Evolution of a Crackhead?

[LPC]

The Federal Court of Claims has filed an opinion dismissing a tax refund complaint for failure to state a claim, based on the same reasoning we recently saw in the Waltner case, namely that the "zero" tax returns filed by the plaintiff were so clearly invalid that there was no administrative refund claim and so the court lacked jurisdiction. (The plaintiff also sued for injunctive relief, and for a refund from the California Franchise Tax board, and those claims were denied for the obvious reasons.)

James Allen Gregoline v. United States, No. 10-690T (Ct.Cl. 5/11/2011).

Based on the court's description of the tax returns that were filed, they were classic "CtC educated," with Forms 4852 attached and claims for refunds of Social Security and Medicare taxes. Looking for other cases involving Gregoline, I found a Tax Court summary opinion that seems to have started out as a dispute over deductible expenses and morphed into a tax protester case.

First, the Court of Claims:

JAMES ALLEN GREGOLINE,
Plaintiff
v.
THE UNITED STATES,
Defendant.

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

(Filed: May 11, 2011)

Tax Refund Claim; Lack of Subject Matter Jurisdiction;
Tax Returns Submitted With Zeros Instead of Dollar
Amounts Do Not Constitute Valid Administrative Claims to
the IRS; No Jurisdiction of Claims Against California
Franchise Tax Board.

James Allen Gregoline, Los Angeles, California, appearing pro se.

Paul G. Galindo, with whom were John A. DiCicco, Acting Assistant Attorney General, Steven I. Frahm, Chief, Court of Federal Claims Section, and Mary M. Abate, Assistant Chief, Court of Federal Claims Section, Tax Division, United States Department of Justice, Washington, D.C., for Defendant.

OPINION AND ORDER ON DEFENDANT'S MOTION TO DISMISS

WHEELER, Judge.

Before the Court is Defendant's February 3, 2011 motion to dismiss for lack of subject matter jurisdiction, or alternatively, for failure to state a claim upon which relief may be granted, pursuant to Rules 12(b)(1) and 12(b)(6) of this Court. Plaintiff, James Allen Gregoline, can best be described as a tax protester. Despite his six-figure annual salary from Twentieth Century Fox Film, he claims that he is not required to pay any taxes for the years 2006 through 2009. This position inevitably has led Mr. Gregoline to conflicts with the Internal Revenue Service (IRS), and with his state taxing authority, the California Franchise Tax Board. Mr. Gregoline petitions this Court for a refund of all amounts withheld from his income by the IRS and the California Franchise Tax Board. He also requests other monetary and equitable relief resulting from his disputes with these entities.

For the reasons stated below, the Court finds that it does not have subject matter jurisdiction over any of Mr. Gregoline's claims. For this Court to have jurisdiction over a tax refund claim, a plaintiff must first file a valid administrative claim with the IRS. While an individual tax return can serve as a valid claim, the return must be properly completed and executed. Mr. Gregoline's tax returns, which have zeros throughout where dollar amounts should appear, do not constitute valid refund claims. Mr. Gregoline's claims also suffer from other flaws. Some of his claims are not against the United States, seek equitable relief not available in this Court, or request a remedy only available in a district court. For these reasons, Defendant's motion to dismiss is GRANTED, and Plaintiff's complaint is DISMISSED without prejudice.

BACKGROUND1

Mr. Gregoline is a resident of California. (Compl. ¶ 2.) During the years 2006-2009, he was employed by Twentieth Century Fox Film, earning more than $100,000 annually. (Pl.'s Resp. Mot. Dismiss Ex. A4.) Mr. Gregoline claims that he is not required to pay taxes on the income he received from his employer. (Compl. ¶ 8.) He seeks from this Court a refund of all amounts withheld from his income by the IRS and the California Franchise Tax Board for the years 2006-2009. He also requests amounts allegedly levied by the IRS and the California Franchise Tax Board in their attempts to collect unpaid taxes, and he requests equitable relief related thereto. Specifically, Mr. Gregoline asks the Court for the following: (1) a refund of $78,952 in federal and state income taxes allegedly overpaid; (2) money damages of $290 for an unauthorized bank levy by the IRS; (3) withdrawal of a notice of federal tax lien related to civil penalties assessed in connection with Plaintiff's 2008 tax year; (4) a refund of a $3,500 wage levy by the California Franchise Tax Board; and (5) a reinstatement of Plaintiff's exempt withholding status with his employer. (Compl. Request for Relief.) Mr. Gregoline also requests interest, costs and other relief as the Court may deem appropriate. Id. In addition to these specific claims for relief, Mr. Gregoline alleges more generally that Defendant is wrongfully interfering with his constitutional right to the possessory interest of property belonging to him, (Compl. ¶ 19), and that Defendant's actions are causing him extreme mental suffering and economic hardship. (Compl. ¶ 20.)

To support his refund claim, Mr. Gregoline attached to his complaint tax returns for 2009 and amended tax returns for 2006-2008 sent to the IRS and the California Franchise Tax Board. (Compl. ¶ 5, Ex A.) Through the returns and amended returns, Mr. Gregoline requested a total of $78,951 in refunds from the tax authorities, $66,079 from the IRS and $12,872 from the California Franchise Tax Board.2 For the federal taxes, the amount Mr. Gregoline requests is approximately the amount that was withheld from his income in 2006-2009. For the state taxes, his claim is for the amount withheld plus an additional $1,281 that Mr. Gregoline reported in his 2006 amended return as having been paid with the original tax or after the return was filed in 2006. (Compl. Ex. A.)

All of the amended tax returns attached to the complaint were filed in March 2010. Defendant explained in its motion to dismiss that Plaintiff actually filed numerous amended returns for the years in question that are not included with the complaint, both before and after the returns submitted with the complaint. (Def.'s Mot. Dismiss 6 n.6, Roney Decl. Ex. 5, 12, 14, 16, 17, 18.) For the purpose of this Opinion, the Court will rely on the documents provided with the complaint, and with Plaintiff's response to Defendant's motion to dismiss. Mr. Gregoline attached the following:3

* For 2006, Mr. Gregoline attached an amended Form 1040X in which he reported zero for adjusted gross income and sought a refund of $8,987 in estimated tax payments. (Compl. Ex. A.) This amount, $8,987, is the amount shown on his Form W-2 as being withheld for Federal Income Tax, Social Security Tax, and Medicare Tax. (Pl.'s Resp. Mot. Dismiss Ex. A4.) Mr. Gregoline did not attach the W-2 to his Form 1040X, but instead attached a Form 4852, Substitute for Form W-2, in which he did not report any wages. Id. He also attached a California Form 540X that reported zeros for state wages and federal adjusted gross income, and sought a refund of $1,788. Id.

* For 2007, Mr. Gregoline attached an amended Form 1040X in which he reported zero for adjusted gross income and sought a refund of $7,617, the amount withheld from his Form W-2 as estimated tax payments. (Compl. Ex. A; Pl.'s Resp. Mot. Dismiss Ex. A4.) Instead of attaching his W-2, he attached a Form 4852 in which he did not report any wages. (Compl. Ex. A.)

* For 2008, Mr. Gregoline attached an amended Form 1040X in which he reported zero for his adjusted gross income and sought a refund of $16,680, the amount withheld from his Form W-2 as estimated tax payments. (Compl. Ex. A; Pl.'s Resp. Mot. Dismiss Ex. A4.) Instead of attaching his W-2, he attached a Form 4852 in which he did not report any wages. (Compl. Ex. A.) He also filed a Form 540X for California in which he requested a refund of $2,754. Id.

* For 2009, Mr. Gregoline attached a Form 1040, reporting zero in every space for wages or income, and requesting a refund of $32,795, the amount withheld from his Form W-2 as estimated tax payments. (Compl. Ex. A; Pl.'s Resp. Mot. Dismiss Ex. A4.) Instead of attaching a W-2, he attached a Form 4852 in which he did not report any wages. (Compl. Ex. A.) He also filed a California Form 540, reporting zero for state and federal wages, and requesting a refund of $8,330. Id.

Mr. Gregoline's remaining claims stem from IRS and California Franchise Tax Board attempts to collect unpaid taxes from him. At some point prior to 2008, Mr. Gregoline claimed on his Form W-4 that he was exempt from federal income tax withholding requirements. (Compl. ¶ 10, Ex. Y.) By letter dated June 19, 2008, the IRS instructed Plaintiff's employer, Twentieth Century Fox Film, to disregard the information on Plaintiff's Form W-4, and instead to withhold income tax based on a marital status of single and a zero withholding allowance. (Compl. Ex. X.) Mr. Gregoline requested his employer to terminate the tax withholdings, but the company refused. (Compl. ¶ 10, Ex. Z, A-1.) Mr. Gregoline requests the Court to reinstate his exempt status.

By letter dated November 12, 2009, the California Franchise Tax Board also sought to collect taxes through Mr. Gregoline's employer. The Board sent an "Earnings Withholding Order for Taxes" to the employer to collect a delinquent tax debt of $3,580.77. (Compl. ¶ 12, Ex. W.) Mr. Gregoline requested his employer to stop garnishing his wages, but his employer refused. (Compl. Ex. A-1.) Mr. Gregoline seeks a refund of $3,500 for the wage levy imposed by the California Franchise Tax Board.

In November 2009, Mr. Gregoline began receiving notices from the IRS stating that it intended to levy his state tax returns, that it may look for other sources to levy, and that it may file a Notice of Federal Tax Lien in order to collect unpaid taxes. (Compl. Ex. H.) In response, Mr. Gregoline filed a Form 911, a Request for Taxpayer Advocate Assistance. Id. Mr. Gregoline received a letter from the Taxpayer Advocate Service on December 1, 2009 stating that no levy action would be taken until the case was closed in the taxpayer advocate office. (Compl. ¶ 13, Ex. I.) On January 7, 2010, the IRS recorded a federal tax lien against Mr. Gregoline in the amount of $5,000. (Compl. ¶ 13, Ex. J.) Mr. Gregoline alleges that he never received a notice from the IRS regarding the tax lien. (Compl. ¶ 13.) He only realized that there was a lien one year later when he checked his credit report, and only received a copy of the lien though a Freedom of Information Act request. Id. Mr. Gregoline applied to the IRS for a withdrawal of the lien but this request was rejected. (Compl. ¶ 13, Ex. M.) The Government explained that the lien relates to civil penalties assessed against Mr. Gregoline on August 24, 2009 for filing a frivolous tax return in the 2008 tax year. (Def.'s Mot. Dismiss 9, Roney Decl. 6.) The Government states that notice of the lien was sent to Mr. Gregoline's last known address by certified mail on January 5 , 2010, but that the notice went unclaimed and was returned to the IRS on February 2, 2010. (Def.'s Mot. Dismiss 9, Roney Decl. Ex. 7, 8.) Mr. Gregoline requests a withdrawal of the tax lien.

On August 16, 2010, the IRS issued a Notice of Levy to Mr. Gregoline for a total amount due of $40,546.24. (Compl. ¶ 16, Ex N.) The Government explains that the assessment is the result of eight frivolous submission penalties against Mr. Gregoline for the 2008 tax year as a result of his zero income tax return and seven amended income tax returns. (Def.'s Mot. Dismiss 9-10, Roney Decl. 6.) Mr. Gregoline alleges that the IRS levied $290 from his bank account. (Compl. ¶ 16.) Defendant states that the IRS's records do not show an actual levy, (Def.'s Mot. Dismiss 10, Roney Decl. Ex. 6), although for the purpose of this Opinion the Court will assume that Plaintiff is correct. Mr. Gregoline asks the Court to award him $290 for an alleged illegal levy of his account.

On October 12, 2010, Mr. Gregoline filed his complaint in this Court. On February 3, 2011, Defendant filed a motion to dismiss for lack of subject matter jurisdiction, or in the alternative, for failure to state a claim upon which relief may be granted. Mr. Gregoline filed a response on February 10, 2011, and Defendant filed a reply on February 17, 2011. Mr. Gregoline filed a sur-reply on March 30, 2011. Although the Court had not granted Mr. Gregoline leave to file the sur-reply, the Court nevertheless accepted the filing.

Also pending before the Court are various ancillary motions, including Mr. Gregoline's motions for default judgment due to Defendant's alleged failure to file a timely answer, and Mr. Gregoline's motion for summary judgment. By order dated March 24, 2011, the Court stayed further briefing on the motion for summary judgment until Defendant's jurisdictional motion was decided. In light of the Court's ruling that it lacks subject matter jurisdiction, these other pending motions are dismissed as moot. The Court deemed oral argument unnecessary.

STANDARDS FOR REVIEW

Plaintiff bears the burden of proving subject matter jurisdiction by a preponderance of the evidence. Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988) (citing Zunamon v. Brown, 418 F.2d 883, 886 (8th Cir. 1969)). In deciding a motion to dismiss for lack of subject matter jurisdiction, the Court must accept as true any facts alleged in the complaint and draw all reasonable inferences in favor of the plaintiff. Henke v. United States, 60 F.3d 795, 797 (Fed. Cir. 1995). If, however, a motion to dismiss for lack of subject matter jurisdiction challenges the truth of the jurisdictional facts alleged in the complaint, the Court may consider relevant evidence in order to resolve the factual dispute. Reynolds, 846 F.2d at 747 (citing Land v. Dollar, 330 U.S. 731, 735 (1947)). The Court holds the pleadings of pro se plaintiffs to less stringent standards than formal pleadings drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 520 (1972). However, the leniency afforded to pro se litigants does not relieve them of meeting the Court's jurisdictional requirements. Sumner v. United States, 71 Fed. Cl. 627, 628 (2006). If the Court finds that it lacks subject matter jurisdiction, it must dismiss the claim. Gluck v. United States, 84 Fed. Cl. 609, 614 (2008).

DISCUSSION

The Court of Federal Claims is a court of limited jurisdiction. Gluck, 84 Fed. Cl. at 612 (citing Jentoft v. United States, 450 F.3d 1342, 1349 (Fed. Cir. 2006)). This Court derives its jurisdiction from the Tucker Act, which confers jurisdiction upon the Court of Federal Claims over specified categories of actions and waives the Government's sovereign immunity for those actions. Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005). The Tucker Act provides that the Court of Federal Claims has jurisdiction "to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort." 28 U.S.C. § 1491(a) (2006). "The Tucker Act itself does not create a substantive cause of action; in order to come within the jurisdictional reach and the waiver of the Tucker Act, a plaintiff must identify a separate source of substantive law that creates the right to money damages." Fisher, 402 F.3d at 1172 (citing United States v. Mitchell, 463 U.S. 206, 216 (1983) and United States v. Testan, 424 U.S. 392, 398 (1976)). In the parlance of Tucker Act cases, the source must be "money-mandating." Id. (citing Mitchell, 463 U.S. at 217 and Testan, 424 U.S. at 398).

26 U.S.C. § 7422(a) provides the money-mandating source for bringing a tax refund claim in this Court. Dumont v. United States, 85 Fed. Cl. 425, 427-28 (2009). This provision grants the taxpayer the right to sue the United States for the recovery of any internal revenue tax erroneously or illegally assessed or collected, provided that the taxpayer first duly files a claim for a refund with the IRS. 26 U.S.C. § 7422(a) (2006); Dumont, 85 Fed. Cl. at 427-28; United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 4 (2008).

A properly executed individual tax return or amended tax return can constitute a refund claim with the IRS. 26 C.F.R. § 301.6402-3(a)(5); Hamzik v. United States, 64 Fed. Cl. 766, 767 (2005). However, "a return which lacks essential financial information and, in particular, contains no recitation of the taxpayer's income, is not a properly executed return for the purposes of the tax laws." Id.; see also, e.g., United States v. Mosel, 738 F.2d 157, 158 (6th Cir. 1984) (holding that a return which had no information upon which a tax could be calculated "might reasonably be considered a protest, but under no circumstances can it be rationally construed as a return"); United States v. Moore, 627 F.2d 830, 835 (7th Cir. 1980) (finding that for an adequate tax return there must be an "honest and reasonable intent to supply the information required by the tax code").4

Tax returns that are filled out only with zeros do not contain sufficient financial information to be considered properly executed tax returns and cannot serve as a claim for a refund with the IRS. See, e.g., Waltner v. United States, No. 10-225T, 2011 WL 1570485, at *27 (Fed. Cl. Apr. 22, 2011) (holding that the returns in which plaintiffs allege that no wages were received did not provide the IRS with sufficient information for the IRS to calculate tax liability and therefore were not proper claims for a refund); Kehmeier v. United States, 95 Fed. Cl. 442, 445 (2010) (holding that this Court lacks jurisdiction over a plaintiff's refund claim because the plaintiff's zero tax return did not contain information sufficient to constitute a valid tax return); Hamzik, 64 Fed. Cl. at 768 (holding that plaintiff's tax return, which was replete with zeros, could not form the basis of a refund claim); Ulloa v. United States, No 1:06-CV-445 (NAM/RFT), 2008 WL 4186328, at *6 (N.D.N.Y. Sept. 9, 2008) (plaintiff did not have a valid refund claim when the tax return reported zero income and wages even though the plaintiff earned more than $100,000); Deyo v. Internal Revenue Service, No. Civ. 3:02CV 85 (ACV), 2004 WL 2051217, at *3-4 (D. Conn. Aug. 2, 2004) (holding that tax return reporting zeros instead of income was not a valid tax return and could not serve as the jurisdictional prerequisite for a tax refund claim), aff'd, 134 F. App'x 475 (2d Cir. 2005); Taylor v. United States, No. Civ. 00-823 (TPJ), 2001 WL 721850, at *1-2 (D.D.C. Mar. 5, 2001) (holding that a return containing only zeros was not a valid income tax return and therefore the plaintiff did not have a valid refund claim); Maruska v. United States, 77 F. Supp. 2d 1035, 1039 (D. Minn. 1999) (finding that a claim replete with zeros in response to all inquiries "was a nullity and, with no properly executed tax return filed, [plaintiff's] ostensible refund claim is rendered inoperative as well.").

Mr. Gregoline's tax returns fit squarely within the above authorities. His improperly executed tax returns cannot form the jurisdictional basis for a tax refund claim. The forms lacked essential financial information. On his Form 1040 for the year 2009, Mr. Gregoline reported a zero in every space on the form to show income. Similarly, the Forms 1040X provided for the years 2006-2008 had zeros for adjusted gross income. By submitting these invalid tax returns, Mr. Gregoline has not fulfilled the requirement of 26 U.S.C. § 7422(a). The Court therefore must dismiss Mr. Gregoline's tax refund claim for lack of subject matter jurisdiction.

Similarly, this Court does not have jurisdiction over any of Mr. Gregoline's other claims. Of the $78,952 that Mr. Gregoline requests as a refund, $12,872 is a refund requested from the California Franchise Tax Board. Mr. Gregoline also requests a refund of $3,500 on a wage levy on his income by the same California Board. The Court cannot review Mr. Gregoline's claims against the California Franchise Tax Board because this Court's jurisdiction is limited to claims for monetary recovery against the United States. United States v. Sherwood, 312 U.S. 584, 588 (1941) ("f the relief sought is against others than the United States the suit as to them must be ignored as beyond the jurisdiction of the court [of claims].").

Plaintiff's request for $290 for an unauthorized bank levy pursuant to 26 U.S.C. § 7433 is barred by the terms of § 7433. That statute allows a taxpayer to bring suit if an officer or employee of the Internal Revenue Service recklessly, intentionally, or negligently disregards any provision of the Internal Revenue Code or regulation in connection with the collection of a Federal Tax. 26 U.S.C. § 7433 (2006). However, § 7433 also states that claims for damages under this statute may be brought in a district court of the United States and that this is the exclusive remedy for actions brought under the statute. Id. The Court of Federal Claims is not a district court of the United States, and therefore this Court lacks subject matter jurisdiction over claims brought under § 7433. Ledford v. United States, 297 F.3d 1378, 1382 (Fed. Cir. 2002).

The Court also does not have jurisdiction of Mr. Gregoline's claims for a withdrawal of the tax lien or a reinstatement of his exempt withholding status because neither of these claims is based upon a substantive source of law creating a right to money damages. Fisher, 402 F.3d at 1172. Furthermore, reviewing these claims would violate the Anti-Injunction Act, which prevents the Court from ordering restraints on the assessment or collection of any tax. 26 U.S.C. § 7421(a) (2006);5 Ledford, 297 F.3d at 1381; Jacobs v. United States, No. 09-146T, 2010 WL 2594320, at *9 (Fed. Cl. June 23, 2010). Both the federal tax lien and the IRS's letter directing Twentieth Century Fox Film to change Mr. Gregoline's exemption status were collection efforts by the IRS. See Betz v. United States, 40 Fed. Cl. 286, 291 (1998) (denying the plaintiff's request that the Court remove a lien as a violation of the Anti-Injunction Act); Bright v. Bechtel Petroleum, Inc., 780 F.2d 766, 770 (9th Cir. 1986) (dismissing as barred by Anti-Injunction Act challenge to IRS's instruction to employer to ignore plaintiff's Form W-4 and withhold federal income tax).

In addition to specific claims for relief, Mr. Gregoline states that Defendant is interfering with his constitutional right to the possessory interest in property belonging to him. He also accuses the Government of deliberate and malicious interference with his property rights. Mr. Gregoline does not provide a source of substantive law for these claims that is money-mandating. Considering that Mr. Gregoline is appearing pro se, the Court may "strain[] our proper role in adversary proceedings to the limit, searching the record to see if plaintiff has a cause of action somewhere displayed." Saladino v. United States, 62 Fed. Cl. 782, 787 (2004) (quoting Ruderer v. United States, 412 F.2d 1285, 1292 (Ct. Cl. 1969)). It appears that Mr. Gregoline may be attempting to plead a Fifth Amendment takings claim. However, he does not have a takings claim under the Fifth Amendment because "the lawful exercise of the Government's tax collection powers does not amount to a taking." Fry v. United States, 72 Fed. Cl. 500, 509 (2006); see also Skillo v. United States, 68 Fed. Cl. 734, 743 (2005) (holding that the collection of taxes does not amount to a prohibited Fifth Amendment taking).

CONCLUSION

The Court does not have subject matter jurisdiction over any of Mr. Gregoline's claims. Therefore, Defendant's motion to dismiss under Rule 12(b)(1) is GRANTED, and the clerk is instructed to DISMISS the complaint without prejudice. Mr. Gregoline's motions for default judgment and motion for summary judgment are DISMISSED as moot. Because the Court has determined that it must dismiss the case pursuant to Rule 12(b)(1), it does not need to address Defendant's alternative ground for dismissal under Rule 12(b)(6).

IT IS SO ORDERED.

Thomas C. Wheeler
Judge

FOOTNOTES

1 The facts described in this Opinion do not constitute findings of fact by the Court. The facts cited herein are either undisputed or alleged and assumed to be true for the purposes of the pending motion. Defendant provided additional factual information in its motion to dismiss. Defendant also attached to its motion as Appendix B a declaration by a Department of Justice attorney, Michael J. Roney ("Roney Decl."), which included 18 exhibits providing additional factual background in this case. For the purposes of this Opinion, the Court will assume that all the facts provided by Plaintiff in his complaint are true.

2 The one dollar difference between the amount requested in the complaint and the amount requested through the return and amended returns is attributable to rounding.

3 Mr. Gregoline also attached copies of Form 843, Claim for Refund or Request for Abatement, but the amounts requested in these forms are not part of the $78,952 Mr. Gregoline requests in the complaint. (Compl. Ex. A.)

4 The Court is aware of one case from the Ninth Circuit which held that a tax return listing zeros in the spaces for exemptions, income, income tax, and tax withheld was still a tax return. United States v. Long, 618 F.2d 74, 76 (9th Cir. 1980). However, this position has been overwhelmingly rejected by courts outside the Ninth Circuit. Hamzik, 64 Fed. Cl. at 768 n.4.

5 There are several statutory exceptions to the Anti-Injunction Act, but none of them apply to this case.

END OF FOOTNOTES

[LPC]

The Court of Claims dealt with refund claims for 2006-2009, but the earlier decision of the Tax Court dealt with the non-CtC return that was filed for 2005.

PURSUANT TO INTERNAL REVENUE CODE
SECTION 7463(b),THIS OPINION MAY NOT
BE TREATED AS PRECEDENT FOR ANY
OTHER CASE.

T.C. Summary Opinion 2010-112

UNITED STATES TAX COURT

JAMES ALLEN GREGOLINE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 12751-08S. Filed August 10, 2010.

James Allen Gregoline, pro se.
Bryan E. Sladek and Robert D. Heitmeyer, for respondent.

GOLDBERG, Special Trial Judge: This case was heard pursuant to the provisions of section 7463 of the Internal Revenue Code in effect at the time the petition was filed. Pursuant to section 7463(b), the decision to be entered is not reviewable by any other court, and this opinion shall not be treated as precedent for any other case. Unless otherwise indicated, subsequent
section references are to the Internal Revenue Code (Code) in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.

Respondent determined a deficiency of $4,564 in petitioner’s 2005 Federal income tax and an addition to tax of $1,098.88 under section 6651(a)(1) for late filing of the 2005 Federal income tax return. The issues for decision are whether for 2005 petitioner: (1) Is entitled to deduct $84,101 in unreimbursed employee business expenses; (2) may exclude his wages of $100,463 from gross income; and (3) is liable for the $1,098.88 addition to tax for late filing of his 2005 Federal income tax return.

Background

Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference. Petitioner resided in California when he filed his petition.

In 2005 petitioner maintained his job as a “Journeyman Engineer - Picture Editorial, Production Dept., Union 41 - IATSE”, for Twentieth Century Fox Film in California, earning $100,463. He had held the job for many years before 2005 and continued in the employment through the close of the record. Petitioner received only two other items of income in 2005: $15 of miscellaneous income from Global Entertainment Partners and $35 of interest from 20th Century Fox Federal Credit Union. Twentieth Century Fox withheld $13,364 of Federal income tax from petitioner’s 2005 wages. By the end of 2005 petitioner was divorced, but his ex-wife was still living with him.

Marga M. A. Bakker, who had been preparing petitioner’s income tax returns since 1999, is a self-employed tax return preparer. On petitioner’s behalf for 2005, she timely filed a Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, securing for petitioner a 6-month extension of time to file his 2005 Federal income tax return.

Ms. Bakker also prepared petitioner’s 2005 Federal income tax return. She dated her combined cover letter and invoice to petitioner as October 13, 2006, billing him a total fee of $349, and electronically filed the return on October 16, 2006. Petitioner’s 2005 Federal income tax return accurately reported the three income items noted above totaling $100,513 of gross income. The return also reflected $87,528 in net itemized deductions, consisting of $5,437 in State and local taxes, $84,101 in unreimbursed employee business expenses, and a reduction of $2,010 in the unreimbursed employee business expenses to incorporate the section 67(a) floor on miscellaneous itemized deductions of 2 percent of adjusted gross income.

Petitioner’s regular and alternative minimum taxes totaled $15,668. After application of petitioner’s withholding of $13,364 and a self-computed estimated tax penalty of $33, the return reported a balance due of $2,337. On March 16, 2007, the IRS received payment in full of $2,572.60 from petitioner for the balance due plus associated penalties and interest. An abbreviated IRS schedule of payments indicates that petitioner had also made prior payments toward balances due from 2003 and 2004.

The IRS selected petitioner’s 2005 Federal income tax return for examination. On a Form 4549-EZ, Income Tax Examination Changes, dated February 19, 2008, Revenue Agent J. Ewert proposed disallowing all of petitioner’s $84,101 in unreimbursed employee business expenses. Agent Ewert did not provide a reason on the form for the disallowance. Because of mathematical adjustments to the alternative minimum tax, the net impact of the adjustment was a proposed Federal income tax deficiency for 2005 of $4,564.

Agent Ewert further ascertained that the extended due date for filing the return was October 15, 2006, and because petitioner filed his return on October 16, 2006, the filing was 1 day late. Consequently, Agent Ewert proposed a $1,098.88 addition to tax under section 6651(a)(1) for petitioner’s late filing of his 2005 Federal income tax return.

In a notice of deficiency respondent determined a deficiency of $4,564 and an addition to tax for late filing of $1,098.88. The notice of deficiency included a copy of the Form 4549-EZ that Agent Ewert had prepared.

Petitioner timely petitioned this Court. He wrote that the addition to tax is incorrect because “I did file my 2005 return with the help of a C.P.A.” Moreover, with respect to the unreimbursed employee business expenses, petitioner wrote:

In 2005, I worked as a union employee and a weekly-hire for Twentieth Century Fox Filmed Entertainment. During that year I worked on twenty-one movies, in multiple cities, in the United States, Hungary and Australia. On each movie I worked a variety of jobs, from on-set during filming to off-set in the cutting rooms and also in the labs. Because of the competetive [sic] nature of my business and it’s [sic] ever changing technologies, I frequently attend trade shows, go to schools for certified training, own and upgrade my own equipment, and frequently attend business meals. I also travel extensively and have a home office. I am a member of the Motion Picture Editors Guild - Local 700. And, if it pleases the court, I can provide to them a copy of my 2005 itemized deductions.

Accordingly, this case appeared to be a straightforward substantiation matter. However, petitioner subsequently adopted a new posture, that his earnings are excludable from gross income. The contents of a letter dated November 4, 2008, from Twentieth Century Fox to the IRS may have motivated petitioner’s change in tack. In response to an inquiry from the IRS, Twentieth Century Fox informed the IRS that

It is the policy of Twentieth Century Fox to reimburse all ordinary, necessary, and reasonable expenses associated with employment which includes, and may not be limited to, travel, meals, lodging, and mileage. For actors, directors, and writers, certain expenses may be negotiated per contract and reimbursement made accordingly. The earnings reported to James Gregoline on the 2005 W-2 form, consists of payments for work or services performed for that period.

Building on his income exclusion theory, petitioner sent to the IRS, among numerous other documents: (1) Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.; (2) Form 1040X, Amended U.S. Individual Income Tax Return; (3) Form 843, Claim for Refund and Request for Abatement; and (4) Form SSA-7008, Request for Correction of Earnings Record. Through these forms, petitioner asserted, respectively, that: (1) His compensation from Twentieth Century Fox for 2005 was zero; (2) he had zero income and zero itemized deductions for 2005 and is therefore entitled to a refund of all the Federal income tax that he paid and which Twentieth Century Fox withheld for 2005; (3) he is also entitled to a refund of all the Social Security and Medicare taxes that he paid for 2005; and (4) his correct earnings for Social Security purposes for each year 2006, 2007, and 2008 were zero.

The IRS accepted none of these documents and after several back and forth discussions and correspondence issued a letter dated April 10, 2009, alerting petitioner in bold print that “section 6702 imposes a $5,000 penalty for the filing of a frivolous tax return or purported return. We are proposing a $5,000 penalty per return based on your filing a frivolous tax return(s) or purported tax returns(s).” The letter gave petitioner 30 days to file a corrected return for 2005. Petitioner noted that he had received similar warnings from the IRS for each year 2002 through 2007. The letter for 2005 stated that the IRS would not respond to any future correspondence from petitioner that asserted a frivolous position. Petitioner considered the letter “harassment” and believed that by not complying with his refund requests, the IRS was “violating my constitutional rights.”

Unbowed, petitioner submitted a new Form 1040X for 2005, reporting adjusted gross income of $50 and a standard deduction of $5,000 and requesting a refund of $22,974, consisting of the payments he made for 2005 of $15,937 in Federal income tax and $7,037 in Social Security and Medicare taxes. The IRS did not accept or respond to this form. Nonetheless, respondent did not assert a penalty under section 6702 or any other section for petitioner’s frivolous arguments, voluminous submissions, and delay tactics with respect to 2005.

Petitioner filed a motion with the Court to dismiss his case for lack of jurisdiction because he contends, in main part, that under the Constitution his “earnings do not constitute taxable income.” The Court denied petitioner’s motion.

Discussion

I. Burden of Proof With Respect to Factual Matters

In general, the Commissioner’s determination set forth in a notice of deficiency is presumed correct, and the taxpayer bears the burden of showing that the determination is in error. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Under section 7491(a) the burden may shift to the Commissioner regarding factual matters if the taxpayer produces credible evidence and meets the other requirements of the section. Petitioner has neither produced credible evidence nor established his compliance with the other requirements of section 7491(a). Petitioner therefore bears the burden of proof regarding factual matters.

II. Petitioner’s Unreimbursed Employee Business Expenses

Deductions are a matter of legislative grace, and taxpayers have the burden to satisfy the statutory requirements for claiming the deductions. Rule 142(a)(1); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Section 6001 requires taxpayers to maintain records sufficient to establish the amount of each deduction. See also Ronnen v. Commissioner, 90 T.C. 74, 102 (1988); sec. 1.6001-1(a), (e), Income Tax Regs.

Taxpayers may deduct ordinary and necessary expenses that they pay in connection with operating a trade or business. Sec. 162(a); Boyd v. Commissioner, 122 T.C. 305, 313 (2004). Generally, the performance of services as an employee constitutes a trade or business. Primuth v. Commissioner, 54 T.C. 374, 377 (1970). For these types of expenses to be deductible the taxpayer must not have the right to obtain reimbursement from his employer. See Orvis v. Commissioner, 788 F.2d 1406, 1408 (9th Cir. 1986), affg. T.C. Memo. 1984-533; Lucas v. Commissioner, 79 T.C. 1, 7 (1982). We now apply the law to the present facts and circumstances.

Petitioner initially pleaded that his unreimbursed employee business expenses were bona fide and substantiated. However, petitioner abandoned that theory, instead alleging that Ms. Bakker concocted the deductions and therefore he did not pay her fee and he never signed or authorized the electronic submission of his 2005 Federal income tax return. Petitioner wrote in his pretrial memorandum that “I had no itemized deductions to take” and “no source of income to take them from”, and in summary, the deductions “did not exist”.

We do not need to and we explicitly do not make a finding as to the reasons for petitioner’s change in legal arguments. As respondent correctly noted, petitioner has simply not substantiated any of the $84,101 in unreimbursed employee business expenses that he deducted on his 2005 Federal income tax return. Further, petitioner has explicitly conceded that his itemized deductions for 2005 “did not exist”.

For the foregoing reasons, we sustain respondent’s disallowance of all of petitioner’s $84,101 in unreimbursed employee business expenses for 2005.

III. Whether Petitioner’s 2005 Compensation is Includable in Gross Income

“Taxes are what we pay for civilized society,” as Justice Oliver Wendell Holmes of the Supreme Court of the United States famously observed. Compania General de Tabacos de Filipinas v. Collector, 275 U.S. 87, 100 (1927). Petitioner argues the opposite; namely that his payment of taxes interferes with his “inalienable rights of life liberty and the pursuit happiness, protected by the constitution [sic].” We abide by Justice Holmes’ view and note that “‘the greatness of our nation is in no small part due to the willingness of our citizens to honestly and fairly participate in our tax collection system which depends upon self-assessment.’” May v. Commissioner, 752 F.2d 1301, 1305 (8th Cir. 1985) (quoting Hatfield v. Commissioner, 68 T.C. 895, 899 (1977)).

Gross income includes all income from whatever source derived, including compensation for services. Sec. 61(a)(1). Petitioner offers unoriginal, tired, and meritless tax-protester type arguments that this and other courts have universally rejected. See Wilcox v. Commissioner, 848 F.2d 1007 (9th Cir. 1988),1 affg. T.C. Memo. 1987-225; Bigley v. Commissioner, T.C. Memo. 2010-29. We will not dignify petitioner’s arguments “with somber reasoning and copious citations of precedent; to do so might suggest that these arguments have some colorable merit.” Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984). Consequently, we sustain respondent’s determination by holding that petitioner’s 2005 compensation from Twentieth Century Fox is includable in gross income.

IV. Addition to Tax Under Section 6651(a)(1) for Petitioner’s Purported Late Filing of His 2005 Federal Income Tax Return

With respect to penalties and additions to tax, the Commissioner bears the burden of production. Sec. 7491(c); Rule 142(a); Higbee v. Commissioner, 116 T.C. 438, 446-447 (2001). To satisfy this burden, the Commissioner must present “sufficient evidence indicating that it is appropriate to impose the relevant penalty” or addition to tax. Higbee v. Commissioner, supra at 446.

In the notice of deficiency respondent determined that petitioner is liable for the addition to tax under section 6651(a)(1) for late filing of his return because petitioner filed his return on October 16, 2006, 1 day after the extended due date of October 15, 2006. Petitioner contends that the IRS’ determination of the addition to tax for delinquent filing is “incorrect”.

We begin our analysis by noting that timely submission of Form 4868 provides individual taxpayers with “an automatic 6-month extension of time to file the return after the date prescribed for filing the return”. Sec. 1.6081-4T(a), Temporary Income Tax Regs., 70 Fed. Reg. 67359 (Nov. 7, 2005). Therefore, in the ordinary course of events, the extended due date for filing a 2005 individual Federal income tax return was October 15, 2006.

However, October 15, 2006, fell on a Sunday. Section 7503 provides that when the due date of a prescribed act under the Code falls on a Saturday, Sunday, or legal holiday, performance of the act is considered timely if it is performed on the next business day. Applying section 7503, petitioner had until the end of the next business day, Monday, October 16, 2006, to timely file his 2005 Federal income tax return.

Respondent has conceded that petitioner filed his return on October 16, 2006. Therefore, we hold that petitioner timely filed his 2005 Federal income tax return, and that respondent’s determination that petitioner is liable for the addition to tax for late filing under section 6651(a)(1) is erroneous.

V. Penalty for Frivolous Submissions

Petitioner claimed deductions to which he was not entitled and later switched to tax-protester type arguments that his wages were not includable in income. In addition to the penalties or additions to tax that the Commissioner may determine, the Court may on its own separately impose an additional penalty not in excess of $25,000 when it appears that a taxpayer has instituted or maintained proceedings primarily for delay or that the taxpayer’s position in a proceeding is frivolous or groundless. Sec. 6673(a)(1). A position maintained by the taxpayer is “frivolous” where it is “contrary to established law and unsupported by a reasoned, colorable argument for change in the law.” Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986); see also Hansen v. Commissioner, 820 F.2d 1464, 1470 (9th Cir. 1987) (section 6673 penalty upheld because the taxpayer should have known that the claim was frivolous). The Court has discretion in deciding whether to impose the penalty. See Neonatology Associates, P.A. v. Commissioner, 115 T.C. 43, 102 (2000), affd. 299 F.3d 221 (3d Cir. 2002).

Petitioner is a shrewd person, works for a prestigious film company, and earns a good livelihood. He had no need for his vacuous theories, nasty comportment, and voluminous submissions. Petitioner delayed payment of his own tax, and he irresponsibly wasted many judicial and administrative resources that could have been better devoted to resolving bona fide claims of other taxpayers. We could not, however, find a prior warning by any court to this particular petitioner. Therefore, though it is a close call, we decline to impose a penalty under section 6673(a)(1). However, as sternly as words can express, we rebuke
petitioner and warn him that should he advance these or similar arguments in the future, or if he institutes or maintains a proceeding primarily for delay, he may be subject to a penalty
under section 6673(a)(1). See Wolf v. Commissioner, 4 F.3d 709, 716 (9th Cir. 1993) (affirming the Tax Court’s section 6673 sanction where the Commissioner had forewarned the taxpayer against litigating frivolous or groundless positions), affg. T.C. Memo. 1991-212.

VI. Conclusion

We have considered all of the other arguments made by petitioner, and to the extent that we have not specifically addressed them, we conclude that those arguments are without merit, irrelevant, or moot.

To reflect our disposition of the issues,

Decision will be entered for respondent with respect to the deficiency and for petitioner with respect to the addition to tax under section 6651(a)(1).

[1] If this case were appealable, the appeal would lie in the Court of Appeals for the Ninth Circuit.

[The Observer]

On August 16, 2010, the IRS issued a Notice of Levy to Mr. Gregoline for a total amount due of $40,546.24.

This doesn't make sense. The IRS issues notices of levy to sources that owe money to the taxpayer, not the taxpayer. I suppose the court meant to say that it issued a notice of intent to levy to the taxpayer, also known as a final demand that provides the taxpayer with the right to file for a Collection Due Process hearing.

[Famspear]

On August 16, 2010, the IRS issued a Notice of Levy to Mr. Gregoline for a total amount due of $40,546.24.

This doesn't make sense. The IRS issues notices of levy to sources that owe money to the taxpayer, not the taxpayer. I suppose the court meant to say that it issued a notice of intent to levy to the taxpayer, also known as a final demand that provides the taxpayer with the right to file for a Collection Due Process hearing.

Or, maybe it was the notice of levy, but it was just a "copy" of that notice provided to the taxpayer. For example, on a Form 668-A (which is the notice of levy, not the notice of intent to levy), doesn't the taxpayer at least receive a copy?

[The Observer]

Or, maybe it was the notice of levy, but it was just a "copy" of that notice provided to the taxpayer. For example, on a Form 668-A (which is the notice of levy, not the notice of intent to levy), doesn't the taxpayer at least receive a copy?

And a copy of the 668-W as well, though that is provided by the employer. But I have a point of contention (and semantics) with the court using the word "issue" in this case. Issuing a notice of levy to the taxpayer is irrelevant in this case since the taxpayer is under no obligation to respond to it. I can only guess that the court was trying to show that there was a possibility that a levy hit his account for $290 as the taxpayer claimed. But it is an awkward way to do that.

[LPC]

Mr. Gregoline has gone back to the Court of Claims, which has again dismissed his rants for lack of jurisdiction, warned him about the possibility of future sanctions, and ordered the clerk not to accept any more filings from him without leave of court.

James Allen Gregoline v. United States, No. 1:14-cv-00776 (Ct.Cl. 12/3/2014).

JAMES ALLEN GREGOLINE,
Plaintiff,
v.
THE UNITED STATES,
Defendant.

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

(Filed: December 30, 2014)

ORDER OF DISMISSAL

WILLIAMS, Judge.

This matter comes before the Court on Defendant's motion to dismiss the complaint for lack of subject-matter jurisdiction. Pro se Plaintiff James Allen Gregoline, identifying himself as a "counterclaimant," alleges a variety of claims arising from the Internal Revenue Service's ("IRS") and the State of California's collection of taxes, including liens and levies against his salary. Plaintiff names as Defendants the United States of America, the State of California, Department of the Treasury -- Internal Revenue Service, the Franchise Tax Board, the United States Tax Court, the California State Board of Equalization, Melba Acosto-Febo, John Koskinen, Selvi Stanislaus, Stanley J. Goldberg, Bryan E. Sladek, Ms. Steel, Ms. Yee, Mr. Horton, Mr. Runner, Ms. Mandel, Mr. Chiang, and Jess De Legarret.1

Because this Court lacks subject-matter jurisdiction, Defendant's motion to dismiss is GRANTED, and Plaintiff's motions to quash and "motion for contempt of affidavit" are DENIED AS MOOT.

BACKGROUND2

The genesis of Plaintiff's complaint is his belief, apparently starting in 2008, that he is a "nontaxpayer at the source of his income" for past calendar years because the income from his employment "is not salaries, wages or compensation for personal services that are to be included in gross income. . . ."3 Compl. ¶ 9. Plaintiff alleges that he had a "simple agreement with his payer, withholding agent for the Secretary, to withhold from his receipts from labor a consideration to deposit in trust for the United States of America and a promise to refund executed considerations to [Plaintiff] upon filing a claim for refund." Id. ¶ 3. Plaintiff also asserts that "[t]his simple agreement [Plaintiff] has with the United States of America is the origin of the obligation owed to [Plaintiff] who is neither the subject nor the object of the revenue laws." Id. Plaintiff thus disputes amounts withheld from his income as taxes for past years.

Plaintiff alleges that he has filed claims for tax refunds for past years, but that these have been wrongfully denied. Id. ¶ 9. Plaintiff also seeks relief based upon the IRS' and the California Franchise Tax Board's attempts to collect unpaid taxes from him. Plaintiff alleges that the IRS and the California Franchise Tax Board have wrongfully imposed tax liens against him from 2010 through 2013, wrongfully garnished his wages, and that the Board members of the California State Board of Equalization have incorrectly ordered him to pay these taxes in July and October 2012. Id. ¶¶ 13-17. Plaintiff also alleges misconduct by the judge and attorneys during a case that he brought on May 27, 2008, before the United States Tax Court. Id. ¶¶ 10-12. Finally, Plaintiff alleges that on July 16, 2014, and August 12, 2014, Mr. De Legarrett attempted to coerce him to provide financial information that would make him subject to federal income tax. Id. ¶¶ 18.

Plaintiff alleges a variety of injuries from Defendant's alleged conduct, including "constructive imprisonment at his place of work," a lack of due process, unjust enrichment, a denial of counsel of his choice, a deprivation of liberty, a loss of physical health, defamation, and trespass. Id. at ¶¶ 3, 4, 6, 22, 23. Plaintiff requests damages of $25,000 multiplied by the "number of days in constructive imprisonment," $274,684.92 for loss of earnings, a declaratory judgment that Defendants have acted contrary to law, and asks that Defendants be enjoined from interfering with Plaintiff's right to negotiate and enter into contracts. Id. ¶¶ 37-50.4

DISCUSSION

Subject-Matter Jurisdiction

Subject-matter jurisdiction must be established before the Court may proceed to the merits. Aerolineas Argentinas v. United States, 77 F.3d 1564, 1572 (Fed. Cir. 1996). If the Court determines that it does not have subject-matter jurisdiction over the claim, the Court must dismiss the action. Adair v. United States, 497 F.3d 1244, 1251 (Fed. Cir. 2007). When deciding a motion to dismiss pursuant to Rule 12(b)(1), this Court must assume that all well-pleaded facts in the complaint are true and draw all reasonable inferences in the nonmovant's favor. Pennington Seed, Inc. v. Produce Exchange No. 299, 457 F.3d 1334, 1338 (Fed. Cir. 2006).

While a plaintiff bears the burden of establishing jurisdiction by a preponderance of the evidence, "complaints drafted by pro se litigants are held to 'less stringent standards than formal pleadings drafted by lawyers.'" Naskar v. United States, 82 Fed. Cl. 319, 320 (2008) (citation omitted). Nevertheless, a pro se litigant must establish the Court's subject-matter jurisdiction. Tindle v. United States, 56 Fed. Cl. 337, 341 (2003). Moreover, "the court has no duty to create a claim where a pro se plaintiff's complaint is so vague or confusing that one cannot be determined." Fullard v. United States, 78 Fed. Cl. 294, 299 (2007).

The Tucker Act, 28 U.S.C. § 1491, provides that this Court

shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.

28 U.S.C. § 1491(a)(1). A plaintiff must demonstrate that the source of substantive law he relies upon for his claim mandates compensation by the Federal Government for damages. United States v. Mitchell, 463 U.S. 206, 216-17 (1983).

Jurisdiction Over Specific Defendants

Plaintiffs claims against the State of California, the Department of the Treasury -- Internal Revenue Service, the Franchise Tax Board, the California State Board of Equalization, the U.S. Tax Court, Melba Acosto-Febo, John Koskinen, Selvi Stanislaus, Stanley J. Goldberg, Bryan E. Sladek, Ms. Steel. Ms. Yee, Mr. Horton, Mr. Runner, Ms. Mandel, Mr. Chiang, and Jess De Legarret must be dismissed because this Court lacks jurisdiction over these entities and individuals. The only proper Defendant before this Court is the United States. See, e.g., Stephenson v. United States, 58 Fed. Cl. 186, 190 (2003) ("[T]he only proper defendant for any matter before this court is the United States, not its officers, nor any other individual.").

Tax Claims

This Court has concurrent jurisdiction with United States District Courts and the Tax Court over the recovery of tax alleged to have been erroneously or illegally assessed or collected under internal-revenue laws. 28 U.S.C. § 1346(a)(1). This Court's jurisdiction under § 1346(a)(1) "requires full payment of the assessment before an income tax refund suit can be maintained." Flora v. United States, 362 U.S. 145, 177 (1960). Thus, a taxpayer must pay the amount the defendant contends is due before filing suit for a refund. Id. Because Plaintiff has not alleged that he paid the taxes that he asks to be refunded, this Court lacks subject-matter jurisdiction.

Due Process Claims

To the extent that Plaintiff alleges due process claims, they must also be dismissed. It is well established that the Due Process clause of the Fifth Amendment is not money mandating. Golder v. United States, 15 Cl. Ct. 513, 517 (1988); Murray v. United States, 817 F.2d 1580, 1583 (Fed. Cir. 1987). Therefore, this Court does not have jurisdiction over such claims.

Tort Claims

This Court lacks jurisdiction over claims sounding in tort. Garrett v. United States, 15 Cl. Ct. 204, 208 (1988). Therefore, to the extent that Plaintiff alleges such claims, they are dismissed for lack of subject-matter jurisdiction.

Injunctive Relief

This Court has limited authority to enter injunctions. E.g., 28 U.S.C. § 1491(b). Plaintiffs general request that the Court enjoin the Government from interfering with his right to enter into contracts is outside the scope of this Court's remedial authority.

Plaintiff May Be Subject to Sanctions If He Attempts to Raise the Same Claims Again

Defendant requests that the Court issue an order directing the Clerk of Court to refuse any further complaints from Plaintiff, except by leave of Court. Courts have the inherent authority to sanction conduct that is abusive of the judicial process. Chambers v. NASCO, Inc., 501 U.S. 32, 42 (1991). A plaintiff's pro se status does not preclude a Court from issuing such sanctions. Constant v. United States, 929 F.2d 654, 658 (Fed. Cir. 1991). In Constant, the Federal Circuit noted that the plaintiff had been explicitly warned twice in prior opinions that further attempts to raise issues that had already been litigated could result in sanctions. Id. Although this Court does not now sanction Plaintiff, the Court warns Plaintiff that if he attempts to raise again the same issues that have been finally decided, he could be sanctioned. Id. at 656.

CONCLUSION

Defendant's motion to dismiss for lack of subject-matter jurisdiction is GRANTED. All other pending motions are DENIED AS MOOT. The Clerk of Court is directed to dismiss the Complaint.

Mary Ellen Coster Williams
Judge

FOOTNOTES

1 Plaintiff alleges that Ms. Acosto-Febo is the Secretary of the Department of Treasury for Puerto Rico, Mr. Kosinen. the Commissioner of the Internal Revenue Service ("IRS"), Mr. Stanislaus, the "Principal agent of the Franchise Tax Board," Mr. Goldberg, "a special trial judge of the U.S. Tax Court," Mr. Sladek, Chief Counsel for the IRS, Ms. Steel, Ms. Yee, Mr. Horton, Mr. Runner, Ms. Mandel, and Mr. Chiang, Board members of the California State Board of Equalization, and Mr. De Legarrett, a revenue officer of the IRS. Compl. ¶ 1.

2 This case is not Plaintiff's first appearance before the United States Court of Federal Claims. On October 12, 2010, Plaintiff filed a complaint in this Court, which was dismissed on May 11, 2011, for lack of subject-matter jurisdiction. See Gregoline v. United States, 99 Fed. Cl. 161 (2011). That opinion provides background on Plaintiff's ongoing disputes with the IRS and the California Franchise Tax Board.

3 Plaintiff does not allege a specific claim period for the relief sought. Plaintiff alleges that Defendants have not returned specific amounts for each calendar year for the years 2001 to 2013. Compl. ¶ 19.

4 Plaintiff filed his complaint on August 25, 2014. Defendant filed the instant motion on October 10, 2014. On October 27, 2014, Plaintiff filed an "objection to motion," which does not address any of the arguments raised by Defendant. On October 29, 2014, Plaintiff filed an "amended objection," which similarly does not address Defendant's arguments, asserts that Plaintiff has decreed the rules of this Court to be the Federal Rules of Civil Procedure, and attempts to issue a "writ of error quae coram nobis residant" in the name of the Court. Defendant filed a reply on October 30, 2014.

END OF FOOTNOTES

[Red Cedar PM]

Interesting case. This knucklehead obviously must have some skills or knowledge if he is making over 100k from his employer. He is, however, dumb enough to file a phony W-4 with them and ask them to stop garnishing his wages.

This brings up an interesting question, although I think it is more of an employment and state law issue than a tax law issue (I'm obviously not a lawyer). If someone is your employee and comes to you with a W-4 that you know is wrong on its face or asks you to disobey a wage garinshment, are you allowed to fire them over this? I don't want people working for me who are dishonest and luckily we have never had this come up, but I'm sure it does happen. I just don't know if someone could claim some sort of free speech infringement or discrimination against them because of a political belief (tax denial) they have that led to their firing. We do a lot of work with the federal government and would never jeopardize our status by disobeying a wage garnishment order or filing false W-4s with the IRS because some numbskull thinks they are exempt when they clearly aren't. So there would clearly be a business reason for firing them but I don't know if this would put us in any legal hot water.

[Hyrion]

Interesting case. [snip] So there would clearly be a business reason for firing them but I don't know if this would put us in any legal hot water.

The obvious answer is: ask the company Lawyer.

The reasoning:

First caveat: I have no role in Law in any way.

Second caveat: I don't own or run a business, and although I was a supervisor at one time, I have never been a manager. I love being a peon, I really really don't like politics in any form (including those games managers play against each other).

However, if I did own my own business (and therefore was in a position to decide to fire someone) - I would certainly get the company Lawyer involved. Ultimately, that's the Lawyer that would be representing me in a Court of Law against a "wrongful dismissal" lawsuit.

If that Lawyer believes the position is sound = great.

If that Lawyer believes the position is not sound = then no matter how good the advice might actually be from another Legal representative, unless I'm going to have that other representative deal with any fall-out lawsuit, I'd better go with the advice of the Lawyer I will have dealing with the problem.

That's my reasoning in a nutshell.

However, I should point out what I see as the ironic logic of what you present:

If an individual is already advancing "crazy" legal theories, then trying to find a path to deal with the "craziness" without facing "a crazy lawsuit" = I don't quite think you realize just how little you can actually do for preventive solutions until the individual stops "thinking crazy".

That's the problem with trying to deal with someone who is being totally unreasonable no matter what the situation is:

Until the person starts to be reasonable, no reasonable solution can be found with the agreement of all parties involved.

[rogfulton]

Until the person starts to be reasonable, no reasonable solution can be found with the agreement of all parties involved.

Well said!

[darling]

If someone is your employee and comes to you with a W-4 that you know is wrong on its face or asks you to disobey a wage garinshment, are you allowed to fire them over this?

Not an employment lawyer, but my understanding is this: it depends.

If you employee is an 'at will' employee, then you don't need any reason to fire them.

If your employee has a contract (actual or implied), or has a government job with some kind of due-process right, then there is probably a process that you have to go through.

From the IRS:

Invalid Form W-4

Any unauthorized change or addition to Form W-4 makes it invalid. This includes taking out any language by which the employee certifies that the form is correct, material defacing of the form, or any writing on the form other than the entries requested. A Form W-4 is also invalid if, by the date an employee gives it to you, he or she indicates in any way that it is false. When you get an invalid Form W-4, do not use it to determine federal income tax withholding. Tell the employee that it is invalid and ask for another one. If the employee does not give you a valid one, withhold taxes as if the employee is single and claiming no withholding allowances. However, if you have an earlier Form W-4 for this employee that is valid, withhold as you did before.

At the very least, if (s)he comes to you with a W-4 that you know is wrong on its face or asks you to disobey a wage garinshment, then you can simply say "no" and continue about your business. Either they will accept that answer or quickly give you a lot more reasons to fire them!

[Gregg]

A garnishment is a court order, you have to do it or it could attach to you. The sov-cit/tax protester withholding stuff is a little more complicated, as said above, depends on if he has a contract, union representation, and if you're in an at-will state.
When I was the one who could say so, I had instructions that when anyone wanted to do it at hire, we changed our mind and didn't hire them, although that never actually happened.
Firing them is also different than not hiring them, in reality if not technically.
I'd go with the "you can't account for crazy" and just get rid of the problem before it became a problem. If its not taxes I'm of the opinion that those type of people have a problem with authority in general and don't adapt well to having a job for someone else.

[Famspear]

.....I just don't know if someone could claim some sort of free speech infringement or discrimination against them because of a political belief (tax denial) they have that led to their firing....

As other posters have noted, in the absence of an oral or written contract that states otherwise, and in the absence of some sort of government job, the employment contract is probably employment "at will" -- which means that the employer generally can fire the employee for good cause, for no cause, or even for "bad" cause.

There are many statutory and case law exceptions to this rule, such as (but not limited to) firings involving discrimination on the basis of race, color, religion, sex, national origin, age, handicap status, firing for refusal to perform an illegal act, firing because the employee had jury duty, etc. Some states (notably California, if I remember correctly) even have laws that impose a duty of "good faith and fair dealing" on the employer.

However, the general rule is that there is no legal right not to be fired by a non-governmental employer because the employee exercised a free speech right under the U.S. Constitution. There is also, generally, no legal right not to be fired by a non-governmental employer because the employee expressed a particular political belief.

Again, the laws of a particular state may allow an employer and employee to have a contrary rule (allowing greater rights to the employee) if there is an oral or written agreement to that effect.

[The Observer]

A garnishment is a court order, you have to do it or it could attach to you.

An IRS wage levy is not a court order. And failing to comply with an IRS wage levy does not automatically attach, the IRS would have to go to federal court and file suit for failure to honor the levy. If the IRS wins, meaning the court agrees that the IRS proved its case that the employer was obligated to turn over funds owed to the IRS, then the employer could be sanctioned up to 50% of the amount of the monies that should have been turned over, in addition to the amount that was attached by the levy.

[LPC]

.....I just don't know if someone could claim some sort of free speech infringement or discrimination against them because of a political belief (tax denial) they have that led to their firing....

[snip]
However, the general rule is that there is no legal right not to be fired by a non-governmental employer because the employee exercised a free speech right under the U.S. Constitution. There is also, generally, no legal right not to be fired by a non-governmental employer because the employee expressed a particular political belief.

It is worth noting that there are several court cases which have upheld the right of an employer to fire an employee for failing to provide a Social Security number for tax withholding even when the employee claimed that the Social Security number violated the employee's religious beliefs.

“It is uncontested that (1) Plaintiff sincerely believes that his religion prevents him from providing a social security number, (2) Plaintiff informed Defendant of his belief, and (3) Defendant refused to hire Plaintiff because he did not provide Defendant with a social security number. Nevertheless, Defendant argues, and the district court held, that Plaintiff cannot establish a prima facie case, because Defendant is required by law to obtain Plaintiff’s social security number. Specifically, the Immigration and Naturalization Service (INS), 8 C.F.R. § 274a.2(a) & (b)(1)(i), 8 C.F.R. § 274a.10(b)(2); Immigration Form I-9; and the Internal Revenue Code (IRC), 26 U.S.C. § 6109(a)(3) & (d), require employers to provide the social security numbers of their employees.

“Although they have disagreed on the rationale, courts agree that an employer is not liable under Title VII [of the Civil Rights Act of 1964] when accommodating an employee’s religious beliefs would require the employer to violate federal or state law.”

Sutton v. Providence St. Joseph Med. Ctr., 192 F.3d 826, 830-31 (9th Cir. 1999) (also rejecting claims under the Religious Freedom Restoration Act).

The 10th Circuit Court of Appeals has also upheld the dismissal of a suit alleging a violation of civil rights when the plaintiff was fired by her employer, State Stores, after refusing to provide a signed Form W-4 with her Social Security number.

“Moreover, State Stores is not only authorized, but also legally bound to withhold and pay federal income taxes to the Internal Revenue Service. See United States v. Lee, 455 U.S. 252, 261 (1982) (upholding the constitutionality and uniform application of the Social Security Act, which requires employers to withhold social security taxes from employees’ wages, even when such withholding conflicts with an employer’s or employee’s religious or other beliefs); Payne v. Dixie Elec. Co., 330 S.E.2d 749, 750 (Ga. App. 1985) (“an employer is not only authorized but required to withhold federal income taxes from his employees’ pay”); Wilhelm v. United States, 84-1 USTC 1700, *3 (E.D. Tex. 1983) (same). Thus, State Stores’ compliance with its legal obligation to withhold taxes from its employees is not a violation of Edwards’ civil rights.”

Edwards v. Stringer, 2004 TNT 34-10, No. 03-2207 (10th Cir. 2/12/2004), (unpublished).

See also, Weber v. Leaseway Dedicated Logistics, Inc., 1999 WL 5111, at *1, No. 98-3172 (10th Cir.1999) (unpublished); Ron Seaworth v. Bob Pearson, et al., 87 AFTR2d Par. 2001-459, 2001 TNT 23-9, No. 99-3014MN (8th Cir. (employer not required to accommodate employee’s refusal to use Social Security number as “mark of the beast”; employer not required to apply for waiver of penalties under I.R.C. section 6724), E.E.O.C. v. Allendale Nursing Ctr., 996 F.Supp. 712, 717 (W.D. Mich. 1998) (requirement that employee obtain SSN is requirement imposed by law and is not employment requirement; provision for waiver of penalties under I.R.C. section 6724 does not exist to benefit employee who caused penalties to be imposed, and employer is not required to take steps to accommodate employee who caused penalty); Shelly L. Baltgalvis v. Newport News Shipbuilding Inc., et al., 87 AFTR2d Par. 2001-609, 2001 TNT 48-59, No. 4:00cv55 (U.S.D.C. E.D. Va. 2/22/2001).

If employees can be fired for acting on what are claimed to be religious beliefs, it should be even easier to fire them for are claimed to be political beliefs.

[fortinbras]

(1) the Tax Code requires employers to make the appropriate payroll deduction for income tax
(2) the Tax Code also requires employers and banks to make their financial records (which are not considered the employee's possession altho they are about him) available to the IRS, and expressly immunizes their compliance from lawsuit.
(3) Courts have already held that employers may refuse to hire, or may fire someone they already hired, if this person refuses to cooperate with the legally required income tax deductions. In the event of an employee who unjustifiably claims total tax exemption or refuses to submit a proper W-2 form (either refusing altogether or providing untrue data) the IRS has instructed employers to take the MAXIMUM payroll deduction and this employee can then argue with the IRS about a refund.

PS: Thanks to LPC and Dan Evans for the preceding entry.

[Red Cedar PM]

Thanks, this is right on point.

Our home state where we do most of our business is (luckily) an at-will state and we can fire anyone without cause. My question was more of could that person turn around and sue me for some kind of discrimination and now it appears they cannot (or at least they would not have much of a case). Of course if we did fire someone for a reason like this we would get our attorneys involved, I was just asking a hypothetical.

EDIT - meant to quote Famspear, but I appreciate all the input here.