rate – Exemption.  UCS 59-10-502 is the liability section for the “imposed” tax.  The liability falls upon individuals “required to file a federal . . . return.”  Which is it, Judge?  Is the State return “triggered” by the “level of gross income;” or by the “filing of a federal return?”  UCS 59-10-104 and 26 USC Section 6012 are reporting requirements for “taxable” subjects.  26 USC Subtitle A and its implementing regulation 26 CFR Section 1.1-1 of the Treasury Regulations “. . . imposes an income tax on the income of every individual who is a citizen or resident of the United States . . .” and section 1.1-c of the Treasury Regulations defines a “citizen” as:  “Every person born or naturalized in the United States and subject to its jurisdiction is a citizen.”  The important element of this regulation is “subject to its jurisdiction is a citizen.” Section 6012 is the reporting requirement for Subtitle A income taxes.  Maybe if we say it enough, it will register with some people.  Liability for the tax is the threshold requirement for reporting and paying the tax, whether it be federal or state.  Reading on, it will be clear that the object of the tax is the privileged occupation, and income is only the measure of the tax.  This helps to understand the statement by Judge Durrant to the audit division that determining income is insufficient to attach a liability for the tax.

The audit division cites UCS 59-10-103 as a definition of State taxable income.  It is unclear why the State legislature altered the language of this section because UCS 59-10-112 definition of State taxable income was not changed by the enactment of 59-10-103.  The fact remains that in calculating a state income, the federal gross income is part of the equation.  The repeal of UCS 59-10-112 (2007) did not change the fact that “State taxable income in the case of a resident individual means his federal taxable income . . .”  The first entry on the TC-40 is lifted from the individual’s 1040 federal tax form.  Whether said or not, in 59-10-103, Utah State tax form TC-40 is dependent upon the federal 1040.  If form 1040 is -0- then state formTC-40 is -0-.  They said it and they will have to live with it.

“If there is no gain, there is no income.”

When Ms. Lombardi relies on flawed cases from the lower courts, she limits the scope of her research, as exhibited in her reply of November 7th, 2014, when she rejects the concept of “gain” in the definition of income for tax purposes. “[N]either the Utah Code nor the Internal Revenue Code limit taxable income to income that represents gain . . . and courts have rejected this argument.” Citing Callahan v. C.I.R., 334 Fed. Appx. 754(p. 3, item No. 2.)  Again, her conclusion is not accurate.

In her reply brief, Ms. Lombardi also cites Lam v. C.I.R., 933 F. 2d. 1019 (10th Circuit, unpublished disposition), relying on Glenshaw Glass, 348 U.S. 426, cases which are cited supporting her argument rejecting the element of “gain” in the meaning of income.  Notwithstanding the cases cited, she fails to read on from Chief Justice Warren in Glenshaw: “[T]he Court  has given a liberal construction to this broad phraseology in recognition of the intention of Congress to tax all gains except those specifically exempted.” (p. 426)  And from Lam, the Tenth Circuit went on to say: “Income as defined under the Sixteenth Amendment is “gain derived from capital, from labor, or from both combined.” Eisner v. Macomber, 252 U.S. 207  (1920).”

And completely ignoring the U.S. District Court of Texas in  Connor v. U.S. (1969) 303 F. Supp. 1187:  “The opinion in Glenshaw Glass Company, supra, regardless of what it said about Eisner v. Macomber, supra, did not repudiate the concept that there must be gain before there is income within the meaning of the sixteenth amendment. . . . Whatever may constitute income, therefore, must have the essential feature of gain to the recipient. . . . If there is no gain, there is no income. . . . Congress has taxed income, not compensation.”

“Income is taxable and wages are income.”  The correct approach to this is understanding the difference between “income” and “taxable income.” This is where the Utah Tax Commission refuses to understand the concept of “gain” when defining “taxable” income. Ms. Lombardi cites IRC §61(a) as a concise definition of “income.” Doing a little history of section 61, the Tax Commission would realize that the predecessor to section 61 (1954), is IRC section 22 (1939), and going back, finds its source in the Underwood–Simmons Tariff Act.  It is important to understand that this is a “tariff” bill from which the Internal Revenue Code evolves.

The 1939 Code rendition of section 22(a) reads: “‘Gross income’ includes gains, profits, and income derived from salaries, wages, or compensation . . . ” In the 1954 revision of the code, the language was changed to: “. . ., gross income means all income from whatever source derived. . . .”  The House Report on this change helps to understand that:  “[t]his section (§61) corresponds to section 22(a) and the 1939 Code. While the language in existing section 22 (a) has been simplified, the all-inclusive nature of statutory gross income has not been affected thereby. Section 61 (a) is as broad in scope as section 22(a).”

The Senate Report is also on record saying: “Section 61(a) provides that gross income includes ‘all income from whatever source derived.’ This definition is based upon the sixteenth amendment and the word ‘income’ is used as in section 22(a) in its constitutional sense. It is not intended to change the concept of income that obtains under section 22 (a).”

Notwithstanding the intent expressed by both Reports, it has confused the federal and state courts. If IRC Section 61(a) did not change the meaning of the word income, what then is the correct reading of Section 61(a)? Does gross income include wages, salaries, compensation, etc., or is it the “income” that is derived from wages, salaries, compensation, etc. that is to be included in gross income? Under code section 22 it read: ‘income includes gains — derived from — salaries’ After congress restructured section 22 into section 61 it read: ‘Income — from any source — derived’

It often happens that those closer in time to the enactment of a statute or the handing down of a precedent know best what it really stands for. Frequently changes in social and political beliefs cause later courts to put glosses on statutes and precedents which do not really belong there. Representative Hull, in Congress was one of the pushers for the amendment and a key member in drafting the legislation for the tax law. In the discussions surrounding the legislation and taxable income in the Underwood–Simmons Tariff Act, Statutes at Large, 63rd Congress, Sess. I, ch. 16, Income tax, [1913], Representative Hull states:  “In any event, the proposed tax is measured by net profits or gains, and is not imposed upon gross income nor capital nor other property. (p. 505) . . .

“Paragraph B defines the net income of a taxable individual or person. Income as thus defined does not embrace capital or principle, but only such gains or profits as may be realized from rent, interest, salaries, trade, , or sales of any kind of property, and so forth, or profits or gains derived from any other source.”  (Congressional Record–House, April 26, 1913, p. 506)  How things have changed.

When the tax laws were challenged the courts were clear on this distinction. In the Eisner case Justice Mahlon Pitney stated: “The Government, although basing its argument upon the definition as quoted, placed chief emphasis upon the word ‘gain’, which was extended to include a variety of meanings; while the significance of the next three words was either overlooked or misconceived. ‘Derived – from – capital’; – ‘the gain – derived – from – capital,’ etc.

“The same fundamental conception is clearly set forth in the Sixteenth Amendment. . . .” Eisner v. Macomber, 252 U.S. 189, 207 (1920) I don’t agree with all of the conclusions that Justice Pitney articulates, but on this one point he makes clearer the principle of gain, the point that Representative Hull made.  “Income in its usual acceptation, is a loose and vague term; it applies equally to gross receipts and to net produce; but when the legislature had limited it to be synonymous with profits and gains, it became clear and precise as any other word.” (Oxford English Dictionary)

Judge Singleton, writing for the United States District Court, in Connor v. United States, supra., went into the “gain/income” concept which the Tax Commission doesn’t seem to want to understand. “[I]n Eisner v. Macomber, . . . the Supreme Court, referring to two cases arising under the Corporation Tax Act of 1909, endorsed the following definition of income: “`Income may be defined as the gain derived from capital, from labor, or from both combined,’ provided it be understood to include profit gained through a sale or conversion of capital assets. . . . (p. 1189) “The opinion in Glenshaw Glass Company, supra, regardless of what it said about Eisner v. Macomber, supra, did not repudiate the concept that there must be gain before there is income within the meaning of the sixteenth amendment. . . . (p. 1190)

“Accountants and economists may differ greatly as to what is or is not income. It is not, however, their theories that have guided the courts throughout the years. Instead, the courts have chosen to use the meaning given the term “income” by its everyday use in common speech. Helvering v. Edison Bros. Stores, (Cite omitted). And the meaning of income in its everyday sense is “a gain or recurrent benefit usually measured in money that derives from capital or labor; also: the amount of such gain recovered by an individual in a given period of time.” Webster’s Seventh New Collegiate Dictionary, p. 425 (1965—Emphasis Added). Income is nothing more nor less than realized gain. Shuster v. Helvering, 121 F.2d 643 (2nd Cir. 1941). . . . It is not synonymous with receipts.”  47 C.J.S. Internal Revenue § 98, p. 226;  “For purposes of this subtitle (subtitle A Income Taxes), the term “ordinary income” includes any gain from the sale or EXCHANGE of property . . .” Internal Revenue Code Section 64

“Whatever may constitute income, therefore, must have the essential feature of gain to the recipient. This was true when the sixteenth amendment became effective, it was true at the time of the decision in Eisner v. McComber, supra, it was true under section 22(a) of the Internal Revenue Code of 1939, and it is likewise true under section 61 (a) of the Internal Revenue Code of 1954. If there is no gain, there is no income.” (1191) And from the United States Code Annotated, Section 61: “To be taxable, ‘income’ must be actually and substantially derived, and the concept of ‘gain’ or ‘profit’ is implicit in the term.”

The Congressional Research Service has published a Report for Congress, “Frequently Asked Questions Concerning the Federal Income Tax.” This was authored by John R. Luckey, legislative attorney. The Tax Commission has a copy of this report, yet they “spin” this by over-shadowing this and the importance of “gain” in the concept of income.  Mr. Luckey very clearly states in his report: “‘Income has been defined as gain derived from capital, from labor, or from both combined.’ (Eisner v. Macomber, 252 U.S. 189) the operative word in this definition is gain.”  With all of this at the disposal of legal counsel, it makes me wonder who the Tax Commission is attempting to deceive.

Understanding of Section 83 of the Internal Revenue Code is necessary in the accounting functions. “Section 83(a) explains how property received in exchange for services is taxed.”  (Montelepre systemed v. CIR, 956 F. 2d 496, 498 (CA5 1992). The Tax Commission was presented with a copy of the research completed by David Myrland on the application of IRC Section 83.  David Myrland’s findings have not been factually refutted by the audit division. This should put the federal government’s position on the income/gain question out of view. The State of Utah has elected to follow Title 26 of the United States Code as it defines income, however, UCS 59-10-502 precludes that discussion.  It is clear that legal counsel has been pointed in the wrong direction when it come to certain areas of tax law.  The principle of gain may not be important in Utah tax law, it is however, essential in federal tax law.  “If there is no gain, there is no income.”


“The best way of determining disputes and of investigating truth is by ascending to elementary principles.”   Alexander Hamilton

“It must be conceded that there are such rights in every free government beyond the control of the state.  A government which recognized no such rights, which held the lives, the liberty, and the property of its citizens subject at all times to the absolute disposition and unlimited control of even the most democratic depository of power, is after all but a despotism. It is true it is a despotism of the many, of the majority, if you choose to call it so, but it is nonetheless a despotism.” 27  Article I of the Utah Constitution itemizes some of these rights “beyond the control of the state.”  Article I, Sec. 1: inherent and unalienable rights, keeping in mind Article I, Sec.25; Rights retained by the people.  Article I, Sec. 2; All political power inherent in the people.  (Sovereignty)  Article I, Sec. 7; Due process of law.  Article I, Sec. 21; involuntary servitude.  Article I, Section 27; Fundamental principles.

Chief Justice Marshall emphasizes these guides when speaking of taxation by the States in M’Culloch v. Maryland,:  “But taxation is said to be an absolute power, which acknowledges no other limits than those expressly prescribed in the constitution, and like sovereign power of every other description, is entrusted to the discretion of those who use it. But the very terms of this argument admit, that the sovereignty of the state, in the article of taxation itself, is subordinate to, and may be controlled by the constitution of the United States.”  28  Just like federal taxation being controlled by the constitution of the United States, so the taxing authority of the State of Utah is controlled by the State Constitution as it incorporates into its tax legislation, Article I, Declaration of Rights.

Article XIII, Section 4 must stand the test of Article I and its declaration of the rights of the individual, and remembering that the United States Constitution is the “supreme law of the land.” 29   This includes all State laws, including UCS 76-1-105, which violates the guarantee clause of the United States Constitution, referred to earlier.

Good Case Law

The Treasury Department of the United States Government recognizes that the decisions of the Supreme Court have an unique standing when determining liability:

“[1] Decisions made at various levels of the court system are considered to be interpretations of tax laws and may be used by either examiners or taxpayers to support a position.

“[2] Certain court cases lend more weight to a position than others.  A case decided by the U.S. Supreme Court . . . takes precedence over decisions of lower courts. . . ., Supreme Court decisions have the same weight as the Code.”

“[3] Decisions made by lower courts, such as Tax Court, District Courts, or Claims Court, are binding on the Service only for the particular taxpayer and the years litigated.”  30

This hearing is to take judicial notice that in as much as the Revenue Manual states that I can rely on Supreme Court decisions to support my position, I have done so in developing my position and the audit division and this hearing must respect it.  As explained by the Supreme Court: “. . .  if the doctrine of stare decisis 31 has any meaning at all, it requires that people in their everyday affairs be able to rely on our decisions, and not be needlessly penalized for such reliance.”  32

This will have to be recognized by the audit division in this matter.  Notwithstanding the error made by the audit division in citing the Supreme Court in Brushaber, 33 they have cited no Supreme Court decisions as good case law for their position.  What lower court cases that legal counsel has cited are at best, questionable and are “only binding for the particular” case.

In drafting this response for the formal hearing, I was led to an interesting case before the Supreme Court of Vermont. 34  Justice Hayes, writing for the Court is critical of such a maneuver by the legal profession to claim a state constitutional authority and not continuing the argument as “skating on the edge of malpractice.”  The audit division after citing Article XIII of the Utah Constitution, they leave it for other issues that are irrelevant.  


“We start with first principles.”

Chief Justice Rehnquist,  U.S. v. Lopez, 514 US 549

Section 27 is a fundamental principle in itself.  “Frequent recurrence to fundamental principles is essential to the security of individual rights and the perpetuity of free government.”  This principle has found its way into the constitutions of a number of states.  West Virginia, Arizona, North Carolina, New Hampshire, Wisconsin, Virginia and of course Utah, to name a few.

“Section 27 is composed of four basic elements: frequent recurrence, fundamental principles, individual rights, and free government.  Section 27 designates fundamental principles as the means to secure individual rights and perpetuate free government.  As an abstract proposition, however, section 27 offers little guidance to the practitioner.  To effectively incorporate section 27 into Utah jurisprudence, practitioners need to understand the fundamental principles that define the scope of individual rights and free government.  Once the term “fundamental principles” is given substance, and its relation to individual rights and free government is identified, section 27 can be more extensively incorporated into Utah jurisprudence.” 35

In a Marquette Law Review article, Circuit Judge A.H. Reid of the 16th Judicial Court, commented on this principle: “. . . [I]t (fundamental principles) impressed with force the great truth that sound government must proceed upon sound, unchanging principles of justice and moderation, to which reference should be always made in deciding upon the wisdom of any proposed legislative policy.” 36  Something the Utah State legislature forgets and they pass legislative fiat and then when an issue is brought before the court and the State constitution is forgotten,  fundamental principles are put aside, and like “judge” Jane Phan indicated, they are only interested in the law and facts, not the truth.  The civil law and facts change with the ruling party.  Using only the law and facts, does not always equal truth.  The truth is found in the fundamentals.

One of the ill advised actions taken by the Utah legislature was to abolish the common law in favor of the civil law, striking at the heart of fundamental principles. 37 To which Circuit Judge Reid counters: “The symmetry and efficiency of our common law in producing justice has been a direct result of the fact that the common law is based upon the fundamental principles of right, from which fundamental principles the course of reasoning always begins, in preparing the way for the correct decision of the case in hand.” (p. 186)  Utah tax legislation can not be justified by the fundamental principles of the common law nor a republic.  In passing on 76-1-105, the legislature should have repealed the Declaration of Rights.  By legislative fiat, Article I of the Utah Constitution has in fact been trashed, as was our republican form of government and the rule of law.

Judge Reid goes on to give some noteworthy advise to the legal division of the audit division: “The lawyer who depends merely on decided cases as authority for the position he takes in argument, and who, as it often occurs, is bewildered and in doubt when without an authority to direct him, is indeed but poorly prepared for the service he should render.  But he who tests every case as it comes to him by the touch-stone of fundamental principles may, and generally does, know the law applicable to the case, . . .  This is always assuming that the legislative fiat has not arbitrarily interfered with the natural course of reasoning.” 38  This is the difference between the briefings of the audit division, which depends upon a precedence set by case law that is inconsistent and changing, and by this party, recurring to fundamental principle which do not change.  As you read the numerous Supreme Court decisions ruling on statute law in question, their reasoning follows closely the fundamental principles of the common law.

Justice Hayes of the Vermont Supreme Court pointed out a current fact about State constitutions, especially fundamental principles: “It is the highest law of our state, yet sometimes esteemed the lowest.  It is routinely cited, then routinely forgotten.  It is our birthright, which we have sold for a bowl of federal porridge.” 39  An interesting commentary on our state sovereignty was noted by the current Chief Judge of the Supreme Court, John Roberts as he wrote that flawed opinion for Obamacare:  “The States are separate and independent sovereigns.  Sometimes they have to act like it.” 40  Probably the only instructive thought to come out of that opinion.  Our legislature should take note; ignoring fundamental principles is a disservice to the citizens of Utah, and a violation of their oath of office to support and defend the Constitution of the United States (Article VI), and the rule of law.

Section 27 of Article I is very instructive as it reminds the citizens that they also have a responsibility to keep in mind, and refer often to the fundamental principles that are at the foundation or our republic and in this instance, state taxing authority.  Forgetting fundamental principles is not only a fault of our governments, but also the public in general as we are taught by the civil law to follow the “rule of man” or the civil law.

Reviewing the previous sections of Article I, several of the essential rights will be shown.  There is a difference between those principles and natural rights.  In listing the various rights contained in the Declaration does not indicate that these are all of our natural and inherent rights “endowed by our Creator.”   Alexander Hamilton was cautious when it came to the inclusion of a “bill of rights” in the Constitution.  “It has been several times truly remarked that bills of rights are, in their origin, stipulations between kings and their subjects, abridgments of prerogative in favor of privilege, reservations of rights not surrendered to the prince. . . .  It is evident, therefore, that, according to their primitive signification, they have no application to constitutions, professedly founded upon the power of the people and executed by their immediate representatives and servants.  Here in strictness, the people surrender nothing; and as they retain everything they have no need of particular reservations, ‘We the people of the United States, to secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.’  . . .

“I . . . affirm that bills of rights, in the sense and to the extent in which they are contended for, are not only unnecessary in the proposed Constitution, but would even be dangerous. They would contain various exceptions to powers not granted; and, on this very account, would afford a colorable pretext to claim more than were granted. For why declare that things shall not be done which there is no power to do?   Why, for instance, should it be said that the liberty of the press shall not be restrained, when no power is given by which restrictions may be imposed?” 41 In like language, “why should it be said that the federal government can tax the people directly, when no power is given by which a tax may be imposed?”

The United States Constitution is absent any language giving the federal government authority to tax the people directly.  That authority is controlled by the States and the people.  It is an authority reserved to the people and the States.  The taxing authority of the federal government is limited to those items listed in the Constitution.  Within that sphere, those powers are complete.  Like reasoning, so with the authority of the State.

The tenth amendment 42 of the United States Constitution, although a little ambiguous as to those powers that remain with the states and the people, should send a message to the state legislators that there are certain powers that the people have not delegated to the states.  Sometimes the legislature forget the people and feel that all powers are reserved to the States, the people be damned.

The internal operations of the State have not been delegated to the federal government.  And in like manner, the control of the individual rights to life, liberty and property, with the exception when the safety of others is involved, have not been delegated to the States.  Each challenge to a rights violation, as much as possible, must be complete in the explanation and foundation.  At this time we are interested in the taxing authority of the state to tax natural rights which are protected by Article I of the Utah State Constitution.

In the year of Utah’s centennial, Paul Wake wrote an informative article on Article I, Section 27 and comments: “One provision in Utah’s Constitution, Article I, Section 27, seems by its terms to be more important than any other part of the Constitution. . . . No other provision in the Constitution claims to show an essential key to freedom.  Yet strangely, virtually no jurist or scholar has commented on Section 27. . . .  The Utah Constitution can and should be used to protect rights and to perpetuate a free government during Utah’s second century. . . .

“. . ., Utah’s Supreme Court has emphatically warned the Utah Bar that some of its members have neglected to consider state constitutional law issues in cases coming before the Court.” 43 Can the State of Utah tax?  Most certainly!  However, there are “ground rules” some of which are contained in the Declaration of Rights and several Supreme Court decisions, two in particular, M’Culloch v. Maryland, and Brushaber v. Union Pac. R.R., which are called upon extensively in this paper.

At the out set of the 2014 Utah State legislative session, Senate President Wayne Niederhauser drew attention to Article I, Section 27 and then routinely forgot it.  The question about what the Utah legislature felt were some of the “fundamental principles” has been asked of Senate President Wayne Niederhauser and others of the legislature.  None have found it necessary to respond.  Since they apparently have no knowledge of what some of these fundamentals are, or maybe if we ignore them they will go away.   How can we trust them to apply them in the legislative process?  It is an oft forgotten adage that “those who fail to learn from history, are doomed to repeat it.”  This is where the people, in general, have also failed, not knowing the fundamentals of government authority, they have abandoned their role as “watchdog” of our State government.  In the Utah Constitutional Convention, on the final debate over the Declaration of Rights, Section 27, some suggested that the section be omitted.  However, Heber Wells spoke out; “. . . because the tendency of the times might be as it has in the past, not to recur very often to fundamental principles.  When the people are oppressed and do not get their rights, it may be necessary to recur to fundamental principles.” 44  This is all that I have asked of the legislature.

“This case involves a cancer in our body politic.  It is a measure of the disease which afflicts us. . . .  Those who already walk submissively will say there is no cause for alarm.  But submissiveness is not our heritage.  The first amendment was designed to allow rebellion to be our heritage.  The Constitution was designed to keep government off the backs of the people. . . .  The aim was to allow men to be free and independent and to assert their rights against government. . . .  The America once extolled as the voice of liberty heard around the world no longer is cast in the image which Jefferson and Madison designed, but more in the Russian image.” 45


This hearing has but one option, that is to dismiss the previous actions by the audit division not only for the lack of due process afforded the person, but also for the lack of jurisdiction over a federal question.  Although much has been communicated to the audit division about the taxing administration of both the federal and state agencies, the sole question is, can the State of Utah rule on and enforce a federal law, and in this case concerning a liability to file a federal return for income taxes?  The audit division state in their opinions; “that Utah may make a state individual income tax assessment whether or not an assessment has been made by the IRS.” 46  Ms. Phan, in a manner of speaking, is correct.  The Audit division can make as many assessments as they please, however, carrying them forward to their enforcement, circumventing UCS59-10-502 and the “requirement” specified, is another question.

In my first encounter with the Utah Tax Commission, back in the 80’s, I submitted to their request for State returns.  Having submitted those, the tax commission said I should also include my 1040 filing with the IRS.  Since there were no filing of the 1040 forms, I submitted “zero” 1040 forms with no signature.  The Tax Commission was fine with this, even though it made no difference in the final outcome of the State TC-40 amounts which was again, “zero.”  If what legal counsel for the Audit division and Jane Phan claim to be the fact, those 1040’s are not required.

On the other hand, legal counsel for the audit division is inaccurate in its phrasing of their authority:  “The State of Utah’s authority to impose an income tax is independent of that of the federal government and the Internal Revenue Service Agency.”  47  Ms. Phan is on record of being interested in only the “facts and the law,” yet both Ms. Phan and legal counsel state only an opinion which is not supported by any law passed by the State legislature.  They completely ignore the direction of the Utah Supreme Court, Judge Durrant; “The general filing requirement is found in Utah Code section 59-10-502 (part of Title 59), which requires that ‘every resident individual’ file a state tax return in any year they are required to file a federal return.”  48

For support of their position, the audit division cite lower court decisions like the Nelson and Jensen opinions.  Counsel summarizes Justice Stewart’s conclusion in Jensen;  “The court rejected this argument, holding that the duty to file a return arises when a person earns income, not when his income is assessed for tax purposes.  . . . (Cite omitted) . . .  Because the taxpayer had earned income, he was required to file a federal income tax return and, as a result, a Utah income tax return.” The two cases may infer the conclusion, but the law (UCS 59-10-502) does not say that.

Without examining the facts, the courts conclude that the parties had a duty to file a federal return because they made income and, “therefore required to file Utah . . . returns.”  All of the cases cited by the audit division regarding the points raised by this respondent, without exception, state conclusions based upon heresy, citing flawed precedents and failing to cite facts to support the various courts findings including the fundamental principles. 49  The object of the Tax Commission and it employees is to protect the interests of the State, not the rights and liberties of the people.

Without supporting facts, these opinions are just that – opinions.  Like asking the man on the street, they carry the same weight.  In difference to the direction of Judge Durrant, the opinions of the Jensen and Nelson opinions skirt around the Utah law, UCS 59-10-502.  Before any of the points outlined in the audit division’s briefs and opinions are of any relevance the initial question must be addressed.  If these cases would have come before Judge Durrant, he possibly would have thrown them out based of this one principle.  These opinions set no legal precedent.

A basic feature of the “civil” law is that “if it does not say it, it doesn’t happen.”  No Utah State statute exists that makes it an offense not to file a federal tax return, or make one liable for a federal income tax. 50  The State of Utah’s authority is derived from the State Constitution, and the State Constitution is silent on this question of allowing the State of Utah to move into the scope of federal sovereignty without the approval of Congress.  The language of UCS 59-10-502 does not give any authority to the Utah audit division to make any determination regarding federal tax liability and to enforce such liability.

As to the authority of the States to rule on a federal law, the Congressional Research Service in a report published September of 2012, although dealing with federal immigration law, found that in respect to federal law, the States must have that authority delegated to them by Congress.  Touching federal and state cooperation the report touched on a fundamental that;  “The Court’s opinion 51 indicates that state and local police do not enjoy broad discretion to determine when and whether to arrest or detain persons for immigration status violations. If such enforcement activity is not directly authorized by federal statute, it must still, at minimum, be pursuant to the “request, approval, or instruction from the Federal Government.”  52

Margaret H. Lemos did a paper for the New York University Law Review (2011), on state enforcement of federal law.  She notes that; “[v]irtually all federal civil statutes vest enforcement authority in a federal agency; . . .

“States have no inherent power to enforce federal statutory law.”  53  Ms. Lemos agrees; “that state enforcement can promote the goals of federalism by opening up new opportunities for decentralized decision making outside of the regulatory realm.”  However, the author recognizes that as of now: “States have no inherent power to enforce federal statutory law. . . ., states’ authority to sue under any given statute is dependent on congressional intent.”  Citing Justice Scalia in, Alexander v. Sandoval, at p. 286; “Like substantive federal law itself, private rights of action to enforce federal law must be created by Congress.”  A repeat of the finding of the Congressional Research Service addressed by the Court in Arizona v. United States.  Sovereign powers must be delegated by the sovereign having possession of such authority in the first instance.

A report commissioned by President Eisenhower (1956), prepared by the Interdepartmental Committee for the study of Jurisdiction over Federal areas within the States, also touches on this separation of jurisdictions: “The United States and each State are in many respects separate sovereigns, and ordinarily one cannot enforce the laws of the other.” 54  This instruction follows Chief Justice Marshall’s counsel: “In America, the powers of sovereignty are divided between the government of the Union, and those of the states. They are each sovereign, with respect to the objects committed to it, and neither sovereign, with respect to the objects committed to the other.” 55  The audit division in this proceeding has shown nothing to the contrary.

In researching for this assumed cooperation between the State of Utah and Federal government, freedom of information requests were sent to the Internal Revenue Service and to the Utah audit division for documents showing such delegation, or requests and approval that may have been given by Congress to the State of Utah to enforce a federal revenue statute.  No information on any approval has been forth-coming from either agency.  As to the failure of the agencies to provide this information, when an agency has a moral and legal obligation to disclose such information known, and fails to do so; “silence is equated with fraud.” 56  So that it is not forgotten, the approval must come from Congress, not from some “low-level” unelected bureaucrat.  The question of liability for a federal requirement is settled by a court of law having jurisdiction over the subject matter. 57

Just a side-note, in reading over a case cited in Jewett, 58  Michigan v. Long, it was interesting to read Justice O’Connor’s remarks on state and federal jurisdiction where she said:  “[W]e will accept as the most reasonable explanation that the state court decided the case the way it did because it believed that federal law required it to do so.”   The Court reasoned that the State used federal rational (Terry v. Ohio, 392 U.S. 1) “for the purpose of guidance” but charged David Long under State law.  59  There is no such language in the IRC or the federal criminal code that would lend itself to a conclusion supporting State enforcement of federal tax laws.  As prima facie evidence, enforcement of any law, State or federal, private or public, is a police power and the federal government has no enforcement authority or police power within the external boundaries of the States.  With the exception of land areas ceded to the federal government by the States.

In this current action, and in the absence of any information to the contrary, Title 26, or any other applicable title in the U.S. Code, is void of any such request employed by the Congress requesting the states to enforce Subtitle A Income taxes.  The State legislature has incorporated certain provisions from the Internal Revenue Code as a guide in determining income.  In order to avoid further confusion, the State legislature may want to consider a re-write of 59-10-502, eliminating any reference to a federal liability.  Taxing authority for the State of Utah has enough authority given to it by the State Constitution that it can stand alone subject only to the fundamental principles of our republic, some of which are listed in Article I of the Utah State Constitution.  The Declaration of Rights article is a limitation on the powers of the government for the State of Utah.


Looking at each of the sections in the Declaration of Rights article, section 1 addresses the inherent and unalienable rights.  Justice Stephen Field in his concurring opinion in Butcher’s Union v. Crescent City Co., supra. at 756, comments on some of the phrases of the Declaration of Independence: “[C]ertain inherent rights lie at the foundation of all action, and upon a recognition of them alone can free institutions be maintained.  (Speaking of fundamental principles)  These inherent rights have never been more happily expressed than in the declaration of independence, . . .  We hold these truths to be self-evident’ . . . ‘that all men are endowed’ – not by . . . acts of congress, . . .’ but ‘by their Creator with certain inalienable rights.’ – that is, right which cannot be bartered away, or given away, or taken away, . . .”  The legal profession’s own law dictionary agrees with Justice Field: “Inalienable rights. Rights which are not capable of being surrendered or transferred without the consent of the one possessing such rights; . . .”  60

“Inalienable rights” has for its opposite, “government granted privileges”.  The government can grant privileges, e.g., corporate license.  Government granted privileges are proper objects of taxation, as are government employees, elected or appointed, as their employment is considered a privilege.  In this instance the State is taxing the privileged activity and the income derived is the measure of the tax.  This keeps the tax in the class of being an “indirect excise tax,” not requiring apportionment.  It is a “taxable” activity and income is the measure of the tax.

Justice Stephen Field expressed this very clearly:  “There is no such thing in the theory of our national government as unlimited power of taxation in Congress.  There are limitations of its powers arising out of the essential nature of all free government; there are reservations of individual rights, without which society could not exist, and which are respected by every government.  The right of taxation is subject to these limitations.”  61  This fundamental principle applies to State authority as well.

And what are some of these “inalienable” rights that can not be “surrendered or transferred.” Article I, Section 1 of the Utah Constitution clearly points out that “All men have the inherent and unalienable right . . . to acquire, possess and protect property; . . .”  And what is “property”?  “For what are our faculties but the extension of our individuality?  And what is property but an extension of our faculties?” 62  Again, to the legal dictionary; “Property. That which is peculiar or proper to any person; that which belongs exclusively to one.”  An individuals income is the “fruit” of their labor, and is their property.  Chief Justice Marshall continues this theme in his opinion from, The Antelope: “That it is contrary to the law of nature will scarcely be denied. That every man has a natural right to the fruits of his own labor is generally admitted, and that no other person can rightfully deprive him of those fruits and appropriate them against his will . . .” 63

As to a federal authority to tax, Chief Justice Fuller pointed to this interesting principle:  “Nothing can be clearer than that what the constitution intended to guard against was the exercise by the general government of the power of directly taxing persons and property within any state. . . .”   64   As for the taking of property, I am not sure how the Tax Commission defines theft, but you may want to consult Black’s Law Dictionary: “The taking of property without the owner’s consent.”  The dictionary also calls it larceny.  Are employees of the State immune from criminal suits for theft?

Quoted earlier, the decision by Justice Samuel Chase, noted for his opinion delivered in Calder v. Bull.  “In that case he explained that there were some supra-constitutional principles that circumscribed any legislature. . . . Chase gave only two examples in his opinion: . . .” (Oxford Companion to The Supreme Court of the United States): “. . . a law that makes a man a Judge in his own cause; or a law that takes property from A. and gives it to B. It is against all reason and justice, for a people to entrust a Legislature with such powers; and, therefore, it cannot be presumed that they have done it. . . .  With very few exceptions, the advocates of such laws were stimulated by ambition, or personal resentment, and vindictive malice.”  65


We can’t leave the concept of property and its “taking” without the constitutional principle found in Article I, Sec. 21, involuntary servitude.  The audit division argues:  “Article I, §21 of the Utah Constitution states: ‘Neither slavery nor involuntary servitude, except as punishment for crime, . . ., shall exist within this State.’  The 13th Amendment to the U.S. Constitution similarly reads: ‘Neither slavery nor involuntary servitude, . . ., shall exist within the United States, . . .’  Article I, §21 of the Utah Constitution and the 13th Amendment of the U.S. Constitution prohibited a system in which certain individuals owned other individuals as property. . . .  This is a far cry from requiring residents of Utah, or the United States on the federal level, to pay tax on their income in exchange for the protections and benefits provided by the state and federal government.” 66  As explained in my reply to the moving parties brief, the audit division lacks vision in this matter.  They who can read, however, do not appear to understand.

As far as my life, liberty and property being protected by the State and paid for by the State income tax;  the State income tax is ear-marked for education only in the State of Utah.  Protection of those objects close to me are paid for out of property taxes and sales taxes, which I pay and are the responsibility of the City of Sandy.  The only thing that the State of Utah is doing, is “taking” my property.  As far as the federal government is concerned, they are to busy protecting the world at our expense.

As we start, it is of interest to note what Justice James Wilson said as reported in his opinion in Chisholm, supra.: “The only reason, I believe, why a free man is bound by human laws, is, that he binds himself.”  Former Supreme Court Justice George Sutherland has put the principles of life, liberty and property into the proper perspective, when addressing the New York Bar Association, Jan. 21, 1921: “Property, per se, has no rights, but the individual – the man – has three great rights, equally sacred from arbitrary interference; the right to life, the right to liberty, and the right to property.  The three rights are so bound together as to be essentially one right.  To give man his life, but deny him his liberty, is to take from him all that makes life worth living.  To give him liberty but take from him the property which is the fruit and badge of his liberty, is to still leave him a slave.”

A like opinion delivered by Justice James Matthews in Yick Wo v. Hopkins, 67 which remains as one of his famous opinions, undisturbed as precedent;  ” For the very idea that one man may be compelled to hold his life, or the means of living, or any material right essential to the enjoyment of life, at the mere will of another, seems to be intolerable in any country where freedom prevails, as being the essence of slavery itself. ”  The audit division in this action limits their thinking to pre-civil war slavery.  Very disappointing as they continue to forget the fundamentals and our State constitution.  As Justice Hays stated in Jewett, supra. “It is routinely cited, then routinely forgotten.”

When you want to explore the thinking and reasoning of the Founders of the Constitution, as they drafted that document, you look to the literature they relied upon.  One authority respected by the Founding Fathers was the British philosopher, John Locke.  He was famous for The Second Treatise of Government (1690).  In it he speaks to property and its taking when he said: ““It is true governments cannot be supported without great charge, and it is fit every one who enjoys his share of the protection should pay out of his estate his proportion for the maintenance of it. But still it must be with his own consent- i.e., the consent of the majority, giving it either by themselves or their representatives chosen by them; for if any one shall claim a power to lay and levy taxes on the people by his own authority, and without such consent of the people, he  thereby invades the fundamental law of property, and  subverts the end of government.  For what property have I in that which another may by right take when he pleases to himself?” 68




No Law, Just a Fundamental Principle

“Legislation is the exercise of sovereign authority.” 

Vanhorne’s Lessee v. dorrance

Justice William Paterson, 2 U.S. (Dallas) 304

All of these Articles in the Declaration of Rights tie into the principle of property and its taking – “taxation”.  Article I, Sec. 2 refers to political power being “inherent in the people.”  Herein evolves the concept of “sovereignty.”  The term sovereignty is widely used without being given much thought.  There is also a political principle also used without thought, “delegation of authority.”   “It is routinely cited, then routinely forgotten.” This doctrine of delegation is an essential element of Article I, sections 2 & 25.  If “[a]ll political power [is] inherent in the people.” (Article I, Section 2); Then it needs to be understood which of the “sovereign” powers inherent in the people can be “delegated” to government, and those which cannot be delegated.  Neither the federal nor the state governments have any inherent powers of sovereignty. These two rights of sovereignty and delegation work together in these sections of Article I.  69  In context as to what is presented here, it is better understood to discover what cannot be taxed within the scope of the federal and state constitutions.

If this forum can accept the principle of original sovereignty, and that it is well settled that it is a unique characteristic inherent in the makeup of the individual; and also the principle of delegation of authority, that that authority can only be passed by one who has sole possession of such; how in god’s green earth, can the State assume they have such authority to take someone’s property?  Without such delegation, the power cannot be exercised by an undelegated agency.  “The right never existed, and the question whether it has been surrendered, cannot arise.” M’Culloch, supra

Chief Justice John Marshall:  “. . . [T]he power of taxation is not confined to the people and property of a state. It may be exercised upon every object brought within its jurisdiction. This is true. But to what source do we trace this right? It is obvious, that it is an incident of sovereignty, and is co-extensive with that to which it is an incident.” 70 Justice Stone in his opinion developed in, Curry v. McCanless:  “Whether we regard the right of a state to tax as founded on power over the object taxed, as declared by Chief Justice Marshall in McCulloch, supra, 368. . . The power to tax is an incident of sovereignty and is coextensive with sovereignty .”  71  I agree with Chief Justice Marshall’s observation on the power of taxation being “exercised upon every object brought within its jurisdiction.”  It must be remembered that the jurisdiction of State or federal jurisdiction is determined by its sovereign authority.  Government has no “sovereign” authority over an individual’s life, liberty or property.  These areas were retained by the people and not given to the States, as indicated by the 10th amendment and Article I, §§ 2 & 25 of our State Constitution.

The two questions which arise are: Under the constitutions of the United States and of the State of Utah, who is the “sovereign”? This is important because;  “. . . all legislative powers appertain to sovereignty.  The original power of giving the law on any subject whatever, is a sovereign power; . . .”  72  As Chief Justice Marshall also explains that taxation is “an incident of sovereignty, . . .  All subjects over which the sovereign power of a state extends, are objects of taxation; . . . ” (p. 429); This principle was also affirmed and pointed out to the Utah Tax Commission in State Tax Commission v. Aldrich. 73  Justice Douglas, in the Aldrich case, quoted only part of the principle that Marshall expounded upon.  The rest of the quote is of most interest; “. . . but those over which it does not extend, are, upon the soundest principles, exempt from taxation.  This proposition may almost be pronounce self-evident.”  The sovereignty of a State extends over objects and persons (however you choose to define ‘person’), that “exists by its own authority, or is introduced by its permission.”  74

In expounding these fundamental principles, I have become acquainted with the principle called, “occam’s razor.”  What Chief Justice Marshall states here in M’Culloch is quite simple, and need no more other explanation.  “But over those which is does not extend, are, upon the soundest principles, exempt from taxation.”  A very fundamental principle for the State legislatures to digest.  Maybe Senate President Neiderhauser, should pass out a medallion with that inscription.

In the principle addressed by Marshall, he uses the term “subject” and in the context of that term, he is correct.  It should be kept in mind, however, as explained by the Chisholm Court: “In one sense, the term ‘sovereign’ has for its correlative ‘subject.’  In this sense, the term can receive no application; for it has no object in the Constitution of the United States.  Under that Constitution there are citizens, but no subjects.  The term “subject” occurs, indeed, once in the instrument; but to mark the contrast strongly the epithet ‘foreign’ is prefixed.” 75  In the same case, Chief Justice Jay described the citizens as “sovereigns without subjects.”  Terms like “subject to” and “exercised on the objects to which it is applicable” are common terms when the Court refers to the taxing authority of the federal and state governments.  As so with the United States Constitution, so with the State of Utah; except by their own choice, the people of the state are “sovereigns without subjects.”  Indeed, if the correlative is ‘subject’, then federal and state entities are the ‘subjects’ of the people.

Justice Thomas S. Matthews in addition to his thoughts on slavery, has addressed the subject of sovereignty several times.  In the Yick Wo decision, the court reminds us that; “Sovereignty itself is, of course, not subject to law, for it is the author and source of law;  but in our system, while sovereign powers are delegated to the agencies of government, sovereignty itself remains with the people, by whom and for whom all government exists and acts.  And the law is the definition and limitation of power.” This was also expressed earlier in the opinion in Chisholm: “The sovereign, when traced to his source, must be found in the man.”  76

“Sovereignty rests either in the State, or in the federal government, but never in both.  Sovereignty is the authority to which there is politically no superior.” 77  As to the individual sovereign, there is no political superior.  Both the State of Utah and the federal government and their agencies, have no authority over the citizens, except what is given them with the consent of the individual.  It is really that simple, and one must start there.

“The term “sovereign power” of a state is often used without any definite idea of its meaning, and it is often misapplied.  Prior to the formation of the federal Constitution, the states were sovereign in the absolute sense of the term. . . . The people of the states, by the adoption of the federal Constitution, imposed certain limitations in the exercise of their powers which appertain to sovereignty.  . . . The sovereignty of a state does not reside in the persons who fill the different departments of its government, but in the people, from whom the government emanated; . . . .  Sovereignty, then, in this country, abides with the constituency, and not with the agent; and this remark is true, both in reference to the federal and state governments.”  78  Under our republican form of government, all sovereign powers and authorities are coextensive and inherent in the people, both as a society and also as an individual.

If the Utah State legislature and the Tax Commission would make an honest and concerted effort to look into this principle, they would see that it is well settled.  The next question that follows is; What “sovereign” powers inherent in the individual can be delegated to the government?  In the decisions of the Supreme Court and other “legal” scholars, are agreed that “sovereignty” resides in the people.  The people in turn delegate to their creation (government) only those powers they hold in common.  In taking a principle expressed by the Supreme Court, 79 Ezra Taft Benson reminds us that; “The creature cannot exceed the creator.” 80

The sovereign people now “delegate” to the State and National governments powers which are held by the people in common, e.g.; defense.  Returning to the M’Culloch opinion, Marshall explains that “Even the 10th amendment, . . . declares . . ., that the powers ‘not delegated to the United States, nor prohibited to the states, are reserved to the states or to the people;'” 81 It cannot be assumed that the people have given complete sovereignty to their government over their person and property.  82  Those sovereign powers, not delegated and where appropriate, are divided between the state and the people.

An interesting fundamental principle brought out by Chief Justice Melville Fuller in the first hearing of Pollock, shows the independence of the sovereign positions of the federal and state governments as he quotes:  “Mr. Justice Nelson, in delivering judgment, 83 said: ‘The general government and the states, although both exist within the same territorial limits, are separate and distinct sovereignties, acting separately and independently of each other, within their respective spheres. The former, in its appropriate sphere, is supreme; but the states, within the limits of their powers not granted, or, in the language of the tenth amendment, ‘reserved,’ are as independent of the general government as that government within its sphere is independent of the states.'”  84  There are actually three separate and distinct sovereigns to be considered in the complete picture of taxation, federal, state and the individual.  Each are supreme “within the limits of their powers.”

There should be no argument as to the fundamental principle found in “delegation”.  It is well settled that “one can only delegate what one has.”  In the matter of taxation of one’s property – since I do not have any right to another’s property, to take and do as I will – I cannot delegate that authority as a formation of government authority to tax property.

This doctrine of delegation has been explained by several writers.  “Whenever government is doing anything that is forbidden to the citizen, that function is illegitimate, according to our theory of government…. Our government is founded squarely on this ‘theory of delegation’. One cannot delegate what one doesn’t have.” 85 “Power. (Def.) The right, ability, authority, or faculty of doing something. Authority to do any act which the grantor might himself lawfully perform.” 86  Ezra Taft Benson translated this so even a child could understand:  “Suppose (individual) ‘A’ wants another horse for his wagon.  He doesn’t have the money to buy one, but since (individual) ‘B’ has an extra horse, he decides that he is entitled to share in his good fortune.  Is he entitled to take his neighbor’s horse?  Obviously not! If his neighbor wishes to give it or lend it, that is another question.  But so long as (individual) ‘B’ wishes to keep his property, (individual) ‘A’ has no claim to it.

“If ‘A’ has no power to take ‘B’s property, can he delegate any such power to the (government)?  No! Even if everyone in the community desires that ‘B’ give his extra horse to ‘A’, they have no right individually or collectively to force him to do it.  They cannot delegate a power they themselves do not have.” 87

And the British philosopher John Locke: “… Nobody can transfer to another more power than he has in himself, and nobody has an absolute arbitrary power over himself, or over any other, to destroy his own life, or take away the life or property of another.” 88  Chief Justice Marshall gives us some insight on how to read tax law: “If we measure the power of taxation residing in a state, by the extent of sovereignty which the people of a single state possess, and can confer on its government, we have an intelligible standard, applicable to every case to which the power may be applied.” 89  This is where the Declaration of Rights, contained in the Utah State Constitution come into play.  The Utah State legislature should try it some time.  The State of Utah is so consumed with form that is forgets the nature and substance of the law and “the extent of sovereignty which the people of a single state possess, and can confer on its government, . . .”

Concluding this on “rights” and “delegation” there are some very poignant principles pointed out by the Supreme Court, one from that ever famous Miranda v. Arizona decision; “Judicial solutions to problems of constitutional dimension have evolved decade by decade. As courts have been presented with the need to enforce constitutional rights, they have found means of doing so. That was our responsibility when Escobedo was before us, and it is our responsibility today.  Where rights secured by the Constitution are involved, there can be no rule making or legislation which would abrogate them.” 90  Also:  “As stated by this Court in West Virginia State Bd. of Educ. v. Barnette, 319 US 624, 638,  ‘One’s right to life, liberty, and property . . . and other fundamental rights may not be submitted to vote; they depend on the outcome of no elections.’

“A citizen’s constitutional rights can hardly be infringed simply because a majority of the people choose that it be.”  91

On the principle explained by Chief Justice Marshall, and knowing just what authorities or powers can be delegated, we find a total failure of this assumed power to take the property of the people by the state.  “The right never existed, and the question whether it has been surrendered, cannot arise.”  92


The opinions expressed so far in this proceeding by the audit division, have a weakness as they depend upon lower courts as precedence to support their claims as the lower federal opinions are blatantly inconsistent in their findings.  The federal cases cited by the audit division, are for the most part inaccurate as was pointed out to legal counsel’s use of the Collins 93 decision calling it “good case law.”  All of the other federal cases cited use Collins for support, repeating the same error.  The audit division cite from the 7th Cir., Miller v. U.S. for support of their position.  This case has no relevance to the present issue.  Miller is challenging the constitutionality of the 16th amendment.  No challenge of this nature has been made during this proceeding.  In fact it has been made known to the audit division just the opposite.  94 The 16th amendment carries no weight in this case, as has been, and will be explained.

To refresh the moving parties memory the Circuit Judge Baldock for the 10th Circuit makes several noticeable errors in Collins, starting off with the admission, “Viewing the evidence in the light most favorable to the government . . .”  In the first instance, this approach is contrary to the policy:  “In the interpretation of statutes levying taxes, it is the established rule not to extend their provisions by implication beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out. In case of doubt, they are construed most strongly against the government and in favor of the citizen.” 95


Next, Judge Baldock, in answer to a challenge by the defendant on federal jurisdiction, claims that article I, section 8 of the US Constitution “empowers Congress to create, define and punish crimes, irrespective of where they are committed.”  Referencing United States v. Worrall, the opinion of  Justice Samuel Chase, makes no such inference.  His comments are mainly centered around the common law.  Justice Chase did say; “there is a power granted to Congress to create, define, and punish, crimes and offenses, whenever they shall deem it necessary and proper by law to do so, . . .” 96  This is a far cry from what Judge Baldock claims.  Maybe the Judge is confusing the word “whenever” with “wherever.”

And, there is no language in Article I, Section 8 of the U.S. Constitution that reflects the statement by Circuit Judge Baldock.  Beside the claim flies in the face of Article I, Section 8, clause 17 and federal jurisdiction within the states.  Judge Baldock also does not understand the extent of federal “police” powers.  Reviewing United States v. Lopez, 97 Justice Thomas, in concurring with the Court, and agreeing in principle with Justice Breyer:  “the Federal Government has nothing approaching a police power. . . .   “[W]e always have rejected readings of the Commerce Clause and the scope of federal power that would permit Congress to exercise  police power; our cases are quite clear that there are real limits to federal power.”  Chief Justice Rehnquist, delivering the opinion of the Court in Lopez:  “The Constitution mandates this uncertainty by withholding from Congress a plenary police power that would authorize enactment of every type of legislation.”  Federal revenue laws are enforced by the “police” powers inherent in the federal government within the federal zone.

After the revolutionary war, there was no “United States of America.”  Up until the conflict, England was the “sovereign” over the colonies.  The war ended that relationship, making each of the 13 colonies separate and independent nations, owing no allegiance to any superior.

In an effort to secure their independence and sovereignty, by necessity, they found it beneficial to join together for their mutual interests and defense.  After a trial and error (the confederacy), the people representing their respective Colony, contracted together forming the “United States of America.”  The purpose of the union was limited to the external affairs of the colonies, now called States.

Those areas of mutual concern and were within the “sovereign” authority of the Nation/States were delegated to the central government.  During the debates in the Federal Convention of 1787 as reported by Madison, Mr. Sherman stated that “[t]he objects of the Union, he thought were few, 1. Defence against foreign danger, 2. against internal disputes and a resort to force, 3. treaties with foreign nations, 4. regulating foreign commerce, and drawing revenues from it . . . .”  To which Thomas Jefferson added:  “To the united nation belong our external and mutual relations; to each State, severally, the care of our persons, our property, our reputation and religious freedom.” 98 Nothing like we have today; our state governments are accepting the “federal porridge.”

James Madison stated in a letter reported in the Federalist Papers, No. 45:  “The powers delegated to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite. The former will be exercised principally on external objects as war, peace, negotiation, and foreign commerce; with which the last power of taxation will, for the most part, be connected. The powers relative to the several states will extend to all the objects which, in the ordinary course of affairs, concerns the lives, liberties and prosperity of the state.” Justice Gray’s opinion in the Legal Tender Cases:  “The sword and the purse, all external relations, . . ., are entrusted to its government.” 99

At the beginning of the Convention, the Union had no authority.  As far as legislating in these areas, the Constitution, which in essence, is a contract between two corporate bodies, the Nation/States outlined those delegated powers in Article I, Section 8, particularly clause 17 of the Constitution, to wit: “To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; . . .”

“All legislation is prima facie territorial.” 100  In New Orleans v. United States: “Special provision is made in the Constitution for the cession of jurisdiction from the states over places where the federal government shall establish forts or other military works. And it is only in these places or in the territories of the United States where it can exercise a general jurisdiction.” 101

In this specific clause, the Nation/States delegates to the central government “exclusive legislation in all cases whatsoever, over such . . .  (District of Columbia) . . ., and to exercise like authority over all Places purchased by the Consent of the Legislature of the State . . .”  Once the Union was in place the federal government had exclusive legislative jurisdiction over the District of Columbia independent of the States.  Of course the respective States had by cession given that to the government.  Thereafter, and even today, in order for the federal government to extend its legislative authority into the States, the States had to by cession, given that to the government.  A review of UCS Title 63L: Lands; with the exception of certain military establishments, shows no such jurisdiction has been ceded to the federal government by the State of Utah.

“It scarcely needs to be said that unless there has been a transfer of jurisdiction (1) pursuant to clause 17 by a Federal acquisition of land with State consent, or (2) by cession from the State to the Federal Government, or unless the Federal Government has reserved jurisdiction upon the admission of the State, the Federal Government possesses no legislative jurisdiction over any area within a State, such jurisdiction being for exercise entirely by the State. . . .”  102  “It is conclusively presumed that jurisdiction has not been accepted until the Government accepts jurisdiction over land as provided in this section.” 103  Every Utah State legislator should have a copy of the Committee’s report.  It is available on-line.

Justice Brewer speaking to the jurisdiction of the District Court points out that: “. . .Generally speaking, within any state of this Union the preservation of the peace and the protection of person and property are the functions of the state government, and are no part of the primary duty, at least, of the nation.  The laws of congress in respect to those matters do not extend into the territorial limits of the states, but have force only in the District of Columbia, and other places that are within the exclusive jurisdiction of the national government.” 104

As far as the federal government having authority to legislate tax law and having the police power to enforce such legislation within the States, none exists unless so granted by the States as directed by the Constitution.  The State of Utah has not so granted.  For jurisdiction to be transferred from State to Federal control, the State has to consent to the secession and the federal government has to accept it.  Searching the statutes of the State of Utah, territory that has been ceded over to the federal government is limited to military purposes such as Hill Air Force Base.  The act of legislation called Title 26 of the United States Code and its regulations as found in the Code of Federal Regulations have no effect on citizens outside of the Federal Zone.

Clause 17 of Article I, Section 8 deals with the land area of the Union as to the authority to legislate control over the natural rights of the people, none exists within the sovereignty of the States and therefore, under the doctrine of delegation, none was transferred to the the central government.  “The United States (union) are sovereign as to all the powers of Government actually surrendered: Each State in the Union is sovereign as to all the powers reserved. It must necessarily be so, because the United States (government) have no claim to any authority but such as the States have surrendered to them: . . .” 105


The real stumbling block for the Circuit Judge in Collins, is his reliance upon his understanding of the 16th amendment, first stating the argument made by the defendant’s counsel:  “Dickstein’s argument that the sixteenth amendment does not authorize a direct, non-apportioned tax on United States citizens similarly is devoid of any arguable basis in law.”  The judge relies on In re Becraft. 106  The judge continues:  “For seventy-five years, the Supreme Court has recognized the the sixteenth amendment authorizes a direct non-apportioned tax upon United States citizens throughout the nation, not just in federal enclaves, . . .”  Claiming the language of Chief Justice Edward White in Brushaber, supra.  I am sorry sir, but that is a lie!  If the 10th circuit would take the time and read the pages cited (12 -19) from the Chief Justice’s opinion will show that it is the 10th circuit that is in error, and “is devoid of any arguable basis in law”;  as is every other lower court opinion that relies on that erroneous conclusion.  Their conclusion is just not true!

The precise wording of the 16th 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.”  The language of the amendment is void of any reference suggesting that the “. . . amendment authorizes a direct non-apportioned tax upon United States citizens throughout the nation, . . .”  The two keystone cases on taxation, M’Culloch and Brushaber, give no language to that effect either.  If anything is gained from these decisions is the fact that the authority to tax the people is a power left to the States and the people.

On June 17, 1909, Senator Norris Brown of Nebraska submitted to the Senate Resolution S.J. 39.  It is interesting to note that the original draft of S.J. 39 is ever-so-slightly different than the final draft of S.J. 40.  S.J. (Senate Joint) 39 resolution read:

“The Congress shall have power to lay and collect direct taxes on income without apportionment among the several States according to population.”

After introducing the resolution to the Senate, the resolution went into the Committee on Finance.  On June 28, 1909, Mr Aldrich, from the Committee on Finance, reported back to the Senate on the new Senate Joint Resolution No. 40 which read:  “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.”

The interesting side note on this process is that somewhere in the machinery of the Senate Committee on Finance, the Committee dropped the word “direct” out of the resolution.  The sixty-four thousand dollar question is WHY???????

My research has turned up nothing in the way of minutes of the meeting of the Committee on Finance and their deliberations.  The only evidence found was in Senator Brown’s remarks that he intended to apply a “direct” tax on incomes only.  If this was truly the intent of the original draft, and the Committee on Finance deleted the word — does that mean that the Committee could not go along with Senator Brown?  If this was the intent of Congress, in proposing the resolution as a direct tax, it would clear up a lot of confusion as to whether the tax on income was direct or indirect.

The question that the Sixteenth Amendment allowed a direct tax upon incomes, as originally proposed by Senator Brown, did not make it through Congress or the ratification process of the States, and should never arise again in income tax cases –  but it does.  The Eighth Circuit Court, in a 1980 case blatantly misquotes Justice White and the Brushaber ruling:  “The purpose of the Sixteenth Amendment was to take it ‘out of the class of excises, duties and imposts and place it in the class of direct taxes.’  Brushaber at page 19;”  U.S. vs. Francisco, 614 F. 2d 617

The Judge in a Tax Court Case in 1981 states:  “Appellant (claims that). . . the income tax is a direct one that must be apportioned among the several states.  . . .  This requirement was eliminated by the Sixteenth Amendment.”   Lonsdale vs. Commissioner of Internal Revenue, T.C. Memo 1981-122

“. . . [T]he sixteenth amendment was enacted for the express purpose of providing for a direct income tax.  . . .  The Supreme Court promptly determined in Brushaber v. Union Pacific R.R. Co., . . .  that the sixteenth amendment provided the needed constitutional basis for the imposition of a direct non-apportioned income tax.”  Parker vs. Commissioner of Internal Revenue, 724 F. 2d 469 (1984)

How many lives and families have been destroyed by the stupidity of the legal profession and incompetent judges.  Truly it was written, “the foundation for the destruction of this people is being laid by the unrighteousness of the lawyers and judges.”  107

Article I of the United States Constitution deals with the powers of the federal government.  Again, no language contained therein, suggests an authority to tax the citizens.  If a citizen engages in an occupation regulated by the Constitution, then there is a tax imposed on that privilege and income is the measure.  If the Union deems it necessary to raise additional revenues to offset the expenses of war, they impose a “direct” tax upon the States, not the citizens.  The collection of that tax then becomes the responsibility of the State of collect.

There are some that would like to expand the “necessary and proper” or the “tax and spend” clauses of the Constitution to justify the sixteenth amendment and tax the incomes of the people directly.  In the first instance, the 16th amendment does not authorize any new or exceptional class of tax.  This was one of the contentions put out of view by the Supreme Court in Brushaber, and in Stanton v. Baltic Mining Co., 108  yet continues to arise from the dead.  Chief Justice White, writing for both opinions, supposedly put that to rest, explaining that; “. . .  the Amendment demonstrates that no such purpose was intended, and on the contrary shows that it was drawn with the object of maintaining the limitations of the Constitution and harmonizing their operation.”  109  Notice the words and phrases used by the Brushaber Court, such as ‘forbids’, ‘maintaining the limitations’, ‘harmonizing their operation’, ‘prevent’, ‘prevention’, ‘simplifying the situation and making clear the limitation’.”  In spite of this clear expose’, the lie is still circulated with a straight face, by the legal profession, Utah senator Orrin Hatch, the IRS and the Utah audit division.

“Those (government) powers are not given by the people of a single state. They are given by the people of the United States, to a government whose laws, made in pursuance of the constitution, are declared to be supreme. Consequently, the people of a single state cannot confer a sovereignty which will extend over them.” 110  Here it is; “Consequently, the people of a single state cannot confer a sovereignty which will extend over them.”  To bring it home, of the 38 states that “ratified” the 16th amendment, Utah was not one of them.  Under the assumption that the States that did ratify the amendment, they have extended a sovereignty over their sister States which rejected it, which Marshall voids.  It is all in the principle of delegation, no state can delegate or vote a sovereignty that would extend over any of the other states.  That delegation of sovereignty is not up for a majority vote.  Whether the amendment is constitutional or whether all of the 38 States listed as “ratifying” the amendment did in fact ratify it, is immaterial.  The amendment does not authorize the income tax.  It is the administration of the income tax that is at fault in regards to certain situations.

Federal authority to tax incomes, is not found in the Sixteenth Amendment, it is Article I, Section 8, cl. 1: “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, . . .”  Like some of the other responsibilities mentioned in Section 8, common defense and general welfare; this authority is limited by the items listed in Section 8.  Revenue for the support of government was principally derived from the role of government in regulating foreign and inter-state commerce, and as Chief Justice Marshall explained in M’Culloch, things which “exists by its own authority, or is introduced by its permission.”

“So the amendment (16th) made it possible to bring investment income within the scope of the general income-tax law, but did not change the character of the tax. It is still fundamentally an excise or duty with respect to the privilege of carrying on any activity or owning any property which produces income. The income tax is, therefore, not a tax on income as such. It is an excise tax with respect to certain activities and privileges which is measured by reference to the income they produce. The income is not the subject of the tax: it is the basis for determining the amount of tax.” 111

It should be noticed that the amendment does not repeal any of the limitations in the Constitution regarding taxation.  Also, it should be noted that several of the amendments include the authorization that; “Congress shall have power to enforce this article by appropriate legislation.”  112  The text of the 16th amendment authorizing such action, is “silent” indicating that Congress was given no authority to enforce the 16th amendment by legislation, which is in harmony with what Chief Justice White said in Brushaber.  This is because the amendment is a clarification of the power of taxation.  In reading the U.S. Constitution, silence is “best understood as an instruction on how to read the Constitution’s silences with respect to national governmental authority: on that subject, we are told, ‘silence’ means ‘prohibition’.”  113  And so it is with Utah State statutes.  “. . . no conduct is a crime unless made so by this code. . . ”

“The Supreme Court, in a decision written by Chief Justice White, first noted that the Sixteenth Amendment did not authorize any new type of tax, nor did it repeal or revoke the tax clauses of Article I of the Constitution, quoted above. Direct taxes were, notwithstanding the advent of the Sixteenth Amendment, still subject to the rule of apportionment and indirect taxes were still the subject of the rule of uniformity. Rather, the Court found that the Sixteenth Amendment sought to restrain the Court from viewing an income tax as a direct tax because of its close effect on the underlying property.” 114

Chief Justice White draws our attention to this very assertion made by the audit division and the many other lower courts, when he said;  “We are of 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 . . .

“But it clearly results that the proposition and the contentions under it, if acceded to, would cause one provision of the Constitution to destroy another; . . .

“. . . 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 . . .” 115  Chief Justice White again emphasized this in the second case of that term saying:  “(1) That as the 16th Amendment authorizes only an exceptional direct income tax without apportionment, . . . .  As the first proposition is plainly in conflict with the meaning of the 16th Amendment as interpreted in the Brushaber Case, it may also be put out of view.” 116

After having brought this the attention of the audit division, they still repeat the error.  It is evident that “they walk in darkness at noon-day.”  It is conceded that because of the mass of contradictory opinions found in the lower court system, the audit division has ample court cites to support their position, however, they haven’t produced one Supreme Court decision for support of their position.  What Chief Justice White said in his decision in Brushaber, fails to justify the conclusion reached by Circuit judge Baldock and all of the other lower courts, which are numerous, and that includes the Utah audit division as it fails to grasp the concept as explained by their legal counsel.  “Courts have consistently held that the 16th Amendment authorizes a direct non-apportioned tax on U.S. citizens.” 117  The Supreme Court has never held this position, the lower court are having fun with it as, like the audit division, they read into the Brushaber opinion something that is not there. (Note No. 4, p. 5 of the audit division’s reply brief, Nov. 7, 2014)  Repeat a lie long enough, and often enough and some will believe it.  Recall the advice of Circuit Judge Reid about “The lawyer who depends merely on decided cases as authority for the position he takes in argument, . . . is indeed but poorly prepared for the service he should render.” 118

These lower court decisions that are repeated by the lower courts and administrative courts like to cite and recite, like Jane Phan copying language from a previous Tax Commission decision. 119  Again, Circuit Judge Reid’s observation is on point.  Someone put on line a quote by Adolf Hitler: “What good fortune for the governments that the people do not think.”

Can’t pass up this opportunity to pass along this observation by Robert G. Natelson writing an article for the University of Kansas Law Review (2002 – 2003) on The General Welfare Clause and the Public Trust: “One of the best Anti-Federalist writers, ‘Brutus,’ described how, without such limitations, federal revenue demands might come to dominate American life:  ‘The general legislature will be empowered to lay and tax what they chuse [sic], to annex any penalties they please to the breach of their revenue laws; and to appoint as many officers as they man think proper to collect the taxes. . . .

“This power, exercised without limitation, will introduce itself into every corner of the city, and country — It will wait upon the ladies at their toilett [sic], and will not leave them in any of their domestic concerns; it will accompany them to the ball, the play, and the assembly; it will go with them when they visit, and will, on all occasions, sit beside them in their carriages, nor will it desert them even at church; it will enter the house of every gentleman, watch over his cellar, wait upon his cook in the kitchen, follow the servants into the parlor, preside over the table, and note down all he eats or drinks; it will attend him to this bedchamber, and watch him while he sleeps; it will take cognizance of the professional man in his office, or his study; it will watch the merchant in the counting-house, or in his store; it will follow the mechanic to his shop, and in his work, and will haunt him in his family, and in all his labour, it will be with him in the house, and in the field, observe the toil of his hands, and the sweat of his brow; it will penetrate into the most obscure cottage; and finally, it will light upon the head of every person in the United States.  To all these different classes of people, and in all these circumstances, in which it will attend them, the language in which it will address them, will be GIVE! GIVE!” 120

The theory that the 16th amendment conferred a power upon the central government to tax all the people will not hold up to the principles of taxation that the Supreme Court has laid down.  First the people of one State cannot confer a ‘sovereign’ power over a sister state.  (M’Culloch, p. 429)  Second, the “original right of taxation, . . . is acknowledged to remain with the states.” Never delegated to the central government.  The United States Constitution was written as a contract between the people and the federal government.  It is only applicable to State authority where so indicated. e.g.; the guarantee clause, for a “republican form of government.” (M’Culloch, p. 428)  Also, Article I, Section 10 is a negative to state authority.  Third, although directing this principle to the State authority, it is applicable also to the federal authority, the general rule of taxation is that it is a ‘sovereign’ power and the ‘sovereignty’ of government extends over things that “exists by its own authority, or is introduced by its permission.”  (M’Culloch, p. 429)   Forth, inalienable (natural) rights are not the object of federal or state taxation.  (Pollock, first hearing; Miranda v. Arizona; West Virginia State Bd. of Ed.)  “The Sixteenth Amendment conferred no new power of taxation.”  Stanton v Baltic Mining Co.  The States receive nothing from the 16th amendment.


Another Fundamental Forgotten

“He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his assent to their acts of pretended legislation:…”  121

This “foreign” jurisdiction was England’s authority imposing the civil law upon the colonies.  “It has indeed been said, that this extensive jurisdiction of the admiralty in the colonies was the subject of complaint at the time of the Revolution; and it is undoubtedly true, that the extension of the admiralty Jurisdiction beyond its ancient limits was, in some petitions and public documents, stated as one of the grievances of the colonies. . . .   [T]he imposition of taxes and the collection of revenue; and the whole of that jurisdiction was given to the admiralty.”” 122

Supreme Court Justice John Campbell commented on the admiralty in his dissenting opinion in Jackson v. The Magnolia: “In 1768, John Adams, the Coke of the Revolution, prepared for the citizens of Boston instructions to their representatives, Otis, Cushing, Samuel Adams, and Hancock. The citizens said to their representatives, that, ‘next to the revenue itself, the late extensions of the jurisdiction of the admiralty are our greatest grievance. The American courts of admiralty seem to be forming by degrees into a system that is to overturn our constitution, and to deprive us of our best inheritance, the laws of the land. It would be thought in England a dangerous innovation, if the trial of any matter on land was given to the admiralty.'” 123

J. Reuben Clark, Jr., speaking to the conflict between the civil law and the common law:  “Briefly, and stated in general terms, the basic concept of these two systems was as opposite as the poles – in the civil law the source of all law is the personal ruler; whether prince, king,or emperor (or legislature) – he is sovereign.  In the Common Law, certainly as finally developed in America, the source of all law is the people; they, as a whole, are sovereign.” 124 A very careful study of the jurisprudence of our republican form of government shows that: “It is therefore a self evident proposition, that the jurisprudence of the United States is not founded in the civil law, . . .  Where the common law was the law of the land, the civil law was held to be the law of admiralty.”  125  And “that without a stipulation, the admiralty (civil law) has no jurisdiction at all over the person.” 126

“The admiralty law is indebted for many of its characteristics to the circumstances of the countries in which it was first administered. The countries that earliest reduced the law of the sea to a system, and adopted codes of maritime regulations, having been countries in which the Roman or civil law prevailed, the principles of that great system of jurisprudence were incorporated with, and gave character to, the maritime law; and so much were pure reason, abstract right, and practical justice mingled in that system, and so important was it that the general maritime law should be uniform and universal, that, in England, where the common law was the of the land, the civil law was held to be the law of the admiralty, and the course of proceedings in admiralty closely resembled the civil law practice.  Browne Civ. and Adm. Law. 348.”  127

One outstanding feature of the admiralty/civil law is the operation of one’s right to a trial by jury.  “It is well known, that in civil causes, in courts of equity and admiralty, juries do not intervene, and that courts of equity use the trial by jury only in extraordinary cases to inform the conscience of the court.”  128

“Civil law procedure developed in early maritime nations and reached its zenith in the declining years of the Roman Empire. . . .

“One of the more serious frustrations with civil law process can be traced to the Roman system where there was an underlying presumption that “the will of the prince is law.” Because of the presumption, which has been commonly manifest in civil law systems through the ages, justice is unreliable as it is characteristically incidental to objectives of entrenched powers. Interpretation and application of law may change from one regime to the next without the law itself being changed.”  129

Understanding this demonstrates the difference between the “rule of law” and the “rule of man”.  Terms confused by the legal profession conveying the understanding that any law passed by the legislature represents the “law of the land,” when in reality, the law of the land consists of the fundamental principles.  The “law of man” is what we are experiencing today, laws that are ever changing with each new legislative session, depending on the people in power.  The civil law has created volumes of statutes and regulations, and are so situated that the average citizen is not capable of finding or even understanding.  The adage “that ignorance of the law is no excuse” does not find a place under the civil law.  Ignorance of the law is a very good excuse when coming into contact with the civil law.  “The general misconception is that any statute passed by legislators bearing the appearance of law constitutes the law of the land.  The U.S. Constitution is the supreme law of the land, and any statute, to be valid, must be in agreement.  It is impossible for both the Constitution and a law violating it to be valid; one must prevail. . . .” 130  Since the Constitution is a ‘common law’ document, it can only be understood in relationship to the common law.

It should be understood by the legal profession that there is only two sources of law, the common law or law of the land and admiralty law or the law of the sea.  Bringing the law of the sea onto the land in the disguise of the civil law is but a corruption of admiralty.  Anything that cuts into the power structure of the legal profession is considered frivolous, no foundation, without merit; terms thrown around when they do not have an answer.

The legislative action taken by the State of Utah abolishing the common law has a direct impact upon the “due process” required by judicial proceedings in the State.  “The understanding which the founders of the American constitutional system, and those who wrote the due process clauses, brought to the subject they derived from Coke who in his Second Institutes expounded the proposition that the term ‘by the law of the land’ was equivalent to ‘due process of law,’ which he in turn defined as ‘by due process of the common law, . . .'”  131

When you hear or read references to the “law of the Land” . . .  you know that they are referring to the “common law.”  Neither the audit division nor the State of Utah has shown any element required by the civil law by way of contract, privilege, servitude or the like that would bring the free citizen within the jurisdiction of this administrative court or their liberty and property within the scope of the sovereign authority of the State of Utah via the Tax Commission.

In spite of the sacrifice made by the founders of the Union, and the “pledge to each other (and future generations) our lives, our fortunes and our sacred honor.”  The State of Utah has erased that commitment by legislative fiat, passing Utah Code Section 76-1-105, abolishing the jurisprudence of the common law, an essential ingredient of our republican form of government.  Without it you cannot understand the fundamentals associated with constitutions and one has neither liberty, property nor justice.

Having provided all of this, it makes clear the reasoning of the various courts having indicated that: “The revenue laws are a code or system in regulation of tax assessment and collection.  They relate to taxpayers, and not to non-taxpayers.  The latter are without their scope.  No procedure is prescribed for non-taxpayers, 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. . . .” 132

The Utah State legislature and the Tax Commission need to expand their thinking.  The attack by the Utah Tax Commission, is built upon the civil law as created by the legislature and cannot be supported by the “law of the land.”  My response to the “letter of the law” is to recur to the fundamentals upon which our state and federal governments were created.  Principles that are unchanging, the rule of law.  When the State of Utah abandoned the fundamentals, it gave birth to a democracy, and the “rule of man.”

“The letter killeth, but the spirit giveth life.”

2 Corinthians 3:6

* * * * * * * * * * * * * * * *

“In doing this, I shall have occasion incidently to evince, how true it is, that States and Governments were made for man; and, at the same time, how true it is, that his creatures and servants have first deceived, next vilified, and, at last, oppressed their master and maker.”  Justice James Wilson, Chisholm, supra., at p. 454


1.  Chief Justice Marshall, M’Culloch v. Maryland, 17 US 316; James Madison, The Federalist Papers, No. 43: “But the authority extends no farther than to a guaranty of a republican form of government, . . .  The only restriction imposed on them is that they shall not exchange republican for anti-republican Constitutions.”

2.   2 US 419 (1793); “Can one generation bind another, and all others, in succession forever?  I think not.  The Creator has made the earth for the living, not the dead. . . .  A generation may bind itself as long as its majority continues in life; . . .  Nothing then is unchangeable but the inherent and unalienable rights of man.”  Thomas Jefferson, letter to Major John Cartwright, June 5, 1824, The Portable Thomas Jefferson.

3.  Bains v. The James and Catherine, 2 Federal Cases, No. 756, 411, 416; Circuit Justice Baldwin.;  See also,Justice Joseph Story, Letter to Chief Justice John Marshall, CHAPTER XVI.

GENERAL REVIEW OF THE COLONIES;  “I think it will be a great importance, when you come to the proper part, to portray at full length the consequences of this new doctrine, that the common law is the law of the U.S., & that their courts have, of course, jurisdiction co-extensive with that law. . . .”  Thomas Jefferson, letter to Edmund Randolph, Aug. 18,1799, The Portable Thomas Jefferson.

4.  “The  language  of the Constitution,  as has been well said, could  not be  understood without  reference to the Common Law.”  1 Kent. Comm. 336,  Kepner v. U.S.  195 U.S. 100 at 125.;  “We are bound to interpret the  Constitution in the light of the law as it existed  at the time it was adopted.”  Mattos v. U.S. 156 U.S. 237 at 243.;  Minor v. Happersett. 21 Wall. 162.; U.S. v. Wong Kim. Ark. 169 U.S. 649.


6.  Harry F. Atwood, Back to the Republic, Laird & Lee, 1918; pp. 29-30.  Harry F. Atwood, a noted speaker, left his legal practice to lecture on the Constitution.

7.  The Federalist Papers, No. 10

8.  Corpus Juris Secundum, United States I, A, Section 2, Nature and Status;

9.  The Constitution, A Heavenly Banner, BYU address, Sept. 16, 1986.

10.  The Constitution of the United States of America, Analysis and Interpretation, Amendment V:  “Scope of Guarantee.

11.  Murray’s Lessee v. Hoboken Land and Improvement Co., 59 U.S. 272, 276 (1856).

12.  Barron v. Baltimore, 32 U.S. 243 (Marshall, 1833)

13.  American Bar Association, Division for Public Education

14.  Advertising supplement produced by the Utah Media Group, Law Day 2015, April 26, 2015.

15.  Letter from Jane Phan, lead administrative law judge, July 10, 2014

16.  Letter to Ben McAfee, May 30, 2014

17.  Wikipedia, Legal burden of proof; “In any system of fairness, the burden of proof is on the accuser.”  Senate Confirmation Hearing for Justice Clarence Thomas, October 11, 1991.

18.  3 Dallas, U.S. 386, 388 (1798); “[T]hese same administrative bodies that so legislate, also act as judges of their legislation.  They are pro tanto the judiciary judging their own laws.”  J. Reuben Clark, Jr., former Solicitor for the Department of State.;  “[W]hen an executive agency adjudicates a violation of one of these edicts – in order to impose a fine or some other penalty–it is an attempt to exercise binding judicial power not through a judicial act, but again through an administrative act. . . .

“As for procedural rights, the history is even more illuminating.  Administrative adjudication evades almost all of the procedural rights guaranteed under the Constitution.  It subjects Americans to adjudication without real judges, without juries, without grand juries, without full protection against self-incrimination, and so forth. Like the old prerogative courts, administrative courts substitute inquisitorial process for the due process of law—and that’s not just an abstract accusation; much early administrative procedure appears to have been modeled on civilian-derived inquisitorial process. Administrative adjudication thus becomes an open avenue for evasion of the Bill of Rights. ”  Philip Hamburger, Professor of Law, Columbia Law School, The History and Danger of Administrative Law.  Address to the students of Hillsdale College.

19.  Alexander Hamilton, Federalist Papers, No. 79

20.  New York Central R.Co. v. Chisholm, 268 U.S. 29 [1925]]; Hanford v. Davis, 163 U.S. 273, (1896); Sandberg v. McDonald, 248 US 185

21.  “Notwithstanding the powers granted to the State Tax Commission in this Constitution, the Legislature may by statute authorize any court established under Article VIII to adjudicate, review, reconsider, or redetermine any matter decided by the State Tax Commission relating to revenue and taxation.”;  Compare to A. Hamilton, Federalist Paper, number 78:  “For I agree that there is no liberty, if the power of judging be not separated from the legislative and executive powers.”

22.  Utah State v. Steed, 2014 UT 16, 05-16-2014.

23.  Bothke v. Terry, 713 F.2d 1405, at 1414 (1983), 9th Cir.

24.  Steed, supra.;  Individual Income Tax TC-40 Forms and Instructions – 2009

  1. Every Utah resident who must file a federal income tax return;
  2. Every non or part-year resident with income from Utah sources who must file a federal return;
  3.   3.       Taxpayers wanting a refund of income tax overpayment regardless of the income
  4. amount; or
  5.   4.       Every individual with Utah income that meets the following requirements:

Who Must File – TC-40 General Instructions (p. 2) – 2014

1. Every Utah resident or part-year resident who must file a federal income tax return;

2.    Every nonresident with income from Utah sources who must file a federal return; and

3. Taxpayers wanting a refund of any income tax overpaid.

Item number four (4) from the 2009 instructions is not included in the latter printings of the TC-40 instructions.  Undoubtedly because this is not the “general requirement?”

Jane Wiseman, employee of the Tax Commission, in an email reply:  “If you do not have to file a federal return you will not be required to file a state return.” “TAXMASTER TAXMASTER” <>, Dolores Furniss, and the Tax Commission’s instruction booklet for filing a TC-40, all state the wording of 59-10-502.  No mention is made which reflect otherwise.

25.  New York Life Ins. Co. v. Gamer, 303 U.S. 161, 171 (1938), “[A] presumption is not evidence and may not be given weight as evidence.”; See also: A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F. 2d. 1020, 1037 (Fed. Cir. 1992); Del Vecchio v. Bowers, 296 U.S. 280, 286 (1935); Jensen v. Brown, 19 F. 3d. 1413, 1415 (Fed. Cir. 1994).

26.  Flora v. U.S., 362 U.S. 145, 176

27.  Loan Association v. Topeka, 87 US 655, 662 (1874); cited again in Pollock v. Farmers’ Loan, 157 US 429, 599 (1895)

28.  M’Culloch v. State, supra., p.427

  29.  Article I, Section 3

30.   Internal Revenue Manual, [4.2] [05-14-99];  (

31.  Stare decisis.  To abide by, or adhere to, decided cases.  Black’s Law Dictionary, 6th, ed.

32.  Justice Thurgood Marshall, U.S. v. Mason, 412 U.S. 391, 399 (1973)

33.  Brushaber v. Union Pac. R.R., 210 U.S. 1 (1916)

34.  State v. Jewett, 500 A. 2d 233 (1985)

35.   Adapted from a Washington Law Review article, 1992, suited to Utah’s section 27.

36.  Marquette Law Review, Vol. 1, issue 4 (1917) p. 186; “That the people have an original right to establish for their future government such principles as, in their opinion, shall most conduce to their own happiness is the basis on which the whole American fabric has been erected. The exercise of this original right is a very great exertion; nor can it nor ought it to be frequently repeated. The principles, therefore, so established are deemed fundamental. And as the authority from which they proceed, is supreme, and can seldom act, they are designed to be permanent.” (Marbury v. Madison, 5 U.S. 137, 176)  Chief Justice Marshall

37.  Utah Code Section 76-1-105: Common law crimes abolished.  Common law crimes are abolished and no conduct is a crime unless made so by this code, other applicable statute or ordinance.

38.  Marquette Law Review, p. 187; “Jim’s persistence in repeating this message is commendable because we need to be summoned over and over again to return to the sources, adfontes!” A Tribute To Jim Ely, by John V. Orth; William & Mary Bill of Rights Journal, Volume 16, Issue 3;

39.  State v. Jewett, at  235

40.  NFIB v. Sebelius, 567 U.S. (2012)

41.  The Federalist Papers No. 84)

42.  Amendment X; The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.

43.  Do Utahns Remember How to Be Free?

44.  Do Utahns Remember How to Be Free?

45.  Laird v. Tatum, 408 U.S. 1, 28; Justice Douglas in dissent.

46.  Initial Hearing Order, Appeal No. 14-1388, p. 7, March 10, 2015

47.  Audit division’s response by legal counsel, p. Appeal No. 14-1388, p. 4, Nov. 7, 2014.

48.  Steed, supra.

49.  “We perceive no need to refute these arguments with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some colorable merit.” Crain v. C.I.R., 737 F. 2d 1417, (5th Cir. 1984).  Cited by UTC response, Sept. 4, 2014;  U.S. v. Koliboske, 732 F. 2d 1328 (1984), the court reaches a conclusion against the defendant by opinion only.  And so on.

50.  UCS 76-1-105, “. . . no conduct is a crime unless made so by this code, other applicable statute or ordinance.”  The federal requirement to file a return is found in 26 USC §§6001, 6011 and 6012(a) “and their regulations.  They say that you must file a return or statement with us for any tax you are liable for.”  Privacy Act and Paperwork Reduction Act Notice.

51. Arizona v. United States, 567 U.S.       2012

52.  Congressional Research Service – Authority of State and Local Police to Enforce Federal Immigration Law, September 10, 2012).

53.  Alexander v. Sandoval, (532 U.S. 275 (2001)

54.  Part II, Chapter V.  Criminal Jurisdiction, p. 108.

55.  M’Culloch, supra., p. 410

56.  U.S. v. Tweel, 550 F.2d 297, 299. See also U.S. v. Prudden, 424 F.2d 1021, 1032; “`Silence’ is species of conduct, and constitutes an implied representation of the existence of facts in question. . . When silence is of such character and under such circumstances that it would become a fraud. . . it will operate as an estoppel.” Carmine v. Bowen, 64 A. 932.

57.  “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 statutes 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)

58.  State v. Jewett, supra. (1985)

59.  Michigan v. Long, 463 U.S. 1032, 1034, 1040, 1041 (1983)

60.  Black’s Law Dictionary, 6th ed.

61.  Justice Field concurring in Pollock, supra, 157 US 429, 599;  “He owes no such duty to the State, since he receives nothing therefrom beyond the protection of his life and property. His rights are such as existed by the law of the land long antecedent to the organization of the State, and can only be taken from him by due process of law, and in accordance with the Constitution.”  Justice Brown, Hale v. Henkel, 201 U.S. 43,74 (1906).  “. . . an essential, unalienable right in nature . . . ever held sacred and irrevocable . . . that what a man has honestly acquired is absolutely his own.”  Massachusetts Circular Letter of 1768.

62.  The Law, Frederic Bastiat, (1801 – 1850), a French economist, statesman, and author.;  The right to property (labor) and its protection is a fundamental law under the Utah Constitution Article I, Section 1.  The right to labor and its fruit is a “common law” right;  “It has been well said that ‘the property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of the poor man lies in the strength and dexterity of his own hands, and to hinder his employing this strength and dexterity in what manner he thinks proper, without injury to his neighbor, is a plain violation of this most sacred property’.”  Butcher’s Union Co. v. Crescent City Co., 111 U.S. 746 (1883)

63.  The Antelope, 23 U.S. 10 Wheat. 66, 120 (1825)

64.  Pollock v Farmers Loan & Trust, 157 U.S.  429,  582.

65.  Calder, supra., at 388.

66.   Appeal No. 14-1388, Brief from the Tax Commission, Nov. 7, 2014, p. 2.

67.  Yick Wo v. Hopkins,118 U.S. 356, 369 (1886)

68.  “The public revenues are a portion that each subject gives of his property, in order to secure or enjoy the remainder.

“To fix these revenues in a proper manner, regard should be had both to the necessities of the state and to those of the subject.  The real wants of the people ought never to give way to the imaginary wants of the state.”  Montesquieu, The Spirit of the Laws, Book XIII, chpt. 1.

69.  Julliard v. Greenman, 110 U.S. 421, 467 (1884).  Justice Field, dissenting;    “It is, however, a rule of law, which has been  designated as a ‘legal axiom,’ that ‘no pecuniary; burden can be imposed upon the subjects of this country, by whatever name it may be called, whether tax, due, rate, or toll, except upon clear and distinct legal authority, established by those who seek to impose the  burden.  . . .”  Herbert Broom, LL.D., A Selection of Legal Maxims, p. 3.;  A. Hamilton, Federalist Paper, number 78:  “There is no clearer principles, than that every act of a delegated authority, contrary to the tenor of the commission under which it is exercised, is void.”

70.  M’Culloch, supra. at 429.

71.  Curry vs. McCanless, 307 U.S. 357, 365 [1939]

72.  (M’Culloch, supra. at 409; See also,  Curry vs. McCanless, 307 U.S. 357)

73.  State Tax Commission v. Aldrich, 316 US 174 (1942)

74.  M’Culloch, supra., p.429.

  75.  Chisholm v. Georgia, supra., Justice Wilson, p. 456

76.  Chisholm v. Georgia, supra., p. 458.

77.  72 American Jurisprudence 2d, Section 4

78.  Spooner v. McConnell, 22 Fed. Cas. 939, 943

79.  Kansas v. State of Colorado, 206 US 46, 83

80.  The Constitution: A Heavenly Banner, supra.

81.  M’Culloch v. Maryland, supra., at p. 406

82.  Utah State Constitution, Article I, Section 25; “This enumeration of rights shall not be construed to impair or deny others retained by the people.”

83.  Dobbins v. Commissioners, 16 Pet. 435

84.  Pollock v. Farmer’s Loan, supra., at p. 584

85.  Dean Russell, Letter to Compiler, March 19, 1964;  Andrew Napolitano,  April 18, 2013, former judge of the Superior Court of New Jersey. “Every official foundational government document — from the Declaration of Independence to the U.S. Constitution to the oaths that everyone who works for the government takes — indicates that the government exists to work for us. The Declaration even proclaims that the government receives all of its powers from the consent of the governed. If you believe all this, as I do, then just as we don’t have the power to take our neighbor’s property and distribute it against his will, we lack the ability to give that power to the government. Stated differently, just as you lack the moral and legal ability to take my property, you cannot authorize the government to do so.”

86.  Black’s Law Dictionary, 6th ed.

87.  The Proper Role of Government, address Feb. 29, 1968, before the Utah Forum for the American Ideal.

88.  Two Treatise of Government, Book II:  “Sec. 138. Thirdly, The supreme power cannot  take from any man any part of his property  without his own consent: for the preservation  of property being the end of government, and that for which men enter into society, …” Chap. XI. Of the Extent of the Legislative Power.

89.  M’Culloch, supra., at p. 429

90.  Miranda v. Arizona, 384 US 436, 490 (1966)

91.  Chief Justice Earl Warren, Lucas v. 44th Gen. Assembly of Col., 377 US 713, 736 (1964);  “Absolute, arbitrary power over the lives, liberties and property of freemen exist nowhere in a republic; not even in the largest majority.”  Constitution for the State of Wyoming, Section 7

92.  M’Culloch, supra., p. 430

93.  U.S. v. Collins, 920 F. 2d 619

94.  Reply to the Appeal court, Sept. 15, 2014

95.  Gould vs. Gould, 245 U.S.; See also: Hassett v. Welch, 303 U.S. 303

96.  United States v. Worrall, 2 U.S. 384, 393

97.  United States v. Lopez, 514 U.S. 549

98.  Thomas Jefferson: To Rhode Island Assembly, 1801. ME 10:262;

99.  Julliard v. Greenmen (110 U.S. 438 (1871); “The founders anticipated that the expenditures of the . . . federal government would be for the most part met by indirect taxes.  And in order that the power of direct taxation by the general government should not be exercised, except on necessity.” Chief Justice Fuller, Pollock v. Farmer’s Loan, 158 U.S. 601, 621, rehearing

100.  Ex parte Blain, L. R. 12 Ch. Div. 522, 528; State v. Carter, 27 N. J. L. 499; People v. Merrill, 2 Park. Crim. Rep. 590, 596.”  American Banana Co. v. United Fruit Co., 213 U.S. 347, 357;  “Legislation is presumptively territorial and confined to limits over which the law-making power has jurisdiction.” Sandberg v. McDonald, 248 U.S. 628.  “Exclusive legislation is consistent only with exclusive jurisdiction.”  Surplus Trading Co. v. Cook, 281 U.S. 647, 652.; Foley Bros. v. Filardo, 336 U.S. 281; Hanford v. Davis, 163 US 273.

101.  New Orleans v. United States, 35 U.S. 662, 737 (1836);  Caha v. U.S., 152 U.S. 211;  Downes v. Bidwell, 182 U.S. 244.;  “. . . the United States have no constitutional capacity to exercise municipal jurisdiction, sovereignty, or eminent domain, within the limits of a State or elsewhere, except in the cases in which it is expressly granted.”  (Article I, § 8, cl. 17)  Pollard’s Lessee v. Hagan, 44 U.S. 212,223.;   “Neither the Legislative, Executive and the Judicial departments of the Federal Government  can lawfully exercise  any authority beyond the limits marked out  by the Constitution.”  Dred Scott v. Sanford, 19 How. 393.

102.  Report of the Interdepartmental Committee For The Study Of Jurisdiction over Federal Areas within the States, Volume II, page 45;  “A plethora of evidence is found in the myriad of cited court cases (700+) which prove that the United States** cannot exercise exclusive legislative jurisdiction outside territories or places purchased from, or ceded by, the 50 States of the Union.” Vol. II, p. 45

103.  Title 40 USC §3112; See also Title 40 USC §255.

104.  Caha v. U.S., 152 U.S. 211, 215 (1894).  “The difficulties arising out of our dual form of government and the opportunities for differing opinions concerning the relative rights of state and national governments are many; but for a very long time this court has steadfastly adhered to the doctrine that the taxing power of Congress does not extend to the states or their political subdivisions. . . . United States v. Butler, supra.”  Ashton v. Cameron County Water Imp.298 U.S. 513, 523 [1936]

105.  Justice Iredell, Chisholm v. Georgia, supra., 435.

106.  In re Becraft, 885 F. 2d 547

107.  Alma 10:27

108.  Stanton v. Baltic Mining Co., 240 US 103, 112; “In dealing with the scope of the taxing power the question has been framed in terms of whether something can be taxed as income under the 16th Amendment.  This is an inaccurate formulation of the question and has led to much loose thinking on the subject.  The source of the taxing power in not the 16th Amendment; it is Article I, Section 8, of the Constitution.”  Penn Mutual Indemnity Co. v. commissioner, 32 Tax Court 659

109.  Brushaber, supra., at p. 19

110.   M’Culloch, supra., at p. 429

111.  A report prepared by F. Morris Hubbard, formerly of the legislative drafting research fund of Columbia University and a former legislative draftsman in the Treasury Department, was introduced into the Congressional Record by Rep. Carlson of Kansas, March 27, 1943;  “In form, the tax is one upon the value of a privilege, and income is nothing but the measure.” Portland Cement v. Knapp, 230 N.Y. 48,68;  “It is therefore well settled by the decisions of this court that when the sovereign authority has exercised the right to tax a legitimate subject of taxation as an exercise of a franchise or privilege, it is no objection that the measure of taxation is found in the income produced in part from property which of itself considered is non-taxable.” Flint v. Stone Tracy Co., 220 U.S. 107, 165

112.  See Amendments 13, 14, 15, 19, 23, 24, 26

113.  Constitutional Choices, Lawrence Tribe; Construing the Sounds of Congressional and Constitutional Silence, p. 29.

114.  The Congressional Research Service. Report No. 84-168A, 784 / 725 titled “Some Constitutional Questions Regarding the Federal Income Tax Laws”, dated May 25, 1979, and updated Sept. 26, 1984, pg. 5.

115.  Brushaber, supra., at 11 – 18.

116.  Stanton v. Baltic Mining Co., supra., at p. 112.

117.  See the response brief by the audit division, November 7, 2014, appeal No. 14-1388.   See also; Broughton v. U.S., 632 F.2d 706, 8th Cir; Ficalora v. C.I.R., TC 85-1, 751 F. 2d 85; Funk v. C.I.R., 687 F. 2d 254, 8th Cir.; Lonsdale v. C.I.R., TC Memo 1981 -122; U.S. v. Francisco, 614 F. 2d 617, 8th Cir.; not to mention, Lovell v. United States, (7th Cir., 1984); Parker v. C.I.R., (5th Cir., 1984); United States v. Mundt, (6th Cir.,1994);  In re Becraft, 885 F. 2d 547, 1989; and of course, U.S. v. Collins, (10th Cir., 1990);  “The Sixteenth Amendment does not extend the power of taxation to new or excepted subjects” Peck v Lowe, 247 U.S. 165;  “The Sixteenth Amendment conferred no new power of taxation.”  Stanton v Baltic Mining Co., 240 US.103, at 112.

118.  Marquette Law Review, p. 187

119.  Fn. 10 of Initial Hearing Order, Jane Phan, March 10, 2015; repeating fn. 1 from Petitioner v. Audit Division, 05-1565, Clinton Jensen, Administrative Law Judge.  For the most part the arguments cited have no relevance and are only unsupported opinions built upon some previous court’s unsupported opinion.

120.  The Documentary History of the Ratification of the Constitution, Vol. 15, note 2, sat 112 – 114

121.  Declaration of Independence.

122.   Benedict On Admiralty, 7th ed., Vol. 1, Jurisdiction; §72. Jurisdiction Complained of.

123.   Jackson v. The Magnolia, 61 U.S. 296,330 (1857).

124.  Stand Fast by Our Constitution, supra

125.  Bains, supra.

126.  Ramsey v. Allegree (25, U.S. 611, [1827]

127.  Benedict, supra.,  §15. The Civil Law.

128.  Bains, supra., at p. 416

129.  Dan Meador, Tax Law Administration & Enforcement

130.  LAW OF THE LAND, Sixteenth American Jurisprudence, Second ed., Section 177.

131.  Congressional Research Service, The Constitution of the United States of America, Analysis and Interpretation, Amendment V, p. 1282.  “The term ‘law of the land’ was early the preferred expression in colonial charters and declarations of rights, which gave way to the term ‘due process of law,’ . . .” p. 1282.

132.   Long v. Rasmussen, 281 f. 236 (1922); Economy Plumbing & Heating v. U.S., 470 F. 2d. 585 (1972)

Utah State Tax Commission

Formal Hearing

Appeal No. 14-1388

July 15, 2015

Just a few comments on the response to the “broken record” of legal counsel’s submittal of July 10th.

At page 1:  As many times as I tried to make it clear that there is no challenge to the constitutionality of the federal income system to the extent that it is administered within the law.  Although discussed, it is not a fundamental used in defense.  Can we put that out of view?

At page 2(B):  Legal counsel gets the “cart before the horse.”  UCS59-10-502, according to the Utah Supreme Court, the “general” requirement.  Until that has been met, all of the accounting is a “moot” exercise on the part of the audit division and the appeals process.  The opinion of Justice Stewart in Michael Jensen’s case is out of place.

At page 5:  Legal counsel repeats the tried expression that:  “The fact that the IRS has not assessed federal income tax does not alter the requirement that . . (the citizen) . . file Utah income tax returns.”  Once again, counsel is in error on this point.

At page 5:  “Because the . . . had earned income, . . .”  The Utah Supreme Court has answered this meritless statement.

At page 6 (fn. 8):  I am not sure just what point legal counsel is trying to prove with this cite from State v. Smith.  I gather from the cite that, as the opinion states, “the division is not seeking to enforce any federal income tax liability.”  In respect to the conclusion by the Smith court, I am not aware, nor has legal counsel produced any alterations to UCS 59-10-502 that may change the “general” requirement that a federal return first be filed.

At page 6 (fn 9):  Legal counsel has NEVER produced any language in my letter to Ben McAfee, challenging the audit.

At page 8(D):  It has been shown that the response by the lower courts have never factually shown an alternative argument, and can only cite previous lower court decisions, which in turn cite other lower court opinions, and the circle continues, ending up with a “hodgepodge of unsupported assertions, irrelevant platitudes, and legalistic gibberish.”

At page 8:  It appears that legal counsel for the audit division feels that the legal profession has a monopoly on the law, notwithstanding the fact that Supreme Court opinions are supported by many of the fundamentals expressed by such men as Madison, Jefferson, etc.

At page 8 – 9:  As to citing out of context, counsel is looking for law, while it is the fundamentals that should guide this discussion, however, counsel is unable to do this and in turn is doing a disservice to the State of Utah.  Article I of the State of Utah Constitution is governing and counsel can not ignore it by not addressed it.


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