ILNews

Tax Court warns against arguing wages aren't taxable

Back to TopCommentsE-mailPrintBookmark and Share

In rejecting a man’s argument that his employment wages shouldn’t be subject to Indiana’s adjusted gross income tax, the Indiana Tax Court warned that those who present a similar argument in the future may be subject to paying the attorney fees of the other party.

Lyle Lacey, a verification engineer at Adecco, attached a federal Form 4852 to his state and federal income tax returns indicating his wages were zero. He didn’t attach his W-2 form. Lacey actually was paid quite a bit from the company for the 2007 tax year, although the amount was not specified. Lacey also claimed a refund in state and county income taxes.

The Indiana Department of State Revenue determined that Lacey actually owed more than $1,000 in state income tax and denied his protest.

On appeal in Lyle Lacey v. Indiana Dept. of State Revenue, No. 49T10-0906-TA-25, Lacey argued his income from Adecco for the 2007 tax year isn’t income within the meaning of the 16th Amendment of the United States Constitution or the Internal Revenue Code. He also argued that the U.S. Supreme Court has held that the 16th Amendment’s provision “exempting a tax from apportionment [is in] irreconcilable conflict with the general [constitutional] requirement that all direct taxes be apportioned.”

Senior Tax Judge Thomas Fisher rejected his arguments, finding them to be without merit. The U.S. Supreme Court has repeatedly rejected the argument that income is limited to gain or profit, as Lacey argued. Also, congressional power to tax is articulated in Article 1, Section 8, and "'embraces every conceivable power of taxation’ including the power to lay and collect income taxes,” wrote the judge.

Lacey’s employment compensation is income subject to Indiana’s adjusted gross income tax. Judge Fisher also pointed out this is the third time the Tax Court has rejected the argument that one’s employment wages don’t constitute income subject to Indiana’s adjusted gross income tax.

“Consequently, the Court now provides the following warning: in the future, when a taxpayer advances the same (or a substantially similar) argument, the Court will not hesitate to consider whether an award of attorney fees is appropriate,” he wrote.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
2015 Distinguished Barrister &
Up and Coming Lawyer Reception

Tuesday, May 5, 2015 • 4:30 - 7:00 pm
Learn More


ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. A traditional parade of attorneys? Really Evansville? Y'all need to get out more. When is the traditional parade of notaries? Nurses? Sanitation workers? Pole dancers? I gotta wonder, do throngs of admiring citizens gather to laud these marching servants of the constitution? "Show us your billing records!!!" Hoping some video gets posted. Ours is not a narcissistic profession by any chance, is it? Nah .....

  2. My previous comment not an aside at court. I agree with smith. Good call. Just thought posting here a bit on the if it bleeds it leads side. Most attorneys need to think of last lines of story above.

  3. Hello everyone I'm Gina and I'm here for the exact same thing you are. I have the wonderful joy of waking up every morning to my heart being pulled out and sheer terror of what DCS is going to Throw at me and my family today.Let me start from the !bebeginning.My daughter lost all rights to her 3beautiful children due to Severe mental issues she no longer lives in our state and has cut all ties.DCS led her to belive that once she done signed over her right the babies would be with their family. We have faught screamed begged and anything else we could possibly due I hired a lawyer five grand down the drain.You know all I want is my babies home.I've done everything they have even asked me to do.Now their saying I can't see my grandchildren cause I'M on a prescription for paipain.I have a very rare blood disease it causes cellulitis a form of blood poisoning to stay dormant in my tissues and nervous system it also causes a ,blood clotting disorder.even with the two blood thinners I'm on I still Continue to develop them them also.DCS knows about my illness and still they refuse to let me see my grandchildren. I Love and miss them so much Please can anyone help Us my grandchildren and I they should be worrying about what toy there going to play with but instead there worrying about if there ever coming home again.THANK YOU DCS FOR ALL YOU'VE DONE. ( And if anyone at all has any ideals or knows who can help. Please contact (765)960~5096.only serious callers

  4. He must be a Rethuglican, for if from the other side of the aisle such acts would be merely personal and thus not something that attaches to his professional life. AND ... gotta love this ... oh, and on top of talking dirty on the phone, he also, as an aside, guess we should mention, might be important, not sure, but .... "In addition to these allegations, Keaton was accused of failing to file an appeal after he collected advance payment from a client seeking to challenge a ruling that the client repay benefits because of unreported income." rimshot

  5. I am not a fan of some of the 8.4 discipline we have seen for private conduct-- but this was so egregious and abusive and had so many points of bad conduct relates to the law and the lawyer's status as a lawyer that it is clearly a proper and just disbarment. A truly despicable account of bad acts showing unfit character to practice law. I applaud the outcome.

ADVERTISEMENT