Court Opinion

ID: 4678852
Source: CourtListenerOpinion
Date Created: 2021-04-20 16:00:40.790895+00
Date Added: 2024-06-11T08:03:47.079404
License: Public Domain

FILED
                                                                      United States Court of Appeals
                      UNITED STATES COURT OF APPEALS                          Tenth Circuit

                            FOR THE TENTH CIRCUIT                             April 20, 2021
                        _________________________________
                                                                          Christopher M. Wolpert
                                                                              Clerk of Court
 WILLIAM J. JAXTHEIMER,

       Petitioner - Appellant,

 v.                                                          No. 20-9003
                                                          (No. 11061-17 L)
 COMMISSIONER OF INTERNAL                              (United States Tax Court)
 REVENUE,

       Respondent - Appellee.
                      _________________________________

                            ORDER AND JUDGMENT*
                        _________________________________

Before BACHARACH, BALDOCK, and EID, Circuit Judges.
                 _________________________________

      William J. Jaxtheimer appeals pro se from a Tax Court order upholding the

IRS’s imposition of a notice of a federal tax lien and a penalty for filing a frivolous

tax return. Exercising jurisdiction under 26 U.S.C. § 7482(a)(1), we affirm.

                                            I

      Jaxtheimer failed to file tax returns for tax years 2006 through 2008. The IRS

therefore calculated his taxes and prepared substitute returns on his behalf using

      *
        After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
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 This order and judgment is not binding precedent,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. It
may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1
and 10th Cir. R. 32.1.
third-party information. The IRS sent him notices of deficiency, and when he failed

to respond, it assessed penalties and interest. Additionally, IRS records indicated

that Jaxtheimer filed three frivolous tax returns associated with tax year 2013.

Although the IRS did not produce the actual returns, its records indicated his returns

were classified as frivolous because they reported no income despite third-party

information reporting otherwise. Based on this information, the IRS assessed three

separate penalties, each for $5,000, for filing three frivolous returns. See 26 U.S.C.

§ 6702. Jaxtheimer’s total liability was $98,753.

      Eventually, the IRS recorded a federal tax lien against Jaxtheimer’s property

and mailed him a notice of the lien and of his right to a collection due process (CDP)

hearing before the IRS Office of Appeals. Jaxtheimer requested a CDP hearing to

challenge the appropriateness of the collection activity and his underlying liability

for the penalties. But before the hearing, he failed to provide his tax returns from

2006 through 2008, despite the Office of Appeals’ repeated requests that he do so.

Instead, he challenged the admissibility of the IRS’s evidence, claimed the IRS

unlawfully assessed his tax liability, and asserted he was not a “taxpayer,” among

other things, R., Vol. 2 at 190 (internal quotation marks omitted).

      The Office of Appeals transferred the CDP hearing from Memphis to Denver

to accommodate Jaxtheimer’s request for a face-to-face hearing, but on the day of the

hearing Jaxtheimer “opted for a telephone hearing,” id. at 38. Although he offered

several arguments, some of which the Office of Appeals characterized as frivolous,

he provided no documentation to support his challenge to his underlying liability, and

                                           2
he declined collection alternatives. Consequently, the Office of Appeals issued a

notice of determination concluding that the IRS followed all legal and procedural

requirements and the notice of the federal tax lien appropriately balanced the need for

efficient collection of taxes against Jaxtheimer’s legitimate concerns that the

collection action be no more intrusive than necessary. See Cropper v. Comm’r,

826 F.3d 1280, 1282-83 (10th Cir. 2016) (explaining the parameters of a CDP

hearing). The Office of Appeals sustained the notice of the federal tax lien and the

penalties.

      Jaxtheimer subsequently petitioned the Tax Court for review. In his petition,

he argued that his income was not taxable under “fundamental law.” R., Vol. 1 at 3.

He also moved the Tax Court to dismiss his case, insisting he was not a “taxpayer”

over whom the IRS and the Tax Court had jurisdiction. Id. at 136. According to

Jaxtheimer, the Tax Court lacked jurisdiction because the IRS failed to identify any

revenue law that subjected him, his property, or his activities to taxes or required him

to file tax returns. And at trial, he urged the Tax Court to rule on his motion to

dismiss before considering the merits of the case, arguing that the Tax Court could

not consider the merits of his case if it lacked jurisdiction. Rejecting this argument,

the Tax Court explained that it could hear parallel arguments on its jurisdiction and

the merits and later issue an appropriate decision after taking the arguments under

advisement. The Tax Court also warned Jaxtheimer that he could be sanctioned

under 26 U.S.C. § 6673 for advancing frivolous arguments. Indeed, the IRS moved

the Tax Court to impose sanctions for raising such arguments.

                                           3
      On December 16, 2019, the Tax Court rendered its findings and opinion, first

ruling that it had jurisdiction over the case because the Office of Appeals issued a

notice of determination sustaining the notice of the federal tax lien and Jaxtheimer

petitioned the Tax Court for review. Second, the Tax Court ruled that Jaxtheimer

could not challenge his underlying tax liability because he failed to provide his tax

returns or submit any evidence in the Office of Appeals to support his claim, and in

any event, he offered only frivolous arguments that he was not subject to taxes.

Third, the Tax Court concluded that Jaxtheimer was liable for only one of the three

frivolous-return penalties because the IRS failed to sustain its burden to demonstrate

the other two penalties were not duplicates for filing a single frivolous return. Last,

the Tax Court denied the IRS’s motion for sanctions but warned Jaxtheimer once

again that he could face sanctions up to $25,000 under § 6673 if he persisted in

making frivolous arguments.

      Undeterred, Jaxtheimer moved the Tax Court to vacate its decision, claiming it

was void because he was not subject to taxes and no specific revenue law required

him to file a tax return. Separately, he also moved the Tax Court to reconsider its

findings and opinion, arguing he was beyond the “legislative jurisdiction of . . .

Congress” and there was no revenue law requiring him to pay taxes, classifying him

as a “taxpayer,” or mandating that he file a tax return. R., Vol. 3 at 116 (internal

quotation marks omitted). The Tax Court summarily denied both of his motions,

ruling that they “advance[d] only frivolous arguments.” Id. at 135. The Tax Court

also imposed a $2,000 penalty against Jaxtheimer under § 6673 because he persisted

                                           4
in making frivolous arguments despite the Tax Court’s previous admonishments not

to do so. Jaxtheimer subsequently appealed.

                                           II

      Where, as here,

      the Tax Court decision rests on its review of an Office of Appeals’
      determination following a CDP hearing, we apply the same standards as
      the Tax Court. Thus, we review the Office of Appeals’ determinations
      about challenges to the amount of the underlying tax liability de novo
      and its administrative determinations unrelated to the amount of tax
      liability for abuse of discretion.

Cropper, 826 F.3d at 1284. We liberally construe Jaxtheimer’s pro se materials, but

we do not act as his advocate. Ford v. Pryor, 552 F.3d 1174, 1178 (10th Cir. 2008).

      On appeal, Jaxtheimer continues to challenge his underlying tax liability and

the frivolous-return penalty, but he offers only frivolous tax-protester arguments.1

We will only briefly address these arguments because we have previously rejected

them and similar contentions as “completely lacking in legal merit and patently

frivolous,” Lonsdale v. United States, 919 F.2d 1440, 1448 (10th Cir. 1990).

      First, throughout his brief, Jaxtheimer contends the IRS and the Tax Court

lacked jurisdiction over him because he is “one of the Posterity of We People, living

and working within the exterior boundaries of the several States.” Aplt. Br. at 10. In

Lonsdale, we rejected similar arguments that “individuals (free born, white,

preamble, sovereign, natural, individual common law de jure citizens of a state, etc.)

      1
        Jaxtheimer does not contest the Tax Court’s $2,000 sanction for making
frivolous arguments, and we do not consider it. See Bronson v. Swensen, 500 F.3d
1099, 1104 (10th Cir. 2007).
                                           5
are not persons subject to taxation” and that “the authority of the United States is

confined to the District of Columbia.” 919 F.2d at 1448 (internal quotation marks

omitted); see also Ford, 552 F.3d at 1177 n.2 (rejecting as frivolous an argument that

taxpayer was “not subject to the income tax because he [was] a non[-]resident alien

to the political jurisdiction of the United States” (internal quotation marks omitted)).

      Second, Jaxtheimer contends Pollock v. Farmers’ Loan & Trust Company,

157 U.S. 429 (1895), requires apportionment for direct taxes on personal employment

income. But Lonsdale rejected the argument that “the income tax is a direct tax

which is invalid absent apportionment, and Pollock . . . is authority for that and other

arguments against the government’s power to impose income taxes on individuals.”

Lonsdale, 919 F.2d at 1448.

      Third, Jaxtheimer contends the Sixteenth Amendment did not extend any new

taxing powers or change the requirement that income taxes be apportioned. Yet

Lonsdale rejected the argument that “the Sixteenth Amendment . . . is either invalid

or applies only to corporations.” Id.

      Fourth, Jaxtheimer contends the IRS failed to distinguish “between a tax on

income that may be enforceable as an excise[,] and a tax on income that burdens

accumulation of property[, which is] subject to . . . apportionment.” Aplt. Br. at 14.

To the extent this contention suggests that income from excise activities is taxable,

but income from other activities such as labor are not taxable, Lonsdale rejected the

premise that “wages are not income,” 919 F.2d at 1448.

                                            6
       Fifth, denying he is a “taxpayer,” Jaxtheimer contends the IRS and the Tax

Court identified no internal revenue law that classified him as a “taxpayer” subject to

taxes. To the extent this argument suggests he is not required to pay taxes so long as

he denies that he is a taxpayer, Lonsdale rejected similar arguments that “the income

tax is voluntary” and that “no statutory authority exists for imposing an income tax

on individuals,” id.2; see also Ford, 552 F.3d at 1177 n.2 (rejecting as frivolous

taxpayer’s arguments that “income taxes do not apply to him”).

       Last, Jaxtheimer contends no internal revenue law requires him to file tax

returns and he breached no duty under “common or natural law” to file a return, Aplt.

Br. at 22. But Lonsdale rejected the argument that “individuals are not required to

file tax returns fully reporting their income.” 919 F.2d at 1448; see also Ford,

552 F.3d at 1177 n.2 (rejecting as frivolous taxpayer’s argument that “he is not

required to file tax returns”).

       In short, Jaxtheimer’s frivolous tax-protester arguments provide no basis for

upsetting the Tax Court’s judgment.

       2
        In his reply brief, Jaxtheimer dismisses Lonsdale as applicable only to
“taxpayers.” We decline to indulge this frivolous argument, which is merely an
extension of his flawed premise that taxes are voluntary for those who submit to the
tax laws.
                                           7
                                  III

Accordingly, the judgment of the Tax Court is affirmed.

                                             Entered for the Court

                                             Bobby R. Baldock
                                             Circuit Judge

                                  8