United States District Court, Northern District of Illinois, E.D
March 8, 1984
CHARLES D. SCHAUT; ALBERT REICH; JOHN CHEEK; NORMAN KRAH, AND MICHAEL H. SMITH, PLAINTIFFS,
UNITED STATES OF AMERICA AND COMMISSIONER OF INTERNAL REVENUE, DEFENDANTS.
The opinion of the court was delivered by: Marovitz, Senior District Judge.
Motion to Dismiss
Plaintiffs Charles D. Schaut, Albert Reich, John Cheek,
Norman Krah and Michael H. Smith bring this action pro se
against the United States of America and the Commissioner of
the Internal Revenue Service alleging that the withholding of
taxes from their wages and the payment of these taxes is in
violation of the authority granted under the Sixteenth
Amendment to the United States Constitution. Plaintiffs seek
injunctive and declaratory relief. The Court's jurisdiction is
allegedly invoked pursuant to the Declaratory Judgment Act,
28 U.S.C. § 2201. Presently pending before the Court is
defendants' motion to dismiss for lack of subject matter
jurisdiction. After full review of the memoranda on file, as
well as the relevant case law, for the reasons that follow,
defendants' motion is granted.
According to the complaint, plaintiffs are all wage earners
who are employed within this judicial district and have been
subject to both the payment of income taxes and the
withholding of taxes from their wages. Plaintiffs claim that
wages are not taxable under the Sixteenth Amendment and thus
the withholding from and the payment of taxes from their wages
violates their Fifth Amendment due process rights. Plaintiffs
request that the Court declare that they are not subject to
being taxed by the Internal Revenue Code because they are wage
earners and thus not subject to income tax provisions.
Plaintiffs also request that the Court enjoin defendants from
subjecting plaintiffs to withholding taxes.
The defendants have moved to dismiss the complaint on the
1. The Doctrine of Sovereign Immunity bars this
2. The Court lacks subject matter jurisdiction;
3. The Anti-Injunction Act bars plaintiffs'
claim for injunctive relief; and
4. The Declaratory Judgment Act bars plaintiffs'
claim for declaratory relief.
"It is elementary that `[t]he United States, as a sovereign,
is immune from suit save as it consents to be sued . . ., and
the terms of its consent to be sued in any court define that
court's jurisdiction to entertain the suit.'" United States v.
Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 1351, 63 L.Ed.2d
607 (1980) quoting United States v. Sherwood, 312 U.S. 584,
586, 61 S.Ct. 767, 769, 85 L.Ed. 1058 (1941). A waiver of
sovereign immunity "cannot be implied but must be unequivocally
In the instant action, plaintiffs have failed to assert any
statutory provision sufficient to waive sovereign immunity and
provide a valid jurisdictional basis. Indeed, plaintiffs'
complaint is silent as to a jurisdictional base, except to
state that the action is brought pursuant to the Declaratory
Judgment Act, 28 U.S.C. § 2201. Ofcourse, the Declaratory
Judgment Act does not create an independent ground for
jurisdiction, but rather permits the award of declaratory
relief only when other bases for jurisdiction are present.
Jones v. Alexander, 609 F.2d 778 (5th Cir. 1980), cert. denied,
449 U.S. 832, 101 S.Ct. 100, 66 L.Ed.2d 37; Skelly Oil Co. v.
Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 878,
94 L.Ed. 1194 (1950). Nor does the general federal question
jurisdictional statute, 28 U.S.C. § 1331, waive sovereign
immunity. Shaffer v. Commissioner of Internal Revenue,
515 F. Supp. 748 (E.D.La. 1981). Additionally, as will be made clear
below, both the Anti-Injunction Act and the Declaratory
Judgment Act expressly preclude the relief sought by
Plaintiffs ask the Court to enter an injunction restraining
defendants from subjecting their wages to withholding taxes.
26 U.S.C. § 7421(a), commonly known as the Anti-Injunction Act,
provides as follows:
(a) Tax. — Except as provided in sections
6212(a) and (c), 6213(a), 6672(b), 6694(c),
7426(a) and (b)(1), and 7429(b), no suit for
the purpose of restraining the assessment or
collection of any tax shall be maintained in
any court by any person, whether or not such
person is the person against whom such tax
The principal purpose of the Act is "the protection of the
Government's need to assess and collect taxes as expeditiously
as possible with a minimum of pre-enforcement judicial
interference, and to require that the legal right to the
disputed sums be determined in a suit for a refund." Bob Jones
University v. Simon, 416 U.S. 725
, 736, 94 S.Ct. 2038, 2046, 40
L.Ed.2d 496 (1974). The Supreme Court has fashioned a limited
exception to the Act's rule prohibiting injunctive relief. In
Enochs v. Williams Packing Co., 370 U.S. 1
, 82 S.Ct. 1125, 8
L.Ed.2d 292 (1962), the Court conditioned an injunction on tax
collection or assessment upon meeting a twofold test:
1) if it is clear that under no circumstances the United
States could ultimately prevail on the merits of the claim;
and 2) if equity jurisdiction otherwise exists. Plaintiffs
have not alleged any facts to support equity jurisdiction.
There is no showing of irreparable injury or wrongful conduct
on defendants' part. Shaffer, 515 F. Supp. 748, 752. Nor can
this Court say that under no circumstances can the United
States ultimately prevail on the merits in this action.
Plaintiffs' whole suit is premised upon their theory that wages
are not income because the value of their labor is the same as
the payment they receive for it, and thus they realize no gain.
This argument has repeatedly been held to be without merit.
Rowlee v. Commissioner, 80 T.C. 1111 (1983); Reading v.
Commissioner, 70 T.C. 730 (1978), aff'd. 614 F.2d 159
1980); Grimes v. Commissioner, 39 T.C.M. 777 (1979). The
language of the Act is clear. Subject to specific exceptions
not relevant here, any pre-enforcement review, by a court, of
the tax liability of an individual or individuals is barred.
Lynch v. Polaroid Corp., et al., 80-1 U.S. T.C. ¶ 9191
(D.Mass. 1980), aff'd. 627 F.2d 1088
(1st Cir. 1980). Thus,
plaintiffs' suit is barred by the Act.
DECLARATORY JUDGMENT ACT
28 U.S.C. § 2201 provides:
In a case of actual controversy within its
jurisdiction, except with respect to Federal taxes
other than actions brought under section 7428 of
the Internal Revenue Code of 1954 or a proceeding
under section 505 or 1146 of title 11, any court of
the United States, upon the filing of an
appropriate pleading, may declare the rights and
other legal relations of any interested party
seeking such declaration, whether or not further
relief is or could be sought. Any such declaration
shall have the force and effect of a final judgment
or decree and shall be reviewable as such.
(emphasis added). It is clear from the express wording of the
Act, that it does not apply to controversies concerning
federal taxes. The reasoning applicable to the Anti-Injunction
Act applies with equal force to the Declaratory Judgment Act.
Shaffer, 515 F. Supp. at 752. "The congressional antipathy for
premature interference with the assessment or collection of any
federal tax also extends to declaratory judgments." Bob Jones
University, 416 U.S. at 732 n. 7, 94 S.Ct. at 2044 n. 7. The
relief requested by plaintiffs, a judicial declaration that
they are not subject to withholding tax, is clearly prohibited
by the plain wording of the Act. Therefore, the Court does not
have jurisdiction over plaintiffs' claim.
In summation, the Court concludes that the United States has
not waived its sovereign immunity in this action and that
plaintiffs' requested relief is barred by both the
Anti-Injunction Act and the Declaratory Judgment Act.
Accordingly, defendants' motion to dismiss is granted.
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