UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

Jeffrey Heleen

v. Civil No. 06-cv-24-SM

Radiation Safety

& Control Services, Inc.

REPORT AND RECOMMENDATION

Jeffrey Heleen moves for a preliminary injunction against

Radiation Safety & Control Services, Inc. (“RSCS”) seeking an

order directing RSCS to pay him $30,078.13 in wages plus 8%

interest from July 2005 through the present. RSCS objects. The

Court held an evidentiary hearing on the motion on June 13, 2006. 

For the reasons set forth below, I recommend that the motion be

denied. I further recommend that RSCS’ pending motion to enforce

settlement be granted.

Motion for Preliminary Injunction

A court may grant a plaintiff’s request for a preliminary

injunction if the plaintiff satisfies a four-part test: (1) the

plaintiff is likely to succeed on the merits; (2) the plaintiff

will suffer irreparable harm if the injunction is not granted;

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(3) the injury to the plaintiff outweighs any harm that granting

the injunction would inflict on the defendant; and (4) the public

interest will not be adversely affected by the granting of the

injunction. See Wine & Spirits Retailers, Inc. v. Rhode Island,

418 F.3d 36, 46 (1st Cir. 2005). “The sine qua non of this fourpart inquiry is likelihood of success on the merits: if the

moving party cannot demonstrate that he is likely to succeed in

his quest, the remaining factors become matters of idle

curiosity.” New Comm Wireless Servs., Inc. v. SprintCom, Inc.,

287 F.3d 1, 9 (1st Cir. 2002). Still, to obtain injunctive

relief a party must independently satisfy each of the four

factors. See Auburn News Co. v. Providence Journal Co., 659 F.2d

273, 277 (1st Cir. 1981).

Heleen grounds his claim against RSCS on RSCS’ alleged

improper disregard for his Form W-4 (Employee’s Withholding

Allowance Certificate) on which Heleen indicated that he was

exempt from paying taxes. The evidence at the hearing showed

that, in a letter dated June 7, 2005, the Internal Revenue

Service (“IRS”) directed RSCS to disregard the information on

Heleen’s Form W-4, and to withhold taxes from Heleen’s earnings

as if he claimed a single filing status with zero allowances. 

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1Despite Heleen’s apparent belief to the contrary, courts

have repeatedly rejected claims that wages are not taxable

income, and that payment of federal taxes is voluntary. See

United States v. Gerads, 999 F.2d 1255, 1256 (8th Cir. 1993)

(finding that wages are subject to taxation and that appellants’

claim that the payment of income taxes is voluntary “clearly

lacks substance”); United States v. Sloan, 939 F.2d 499, 500 (7th

Cir. 1991) (the federal income tax is not voluntary and must be

paid by all individuals on their wages); Perkins v. Comm’r, 746

F.2d 1187, 1188 (6th Cir. 1984) (wages are taxable income within

the meaning of 26 U.S.C. § 61(a)). 

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See Df.’s Ex. B. The IRS further directed RSCS not to honor a

new Form W-4 from Heleen if he submitted one. See id. The IRS

has the authority to direct an employer to disregard an

employee’s Form W-4 when it has reason to believe that the

statements made on the form are materially incorrect1 under 26

C.F.R. § 31.3402(f)(2)-1(g)(5). Scott v. Miller, No. IP 97-0079-

C-M/S, 1997 WL 881207 (S.D. Ind. Sept. 3, 1997); Pascoe v. IRS,

580 F. Supp. 649, 651 (E.D. Mich. 1984); see also Stonecipher v.

Bray, 653 F.2d 398 (9th Cir. 1981) (recognizing the IRS’ right to

require employers to disregard an employee’s Form W-4), cert.

denied, 454 U.S. 1145 (1982). 

Heleen argues that he has a valid claim against RSCS under

26 U.S.C. § 3402(n) for withholding federal taxes from his wages

contrary to the certification in Heleen’s Form W-4. He does not.

Section 3402(n) provides in pertinent part:

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Notwithstanding any other provision of this section, an

employer shall not be required to deduct and withhold

any tax under this chapter upon a payment of wages to

an employee if there is in effect with respect to such

payment a withholding exemption certificate . . .

furnished to the employer by the employee certifying

that the employee --

(1) incurred no liability for income tax imposed under

subtitle A for his preceding taxable year, and

(2) anticipates that he will incur no liability for the

income tax imposed under subtitle A for his current

taxable year.

26 U.S.C. § 3402(n). Section 3402(n) confers upon an employer “a

right to respect the claim of exemption by one of its employees

without subjecting itself to liability or official compulsion to

do otherwise.” Pascoe, 580 F. Supp. at 653. But the statute

does not prohibit an employer from voluntarily complying with a

letter from the IRS issued under 26 C.F.R. § 31.3402(f)(2)-

1(g)(5)(i)-(vii) directing the employer to withhold taxes. Id.

Moreover, the statute does not address the legal rights of an

employee as against his employer. Id. Therefore, Heleen’s

reliance on 26 U.S.C. § 3402(n) is misplaced. To the extent that

Heleen contends that the IRS’ letter to RSCS is misleading and

fraudulent, I find his argument to be without merit. See

generally Pesci v. IRS, 67 F. Supp. 2d 1189, 1192 n.3 (D. Nev.

1999) (rejecting the plaintiff’s claims that letters from the IRS

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were invalid because the IRS had no authority to issue them and

because the letters did not have the required OMB number).

Heleen admitted during the hearing that he received a letter

from the IRS explaining the instructions that the IRS gave to

RSCS. See Df.’s Ex. E. Heleen further admitted that he never

contacted the IRS directly to appeal its determination of his tax

status despite receiving notification from the IRS and from RSCS

of his right to do so. Although Heleen asserted during the

hearing that he has no dispute with the IRS, courts “will not

impute to Congress the purpose of undermining the elaborate

procedure for withholding of taxes established by § 3402 by

permitting the taxpayer to avoid withholding with a mere

unsupported, undocumented claim of exemption that is not subject

to administrative review.” Pascoe, 580 F. Supp. at 653.

In the absence of a valid exemption, RSCS was required to

deduct and withhold taxes from Heleen’s earnings. See Lubetzky

v. United States, 393 F.3d 76, 78 (1st Cir. 2004) (“Employers are

required to deduct from employee wages -- and turn over to the

Internal Revenue Service -- social security, Medicare and federal

income taxes.”); Bright v. Bechtel Petroleum, Inc., 780 F.2d 766,

770 (9th Cir. 1986) (“Under 26 U.S.C. § 3402, an employer has a

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mandatory duty to withhold federal income tax from an employee’s

wages where required by applicable regulations.”). Heleen failed

to demonstrate that he is likely to succeed on the merits of his

claim against RSCS because he has not demonstrated that RSCS’

compliance with the IRS’ directions violated his rights. And, in

fact, Heleen does not possess any right against RSCS under these

circumstances. See 26 U.S.C. § 3403 (providing that employers

shall not be liable to any person for the amount of federal tax

withheld); Bright, 780 F.2d at 770 (suits by employees against

their employers for federal taxes withheld are statutorily

barred); Edgar v. Inland Steel Co., 744 F.2d 1276, 1278 (7th Cir.

1984) (employees have no cause of action against employers to

recover wages withheld and paid over to the government in

satisfaction of federal income tax liability). 

Since Heleen failed to demonstrate a likelihood of success

on the merits, the court need not address the remaining

preliminary injunction factors. See New Comm Wireless Servs, 287

F.3d at 9. It is particularly noteworthy in this case, however,

that Heleen fails to satisfy a single element required for the

grant of a preliminary injunction. 

Heleen made no attempt to demonstrate at the hearing that he

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will suffer irreparable harm if his request for injunctive relief

is denied. And indeed, any such claim should be rejected. 

“Irreparable injury is that injury for which money damages are

not adequate compensation.” Sierra Club v. Larson, 769 F. Supp.

420, 422 (D. Mass. 1991) (citing Auburn News, 659 F.2d at 277);

see also Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d

12, 18 (1st Cir. 1996) (finding that irreparable harm exists if

the plaintiff suffers a substantial injury that is not accurately

measurable or adequately compensable by money damages). The

amount of money at issue on Heleen’s claim based on the alleged

wrongful withholding of federal taxes is readily determinable. 

Therefore, if Heleen were to prevail his damages are entirely

compensable and no irreparable harm exists.

The balance of the harms does not favor Heleen. He elected

not to receive payment from RSCS through direct deposit into his

checking account, so RSCS sent Heleen paychecks with pay stubs

attached showing his earnings, the taxes withheld and adjustments

to his net pay. See Df.’s Ex. D. Beginning in July 2005,

however, Heleen began stamping his paychecks “DISCHARGED WITHOUT

PREJUDICE UCC1-207” and mailing them back to RSCS. Heleen sent

RSCS a letter demanding that RSCS honor his claimed tax exempt

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2The evidence showed that the amount of wages that Heleen

rejected and returned to RSCS totals $25,950.31 not $30,078.13 as

Heleen claims. After filing this lawsuit, Heleen asserted that

in addition to his wages he was also entitled to payment of per

diem expenses in the amount of $4,128. As discussed in more

detail infra, RSCS offered to pay Heleen $25,951 plus his

requested per diem less the applicable taxes in order to settle

this lawsuit.

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withholding status, but he did not otherwise instruct RSCS as to

what he wanted RSCS to do with the checks that he refused to

cash. Thus, although RSCS attempted to pay Heleen the money that

he was entitled to receive, Heleen refused to accept it.2 He now

seeks immediate payment of the money that he refused to accept

plus interest from the time that he sent back RSCS’ checks. That

is an inequitable result as RSCS would be harmed by requiring it

to pay Heleen interest that he has not shown he is entitled to

receive, as it is not at fault for Heleen’s failure to accept the

money when it was tendered.

 Finally, the public interest would be adversely affected by

granting Plaintiff’s request for a preliminary injunction. 

Granting Plaintiff’s motion would encourage employers to disobey

efforts to enforce valid federal tax law. The burden is on

Heleen, not RSCS, to challenge the IRS’ determination of his tax

status for purposes of the withholding required by federal law.

In sum, Heleen has not met any of the required elements for

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the grant of a preliminary injunction. I find that his motion

for a preliminary injunction is frivolous, and I recommend that

it be denied.

Motion to Enforce Settlement

After addressing Plaintiff’s motion for a preliminary

injunction, the Court considered the evidence on RSCS’ pending

motion to enforce settlement. The following facts are

undisputed.

The total amount of wages that Heleen refused to accept from

RSCS totaled $25,950.31. On March 23, 2006, RSCS made an offer

of judgment to Heleen in the amount of $25,951, which Heleen

rejected. At a preliminary pretrial conference held on April 25,

2006, RSCS provided Heleen a breakdown of the taxes that were

withheld from his earnings. By letter dated April 26, 2006,

Heleen indicated that he was also seeking additional money for

per diem expenses in the amount of $4,128.

On May 4, 2006, RSCS sent Heleen a letter through counsel

that stated, in pertinent part,

in an effort to settle this matter, [RSCS] is willing

to offer you the per diem amount of $4,128 less federal

and state taxes in addition to the taxable wages of

$25,951 which you had returned to [RSCS]. I would

appreciate if you could please advise me within the

next week whether this offer is acceptable.

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See Exhibit G to Motion to Enforce Settlement (emphasis added). 

In response to RSCS’s letter, Heleen contacted RSCS’ counsel on

May 8, 2006 to learn the exact amount of the offer. RSCS’

counsel informed Heleen that the total settlement offer was

$28,525, which represented $25,951 in wages plus $2,574 in per

diem expenses. On May 11, 2006 at 10:30 a.m., Heleen left a

telephone message for RSCS’ counsel in which he stated, in

pertinent part:

This is Jeff Heleen . . . I got your message yesterday

and I understand that the amount of the per diem after

everything is taken out is $2,574 which added to the

$25,951 comes to $28,525. I will accept that amount. 

When can I expect to see that check, is what I would

like to know and also, I would like something to come

with the check, a letter just stating this money is

from wages withheld from July to December of last year

from case number such and such, . . . and that should

take care of that particular matter . . . .

Exhibit H to Motion to Enforce Settlement (emphasis added). 

After RSCS’ counsel contacted Heleen to inform him that RSCS

would send a release agreement for him to sign in connection with

the settlement, Heleen faxed RSCS’ counsel a letter dated May 12,

2006 in which Heleen stated that he declined to accept RSCS’

offer, and that he was willing to dismiss his complaint only if

RSCS paid the amount sought in the complaint of $44,773. Id.

RSCS responded stating that Heleen had already accepted the

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settlement offer, and that RSCS planned to move to enforce the

settlement in federal court. The instant motion followed.

This court has recognized previously that settlement

agreements are in the nature of contracts and are binding on the

parties. See Lady Ester Lingerie Corp. v. The Wooden Soldier,

Ltd., 2003 DNH 124 (D.N.H. July 17, 2003); Clark v. Mitchell, 937

F. Supp. 110 (D.N.H. 1996). The Court finds, based on the

evidence at the June 13, 2006 hearing, that all of the elements

required for a binding contract are met in this case.

RSCS’ May 4, 2006 letter to Heleen constituted an offer to

settle this litigation. Heleen’s voicemail to RSCS’ counsel on

May 11, 2006 was an objective manifestation of Heleen’s

acceptance of the terms of RSCS’ settlement offer, and

demonstrates that a meeting of the minds existed between the

parties. Consideration was exchanged between the parties in that

RSCS agreed to pay an amount of money that Heleen stated was

acceptable in exchange for Heleen ending this lawsuit. 

Heleen asserted during the evidentiary hearing that he did

not realize that this case would be terminated until RSCS’

counsel informed him that he would need to sign a release

agreement. Heleen claimed that he believed that he could

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continue to pursue his case against RSCS even after receiving the

agreed upon payment. The Court finds that Heleen’s purported

belief that he could continue to prosecute this case to obtain

additional relief from RSCS after receiving the payment specified

in RSCS’ May 4, 2006 offer is inconsistent with Heleen’s own

words that RSCS’s settlement offer “should take care of that

particular matter,” and with common sense.

Based on the evidence presented, the Court finds that a

binding agreement existed to settle this litigation, consisting

of an offer, an acceptance, a meeting of the minds between the

parties on all of the material terms, and an exchange of adequate

consideration between the parties. Therefore, I recommend that

the court grant RSCS’ motion to enforce the settlement, and that

this case be terminated consistent therewith.

Conclusion

For the reasons set forth above, I recommend that the court

deny Plaintiff’s Motion For Preliminary Injunction (document no.

11), and that the court grant Defendant’s Motion to Enforce

Settlement (document no. 12). 

Any objections to this Report and Recommendation must be

filed within ten (10) days of receipt of this notice. Failure to

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file objections within the specified time waives the right to

appeal the district court’s order. See Unauthorized Practice of

Law Comm. v. Gordon, 979 F.2d 11, 13-14 (1st Cir. 1992); United

States v. Valencia-Copete, 792 F.2d 4, 6 (1st Cir. 1986). 

_________________________________

James R. Muirhead

United States Magistrate Judge

Date: June 20, 2006 

cc: Jeffrey Heleen, pro se

Mary Ann Dempsey, Esq.

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