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Tax Court warns against arguing wages aren't taxable

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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.

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  1. Uh oh, someone is really going to get their panti ... uh, um ... I mean get upset now: http://www.theguardian.com/us-news/2015/mar/31/arkansas-passes-indiana-style-religious-freedom-bill

  2. Bryan, stop insulting the Swedes by comparing them to the American oligarchs. Otherwise your point is well taken.

  3. Sociologist of religion Peter Berger once said that the US is a “nation of Indians ruled by Swedes.” He meant an irreligious elite ruling a religious people, as that Sweden is the world’s least religious country and India the most religious. The idea is that American social elites tend to be much less religious than just about everyone else in the country. If this is true, it helps explain the controversy raking Indiana over Hollywood, San Fran, NYC, academia and downtown Indy hot coals. Nevermind logic, nevermind it is just the 1993 fed bill did, forget the Founders, abandon of historic dedication to religious liberty. The Swedes rule. You cannot argue with elitists. They have the power, they will use the power, sit down and shut up or feel the power. I know firsthand, having been dealt blows from the elite's high and mighty hands often as a mere religious plebe.

  4. I need helping gaining custody of my 5 and 1 year old from my alcoholic girlfriend. This should be an easy case for any lawyer to win... I've just never had the courage to take her that far. She has a record of public intox and other things. She has no job and no where to live othe than with me. But after 5 years of trying to help her with her bad habit, she has put our kids in danger by driving after drinking with them... She got detained yesterday and the police chief released my kids to me from the police station. I live paycheck to paycheck and Im under alot of stress dealing with this situation. Can anyone please help?

  5. The more a state tries to force people to associate, who don't like each other and simply want to lead separate lives, the more that state invalidates itself....... This conflict has shown clearly that the advocates of "tolerance" are themselves intolerant, the advocates of "diversity" intend to inflict themselves on an unwilling majority by force if necessary, until that people complies and relents and allows itself to be made homogenous with the politically correct preferences of the diversity-lobbies. Let's clearly understand, this is force versus force and democracy has nothing to do with this. Democracy is a false god in the first place, even if it is a valid ideal for politics, but it is becoming ever more just an empty slogan that just suckers a bunch of cattle into paying their taxes and volunteering for stupid wars.

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