Tax protester constitutional arguments

Tax protester constitutional arguments are arguments raised by tax protesters that assert that the imposition of the income tax in the United States is in violation of the United States Constitution. Such arguments generally claim that the Sixteenth Amendment to the United States Constitution was never properly ratified or provides no power to tax income; that the income tax violates some other provision of the Constitution; or that some other provision that would prevent the assessment of the income tax was ratified but wrongfully excluded from the Constitution.

Arguments that the Sixteenth Amendment was never ratified

One argument that has been raised several times (and always ruled meritless) suggests that the Sixteenth Amendment was not properly ratified. This argument is based on the contention that the legislatures of various states passed bills of ratification with different capitalization, spelling of words, or punctuation marks (e.g. semi-colons instead of commas). The earliest reported court case where this argument was raised appears to be United States v. House, 617 F. Supp. 237, 87-2 U.S. Tax Cas. (CCH) paragr. 9562 (W.D. Mich. 1985), about seventy-two years after the ratification. The best-known proponent of the non-ratification claim is William J. Benson, co-author of the book The Law That Never Was (1985), who testified in the House case to no avail. The Benson contention was comprehensively addressed by the Seventh Circuit Court of Appeals in United States v. Thomas, 788 F.2d 1250 (7th Cir. 1986), cert. den. 107 S.Ct. 187 (1986):

Thomas is a tax protester, and one of his arguments is that he did not need to file tax returns because the sixteenth amendment is not part of the constitution. It was not properly ratified, Thomas insists, repeating the argument of W. Benson & M. Beckman, The Law That Never Was (1985). Benson and Beckman review the documents concerning the states' ratification of the sixteenth amendment and conclude that only four states ratified the sixteenth amendment; they insist that the official promulgation of that amendment by Secretary of State Knox in 1913 is therefore void.

Benson and Beckman did not discover anything; they rediscovered something that Secretary Knox considered in 1913. Thirty-eight states ratified the sixteenth amendment, and thirty-seven sent formal instruments of ratification to the Secretary of State. (Minnesota notified the Secretary orally, and additional states ratified later; we consider only those Secretary Knox considered.) Only four instruments repeat the language of the sixteenth amendment exactly as Congress approved it. The others contain errors of diction, capitalization, punctuation, and spelling. The text Congress transmitted to the states was: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration." Many of the instruments neglected to capitalize "States," and some capitalized other words instead. The instrument from Illinois had "remuneration" in place of "enumeration"; the instrument from Missouri substituted "levy" for "lay"; the instrument from Washington had "income" not "incomes"; others made similar blunders.

Thomas insists that because the states did not approve exactly the same text, the amendment did not go into effect. Secretary Knox considered this argument. The Solicitor of the Department of State drew up a list of the errors in the instruments and — taking into account both the triviality of the deviations and the treatment of earlier amendments that had experienced more substantial problems — advised the Secretary that he was authorized to declare the amendment adopted. The Secretary did so.

Although Thomas urges us to take the view of several state courts that only agreement on the literal text may make a legal document effective, the Supreme Court follows the "enrolled bill rule." If a legislative document is authenticated in regular form by the appropriate officials, the court treats that document as properly adopted. Field v. Clark, 143 U.S. 649, 36 L.Ed. 294, 12 S.Ct. 495 (1892). The principle is equally applicable to constitutional amendments. See Leser v. Garnett, 258 U.S. 130, 66 L.Ed. 505, 42 S.Ct. 217 (1922), which treats as conclusive the declaration of the Secretary of State that the nineteenth amendment had been adopted. In United States v. Foster, 789 F.2d. 457, 462-463, n.6 (7th Cir. 1986), we relied on Leser, as well as the inconsequential nature of the objections in the face of the 73-year acceptance of the effectiveness of the sixteenth amendment, to reject a claim similar to Thomas's. See also Coleman v. Miller, 307 U.S. 433, 83 L. Ed. 1385, 59 S. Ct. 972 (1939) (questions about ratification of amendments may be nonjusticiable). Secretary Knox declared that enough states had ratified the sixteenth amendment. The Secretary's decision is not transparently defective. We need not decide when, if ever, such a decision may be reviewed in order to know that Secretary Knox's decision is now beyond review.

This decision did not satisfy tax protesters, who contended that the Courts, in order to set a precedent supporting ratification, deliberately chose to hear cases in which the litigants presented no "evidence." However, appeals courts (including the Supreme Court) decide questions of law, not questions of fact. Under the U.S. legal system, "evidence" cannot be "admitted" at the appeals court level, as all evidence must be presented at the trial court, where factual (evidentiary) issues are determined. In other words, the appellate court could determine whether a particular item of evidence should or should not have been admitted at the trial court level, and could refer to evidence that was admitted (or refused) by the trial court to determine whether the trial court's decision was correct, but the appellate court does not itself hear "testimony" or other "evidence." Further, the question of whether a particular amendment is a valid part of the Constitution would be a question of law, not a question of "evidence" or "fact."

Similar "Sixteenth Amendment arguments" have been uniformly rejected by the courts in other cases including Ficalora v. Commissioner, 751 F.2d 85, 85-1 U.S. Tax Cas. (CCH) paragr. 9103 (2d Cir. 1984); Sisk v. Commissioner, 791 F.2d 58, 86-1 U.S. Tax Cas. (CCH) paragr. 9433 (6th Cir. 1986); United States v. Sitka, 845 F.2d 43, 88-1 U.S. Tax Cas. (CCH) paragr. 9308 (2d Cir.), cert. denied, 488 U.S. 827 (1988); and United States v. Stahl, 792 F.2d 1438, 86-2 U.S. Tax Cas. (CCH) paragr. 9518 (9th Cir. 1986), cert. denied, 107 S. Ct. 888 (1987). The non-ratification argument has been specifically deemed legally frivolous in Brown v. Commissioner, 53 T.C.M. (CCH) 94, T.C. Memo 1987-78, CCH Dec. 43,696(M) (1987); Lysiak v. Commissioner, 816 F.2d 311, 87-1 U.S. Tax Cas. (CCH) paragr. 9296 (7th Cir. 1987); and Miller v. United States, 868 F.2d 236, 89-1 U.S. Tax Cas. (CCH) paragr. 9184 (7th Cir. 1989).

William J. Benson, the co-author of the book mentioned in the Thomas case above, was unsuccessful with his Sixteenth Amendment argument when he had his own legal problems. He was prosecuted for tax evasion and willful failure to file tax returns. The court rejected his Sixteenth Amendment "non-ratification" argument in United States v. Benson, 941 F.2d 598, 91-2 U.S. Tax Cas. (CCH) paragr. 50,437 (7th Cir. 1991). Benson was convicted of tax evasion and willful failure to file tax returns in connection with over $100,000 of unreported income, and his conviction was upheld on appeal. He was sentenced to four years in prison and five years of probation. See United States v. Benson, 67 F.3d 641, 95-2 U.S. Tax Cas. (CCH) paragr. 50,540 (7th Cir. 1995).

Another argument made by some tax protesters is that because Congress did not pass an official proclamation recognizing Ohio's year 1803 admission to statehood until 1953 (see Ohio Constitution), Ohio was not a state until 1953 and therefore the Sixteenth Amendment was not properly ratified. The earliest reported court case where this argument was raised appears to be Ivey v. United States, 76-2 U.S. Tax Cas. (CCH) paragr. 9682 (E.D. Wisc. 1976), some sixty-three years after the ratification. This argument also has been uniformly rejected by the courts. See, for example, Knoblauch v. Commissioner, 749 F.2d 200, 85-1 U.S. Tax. Cas. (CCH) paragr. 9109 (5th Cir. 1984), cert. denied, 474 U.S. 830 (1985).

Arguments that the Sixteenth Amendment does not permit taxation of income

Some protesters have argued that because the Sixteenth Amendment does not contain the words "repeal" or "repealed," the Amendment is ineffective to change the law forming the basis of cases decided prior to the ratification of the amendment. This argument has never succeeded in the courts, in part for the simple reason that under the American legal system there is no requirement that an amendment include the words "repeal" or "repealed" to be Constitutionally valid. Instead, U.S. constitutional law with respect to constitutional amendments includes a form of the legal doctrine known as the "doctrine of implied repeal". See also Constitutional amendment. Indeed, the vast majority of U.S. Constitutional amendments do not contain the words "repeal" or "repealed." Section One of the Twenty-first Amendment contains a notable exception.

Another argument made by tax protesters is that the word "income" as used in the Sixteenth Amendment cannot be interpreted as applying to wages. Others have claimed that wages are not income because labor is exchanged for them (see below).

All courts that have considered these positions have rejected them, and have imposed sanctions on persons who raise these arguments.

Arguments relating to citizenship or the Fourteenth Amendment

Some tax protesters argue that all Americans are citizens of individual states as opposed to citizens of the "United States," and the United States therefore has no power to tax citizens outside of Washington D.C. However, the Fourteenth Amendment states, in part, All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.

Notably, some tax protesters contend that the Fourteenth Amendment itself was never properly ratified, under the theory that the governments of southern states that supported the post-Civil War amendments were not representative of the people.

The federal zone argument

Some tax protesters argue that under article I, section 8, clause 17 of the U.S. Constitution, Federal income taxes can be imposed only inside an area called the "Federal zone" -- presumably limited to the District of Columbia and various Federal enclaves such as military bases. This argument is based at least in part on the U.S. Supreme Court decision in the case of United States v. Bevans, 16 U.S. 336 (1818). Clause 17 provides that Congress shall have the power:

To exercise exclusive legislation in all cases whatsoever, over such District (not exceeding ten miles square) as may, by cession of particular states, and the acceptance of Congress, become the seat of the government of the United States, and to exercise like authority over all places purchased by the consent of the legislature of the state in which the same shall be, for the erection of forts, magazines, arsenals, dockyards, and other needful buildings [ . . . . ]

In Bevans, the parties argued over whether a Federal court in Massachusetts had jurisdiction over the case of a U.S. Marine charged with a murder that occurred on a ship in Boston Harbor. No issues regarding Federal income taxation or the Internal Revenue Code were presented to or decided by the Court in the Bevans case. Indeed, the Internal Revenue Code and the Internal Revenue Service did not yet exist in 1818, when the Bevans murder case was decided.

The courts have uniformly rejected the "Federal zone" argument that Congressional authority to impose an income tax is limited to the District of Columbia, forts, magazines, arsenals, or dockyards, etc. See, for example, United States v. Mundt, 29 F.3d 233, 94-2 U.S. Tax Cas. (CCH) paragr. 50,366 (6th Cir. 1994); Nelsen v. Commissioner, 65 T.C.M. (CCH) 2530, T.C. Memo 1993-189 (1993); Abbs v. Imhoff, 99-2 U.S. Tax Cas. (CCH) paragr. 50,652 (W.D. Mich. 1999).

Other Constitutional arguments

Some protesters argue that imposition of income taxes violates the First Amendment freedom of speech because it requires the subject of the tax to write information on a tax return; or violates freedom of religion if the subject of the tax claims some religious objection to the payment of taxes, particularly if the subject styles himself or herself as a Reverend, Minister, or other religious office-holder. However, while the Internal Revenue Code makes an exemption for churches and other religious institutions, it makes no such exception for religious professionals. The United States Supreme Court long ago held in Reynolds v. United States, 98 U.S. 145 (1878), that a religious belief, however strongly held, does not exempt the believer from adhering to general laws.

Other protesters argue that the Fifth Amendment right against self-incrimination allows an individual to refuse to file an income tax return calling for information that could lead to a conviction for criminal acts from which the income was derived, or for the crime of not paying the tax itself. In response, the courts generally refer to the case of United States v. Sullivan, 274 U.S. 259, 263-64 (1927), where Justice Oliver Wendell Holmes wrote:

If the form of return provided called for answers that the defendant was privileged from making he could have raised the objection in the return, but could not on that account refuse to make any return at all.... It would be an extreme if not an extravagant application of the Fifth Amendment to say that it authorized a man to refuse to state the amount of his income because it had been made in crime. But if the defendant desired to test that or any other point he should have tested it in the return so that it could be passed upon. He could not draw a conjurer's circle around the whole matter by his own declaration that to write any word upon the government blank would bring him into danger of the law.

Some protesters have argued that the income tax is a prohibited "taking" under the Fifth Amendment's Takings Clause, and can not be imposed unless the taxpayer receives adequate compensation. The United States Supreme Court rejected this argument in Brushaber v. Union Pacific Railroad.

Another tax protester argument is that a 'missing' Thirteenth Amendment to the Constitution known as the Titles of Nobility amendment precedes the current Thirteenth Amendment; the missing amendment purportedly would have divested the citizenship of any person receiving a title of nobility. Therefore, actions taken by lawyers and judges, who use the title 'Esquire' (which some protesters claim is a title of nobility), are monarchical, and therefore unconstitutional. This contention, rarely raised before courts, was most recently addressed in Campion v. Towns, No.CV-04-1516PHX-ROS, *2 n.1 (D. Ariz. 2005) as a defense to a charge of tax evasion. The court replied:

Additionally, the Court will correct any misunderstanding Plaintiff has concerning the text of the Thirteenth Amendment to the United States Constitution. In his Complaint, Plaintiff includes a certified copy of the Thirteenth Amendment from the Colorado State Archives which was published in 1861. As included in that compilation, the Thirteenth Amendment would strip an individual of United States citizenship if they accept any title of nobility or honor. However, this is not the Thirteenth Amendment. The correct Thirteenth Amendment prohibits slavery. Although some people claim that state publication of the erroneous Thirteenth Amendment makes it valid, Article V of the Constitution does not so provide.

Under the United States Supreme Court ruling in Cheek v. United States, 498 U.S. 192 (1991), a defendant in a tax evasion prosecution who has made arguments that the Federal income tax laws are unconstitutional may have the arguments turned against him (or her). Such arguments, even if based on honestly held beliefs, may constitute evidence that helps the prosecutor prove willfulness, one of the elements of tax evasion. See Tax avoidance and tax evasion.

Taxing labor or income from labor

One tax protester argument is that the Congress has no Constitutional power to tax labor or income from labor, citing a variety of court cases.

Coppage v. Kansas

One case frequently cited for this argument is Coppage v. Kansas, 236 U.S. 1 (1915), with respect to the following quote:

Included in the right of personal liberty and the right of private property-partaking of the nature of each- is the right to make contracts for the acquisition of property. Chief among such contracts is that of personal employment, by which labor and other services are exchanged for money or other forms of property.

Coppage was a criminal case involving a defendant convicted, under a Kansas statute, of firing an employee for refusing to resign as a member of a labor union. No issues of taxation were presented to or decided by the Court, and the word "tax" is not found in the text of the Court's decision.

Truax v. Corrigan

Tax protesters also quote from Truax v. Corrigan, 257 U.S. 312 (1921) for the argument that an income tax should not be imposed on labor and at least arguably relating "labor" to a right of "property":

That the right to conduct a lawful business, and thereby acquire pecuniary profits, is property, is indisputable.

The Truax case involved a Mr. William Truax who owned a restaurant called "English Kitchen," in Bisbee, Arizona. A Mr. Michael Corrigan and others were former cooks and waiters at the restaurant. Corrigan and others allegedly instituted a boycott of the restaurant, after a dispute arose over the terms and conditions of employment. A strike was allegedly ordered by a local union with respect to certain union members employed at the restaurant. The restaurant’s business was allegedly harmed, and Mr. Truax sued various parties on a variety of grounds. The lawsuit was thrown out by the trial court before the case could be heard, on the theory that Mr. Truax was incorrect as a matter of law. Mr. Truax appealed and the case eventually ended up in the U.S. Supreme Court. The U.S. Supreme Court ruled that the trial court should not have thrown out the lawsuit, but should have heard Mr. Truax’s case. The case was sent back to the trial court so that a trial could take place. Truax was not a tax case. No issues involving taxation were presented to or decided by the Court.

Butchers' Union Co. v. Crescent City Co.

Tax protesters also quote from the U.S. Supreme Court case of Butcher's Union Co. v. Crescent City Co., 111 U.S. 746 (1884), for the argument that an income tax should not be imposed on labor:

A monopoly is defined 'to be an institution or allowance from the sovereign power of the state, by grant, commission, or otherwise, to any person or corporation, for the sole buying, selling, making, working, or using of anything whereby any person or persons, bodies politic or corporate, are sought to be restrained of any freedom or liberty they had before or hindered in their lawful trade,' All grants of this kind are void at common law, because they destroy the freedom of trade, discourage labor and industry, restrain persons from getting an honest livelihood, and put it in the power of the grantees to enhance the price of commodities. They are void because they interfere with the liberty of the individual to pursue a lawful trade or employment.

Butchers' Union Co. was a case involving interpretation of the Louisiana constitution and certain ordinances of the city of New Orleans. The Court ruled that the Louisiana constitution and the New Orleans ordinances did not impermissibly impair a pre-existing obligation under a contract when those laws effectively ended a slaughter-house business monopoly by the Crescent City Company. No issues regarding the power to tax incomes from businesses, vocations, or labor were presented to or decided by the Court, and the word "tax" does not appear in the text of the decision.

Murdock

Tax protesters also quote the following verbiage from Murdock v. Pennsylvania (also known as Jones v. City of Opelika), 319 U.S. 105 (1943):

A state may not impose a charge for the enjoyment of a right granted by the federal constitution.

Murdock (or Jones v. City of Opelika) was a case involving the validity of a city ordinance (in Jeannette, Pennsylvania) worded as follows:

That all persons canvassing for or soliciting within said Borough, orders for goods, paintings, pictures, wares, or merchandise of any kind, or persons delivering such articles under orders so obtained or solicited, shall be required to procure from the Burgess a license to transact said business and shall pay to the Treasurer of said Borough therefore the following sums according to the time for which said license shall be granted.

'For one day $1.50, for one week seven dollars ($7.00), for two weeks twelve dollars ($12.00), for three weeks twenty dollars ($20.00), provided that the provisions of this ordinance shall not apply to persons selling by sample to manufacturers or licensed merchants or dealers doing business in said Borough of Jeannette.

A group of people who were Jehovah's Witnesses went from door to door distributing literature in the town. They failed to obtain the license under the ordinance. The case ended up in court, and went all the way to the U.S. Supreme Court, which stated:

There was evidence that it was their [the Jehovah’s Witnesses’] practice in making these solicitations to request a 'contribution' of twenty-five cents each for the books and five cents each for the pamphlets but to accept lesser sums or even to donate the volumes in case an interested person was without funds. [ . . . ] The First Amendment, which the Fourteenth makes applicable to the states, declares that 'Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press ....' [ . . . ] It could hardly be denied that a tax laid specifically on the exercise of those freedoms would be unconstitutional.

The protester argument appears to be that the Federal government should not be able to tax income from labor because it would be a tax on an exercise of the freedoms mentioned in the quotation. The "tax" in this case was, in effect, a license fee imposed on door to door sales people under a city ordinance. The city was trying to exact the fee from Jehovah’s Witness members who were going door to door. Questions about the validity of Federal income taxes were neither presented to nor decided by the Court.

Redfield v. Fisher

Some tax protesters quote from Redfield v. Fisher, 135 Ore. 180, 292 P. 813 (1930):

The individual, unlike the corporation, cannot be taxed for the mere privilege of existing. The corporation is an artificial entity which owes its existence and charter powers to the state; but the individual's rights to live and own property are natural rights for the enjoyment of which an excise cannot be imposed.

The argument seems to be that because "the individual's rights to live and own property" are arguably rights against which "an excise cannot be imposed," the Federal income tax on income from labor should therefore be unconstitutional. However, Redfield v. Fisher is an Oregon Supreme Court case, not a Federal case. No issues involving the validity of Federal income tax laws were decided by the court.

Cases where wages or labor ruled taxable

The courts have consistently rejected arguments that "wages" or "labor" (whether denominated as "labor property" or not) cannot be taxed under the Internal Revenue Code. For example, see:

• United States v. Connor, 898 F.2d 942, 90-1 U.S. Tax Cas. (CCH) paragr. 50,166 (3d Cir. 1990) (tax evasion conviction under 26 U.S.C. § 7201 affirmed; taxpayer’s argument -- that because of the Sixteenth Amendment, wages were not taxable -- was rejected; taxpayer’s argument that an income tax on wages is required to be apportioned by population also rejected);

• Perkins v. Commissioner, 746 F.2d 1187, 84-2 U.S. Tax Cas. (CCH) paragr. 9898 (6th Cir. 1984) (26 U.S.C. § 61 ruled to be “in full accordance with Congressional authority under the Sixteenth Amendment to the Constitution to impose taxes on income without apportionment among the states”; taxpayer’s argument that wages paid for labor are non-taxable was rejected, and ruled frivolous);

• White v. United States, 2005-1 U.S. Tax Cas. (CCH) paragr. 50,289 (6th Cir. 2004), cert. denied, ____ U.S. ____ (2005) (taxpayer’s argument that wages are not taxable was frivolous; penalty imposed under 26 U.S.C. § 6702 for filing tax return with frivolous position was therefore proper);

• Granzow v. Commissioner, 739 F.2d 265, 84-2 U.S. Tax Cas. (CCH) paragr. 9660 (7th Cir. 1984) (taxpayer’s argument that wages are not taxable was rejected, and ruled frivolous);

• Waters v. Commissioner, 764 F.2d 1389, 85-2 U.S. Tax Cas. (CCH) paragr. 9512 (11th Cir. 1985) (taxpayer’s argument that income taxation of wages is unconstitutional was rejected; taxpayer required to pay damages for filing frivolous suit);

Another tax protester argument is that income from labor should not be taxable because any amount the worker receives in exchange for his or her labor is received in an exchange of "equal value," although the logic of this argument is unclear given that an exchange in any true "arm's length" fair market value transaction is, essentially by definition, an exchange of equal value. Further, under the U.S. Federal tax laws, even if labor were considered "property" the gain or income from "labor property" would be defined as the excess of the amount realized (for example, the money received) by the taxpayer over the amount of the taxpayer's "adjusted basis" in the "property" (see 26 U.S.C. § 1001). Since the taxpayer can have only a zero "basis" amount in his or her own labor -- the personal living expenses incurred to generate labor being both non-capitalizable and, under 26 U.S.C. § 262, non-deductible -- the "gain" would thus be equal to the amount of compensation received by the taxpayer. At any rate, the courts have uniformly rejected this protester argument as well. See, e.g., Link v. Commissioner, CCH Dec. 56,565(M), T.C. Memo. 2006-146 (2006) (taxpayer's argument -- that pension income is "labor property" and that when taxpayer receives his pension income from his former employer for whom he once performed services (or labor), any amount he receives in exchange for his labor is a nontaxable exchange of equal value -- was rejected).

The corporate profits argument

One argument repeatedly made by tax protesters is that the income of individuals is not taxable because income should mean only "corporate profits" or "corporate gain." This is the so-called Merchants' Loan argument, named after the case of Merchants’ Loan & Trust Company, as Trustee of the Estate of Arthur Ryerson, Deceased, Plaintiff in Error v. Julius F. Smietanka, formerly United States Collector of Internal Revenue for the First District of the State of Illinois, 255 U.S. 509 (1921).

The protesters' Merchants' Loan argument is essentially that "income" for Federal income tax purposes means only the income of a "corporation" -- not the income of a non-corporate taxpayer -- because the United States Supreme Court in that case, in discussing the meaning of "income," mentioned a statute enacted in 1909 that taxed the income of corporations.

However, the Court in Merchants' Loan was specifically interpreting a 1916 income tax statute, not the 1909 statute. The 1916 tax statute imposed income taxes on the income of individuals and estates (among other kinds of entities). The taxpayer in Merchants' Loan was not a corporation but was the "Estate of Arthur Ryerson, Deceased." The Court was not presented with (and did not decide) any issue involving the taxability of "corporate profits" or "corporate gains" or any other kind of income except the gain on the sale of the stock by the "Estate of Arthur Ryerson, Deceased." The terms "corporate profit" and "corporate gain" are not even found in the text of the Court’s decision in Merchants’ Loan.

In Merchants' Loan the Supreme Court ruled that under the Sixteenth Amendment to the United States Constitution and the 1916 tax statute applicable at the time, a gain on a sale of stock by the estate of a deceased person is included in the income of that estate, and is therefore taxable to that estate for Federal income tax purposes.

The Merchants' Loan argument has been litigated by tax protesters several times, and the courts have uniformly rejected the argument that Merchants' Loan could somehow support the theory that income consists only of corporate profits. See, for example:

Cameron v. Internal Revenue Serv., 593 F. Supp. 1540, 84-2 U.S. Tax Cas. (CCH) paragr. 9845 (N.D. Ind. 1984), aff’d, 773 F.2d 126, 85-2 U.S. Tax Cas. (CCH) paragr. 9661 (7th Cir. 1985);

Stoewer v. Commissioner, 84 T.C.M. (CCH) 13, T.C. Memo 2002-167, CCH Dec. 54,805(M) (2002);

Reinhart v. United States, 2003-2 U.S. Tax Cas. (CCH) paragr. 50,658 (W.D. Tex. 2003);

Fink v. Commissioner, 85 T.C.M. (CCH) 976, T.C. Memo 2003-61, CCH Dec. 55,068(M) (2003);

Flathers v. Commissioner, 85 T.C.M. (CCH) 969, T.C. Memo 2003-60, CCH Dec. 55,067(M) (2003);

Schroeder v. Commissioner, 84 T.C.M. (CCH) 220, T.C. Memo 2002-211, CCH Dec. 54,851(M) (2002), aff’d, 2003-1 U.S. Tax Cas. (CCH) paragr. 50,511 (9th Cir. 2003), cert. denied, 540 U.S. 1220 (2004);

Sherwood v. Commissioner, T.C. Memo 2005-268, CCH Dec. 56,200(M) (2005);

Ho v. Commissioner, T.C. Memo 2006-41, CCH Dec. 56,447(M) (2006).

Tax protesters -- who have lost every case using Merchants' Loan for the theory that only "corporate profits" could be taxable -- are actually citing a case where the U.S. Supreme Court ruled that the income of a non-corporate taxpayer is taxable. Neither the United States Supreme Court nor any other Federal court has ever ruled that under the Internal Revenue Code the term "income" means only the income of a corporation for Federal income tax purposes.

Constitutional status of the U.S. Federal income tax in case law

As of July 2006, neither the U.S. Supreme Court nor any other Federal court has ever ruled that any Federal income tax imposed under the Internal Revenue Code of 1986 is unconstitutional.