  |
|
|
|
||||||
|
|
|
| 10-10-03 Ken Evans USDC Transcript NOTE FROM KEN EVANS: In my opinion, the following transcript is a relatively poor record of the conversations that actually took place in court on August 22, 2003. That’s probably why I wasn’t allowed to take my own tape recorder into the hearing. Of course, most of the substance is present, but the stenographer’s short hand was transcribed by a computer and the transcript contains many broken sentences and FAR TOO MANY incomplete statements (These are indicated by the following - - ). During the hearing, I had a prepared written statement from which I sometimes read. I have found multiple incidences where what I read is not what is found in the transcript and also where things that were said were indicated on the transcript to have been said by someone else. I have filed a Notice with the court of twenty-two corrections that I would like to see made to this transcript. However, because of the recent negative ruling, they will likely never be made. If you are interested, you can read my proposed corrections at the following page: http://www.reasons2vote.com/addendumbriefsummaryjudgment.html I also find some irony in the fact that the stenographer’s last name is Rothschild. It may be entirely coincidental that he has the same last name as the banking family that has links to the origin of the Federal Reserve, but it wouldn’t surprise me in the least, if it wasn’t.
ENJOY …
==============================================
1 1
2
3 IN THE UNITED STATES DISTRICT COURT
4 FOR THE EASTERN DISTRICT OF PENNSYLVANIA
5 - - - - - - - - -
6 KEN EVANS : CIVIL ACTION 7 : Plaintiff: 8 : vs. : 9 : THE UNITED STATES OF AMERICA : 10 : Defendant : 11
12 Philadelphia, PA 13 August 22, 2003
14
15 BEFORE: HON. CHARLES R. WEINER, SJ
16
17 HEARING 18
19 P R E S E N T:
20 For the Plaintiff: 21 KEN EVANS, PRO SE 22
23
24
25
2 1 For the Defendant: 2
3
4 U.S. Department of Justice BY: JONATHAN DWYER CARROLL, ESQ. 5 Tax Division PO Box 227 6 Washington, DC 20044
7 Attorney for Defendant
8
9
10
11
12
13
14
15
16
17
18
19 Sidney S. Rothschild 20 Official Court Reporters U.S. COURT – Room 1234 21 601 Market Street Philadelphia, PA 19106 22 (215) 627-0184
23
24 Proceedings recorded by mechanical stenography, 25 transcript produced by computer.
3 1 (Proceedings commenced at 11 a.m)
2 THE COURT: Good morning. Please be
3 seated.
4 Mr. Evans, I would be glad to hear you.
5 Come up, please.
6 MR. EVANS: Good morning, your Honor.
7 THE COURT: Yes, sir.
8 MR. EVANS: Your Honor, there are a few
9 items I think deserve the Court’s attention before
10 the argument for summary judgment.
11 During your preliminary conference, some
12 attorney for the defendant was to file a notice of
13 appearance.
14 I believe you ordered paperwork, to the
15 best of my knowledge and that still hasn’t been
16 done.
17 THE COURT: All right.
18 MR. EVANS: Also, simultaneously with
19 filing my motion for summary judgment, I submitted a
20 list of 10 interrogatories which I included in my
21 certificate of service. And, to date, those
22 interrogatories have also not yet been responded to.
23 THE COURT: I’ll see he answers the
24 interrogatories. We will know the reason why.
25 Let me ask you a question, while
4
1 questioning each other with interrogatories, the
2 rest of it, did you ever pay any money due to the
3 Court of Appeals?
4 MR. EVANS: Your Honor, to the best of my
5 knowledge, that no money was due the Court of
6 Appeals.
7 THE COURT: They didn’t fine you $4,000.
8 MR. EVANS: I did not receive an order
9 signed by a Judge. I received a notice signed by a
10 clerk. To the best of my knowledge, a clerk can’t
11 order me to do anything.
12 THE COURT: In other words, if the judge
13 ordered, you would pay it?
14 MR. EVANS: I would have to say, I would
15 assume so.
16 THE COURT: Basically most messages are
17 sent from the courts through the clerks. If you
18 received a judgment in this case, the judge would
19 sign the judgment, but probably the clerk would send
20 you a notice saying that judgment is due.
21 MR. EVANS: I don’t believe I ever received
22 a judgment signed by a judge.
23 THE COURT: What did you receive from the
24 Court of Appeals?
25 MR. EVANS: I can check.
5
1 THE COURT: Pardon me?
2 MR. EVANS: I can check. I believe I
3 received a notice.
4 THE COURT: What did the notice say?
5 MR. EVANS: Off the top of my head, I
6 remember receiving some sort of a notice.
7 THE COURT: Was the amount $4,000.
8 MR. EVANS: That amount was listed, yes.
9 THE COURT: How do you think they came to
10 that? In other words, how do you think the clerk
11 came to that?
12 MR. EVANS: Your Honor, I don’t know.
13 THE COURT: Okay. All right, sir.
14 I think you ought to look into it. They
15 will probably take action against you, if you don’t
16 pay it.
17 Proceed, please.
18 MR. EVANS: My pleasure.
19 Along the lines of the interrogatories, I
20 would like to file a motion for an order to compel a
21 response to the interrogatories.
22 THE COURT: I’ll take care of that today.
23 You can leave that here. Put it up on the desk.
24 Tell me why you are here this morning.
25 MR. EVANS: I filed a motion for summary
6
1 judgment, in relation to monies, two bonds that are
2 currently being held by the defendant.
3 I would like to state up front, I’m more
4 than willing and happy to pay every penny of tax I’m
5 liable for, according to what the law actually says.
6 THE COURT: Why don’t you think you shouldn’t
7 pay taxes?
8 MR. EVANS: I do not think that. I think I
9 should pay everything the law says I owe.
10 THE COURT: Why do you think the law says
11 you shouldn’t?
12 MR. EVANS: I don’t believe that, I don’t
13 believe the law - -
14 THE COURT: Tell me the law you are relying
15 upon?
16 MR. EVANS: On multiple statutes and
17 regulations of Title 26.
18 THE COURT: Tell me one or two, so your
19 opponent can answer that.
20 MR. EVANS: Gladly. The imposition of
21 federal income taxes is found in Section 1 of the
22 regulations, as I am sure the Court is aware, are
23 often much more specific as to what is owed.
24 Section 1 reads: There is hereby imposed a
25 tax on the taxable income of individuals. Taxable
7
1 income being a legal definition defined elsewhere in
2 the law. The regulations under Section 1 state quite
3 clearly that the taxes on taxable income and
4 - -
5 THE COURT: What do you consider taxable
6 income?
7 MR. EVANS: I consider taxable income,
8 income derived from those types of commerce under
9 which the federal government has jurisdiction to
10 regulate. Those types of commerce - -
11 THE COURT: What kind of work do you do,
12 sir?
13 MR. EVANS: I’m a pharmaceutical sales rep.
14 THE COURT: What?
15 MR. EVANS: A pharmaceutical sale rep.
16 THE COURT: Does the government have
17 jurisdiction over that group?
18 MR. EVANS: Over the technical commerce I
19 engage in, no.
20 THE COURT: Why?
21 MR. EVANS: The Constitution doesn’t
22 delegate that authority.
23 THE COURT: You don’t think they have
24 jurisdiction over pharmaceuticals?
25 MR. EVANS: Not jurisdiction over me
8
1 working for a living.
2 THE COURT: Explain that to me.
3 MR. EVANS: As the law in Title 26 spells
4 out, specifically those types of commerce, those are
5 found in parts two through five of subsection N.
6 THE COURT: What exempts you from that?
7 MR. EVANS: The United States
8 Constitution. It is not - -
9 THE COURT: What does the Constitution say,
10 to relieve you from paying taxes?
11 MR. EVANS: The Constitution delegates
12 specific authority to regulate specific activities.
13 The activity in which I engage is not one of the
14 specific activities.
15 The 10th Amendment specifically
16 delegated to the United States - -
17 THE COURT: Does the government have
18 jurisdiction over interstate commerce?
19 MR. EVANS: Yes.
20 THE COURT: The company you work for, what
21 company is that?
22 MR. EVANS: Aventis Pharmaceuticals.
23 THE COURT: Are they engaged in the
24 pharmaceutical business?
25 MR. EVANS: The federal government has
9
1 jurisdiction to regulate what my company does, not
2 what I do.
3 THE COURT: How did you get your job?
4 MR. EVANS: They hired me.
5 THE COURT: If they hired you, aren’t you
6 an agent of that company?
7 MR. EVANS: I work for that company. I
8 don’t know if agent has a specific meaning.
9 THE COURT: Let’s just make it easy for
10 me. I don’t understand things that easily.
11 MR. EVANS: I’m trying to make it as easy
12 as possible.
13 THE COURT: When you were hired, suppose
14 you visit me - - you visit doctors?
15 MR. EVANS: Yes.
16 THE COURT: If you visit me, as a doctor,
17 how do you represent yourself? Who would you say
18 you are?
19 MR. EVANS: I am a representative for
20 Aventis Pharmaceuticals.
21 THE COURT: You act as their agent, don’t
22 you?
23 MR. EVANS: Again, I don’t know if agent
24 has a specific legal definition. I act as a sales
25
10
1 representative.
2 THE COURT: You are in a position to take
3 their orders; if a doctor says I want to buy so and
4 so medication.
5 MR. EVANS: I don’t sell medication to the
6 doctors. I simply try to change their prescribing
7 habits. There is no actual transaction that goes on
8 between us.
9 THE COURT: You try to convince them?
10 MR. EVANS: To sell more of what the
11 company sells.
12 THE COURT: When you represent the company,
13 the product, you are their agent, don’t you speak
14 for the company?
15 MR. EVANS: I do speak for the company,
16 yes.
17 THE COURT: You say, I sell a superior
18 product?
19 MR. EVANS: That is correct.
20 THE COURT: You are using X, Y, Z, and if
21 you buy my product, it is superior to the one you
22 are using now, isn’t that correct?
23 MR. EVANS: That is correct.
24 THE COURT: Your success or lack of success
25 depends on what you do, right?
11
1 MR. EVANS: That is correct.
2 THE COURT: In other words, if you don’t
3 convince me, I don’t buy any product, that goes on
4 for quite a longtime, that company won’t keep you,
5 is that correct?
6 MR. EVANS: That is correct.
7 THE COURT: When you are going there, you
8 are anxious to be successful, to make sure that they
9 buy that product, isn’t that so?
10 MR. EVANS: Yes, very much so.
11 THE COURT: While you are doing that, what
12 activity are you engaged in?
13 MR. EVANS: I’m engaged in working for a
14 living.
15 THE COURT: Right. So, in other words, you
16 expect that you will be paid as a result of the work
17 that you do?
18 MR. EVANS: That is correct.
19 The service that I provide for the company
20 is not the same service that the company provides
21 for the doctor.
22 THE COURT: We will come to that in a
23 minute.
24 If you are successful, they get a lot of
25 orders from the people that you visit. The company
12
1 is anxious to keep you, right?
2 MR. EVANS: Yes.
3 THE COURT: They are anxious to pay you for
4 that service?
5 MR. EVANS: I was sales rep of the year
6 last year.
7 THE COURT: If you don’t do a good job, or
8 they don’t pay you enough, you will leave them?
9 MR. EVANS: Yes, that’s right. The beauty
10 of the free market.
11 THE COURT: When you are doing that, what
12 are you doing, you are not engaging in some
13 recreational activity, are you?
14 MR. EVANS: No.
15 I’m engaging in a type of commerce, yes.
16 THE COURT: Every company in the United
17 States is engaged in interstate commerce?
18 MR. EVANS: As I said, the federal
19 government has the authority to regulate what my
20 company does. I don’t deny that.
21 THE COURT: The company regulates what you
22 do, don’t they?
23 MR. EVANS: They set guidelines as to - -
24 THE COURT: They also trained you, didn’t
25 they?
13
1 MR. EVANS: Yes, your Honor. But, the
2 activities in which I’m engaging is not interstate
3 commerce.
4 THE COURT: We will come to it in a minute.
5 They trained you?
6 MR. EVANS: Yes.
7 THE COURT: They trained to you sell their
8 products?
9 MR. EVANS: Yes.
10 THE COURT: And, I guess periodically they
11 review what you do, right?
12 MR. EVANS: Yes.
13 THE COURT: Periodically they give you a
14 raise? I hope they do anyway.
15 MR. EVANS: Yes, they do.
16 THE COURT: So that you are an agent of
17 that company?
18 MR. EVANS: Again, I will not admit to
19 being an agent. I don’t know the specific legal
20 definition of what that term means.
21 THE COURT: This is a company in the United
22 States, that is engaging in pharmaceuticals. Where
23 are they located?
24 MR. EVANS: In the United States. The
25 headquarters are in New Jersey.
14
1 THE COURT: Where do you live?
2 MR. EVANS: Right now I reside in Delaware.
3 THE COURT: You don’t live in the same
4 state as the company, is that correct?
5 MR. EVANS: Yes.
6 THE COURT: Where do you make your calls?
7 MR. EVANS: In Delaware.
8 THE COURT: You ever go outside of
9 Delaware?
10 MR. EVANS: No, I don’t.
11 THE COURT: If you need any pharmaceuticals
12 sent to a particular person that you sold, who was
13 charmed by your abilities and your affability of
14 your telling him how things go, and so on and so
15 forth, where is the product shipped from?
16 MR. EVANS: The products are manufactured
17 in Kansas City and in New Jersey.
18 THE COURT: Where are they shipped from?
19 MR. EVANS: They are shipped from Kansas
20 City and New Jersey.
21 THE COURT: Where are they shipped to?
22 MR. EVANS: All over the world.
23 THE COURT: As far as you are concerned?
24 MR. EVANS: As far as, I don’t sell the
25 product, they ship them to pharmacies. All I do is
15
1 convince doctors to write prescriptions. The
2 patient takes the prescription. The actual act of
3 perfecting the products, I have nothing to do with.
4 THE COURT: You are the person that
5 stimulated the sale?
6 MR. EVANS: Yes.
7 THE COURT: You are in Delaware and the
8 company is in, I think you said the company is
9 located in New Jersey and they have a warehouse or
10 some kind of operation in Kansas. So when they
11 send a product, the people that you have, that you
12 have accosted, I’ll use that term in a generous
13 manner.
14 MR. EVANS: I am sure they feel the same
15 way.
16 THE COURT: I’m sure they do.
17 The point is they get that delivered to
18 them in Delaware somewhere along the line?
19 MR. EVANS: The manufacturer and the
20 delivery certainly is interstate commerce, that’s
21 again not commerce that I engage.
22 THE COURT: Tell me what you engage in,
23 that doesn’t make it interstate commerce?
24 MR. EVANS: I would say rather specifically
25 that the law itself, as it is written, makes clear
16
1 those types of commerce that are taxed by Section 1,
2 they are found in parts one through five of
3 Subchapter N and they are listed in the regulations
4 under Section 861.
5 THE COURT: Wouldn’t you be in a stronger
6 position, if you were an independent person, if you
7 came to me?
8 MR. EVANS: The law is very clear, very
9 specific.
10 THE COURT: Wouldn’t you be in a better
11 position to make this argument?
12 MR. EVANS: Not at all.
13 THE COURT: Suppose you had a company set
14 up for sales. The word, Mr. Evans is sales. I come
15 to sell you bread, someone sells milk, someone sells
16 pharmaceuticals, you pick and choose where you will
17 sell; that you get a percentage of whatever it is
18 that you sell. In other words, you don’t get a
19 salary, you get a percentage, all right. Wouldn’t
20 you be in a stronger position, you are an
21 independent person, you don’t leave Delaware under
22 any circumstances?
23 MR. EVANS: No, it wouldn’t make any
24 difference. The specifics of that argument would
25 depend on whether or not the commerce they engage is
17
1 clarified in the operative sections of the code.
2 The commerce in which I engage is not specifically
3 identified as one of those types of commerce under
4 which it is actionable under Section 1.
5 THE COURT: You feel everybody that does
6 what you do, doesn’t have to pay taxes?
7 MR. EVANS: I certainly don’t feel anybody
8 should not pay taxes. They should pay every penny
9 the law says they owe.
10 THE COURT: Using your definition, as I
11 understand it, no one would pay taxes, if they were
12 hired by a company and hired as a sales
13 representative, that’s what you are?
14 MR. EVANS: If the majority of the people
15 in the United States don’t engage in that type of
16 commerce, they are not liable for the tax. No, they
17 shouldn’t pay that. If they do engage in that type
18 of commerce, they are liable by law, they should pay
19 it. That’s my position.
20 THE COURT: I’ll be glad to hear anything
21 else you have to say.
22 MR. EVANS: Well, I wanted to point out
23 specifically that the courts have held that the
24 revenue laws, code or system in regulation of tax,
25 they relate to taxpayers. And taxpayer is a legal
18
1 term, someone who is liable for a tax under the
2 code.
3 And, two, in my complaint, Article Eight
4 and Article 34 state clearly, I do not have
5 liability for any tax imposed under the IRC, I do
6 not.
7 THE COURT: Read me the section that says
8 that?
9 MR. EVANS: Of my complaint.
10 THE COURT: You said that Section 34, you
11 just said?
12 MR. EVANS: Averment 34 of my complaint,
13 one for 2001. For 2001, both state I don’t meet the
14 legal definition and under 8D, they admitted that
15 they have not specifically rebutted this in their
16 response.
17 The defendant has not referred or rebutted
18 Article 7, which state I have not received nonexempt
19 income. Nonexempt income as defined under the
20 regulations is another place that you find a list of
21 the operative sections of the code, which
22 statutorily are found in parts two through five of
23 subchapter N.
24 Mr. Carroll does claim in his response that
25 I engaged in an activity that results in taxable
19
1 income, but nowhere in his argument does he clarify
2 what types of activities are found to be taxable
3 under the code.
4 Five, the defendant has not offered any
5 evidence of liability nor made any argument that
6 specific liability exists in the instant case.
7 I would point out, my interrogatories ask
8 these very specific questions, what liability
9 exists, should section 861 be used in determining
10 taxable income from sources within the United States
11 among others. Considering that they have not
12 provided any evidence of liability, that they have
13 not rebutted the fact that I am not a taxpayer as
14 that term is defined legally, I could and would be
15 happy to go through the specific sections, statutes
16 and the regulations to determine liability that
17 taxpayers do use but to do so would effectively be a
18 waste time with the Court.
19 THE COURT: Have you ever taken it up with
20 the employer that deducts your money?
21 MR. EVANS: Yes.
22 THE COURT: What is the response?
23 MR. EVANS: I took steps to stop
24 withholding, what is commonly referred to as federal
25 income tax.
20
1 THE COURT: How has that turned out?
2 MR. EVANS: I haven’t had it withheld for
3 almost two years.
4 THE COURT: How long are you working for
5 the company?
6 MR. EVANS: Six years.
7 THE COURT: Only the last two years you
8 asked them to stop doing that?
9 MR. EVANS: Yes.
10 THE COURT: Before that you had no
11 complaints?
12 MR. EVANS: I was not sure of the steps,
13 what my legal responsibilities were, etcetera,
14 before that.
15 THE COURT: At this point, they are still
16 deducting money from your salary?
17 MR. EVANS: They are deducting some money
18 from my salary for certain categories, yes.
19 THE COURT: Different from what they were
20 doing previously?
21 MR. EVANS: They are not withholding money
22 to be applied to what would have been liability
23 under Section 1, which I know I do not have.
24 THE COURT: Okay.
25 Anything else, Mr. Evans?
21
1 MR. EVANS: Yes, if you would be so kind, I
2 wanted to point out that, of course, we know that
3 the Act goes on under Section 1, which imposes the
4 tax on taxable income. Taxable income is defined
5 generally in Section 63, as gross income minus the
6 deductions.
7 Gross income is defined in Section 61
8 generally as all income from whatever source
9 derived. Here the term source is used. It is not
10 defined.
11 We also see that the term source is used in
12 the regulations under Section One, which says that
13 citizens of the United States are liable for the tax
14 imposed, whether from sources within or without the
15 United States.
16 This shows clearly that subchapter N is
17 applicable in determining taxable income as
18 subchapter N is titled, tax based on income from
19 sources within or without the United States.
20 Part one of subchapter N is titled in,
21 depending on which printing of the code you look at,
22 determination of sources of income.
23 I would like to point out that the term of
24 source is used at times in a geographic sense, at
25 times as an activity sense. It seems like it is
22
1 designed almost deliberately to be confusing.
2 As the source derived under Section 61, if
3 we believe the defendant’s argument, whatever source
4 derived, no matter where it came from, no matter who
5 it is received, no matter what type of commerce, but
6 the Supreme Court has said: We are not at liberty
7 to construe any statutes as to deny effect to any
8 part of its language. It is a cardinal rule of
9 statutory construction that significance and effect
10 shall, if possible, be accorded to every word, no
11 clause, sentence or word shall be superfluous, void
12 or insignificant. That was the U.S. Supreme Court.
13 If you would like the citation, I would be
14 happy to give it to you. The phrase from whatever
15 source derived is important to the definition of
16 gross income. The regulations under part one of
17 subchapter N begin by saying that in One. I am
18 quoting directly from the regulations, part One,
19 Section 861, following subchapter N, chapter one of
20 the code and the regulations thereunder determine
21 the sources of income for purposes of the income
22 tax. That is not for purposes of nonresident alien
23 U.S. citizens or foreign nations. The purposes of
24 the income tax, part one determines the source of
25 income for purposes of the income tax.
23
1 Again, 63, 61, and even section 861 are
2 general definitions.
3 But, we know that the tax laws need to be
4 specific upon whom the tax is imposed.
5 THE COURT: Did you make these same
6 arguments before Judge Kelly?
7 MR. EVANS: No, I did not.
8 THE COURT: What was your case before Judge
9 Kelly?
10 MR. EVANS: My understanding before, with
11 Judge Kelly was that I was receiving what is legally
12 defined as wages. I know now I am not.
13 THE COURT: How about - - how do they
14 determine your salary, the amount you will get from
15 the company?
16 MR. EVANS: My company determines what it
17 will be.
18 THE COURT: Yes, sir.
19 MR. EVANS: By my performance.
20 THE COURT: In other words, if you don’t
21 produce any sales, or people don’t want the product,
22 you don’t get paid.
23 MR. EVANS: Eventually, I would imagine.
24 THE COURT: Don’t say eventually. Suppose
25 you go out this week, everybody you talked to this
24
1 week, they don’t want the product, do you get paid?
2 MR. EVANS: Absolutely.
3 THE COURT: Why absolutely?
4 MR. EVANS: Because I am getting paid a
5 salary.
6 THE COURT: You are not doing it on a
7 percentage or anything of that nature, it is a
8 salary, isn’t that right?
9 MR. EVANS: I am compensated for a service
10 again.
11 THE COURT: It is a salary, that you get a
12 fixed number that you get every week, isn’t that
13 true?
14 MR. EVANS: Every other week. I have a
15 direct deposit.
16 THE COURT: The same amount, whether you
17 see 50 people or five people?
18 MR. EVANS: Yes.
19 THE COURT: Tell me why it is not wages?
20 MR. EVANS: I would be happy to, because
21 wages is a term that is defined specifically within
22 the code. It is defined in several places
23 actually. Usually most occurrences that I have
24 found or the occurrences I have found under Subtitle
25 C, which relates to employment taxes, which are not
25
1 applicable to me.
2 THE COURT: You don’t pay any employment
3 taxes either, the taxes to the state, they don’t
4 take money from your salary?
5 MR. EVANS: There is money withheld, sent
6 to Pennsylvania, yes.
7 THE COURT: How do they decide the amount to
8 be taken out?
9 MR. EVANS: I imagine there are tables that
10 they have.
11 THE COURT: You don’t imagine. You are an
12 intelligent man. Tell me how they get the money
13 from your salary for the state, what do they do?
14 MR. EVANS: When I started working for the
15 company six years ago, I signed a W-4 form, under
16 the misunderstanding I was required to do so. I
17 know it is not a requirement. A misrepresentation
18 of - -
19 THE COURT: Have you told your employer?
20 MR. EVANS: Yes.
21 THE COURT: He doesn’t take money out for
22 the state?
23 MR. EVANS: They still do.
24 THE COURT: If it is wrong, why is he doing
25 it?
26
1 MR. EVANS: I don’t know.
2 THE COURT: Will you put him in jail?
3 MR. EVANS: I imagine I would have legal
4 recourse to stop doing that. At the time, I have
5 enough things.
6 THE COURT: You have a Bachelor of Arts
7 Degree in the Administration of Justice?
8 MR. EVANS: I interned with Allegheny
9 County. I respect the law tremendously.
10 THE COURT: Why do you allow them to take
11 the money for the state?
12 MR. EVANS: At the present time I have
13 other battles that take up much of my time.
14 THE COURT: They are taking the money out?
15 MR. EVANS: Yes.
16 THE COURT: The local area you live in, do
17 they take money out from your salary?
18 MR. EVANS: No.
19 THE COURT: Where do you live in Delaware?
20 MR. EVANS: In an apartment complex, in
21 North Wilmington. I’m domiciled in Pennsylvania.
22 THE COURT: In Pennsylvania, they don’t
23 charge you, you don’t pay any taxes?
24 MR. EVANS: There is no local - -
25 THE COURT: Careful.
27
1 MR. EVANS: Thank you for providing that.
2 THE COURT: You get a percentage here, if
3 you turn people in. I’ll see if I get a percentage.
4 You don’t pay anything to the state?
5 MR. EVANS: There is money still withheld,
6 sent to Pennsylvania.
7 THE COURT: The mark, if I am saying it
8 correctly, the mark is how they determine?
9 MR. EVANS: What the law actually says, the
10 law says you have to pay a certain percentage.
11 MR. EVANS: No, I don not believe so.
12 THE COURT: Are you paying any taxes to the
13 State of Pennsylvania?
14 MR. EVANS: Technically no, but I am
15 donating to Pennsylvania, yes.
16 THE COURT: I am sure they are glad for the
17 donation.
18 Do you pay school taxes?
19 MR. EVANS: I do not.
20 THE COURT: Do you pay real estate taxes?
21 MR. EVANS: No. I rent.
22 Ultimately, I am sure that money goes
23 there.
24 THE COURT: So that all the monies that you
25 pay in taxes, are taken from you, are being
28
1 purloined from you, if it makes you happier, is done
2 as a result of what you get in salary, right?
3 MR. EVANS: No.
4 THE COURT: It becomes a standard?
5 MR. EVANS: No, it is a result of my being
6 mislead into entering into a voluntary agreement
7 when I began working for the company.
8 THE COURT: Did you tell them you didn’t
9 want them to do it anymore?
10 MR. EVANS: Yes.
11 THE COURT: What did they do?
12 MR. EVANS: Stop extracting money under the
13 guise of federal income tax but Pennsylvania - -
14 Social Insecurity, as I believe Medicare, which
15 falls under the Social Security Act.
16 THE COURT: If I went to the company and
17 asked, are you paying taxes for this man, they would
18 say, they don’t pay taxes for you?
19 MR. EVANS: I don’t know.
20 THE COURT: Do you get a pay slip?
21 MR. EVANS: I do.
22 THE COURT: What does it say?
23 MR. EVANS: It says exactly what I just
24 said. They don’t deduct any money for taxes.
25 THE COURT: For the state, send it to
29
1 Pennsylvania?
2 MR. EVANS: Taxes are a statutory
3 imposition.
4 THE COURT: Right.
5 MR. EVANS: It is my understanding now that
6 Pennsylvania income tax is for the most part
7 piggybacked on federal income tax. If you owe
8 federal income tax, you would likely owe
9 Pennsylvania income tax. I do not owe federal
10 income tax.
11 THE COURT: They are still taking it out?
12 MR. EVANS: Unfortunately.
13 THE COURT: What are they using as a
14 measure for that? In other words, how do they
15 determine if it is $2, $5, $ 10, $ 100?
16 MR. EVANS: They base it on the tables that
17 Pennsylvania has set up.
18 THE COURT: Based on the federal income
19 tax?
20 MR EVANS: Or agreements entered in to
21 volunteer under Section 3240(p).
22 THE COURT: Every time you pay your federal
23 taxes, you have to pay state taxes as well?
24 MR. EVANS: I pay federal taxes all the
25 time. Every time I buy gas, I pay federal taxes.
30
1 THE COURT: You have no problem with that?
2 MR. EVANS: Absolutely not.
3 THE COURT: Otherwise the car won’t work?
4 MR. EVANS: Direct tax apportioned within
5 the states according to federal authority. Taxable
6 income tax, gross income as well as taxable income
7 from sources within the United States, and gross
8 income from sources within the United States, found
9 in Section 861 of the statutes are all general
10 definitions. They state so within the language.
11 As this Court is well aware, taxation must
12 be specific. The specification of who is taxable
13 under Section 1 are found in the operative sections
14 of the code, under parts two through five of
15 subchapter N. They are listed in the regulations
16 under Section 861(b).
17 As the Supreme Court has said: “In the
18 interpretation of statutes, levying taxes it is the
19 established rule that not to extend their
20 provisions, by implication, beyond the clear import
21 of the language used, or to enlarge their operations
22 so as to embrace matters not specifically pointed
23 out. In case of doubt they are construed most
24 strongly against the government, and in favor of the
25 citizen.”
31
1 There is no statute within Title 26 that
2 specifically defines the type of commerce in which I
3 engage. I do not have liability for the tax imposed
4 under Section 1 because I do not receive and haven’t
5 received taxable income as that term is defined.
6 THE COURT: Tell me how this case before me
7 is different that before Judge Kelly?
8 MR. EVANS: Well, in my motion for
9 reconsideration in that previous case, I did bring
10 up the applicable statute or regulation, the
11 applicable regulation which defines nonexempt
12 income, which I did not receive non exempt income is
13 very specific, that is income which is subject to
14 the tax.
15 THE COURT: You never argued it before
16 Judge Kelly?
17 MR. EVANS: In my motion
18 for reconsideration, in his order or his opinion, he did
19 not address it. I would also like to point out - -
20 THE COURT: Did you argue this case before
21 the Third Circuit?
22 MR. EVANS: Not the specifics. I argued
23 that case and all they were doing was examining what
24 I brought up obviously in the District Court.
25 THE COURT: Could I also point out there
32 1 was an opinion in your case with the Third Circuit
2 three judges that sat on it. The opinion of the
3 Court, I won’t go through. They affirmed Judge
4 Kelly. “Thus, we will affirm and award sanctions
5 pursuant to Rule 38 in the amount of $4,000.” That’s
6 right here, signed by the judges.
7 What the clerk - -
8 MR. EVANS: I’ll have to look at it.
9 THE COURT: The clerk did send you a copy
10 of what the judges did. If you will look, the clerk
11 didn’t sign it. The clerk attested to a judgment
12 entered of record against you.
13 MR. EVANS: Was there a mandate issued for
14 that order, do you know?
15 THE COURT: Yes, it came down with the
16 opinion. In other words, when the judges put in the
17 their opinion that they awarded sanctions pursuant
18 to Rule 38, in an amount of $4,000, the Clerk of the
19 Court merely takes that and attests that has been
20 the opinion of the Court, like you put a seal on
21 it. And sent it to you, and said damages in the
22 amount of $4,000 awarded to the appellee, as
23 sanctions, pursuant to Rule 38, all above, in
24 accordance with the opinion of the Court; attested
25 to by Marcia Waldron, the Clerk of the Court.
33
1 MR. EVANS: I appreciate your bringing that
2 information to my attention, certainly.
3 THE COURT: You know, I am sure you are a
4 law abiding citizen.
5 MR. EVANS: I want to pay everything that
6 the law says.
7 THE COURT: If you want to look at that.
8 They will be in touch with you.
9 MR. EVANS: I would be happy to. As a
10 matter of fact, the DOJ contacted me twice. I have
11 responded twice for which they have not responded.
12 They stated that there were certain procedures they
13 would take. And again that’s an issue related to
14 that case not specific to this one.
15 THE COURT: I’ll hear from your opponent and
16 I’ll give you another opportunity to be heard.
17 MR. EVANS: Thank you.
18 MR. CARROLL: Good morning, your Honor.
19 THE COURT: Did you get the
20 interrogatories?
21 MR. CARROLL: I did, your Honor.
22 THE COURT: Will you answer them, please,
23 if you can.
24 MR. CARROLL: Yes, although all of them,
25 excuse me, I have a cold today. All of them require
34
1 really legal answers. So I’ll respond to them.
2 THE COURT: Do the best you can and I’ll be
3 glad to hear you.
4 MR. CARROLL: Plaintiff is really arguing
5 that citizens that receive all of their income from
6 sources within the United States are not taxable as
7 explained to you earlier. And, in his previous
8 case, the Third Circuit, one in the Third Circuit.
9 The Third Circuit held is argument was frivolous.
10 Judge - -
11 THE COURT: Judge Kelly.
12 MR. CARROLL: Judge Kelly dismissed the
13 case.
14 In his motion for summary judgment, he
15 claims that only income from foreign sources are
16 taxable. So according to him, anyone that works in
17 the United States or operates a trade or a business
18 is not liable for income taxes.
19 These are really the same arguments he made
20 to the lower court in the Third Circuit. The Third
21 Circuit said - -
22 THE COURT: What did he say?
23 MR. CARROLL: Basically arguing to the
24 Court, that if it doesn’t specifically say apples or
25 oranges, whatever it is are taxable, he doesn’t have
35
1 to pay taxes.
2 THE COURT: He said he is engaged in an
3 activity not covered by any specific thing he can
4 find in the statute. I think that’s what he said.
5 MR. CARROLL: Sure, the section as he
6 properly stated earlier, Section 1 states that there
7 is a tax on all taxable income.
8 Section 63 says that taxable income is
9 gross income less allowable deductions.
10 Then 61 defines gross income as all income
11 from whatever source derived. This clearly
12 involves compensation for services.
13 THE COURT: He gets a regular salary, no
14 matter what he does. In other words, he is not a
15 commissioned merchant or a person rewarded for
16 obtaining X or Y number of sales or people. he
17 claims he doesn’t do sales. All he does is serve as
18 an agent to get people to be interested in the
19 product which they may or may not know about.
20 MR. CARROLL: That is correct.
21 THE COURT: I suspect there are free
22 samples, so the doctor can see the effect of that
23 particular item.
24 MR. CARROLL: Regarding the 861 argument,
25 I’m not sure if your Honor has looked at it, but it
36
1 is really a variation.
2 THE COURT. We have had these cases before.
3 MR. CARROLL: Exactly.
4 THE COURT: Not particularly this group.
5 Another group of people.
6 MR. CARROLL: There have been injunctions
7 issued against individuals prohibiting them from
8 making this argument. I have case cites, if you
9 would like. Often the courts don’t go in great
10 depth. They say it is patently frivolous. 861
11 doesn’t apply to United States citizens. It is
12 determining if income is earned in the United
13 States, generally for foreign nationals and it
14 doesn’t apply to plaintiff in the situation.
15 I’m not sure what more you would like me to
16 argue.
17 THE COURT: Basically his argument, he
18 doesn’t come under it. He is not one of the people
19 mentioned in the statute, if it is not mentioned in
20 the statute, he is not liable, I think is what he is
21 saying.
22 MR. CARROLL: That is patently absurd. The
23 statute is all encompassing and it applies to U.S.
24 citizens, from all sources derived, it can’t be more
25 encompassing than that, as was discussed in his
37
1 previous case. His arguments are frivolous in
2 essence.
3 Would you like me to provide the cites for
4 the 861 cases?
5 THE COURT: I don’t think it is necessary.
6 If you have some of the cites, you may want to send
7 him those cases.
8 MR. CARROLL: I provided on. I’ll send
9 the rest.
10 In addition, attached to his complaint, he
11 was provided information by the Internal Revenue
12 Service, sort of explaining to him why his arguments
13 don’t make sense. So, I think there’s no question
14 that he was on notice as was suggested in our motion
15 for summary judgment. We have not made a motion for
16 sanctions. It is within the Court’s power to grant
17 sanctions on its own.
18 THE COURT: Of course, his view that, is
19 that the Internal Revenue Service explaining that to
20 him is like letting the fox loose in the hen house,
21 telling you how to run the chicken coop. He doesn’t
22 think that’s a great source.
23 MR. CARROLL: They cited cases and he can
24 look up the cases.
25 THE COURT: This matter was up many times.
38
1 There were other groups around, some were part of a
2 church group, that would come in to say they did not
3 need to pay taxes. They were not ordained as
4 ministers, they ordained themselves.
5 Were you present when that took place?
6 MR. CARROLL: I was not. Actually I’m
7 aware of those cases. I have read similar cases.
8 THE COURT: Thank you very much.
9 MR. CARROLL: Thank you.
10 THE COURT: Thank you for coming here.
11 Mr. Evans, anything else?
12 MR. EVANS: First, your Honor, I also have
13 additional evidence in relation to what I have
14 included as evidence. The statutory notice of
15 deficiency sent December 11th and this is a copy of
16 my individual master file printed from the IRS
17 computer that shows as of May 22nd, that no
18 assessment was made, based on that statutory notice
19 of deficiency and federal law, requires a 90 day
20 window, in which to petition the tax court, followed
21 by a 60 day window in which assessment can be made.
22 Based on that notice, this evidence, there
23 should not be any future assessment based on the
24 statutory notice. It would be invalid, time barred
25 and it would be required to be abated by the
39
1 Secretary of the Treasury. It also would provide
2 that any assessment attempted to be introduced into
3 court would be invalid as well.
4 I would like to leave that.
5 THE COURT: Thank you very much.
6 MR. EVANS: You Honor, Mr. Carroll
7 completely misstates my argument.
8 First, he states that Section 861 doesn’t
9 really apply to this situation. This is clearly
10 false. Through an examination not only of the cross
11 references of the code as well as the index to the
12 codes of federal regulations, that state
13 determination of source of income and income from
14 within the United States, Section 861 applies to
15 everyone in the world, anyone who earns income
16 within the United States should refer to that
17 statute to determine whether or not the commerce
18 in which then engaged is one of those types of
19 commerce.
20 THE COURT: How do you avoid the holdings
21 of the Supreme Court over a long period of time,
22 that almost everything is interstate commerce; if
23 you buy, for example, I am sure you are aware of the
24 recent discussions in the press about people
25 purchasing guns, right?
40
1 MR. EVANS: Yes.
2 THE COURT: If you are found with a gun in
3 Pennsylvania, and that gun was manufactured
4 somewhere else, they immediately apply that. You
5 have violated a federal statute.
6 Now, you may have bought the gun on market
7 Street and may have never left the State of
8 Pennsylvania. One of the things that brings that
9 case before federal courts, that the weapon must
10 have been in interstate commerce. The federal
11 government now has authority, you can be prosecuted
12 not only by the local community but also by the
13 federal government for that.
14 MR. EVANS: Your Honor, I can’t address
15 that situation.
16 THE COURT: I’m saying this is what the
17 Supreme Court of the United States has said on
18 numerous occasions.
19 MR. EVANS: I cannot find a single Supreme
20 Court decision that contradicts what I’m saying, in
21 fact.
22 THE COURT: The reason you can’t, because
23 it is very clear, it is only brought to the courts
24 by people who think they have a special section that
25 carves them out from paying taxes.
41
1 MR. EVANS: Not at all.
2 THE COURT: Why weren’t these cases brought
3 years ago?
4 MR. EVANS: I can’t answer that.
5 THE COURT: You are not the first person
6 that thought about it.
7 MR. EVANS: I’m not saying there’s a
8 specific section that exempts. The specific
9 sections have to say what is applicable. Section
10 861 says nonresidents, aliens in a trade or business
11 within the United States are taxable under Section
12 1.
13 As a citizen of the Commonwealth of
14 Pennsylvania not engaged in interstate commerce - -
15 THE COURT: You don’t live here?
16 You said this is your domicile.
17 MR. EVANS: That is correct.
18 THE COURT: You don’t live here?
19 MR. EVANS: Again - -
20 THE COURT: But, you don’t live here,
21 right?
22 You physically are not here. You claim
23 this is your domicile, correct?
24 MR. EVANS: With intent to move back.
25 THE COURT: To get where you’re domiciled,
42
1 to where you live, is that crossing state borders?
2 MR. EVANS: In order to get from
3 Pennsylvania to Delaware, I have to cross a state
4 border.
5 THE COURT: To get to your company, to get
6 your salary, you don’t?
7 MR. EVANS: No, it is direct deposit.
8 THE COURT: It comes from New Jersey to
9 Delaware, it goes to a place?
10 MR. EVANS: The activities of my getting
11 paid is not the same as the business I’m engaged.
12 THE COURT: I am saying you are engaged in
13 a number of ways in interstate commerce?
14 MR. EVANS: If that were the case, the
15 Constitution also prohibits taxation on exports from
16 states, if that were the case, I would be exporting
17 from Pennsylvania.
18 THE COURT: The reason is that the states
19 are held to be also sovereign in their own areas.
20 MR. EVANS: Correct.
21 THE COURT: The government doesn’t want to
22 take money from them that they need to run the
23 states. It is a simple proposition, even I
24 understand it.
25 I would like to point out that if we are
43
1 doing what you are saying, nobody would pay taxes,
2 is that your point?
3 MR. EVANS: No, everyone should pay taxes
4 according to what the law is, not what they think
5 they should.
6 THE COURT: They should pay taxes. Using
7 your definition of who owes it?
8 MR. EVANS: There is no doubt in my mind,
9 the majority of Americans are not subject to the tax
10 imposed. They voluntarily make themselves liable by
11 testifying under penalty of perjury that they owe a
12 tax that they do not owe, yes, that is correct.
13 THE COURT: Why do they do that? They are
14 not stupid.
15 MR. EVANS: They are afraid of the IRS.
16 THE COURT: They are not stupid people?
17 MR. EVANS: They are not stupid, no, nor
18 are most people in the IRS stupid. They have been
19 deliberately mislead as to what the law actually
20 says, that is ultimately what is most important,
21 what the law actually says.
22 THE COURT: You think millions of people
23 are mislead paying taxes every year?
24 MR. EVANS: They are paying taxes but they
25 don’t owe taxes according to the law. They are
44
1 effectively testifying to owing something they do
2 not owe, yes, that’s my belief.
3 THE COURT: I’m curious, nothing to do with
4 the case. How would the country survive?
5 MR. EVANS: If you are curious, I’m happy
6 to engage in that authority. The Grace Commission,
7 the Grace Commission under Ronal Regan, the
8 compete amount of money collected for the personal
9 federal tax does nothing but pay down the interest
10 on the debts. Our government services our funded
11 through the Federal Reserve, which is an issue I
12 would love to discuss sometime.
13 THE COURT: What do we do, not pay our
14 debts?
15 MR. EVANS: If you are asking opinions, we
16 have to resort to an honest monetary system.
17 THE COURT: Anything else?
18 MR. EVANS: I would like to point out, Mr.
19 Carroll said 861 doesn’t apply to my situation, that
20 is incorrect, through not only the current cross
21 references in the index to the CFR, but examining
22 the legislative history of these statutes, you will
23 see clearly, your Honor, that the legislative
24 history proves that the major modifications made to
25 the code in 1939 and in 1954 were designed
45
1 deliberately to obfuscate.
2 I would plead with this Court to please
3 watch that video introduced as evidence. It is 88
4 minutes. If you can find something wrong with it,
5 please let me know, but there is no doubt in my
6 mind, I do not have liability for federal income
7 tax. I’m due a full and complete refund.
8 THE COURT: Thank you.
9 Did you ever talk to a Congressman or
10 United States Senator?
11 MR. EVANS: The IRS performed an illegal
12 act and sent a letter to my bank.
13 THE COURT: Who?
14 MR. EVANS: The IRS. I got my congressman
15 - - the IRS backed down. This is the beauty of
16 this, the IRS sent me a letter for 1999, saying that
17 according to our records, that you reported and paid
18 all tax due. I did not file a return for 1999.
19 They admitted that I did not owe any tax.
20 THE COURT: Okay.
21 MR. EVANS: I would also like to point out
22 through the individual master files that I obtained
23 through the Freedom of Information Act, that
24 previous individual master files showed a mail
25 filing requirement code, that I was not liable, had
46
1 no filing requirement. That code has since been
2 changed to code 05. The IRS has classified me
3 within their computer as a business, which I
4 obviously am not.
5 THE COURT: Are you paying any taxes?
6 MR. EVANS: I’m paying lots of taxes, you
7 Honor. I’m paying, still paying more than the law
8 says I owe.
9 THE COURT: You figure out a way to avoid
10 that and get rid of the company.
11 MR. EVANS: I don’t want to avoid.
12 THE COURT: Open up a company and you will
13 have more people than you can take care of.
14 MR. EVANS: Pay careful attention to
15 Subchapter N.
16 THE COURT: I would urge you to look at the
17 matters in the Court of Appeals?
18 MR. EVANS: I will.
19 THE COURT: Thank you for coming. I
20 appreciate it.
21 MR. CARROLL: One more thing, if I may.
22 THE COURT: Yes.
23 MR. CARROLL: In the 861 cases that I
24 provided to the plaintiff, if you would like it, the
25 argument about the discovery issue, one of the
47 1 reasons that I didn’t respond, we hadn’t had our
2 discovery conference yet and the discovery order
3 hadn’t been issued. I didn’t think discovery was
4 open. I was waiting for this hearing.
5 I’m glad to send him the responses but I
6 guess I wanted to know if I should respond to the
7 motion to compel, if I have to respond to the motion
8 to compel and go through that.
9 THE COURT: Unless you want to do that. I
10 think you ought to answer his interrogatories.
11 MR. CARROLL: Okay.
12 THE COURT: Thank you very much. Thank you
13 for coming, all of you.
14 (Hearing adjourned at 11:50 a.m.)
15
16
17
18
19
20
21
22
23
24
25
48
1 SIDNEY ROTHSCHILD, being a United States 2 Court Reporter, United States District Court, Eastern District of Pennsylvania, do hereby certify 3 that I was authorized to and did report in shorthand, the above and foregoing proceedings, and 4 that thereafter my shorthand notes were transcribed under my supervision, and that the foregoing pages 5 contain a true and correct transcription of my shorthand notes taken therein. 6 Done and singed this 16th day of September, 2003, in the City of Philadelphia, County of 7 Philadelphia, State of Pennsylvania.
8 - - - - - - - - - - - - - - - - - - - - - - - - 9 SIDNEY S. ROTHSCHILD
10 U.S. Court Reporters United States District Court 11 Eastern District of Pennsylvania
12
13
14
15
16
17
18
19
20
21
22
23
24
25
|
