Utah State Tax Commission/Jurisdiction



Petitioner:                                                    Counter Claim and

Motion to Dismiss for

Lack of Jurisdiction

Case No. 14-1388


Utah State Tax Commission,  Respondents:


The Petitioner, as one of the People of Utah in the above Action has challenged the failure of the Utah State Tax Commission to demonstrate a jurisdiction giving authority to the proceedings and hearings and it is incumbent upon Respondents acting in concert, who are responsible for commencing the action, to factually prove that jurisdiction.   “The law requires proof of jurisdiction to appear on the record of the administrative agency and all administrative proceedings.” Hagans v. Lavine, 415 U. S. 533.


The Applicable Law in this Case is clear and simple: Utah Code Section 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, estate, or trust required to file a federal income tax return for the taxable year; . . .”  (Emphasis added)

Evidence submitted from the records of the Internal Revenue has been ignored by the Tax Commission as to this Petitioner having a federal requirement to file a return, to wit:

1)  Letter from the Department of Treasury, 11/26/2012; At the request of Petitioner to the Internal Revenue Service, confirms that they have “researched [their] records and found no activity pertaining to Form 1040 or assessments for the years 2005, 2006, . . . 2012.” And;

2)  We have “researched our records and found no activity pertaining to court judgements.”  (Letter included)

3)  On September 24, 2010 a letter was sent to IRS Disclosure Office in Nashville calling the attention to the fact that Petitioner was classified as a “small business” in error.  (letter included)

4) Furthermore, Individual Master Files obtained by Petitioner from the Internal Revenue Service demonstrate the error further.  Two prominent entries, the first, entries by the IRS are classified as “business” codes (BMF – business master file); Secondly, the computer record shows a MFR-01 (Mailing Filing Requirement), the -01 indicates a 1040 is not required. (IRS letter from Ra Nae Fielding, Disclosure Officer, Fresno, CA)  (Letter included).

5) Certificate of Release of Federal Tax Lien, Form 668(Z), 03/04/2015, shows that all liens filed by the IRS (8), were released. (Letter included)

The above actions taken by the Internal Revenue Service demonstrate that Petitioner has no “requirement to file a federal return.”  The “requirement” of a federal return is the “trigger” for the Audit Division to then examine the numbers.  Respondents are apparently unfamiliar with this law when read at the final hearing and by the failed attempts to cover it up.


The Audit Division, although going to great lengths to show “gross income”, yet has failed to show “gross income” as defined by the United States Code §61 (substance is the same as the 1939 edition).  Utah revenue laws have incorporated federal tax laws as indicated in Utah Code Ann. §59-10-103(1)(a) which defines “adjusted gross income” referring to IRC §§61, 62.  Respondents seem to have very little knowledge about federal tax law.  The wording of §61 in the IRC is misleading, in stating that “gross income means all income from whatever source derived, . . .”


FYI: The footnote at the end of §61 states:  “Source: Sec. 22(a), 1939 Code, substantially unchanged”.  [Legislative History] The language of §61 finds its authority in the 1939 Revenue Code §22(a), which reads: “Gross Income – (a) General Definition.  ‘Gross income’ includes gains, profits, and income derived from salaries, wages, or compensation . . .”  The House Report on the proposed legislation for Section 61 notes 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 affirms the House Report:  “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).”

Code section 22 reads: ‘income includes gains — derived from — salaries’.  After congress restructured section 22 into section 61 it read: ‘Income — from any source — derived’.  It does not require an accounting or a law degree to notice the subtle change in the code, notwithstanding, there was to be no change in substance.

Representative Hull states: “Paragraph B (Statutes at Large, 63rd Congress, Sess. I, ch. 16, Income tax, [1913]) 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, commerce, or sales of any kind of property, and so forth, or profits or gains derived from any other source.”  CR-House, April 26, 1913, p. 506  (Emphasis added)

In the Supreme Court decision, Eisner v. Macomber (252 U.S. 189 [1920]), Justice Pitney discussing §22(a) of the Code, made clear that: “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. Here we have the essential matter: not a gain accruing to capital; not a growth or increment of value in the investment; but a gain, a profit, something of exchangeable value, proceeding from the property, severed from the capital, however invested or employed, and coming in, being ‘derived’-that is, received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal- that is income derived from property. Nothing else answers the description.” (p. 207)

Justice Pitney explained this in writing his decision in Stratton’s Ind., Ltd v. Howbert (231 U.S.399 [1913]) as “a manufacturing process, . . . and the gains derived from it are properly and strictly the income from that business; for ‘income’ may be defined as the gain derived from capital, from labor, or from both combined, and here we have combined operations of capital and labor.”  The Court was discussing a corporate tax and the “income” was the measure of the tax, being an indirect tax and not on the source.

Roswell Magill, professor of law, Columbia University, Member of the New York Bar, comments: “That it is reasonable to tax a salary to the man who earns it, even in the case of an assignment, is a proposition readily accepted.  It is not so clear that the federal statute in fact so provides any compelling form. The language …., occurring in the definition  of gross income, (IRC 22a) … seems rather to state that salary is a source from which taxable income arises, than to allocate such income for the purpose of taxation to the owner.”  (Taxable Income, pp. 283, 284)  (emphasis added)

Section 61 as read, makes salary, wages, etc. being the “source” a direct violation of the finding of the Court in Pollock and the Constitution as to direct taxes.  Then who derives “income” from the source?  The employer! Not the employee! The Pollock decision has never been over turned.  It is still controlling, any tax upon the source is a direct tax and requires apportionment, Sixteenth Amendment notwithstanding.

Supreme Court decisions of that time have clearly stated,  “it was settled that the provisions of the 16th Amendment conferred no new power of taxation, . . . .” Stanton v. Baltic Mining; Brushaber v. Union Pac. RR, [1915]; Bower v. Kerbaugh-Empire Co.;[1926].  Even the Tax Court agreed, “The source of the taxing power is not the 16th Amendment;  it is Article I, section 8, of the Constitution.”  Penn Mutual Indemnity Co. vs. Commissioner, 32 Tax Court 659; U.S. Court of Appeals for the third circuit agrees.

“…[I]t 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.” (Ewing v. U.S., 711 F. Supp. 265 [1989])  And so administrative agencies and the courts have added a definition not found in law as demonstrated here by the Utah State Tax Commission.


The accounting numbers presented by Angie Hillas, only show that this Petitioner generated income as that term is commonly understood.  The Audit Division has not shown “income” in the contemplation of the law.    The Audit Manager, having read into the record the language of UCS 59-10-502, which emphasized the term “required” yet has factually failed to produce any evidence to substantiate the “opinion” of the Tax Commission that this Petitioner, as one of the People of Utah is required to file a federal tax return based upon the calculations of the Audit Division.

As to the accounting of the Audit Division, Utah Supreme Court Justice Durrant explained that, “a person does not owe income tax simply because he earned income.”  As part of complying with the law, the Audit Division “must show that a tax was, in fact, due and owing; merely establishing income does not suffice.”  (State of Utah v. Eyre, 2008; also confirmed by Chief Justice Durham in State v. Steed)

In State of Utah v. Steed, ¶ 30, (2014), Chief Justice Durham addressed the requirements of UCS 59-10-502, as the “general filing requirement . . . which requires that ‘every resident individual’ file a state tax return in any year they are required to file a federal return.

¶ 31 “In fact, the Commission’s publications incorporate the language from Utah Code section 59–10–502 when discussing the filing requirement.”

It is important to understand that it is not what the law “means” that rules the day, for any particular law will have a different application and “meaning” to different people.  This is evident by the volumes of commentary and regulations to assist the reader as they try to administer, apply and judge the law.  It is rather “what the law says” that is paramount.

Law is positive, not negative and when reading law, one should pay attention, not only to what the law says, but in particular what the law does not say.  And in this instant case, the Utah code section in question has no language contained within the wording of the law respecting “income”.  It only calls out those who are “required to file” a federal income return.  And who determines that requirement?

IRS Publication 21:  “Two aspects of the Federal Income Tax system – voluntary compliance with the law and self-assessment of tax – make it important for you to understand your rights and responsibilities as a taxpayer. ‘Voluntary compliance’ places on the taxpayer the responsibility for filing an income tax return. You must decide whether the law requires you to file a return. If it does, you must file your return by the date it is due.”  This opens the question . . . if the law does not require you?

. . .  “Let me point this out now. Your income tax is 100 percent voluntary . . .”  Dwight E. Avis, Head of ATF, IRS – House Ways and Means Subcommittee Hearings – 1953. . . .  “Our tax system is based on individual self-assessment and voluntary compliance.” (Mortimer Caplin, IRS Commissioner, 1975 IRS IR Audit Manual). . . . .  “Our system of taxation is based on voluntary assessment and payment, not upon distraint.” (United States v. Flora, 362 US 145 (1958))  (Emphasis added)

It is hoped that the witnesses herein quoted helps the Tax Commission understand that liability for a federal tax is assessed by the individual and not some administrative bureaucrat.  This is why our State Constitution has set up the court system to mediate differences and when ANY administrative agency steps beyond those borders it is a trespass on the natural rights (Article I, §1 Utah State Constitution) of the People.  It bears repeating so that all will understand, the declaration of Chief Justice Warren in the Miranda case on “overzealous police practices”:  “Where rights secured by the Constitution are involved, there can be no rule making or legislation which would abrogate them.”


As demonstrated in the Conclusions presented by the Tax Commission, this is an Administrative Court, and not a part of the Judicial Branch of government and therefore it is not a Court of Law as it has failed to factually address the constitutional questions that lay at the foundation of this Administrative Hearing, in particular, UCS 59-10-502, which is a mistake of law and fact.  The conclusion that Jan Marshall states; “The Petitioner had sufficient income to trigger the filing requirement of Utah Code Ann. §59-10-502.”;  is devoid of any language supporting the Tax Commission’s position.  Remember, it is what the law says!  UCS 59-10-502 speaks directly to the “federal filing requirement”, not whether the individual had “income”.

Jan Marshall mixes the arguments made by the Petitioner respecting individual’s requirement to file in the first instance, with the laws respecting laws and regulations relating to the accounting procedures of the Audit Division.  Petitioner has never challenged the accounting by the Audit Division, only their jurisdiction to move forward against the property of Petitioner outside the principles of due process (Article I, §7)  admitting that these questions of law are beyond the scope of their authority, which I agree.

These constitutional questions may be without their jurisdiction, however, they should guide their actions inasmuch as they have sworn an oath to support and uphold the Utah State Constitution, in which case by taking such oath of office, they are committed to be guided by the fundamentals of good government.  By moving upon the liberty and property of the People of Utah, this administrative agency of the Executive division of the State, is a violation of that oath and a trespass against the People.


As an Administrative agency of the Executive Department, the Tax Commission has no judicial authority delegated to it by the Utah State Constitution, Article VIII.  To assume any such authority violates Article V, Section 1, Distribution of Powers.

The Tax Commission lacks the authority to summon any of the People of the State of Utah in for an audit hearing.  Therefore the Respondent in this counter claim, fraudulently imposed the title of Petitioner in an Action No. 14-1388 in equity, citing a letter to one Ben McAfee (May 30, 2014) be “treated as an appeal”.  The administrative court has only “fact finding” authority respecting the math as noted by Administrative Law Judge Jan Marshall in her response.  Thereby forcing one of the People into an administrative jurisdiction as a “petitioner” and invoking a foreign jurisdiction in order to take his liberty and property, therefore:

1.  Where as Petitioner, as one of the People of Utah challenged the jurisdiction of the Respondent to continue the attack on the Liberty and Property of the Petitioner.  And;

2.  Where as this Administrative Tribunal has neglected to give judicial cognizance to the Law, UCS 59-10-502, as pass upon by the Utah State Legislature showing factual evidence that the Law has no bearing upon case No. 14-1388.  And;

3.  Where as the Respondent has failed to produce evidence that the Petitioner has met the requirements of UCS 59-10-502.  And;

4.  Where as the Respondent lacks the capacity to enforce or rule on federal statutes and its regulations (Title 26 of the United States Code).  And;

5.  Whereas Respondent has been unable to produce evidence of income as contemplated in law (IRC §22[1939]).  Petitioner’s challenge to the jurisdiction of the Tax Commission still stands factually unrefuted.  And;

6.  Where as the continuation of the proceeding is a violation of Article I, Declaration of Rights §§ 1 & 7 of the Utah State Constitution, the Utah State Tax Commission has committed a trespass by threatening the seizure of property of one of the People of Utah.

In the absence of any honest effort on the part of the Respondents, Petitioner will have no other recourse than to move it to the State Courts.  Wherefore, it is incumbent upon the Utah State Tax Commission to rule this administrative action, claim No. 14-1388, null and void for lack of jurisdiction.  “. . . he that is compelled in all things, the same is a slothful and not a wise servant; wherefore he receiveth no reward.”


Gallery | This entry was posted in an enemy hath done this, Federal income tax, Federal Jurisdiction, freedom, government authority, judge jane phan, liberty, Sixteenth Amendment, Socialism, State Authority to tax, state enforcement of federal law, utah state tax commission and tagged , , , , , , , , . Bookmark the permalink.

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