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Miller v. United States and Internal Revenue Service

decided*fn*: February 8, 1989.

MARVIN D. MILLER, PLAINTIFF-APPELLANT,
v.
UNITED STATES OF AMERICA AND INTERNAL REVENUE SERVICE, DEFENDANTS-APPELLEES



Appeal from the United States District Court for the Northern District of Indiana, Hammond Division. No. 85-913 -- James T. Moody, Judge.

Posner, Manion, Kanne, Circuit Judges.

Author: Per Curiam

Per Curiam.

Marvin Miller is a tax protester whose persistence in pursuing meritless constitutional claims through the use of the judicial review mechanism for penalty assessments under the frivolous tax return provision of 26 U.S.C. § 6702 caused the district court to sanction him $1500 for costs and attorneys' fees under Rule 11 of the Federal Rules of Civil Procedure. The court also enjoined Miller from filing such claims in the future without first obtaining, leave of court. Miller has brought this pro se appeal from the district court's denial of his motion to reconsider these sanctions.

I. BACKGROUND

This appeal arises from Miller's third attempt to challenge the constitutionality of the entire federal income tax structure. The genesis of the present action is Miller's 1984 tax return, in which he chose not to provide any information regarding his income. Instead, Miller entered either the word "None" or a double asterisk ("**") after each question on the return. Miller also typed a note on the return, explaining that the double asterisks signified his "specific objection to the question under the 5th Amendment U.S. Constitution," and "similar objections under 1, 4, 7, 8, 9, 10, 13 & 14th Amendments." Miller also typed on the return that "new evidence, Certified and Documented, Shows the 16th Amendment was never legally passed. This means the whole Form, The IRS and income tax Structure is Fraudulent and Illegal, doesn't it? Please Advise!" The Internal Revenue Service responded by assessing Miller with a civil penalty of $500 for filing a "frivolous" return within the meaning of 26 U.S.C. § 6702.*fn1 Miller paid $75 of the penalty and filed unsuccessfully for a refund. He then relied on the judicial review provisions of 26 U.S.C. § 6703*fn2 to challenge his assessment and the constitutionality of the sixteenth amendment in district court.*fn3

In his complaint, Miller alleges that the sixteenth amendment is unconstitutional because it was illegally ratified. More specifically, he states in Count II that a book by William Benson and "Red" Beckman entitled The Law That Never Was (1985), documents the impropriety of the ratification process. Miller asked the district court to determine the legality of the sixteenth amendment, refund the $75 he paid toward the frivolous filing penalty, and rescind the unpaid balance of the penalty. The government, in turn, moved for summary judgment and requested attorneys' fees and costs for defending against a frivolous suit.

On September 3, 1987, the district court granted the government's motion and dismissed Miller's complaint. The district court also sanctioned Miller $1500 under Rule 11 of the Federal Rules of Civil Procedure and enjoined him from filing any further actions before it without first obtaining leave of court. The district court specified that leave to file would hinge upon Miller's certification that his claim is not one which he has previously pressed before the court and lost, and that the claim is brought in the good faith belief that it is not frivolous. On October 5, 1987, Miller filed a motion asking the district court to reconsider its sanctions. This the district court declined to do, and on December 1, 1987, Miller filed a notice of appeal. In this appeal, Miller argues that he brought his claim in good faith and that the sanctions are excessive.

II. ANALYSIS

The merits of the district court's imposition of sanctions in the present case are not before us since Miller filed his notice of appeal from the district court's September 3, 1987, dismissal order well beyond the sixty-day period proscribed for suits against the United States. Fed. R. App. P. 4(a)(1); Pryor v. U.S. Postal Service, 769 F.2d 281, 284 (5th Cir. 1985). Adherence to this time limit is both mandatory and jurisdictional. Browder v. Director, Dept. of Corrections of Illinois, 434 U.S. 257, 264, 54 L. Ed. 2d 521, 98 S. Ct. 556 (1978). Thus, the failure to file a timely notice from the district court's final judgment leaves us without appellate jurisdiction. Wort v. Vierling, 778 F.2d 1233, 1234 (7th Cir. 1985). Miller's motion urging the district court to reconsider its order of sanctions -- filed over one month after the court entered the order--must be treated as a motion under Rule 60(b). Browder, 434 U.S. at 263 n.7. As such, it did not toll the time in which to file the notice of appeal from the district court's judgment. Id.; Marane, Inc. v. McDonald's Corp., 755 F.2d 106, 112 (7th Cir. 1985). Our review is therefore limited to the question whether the district court abused its discretion in denying the motion for reconsideration. Marane at 755 F.2d 106; Tunca v. Lutheran General Hospital, 844 F.2d 411, 412 (7th Cir. 1988).

Relief from a judgment under Rule 60(b) is limited to the following reasons: mistake, inadvertence, excusable neglect, newly discovered evidence, fraud, and "any other reason justifying relief from the operation of the judgment." Fed. R. Civ. P. 60(b). Miller made no reference to any of these grounds in his motion to reconsider. Rather, his request for relief is based upon the allegations that the district court encouraged him to prosecute his case by granting him a jury trial in response to his request; that he was not using the courts frivolously because he was following a statutorily proscribed procedure; and that the sanctions against him are excessive. Each of these claims is without merit. For example, the first claim is unavailing since the district court's order granting Miller a jury trial according to 28 U.S.C. § 2402 if his case proceeded to that point cannot legitimately be considered "encouragement" to prosecute a frivolous action. Miller's contention that his claims are not frivolous merely because he is following the procedure enumerated in 26 U.S.C. §§ 6702 and 6703 is equally meritless. However, his argument on this point has highlighted a trend of rather significant proportions which may benefit from some attention.

When Congress instituted the frivolous return penalty provisions of 26 U.S.C. §§ 6702 and 6703, it was seeking to address the vexing problem associated with the approximately 13,600 illegal protest returns the Internal Revenue Service had under investigation as of June 30, 1981. The legislative history of these provisions reveals that Congress sought to implement a mechanism for addressing the "rapid growth in deliberate defiance of the tax laws by tax protestors." S. Rep. No. 97-494, 97th Cong., 2d Sess. 278, reprinted in 1982 U.S. Code Cong. & Ad. News 781, 1024 [hereinafter Senate Report]. To that end, § 6702 was intended to provide the IRS with an immediately assessable penalty for such frivolous protest returns. The Senate Report specifically stated that "the penalty will be immediately assessable against any individual filing a return in which many or all of the line items are not filled in except for references to spurious constitutional objections." Senate Report, at 1024. Similarly, it is clear that § 6703 was designed to provide only limited federal judicial review of whether the penalty imposed under § 6702 was proper in light of the aims of Congress. Senate Report, at 1025.

The legislative history of these provisions makes it clear that in this case as well as in his two previous actions, Miller has sought to turn the judicial review procedure of § 6703 on its head by making it a vehicle for challenging the constitutionality of the sixteenth amendment. Miller's repeated abuse of § 6703 to press his stale constitutional claims has confounded Congress' larger and unquestionably legitimate aim of maintaining the integrity of the income tax system. Senate Report, at 1025.

Our research into the practice employed by Miller and the issues he has attempted to raise reveals a troubling pattern of similar cases. Schoffner v. Commissioner of Internal Revenue, 812 F.2d 292 (6th Cir. 1987) (challenge to frivolous penalty assessment for filing return containing asterisks and blanket fifth amendment objection); Eicher v. United States, 774 F.2d 27 (1st Cir. 1985) (challenge to frivolous penalty assessment for filing return containing asterisks and blanket fifth amendment objection); Paulson v. United States, 758 F.2d 61 (2d Cir. 1985) (challenge to frivolous penalty assessment for filing return containing asterisks and series of constitutional objections); Boomer v. United States, 755 F.2d 696 (8th Cir. 1985) (challenge to frivolous penalty assessment for filing return containing asterisks and blanket constitutional objections); Baskin v. United States, 738 F.2d 975 (8th Cir. 1984) (challenge to frivolous penalty assessment for filing return containing asterisks and blanket fifth amendment and ...


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