Court Opinion

ID: 162135
Source: CourtListenerOpinion
Date Created: 2010-08-14 07:24:56+00
Date Added: 2024-06-11T17:17:06.677336
License: Public Domain

F I L E D
                                                                   United States Court of Appeals
                                                                           Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                          MAR 21 2002
                            FOR THE TENTH CIRCUIT
                                                                      PATRICK FISHER
                                                                                 Clerk

    JAMES R. PROUT,

                Petitioner-Appellant,

    v.                                                   No. 01-9005
                                                     (T.C. No. 13122-99)
    COMMISSIONER OF INTERNAL                         (Petition for Review)
    REVENUE,

                Respondent-Appellee.

                            ORDER AND JUDGMENT            *

Before HENRY , ANDERSON , and LUCERO , Circuit Judges.

         After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal.   See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
      Petitioner James R. Prout, proceeding pro se, appeals the decision of the

Tax Court assessing taxes and penalties against him for the tax years 1992

through 1997. The Tax Court imposed sanctions in the amount of $2,500 because

Mr. Prout pursued frivolous claims. We exercise jurisdiction under 26 U.S.C.

§ 7482(a)(1) and affirm.

      Mr. Prout admitted that he received the income stated in the notice of

deficiency. He does not appeal the sanctions order, nor does he challenge the

merits of the deficiencies and penalties charged in the notice of deficiency. He

appeals on the following grounds: (1) he cannot fairly be required to pay the same

rate of tax as the rate imposed on federal employees and officers because he does

not receive the same benefits as federal employees and officers; (2) he was

incorrectly characterized as “self-employed” when, in fact, he is a “private

independent contractor,” as distinguished from an “independent contractor,” who

could contract to do work for the federal government; (3) the taxes assessed

against him were employee taxes levied for the privilege of government

employment, so he does not owe them; (4) no evidence supports the Tax Court’s

finding that he is a “sole proprietor;” (5) he is not similarly situated to a federal

employee or officer and is not eligible for government employment benefits;

(6) he cannot be required to pay income taxes because he receives no direct

federal employment benefits; and (7) the Tax Court applied the wrong standard

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when evaluating his disparate-treatment constitutional challenge to the income

taxes assessed against him. Mr. Prout’s seven arguments can be condensed into

two claims: (1) federal income taxes apply only to federal employees, and

(2) applying to him the same tax laws that are applied to federal employees

violates the Equal Protection Clause.

      We review Tax Court decisions “in the same manner and to the same extent

as decisions of the district courts in civil actions tried without a jury.” 26 U.S.C.

§ 7482(a)(1). Thus, we review purely factual issues under a clearly erroneous

standard, and we review purely legal questions de novo.     Twenty Mile Joint

Venture, PND, Ltd. v. Commissioner    , 200 F.3d 1268, 1275 (10th Cir. 1999).

      We first reject the argument that the income-tax laws apply only to

employees of the federal government. Mr. Prout, like every individual, whether

or not employed by the federal government, is subject to the income-tax laws.

26 U.S.C. § 1 (taxable income of every individual is subject to tax). “‘All

individuals, natural or unnatural, must pay federal income tax on their wages,’

regardless of whether they requested, obtained or exercised any privilege from

the federal government .” United States v. Sloan , 939 F.2d 499, 501 (7th Cir.

1991) (quoting Lovell v. United States , 755 F.2d 517, 519 (7th Cir. 1984))

(emphasis added); cf. Lonsdale v. United States , 919 F.2d 1440, 1448 (10th Cir.

1990) (listing frivolous tax-protester arguments, including claims that individuals

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are not subject to income tax, the tax laws apply only in the District of Columbia,

and wages are not income).

      Mr. Prout’s equal protection argument is also unavailing. “The Equal

Protection Clause of the Fourteenth Amendment commands that no State shall

deny to any person within its jurisdiction the equal protection of the laws, which

is essentially a direction that all persons similarly situated should be treated

alike.” City of Cleburne v. Cleburne Living Ctr.   , 473 U.S. 432, 439 (1985)

(quotation omitted). Mr. Prout, who is not employed by the federal government,

alleges that he is not similarly situated to employees of the federal government

because he is not eligible for federal employees’ benefits. Accordingly, he

demands different treatment, arguing that his ineligibility for federal employee

benefits exempts his income from taxation. This argument does not invoke the

Equal Protection Clause which requires that similarly-situated persons be treated

the same. Mr. Prout, like others who are not employed by the government as well

as those who are, is subject to the income-tax laws. The Tax Court properly

treated Mr. Prout the same as other individuals, whether employed by the federal

government or not.

      Mr. Prout’s arguments are frivolous. Even after the Tax Court warned him

that his claims were frivolous and he was therefore subject to sanctions, Mr. Prout

continued to press his claims. The Commissioner has filed a motion seeking

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sanctions against him for pursuing a frivolous appeal in the amount of $4,000.

Mr. Prout was served with the motion and has had an opportunity to oppose the

request for sanctions.   See Braley v. Campbell , 832 F.2d 1504, 1515 (10th Cir.

1987) (party against whom sanctions are sought must have notice and an

opportunity to be heard). He has not responded. Because Mr. Prout’s arguments

on appeal are legally frivolous, we impose sanctions against him in the amount of

$4,000. Stafford v. United States , 208 F.3d 1177, 1179 (10th Cir. 2000) (adopting

flat fee of $4,000 as sanction for frivolous appeal from a Tax Court decision).

       The judgment of the United States Tax Court is AFFIRMED. The

Commissioner’s motion for sanctions is GRANTED in the amount of $4,000.

                                                     Entered for the Court

                                                     Stephen H. Anderson
                                                     Circuit Judge

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