Fun, Fun, Fun: Sue Sues the United States for Tax Overcollections


[Editor’s note: Some footnotes in this article are missing, but will be added upon complete Volume 4 of my treatise, The Kiss of Judice: The Constitution Betrayed–A Coroner’s Inquest & Report. Two volumes of the treatise have been published with the third due out this summer. For more information, see

In the summer of 1966, when I’d just finished my freshman year in college, I was reading a little book called The Law—a long pamphlet, really—by the nineteenth-century French legislator Frédéric Bastiat, when I was riveted by a single sentence: “Look at the law, and see if it does for one man at the expense of another what it would be a crime for the one to do to the other himself.”

In Bastiat’s view, government, beyond the strictest limits of justice, became “organized plunder,” a device by which “everyone seeks to enrich himself at the expense of everyone else.” In other words, government itself tends to become the very evil it is supposed to prevent: crime. But it confuses people because it enacts criminal acts under the forms of law.

The simple insight rocked me. It upset my faith in my country and its basic justice. If Bastiat was right, the United States was already profoundly corrupt. It took me years to come to terms with this idea. Today it seems to me almost self-evident. I marvel that anyone with common sense thinks otherwise.

“[W]henever a particular statute contravenes the Constitution, it will be the duty of the judicial tribunals to adhere to the latter and disregard the former.”  Alexander Hamilton, Federalist No. 78.

 “It is a proposition too plain to be contested, that the constitution controls any legislative act repugnant to it; * * * [A] legislative act contrary to the Constitution is not law . . . . ”  Chief Justice John Marshall in Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803).


Some people are always in the right place, but always unfortunately at the wrong time.  George Watts, “the fount whence honor springs,” is one.  The sainted Suzanne Bartley is another.  They have a lot in common—both are very religious; one’s a Christian Scientist; one’s a Catholic.  Both believe devoutly that virtue, though sometimes mysteriously slow in manifesting itself, will always prevail.  Both have impeccable appearances and manners; both are steadfast in devotion to family and friends.  Both suffer fools and knaves with greatest patience.  Each carries an effervescent presumption of good faith in others that is to the more jaded of us extreme in its constancy.

But what really distinguishes those two from ordinary mortals is that neither has been striken with the disease, usually terminal, of moral relativism.  Neither will ever countenance the idea that the constitution is politically malleable.  To each there are certain eternal verities that will always withstand the slings and arrows of our modern “statesmen.”

A few years ago, after I was fired by Tommy Thompson, Suzanne and I and three of our six children moved to a spot near Ely, Minnesota, at the edge the Boundary Waters Wilderness Area, the most beautiful place on earth with the finest people anywhere found.  We had fallen on hard times.  I had no job (none of the law firms in my hometown—Milwaukee—were interested in my services; all did too much business with Tommy Thompson and the state government).  Suzanne Bartley took three jobs to pay the bills.  Though we were very new to the area, someone—I know not who—who apparently knew of the difficulties we were having, left a complete Christmas dinner with all the trimmings on our doorstep Christmas Eve—just the sort of thing George Watts would do.

Although my new duties as Mr. Mom were far more pressing than I had ever imagined, I did have some time on my hands.   We hadn’t completed our cabin by winter and we had no plumbing; but we managed all the same to live quite delightfully in the walk-out basement.  Our central heat was a small wood stove that warmed the basement beautifully.  And we had the most exquisite of outhouses—a pine-panelled, two-holer complete with a Sears catalogue; though when the temperature plummeted to -30° as it often did (one night we had -50° ambient!), some of the more wimpish in the family preferred the chamber pots we had stationed behind a curtain.  As Mr. Mom, I usually had the chore of disposing of the contents.

With the spare time I had, I decided to make an effort to become reacquainted with the constitution.  That effort lead to the discoveries (or should I say “rediscoveries”) ultimately penned into this book.

As things turned out, I didn’t have time to finish the book then.  The toll of Suzanne’s 18-hour workdays, coupled with the discovery our son’s asthma and the visit of a flight for life helicopter dispatched from Duluth (about 2½ hours’ drive away) to carry him away meant that we had to abandon our life in the Superior National Forest—until my son’s health and our financial situation improved.

We returned to Milwaukee and almost immediately I was hired by the late Gaar Steiner, whom I have said, quite rightly and quite absolutely, is the greatest lawyer on Earth, basically because (a) he doesn’t give a damn about spiral staircases and marbled floors,  (b) he doesn’t give a damn about form, only substance,  (c) he doesn’t give a damn about useless detail and has the quickest instincts for uncovering the core issues in even the most complex of cases, (d) and he doesn’t give a damn about whom he offends in pressing his clients’ cases.  In other words, he’s a lawyer, not a politician, because he doesn’t give a damn about much of anything except doing his job, the Green Bay Packers, and the fetching Pam, not necessarily in that order.

I must say that I capitalized on my association with Gaar.  As I mentioned, Gaar agreed to sue Governor Thompson in Bartley v. Thompson.  He agreed to sue Governor Thompson again in the stadium case.  Few other lawyers would have touched those cases with the proverbial ten foot pole.  But Gaar doesn’t give a damn—the more politically-incorrect a case is, the more it intrigues him.  The man is an honest-to-goodness lawyer not a technocrat.

Gaar is so open-minded that he even agreed to let me field test, on his time, some of the ideas in this book, and Suzanne Bartley agreed to be the sacrificial lamb.

The general basis for Suzanne Bartley v. The United States of America it is that the government, with its various taxing statutes and regulations, has far exceeded its lawful taxing authority under ART. I., §8, of the constitution. As Chapter # shows, that provision lists almost all the purposes for which the government may lay and collect taxes, and strictly limits the government’s taxing power to raising taxes to carry out those enumerated functions and those alone.  The government, the suit claimed, has no general power of taxation.

Chapter # shows that the general welfare clause, on which congress hangs the cloak of much of its taxing power, is not a grant of power at all, but, as Jefferson noted, a limitation on power, “intended to lace [Congress] up strictly within the enumerated powers”.[1]   The terms “general welfare” and “common defense” were designed to ensure that when the government was exercising an enumerated power, it had to do so in a non-discriminatory manner (i.e., when providing national defense or post offices, the government must provide both to every state, not just, e.g., Arkansas).

The suit also sought to debunk the myth that Congress has power under the commerce clause to tax to fund programs outside the enumerated powers.  Chapter # shows that to the framers, “commerce . . . among the states”, meant trade among the states, not manufacturing, mining, agriculture, retailing, or other activities within states.   As Professor Epstein has shown, it makes no sense textually to say that “commerce” means manufacturing, agriculture, or any other activity that precedes trade:

One should assume that the word commerce . . . bears the same meaning with respect to each of its objects . . . .  What possible sense does it make as a matter of ordinary English to say that Congress can regulate ‘manufacturing with foreign nations, or with Indian tribes’ or for that matter ‘manufacturing among the several states’ . . . ? [2]

Only if ‘trade’ is substituted for ‘commerce’ does the commerce clause make sense:  “Congress shall have power . . . to regulate trade with foreign nations, trade among the states, and trade with Indian tribes.”

Unlike the usual “tax protest” case, the Suzanne Bartley suit accepts the validity of the 16th Amendment, which authorized the federal income tax; but argues that taxes for purposes not authorized by the constitution are unconstitutional and must be refunded.   The approximate amount in controversy, for FY 1991-93, is staggering: overcollections appear to approach 70% of all revenue collected for each year,[3] which amounts to a grand total of about $16,000 for Mrs. Bartley and $2.4 trillion for the class as a whole.

On April 14, 1995, Mrs. Bartley, on behalf of herself and all other persons and corporations who or which paid federal taxes in 1991-1993, filed a refund claim with IRS.   The claim described the legal theory outlined above and the method by which the government could calculate the overcollections:

The amount of the government’s overcollection and the refund claim here is uncertain.  But it can be calculated generally year-by-year by multiplying a fraction, the denominator of which is total federal outlays for the year and the numerator of which is that portion of federal outlays year-by-year for which no authority [exists], times the total federal tax revenues collected from taxes for the year involved.

Three days later, on April 17, knowing that there was no chance that IRS would even consider the claim, Mrs. Bartley filed a class action tax refund suit in federal district court in Milwaukee.[4]   On June 20, the government, through the department of justice in Washington, moved to dismiss on the grounds that Mrs. Bartley hadn’t filed a proper refund claim, didn’t have standing to sue, and couldn’t ask for an injunction.  In the brief, the government said Mrs. Bartley’s claim was “frivolous”, the quintessential legal swear word, the use of which is, as we saw in Chapter #, designed to terrorize with the specter of financial disaster.

That utterance shows how badly things have slipped.  It is of course dismaying, to say the least, that our government has grown into the Leviathan it has, particularly with the judicial complicity of the United States Supreme Court, that eminent tribunal Hamilton called the “least dangerous” branch and the ultimate guardian of all our liberties.[5]  But to call “frivolous” a claim grounded totally on the Framers’ own words is like saying Barry Goldwater is a communist.  Shades of Thompson, Klauser, and Axelrod in the stadium case.  It’s bad enough that our liberties have been canceled out—but it’s deplorable that we can’t even complain about that disheartening phenomenon without the Bull Connors in our federal government unleashing their attack dog lawyers.

The government’s use of the “F” word  wouldn’t be so dismaying if it were aimed merely at Mrs. Bartley or her lawyer.  What’s really deplorable, though, is that the government scurrilously libeled Madison, Hamilton, Jefferson, and many others, without whom the United States likely wouldn’t exist. Mrs. Bartley’s claim, though apparently unique in modern litigation, is hardly [expletive deleted], for Mrs. Bartley is to the Founding Fathers as Charlie McCarthy was to Edgar Bergen.

Her claim is no more than a Madison-Hamilton puppet show, merely a recital of several simple precepts verbalized by the Founders and used by them in The Federalist to sell the Constitution to the ratifying states:  1. The government’s taxing and spending power under ART. I., § 8,  is strictly limited by the enumerations that follow and the other enumerated powers;  2.  The general welfare and common defense language of CL. 1 do not convey additional or independent powers, but are limitations on the exercise of the enumerated powers;  3.  And the enumerated commerce power is the power to regulate trade and not a source of authority for federal regulation of manufacturing, mining, agriculture, snack bars, loan sharking, or any other local activities which precede trade among the states.

To have called Mrs. Bartley’s claim “f********” is the same as saying that our Founding Fathers, and indeed the Constitution itself, are f********, for there is absolutely nothing in Mrs. Bartley’s complaint that was ipse dixit.  Everything she said either was directly plagiarized from the guiding hands and quills of Madison, Hamilton, and Jefferson, or was the inescapable consequence of what they said.   (In that respect she resembles the Wisconsin Supreme Court; but the difference, of course, was that Mrs. Bartley’s complaint used quotation marks.)

What then accounts for our government repudiating the parentage of those who gave birth to it?  The department of justice apparently suffers from the hubris to which many moderns have succumbed, the syndrome we alluded to in the Prologue—that we moderns are much more sophisticated than those old fuddy-duddies who met that summer of 1787 in Philadelphia.  This modern insolence is the result of our ignoring Newton’s aphorism, “Modern men and women are dwarfs on the shoulders of giants, able to see farther only because of the great stature of those who preceded us in time”, the aphorism that no longer obtains in law schools where deconstruction and a conceited originality are the shrines at which bewildered students are taught to worship.

The prosperity and freedoms we enjoy today exist only because of giants like Jefferson, the Author of the Declaration of Independence and of the Virginia Statute for the Disestablishment of the Anglican Church, the Father of the University of Virginia, the Sage of Monticello, et cetera—a man so talented that once President Kennedy, in welcoming a group of Nobel Prize winners to the White House for dinner, told the group it was the most distinguished gathering of intellects to have dined at the White House “with the possible exception of when Mr. Jefferson dined alone.”

Giants like the diminutive Madison, the Father of the Constitution, the 4th President, Jefferson’s most loyal ally, friend, and neighbor, the husband of the inimitable Dolley Madison, and a man noted at the Constitutional Convention for delivering highly animated, impassioned speeches.  The anecdote is told that Madison had arranged for a friend at the Convention to tug at Madison’s coat if he seemed to be getting too agitated in giving a speech.  Madison delivered a particularly impassioned speech, sat down exhausted, and reproached his friend for not having tweaked him.  The friend replied, “I would as soon have laid a finger on lightning.”

Giants like the aristocratic Hamilton, the highest of the High Federalists, the man about whom Talleyrand, the confidant of many distinguished men during his long life, said none had been Hamilton’s equal. In a word, it’s unseemly for any modern lawyer to criticize the lawyers who laid the building blocks of the freedoms we enjoy today just because the work they did is dated.

Really things are far worse, for to call the timeless work of these patriot-lawyers “f********” is really the height of impudence—rather like the gross judicial disparagement that occurred during a murder trial in England.  The great barrister, Sir John Maynard, had challenged the judge on a point of law.  “Sir”, said the judge, “you have grown so old you have forgotten the law.”  Sir John replied, “I have forgotten more law than you ever knew, but allow me to say, I have not forgotten much.”

Madison and the other framers may have grown “old” to us, but the principles they championed and embodied in the constitution are as vibrant today as ever, even if certain government lawyers find them to be “f********” relics of the past, detritus to be cast out in the wake of the Leviathan, the modern ship of state has become.

The government’s brief was astonishing not only for its infantile vulgarities like “f********” and even “completely f********“, but also for its constitutional palindromes, standing the constitution on its head.  For example, the government complains that Mrs. Bartley has “completely failed to identify any ‘specific constitutional limitations upon the exercise of the taxing and spending power.'”  It’s amazing how far things have gotten out of whack.

First of all, Mrs. Bartley did identify the “specific constitutional limitations” on federal taxing—among others, the general welfare and common defense language—which are inherent limitations on, not expansions of, the federal taxing power.

But the government’s griping is objectionable for a more fundamental reason—it inverts what the Framers, the constitution, and the doctrine of enumerated powers, and Mrs. Bartley all say:  taxing power doesn’t exist unless specifically granted. The government’s assertion that it has all powers not denied is just the opposite of what The Federalist says:  the government has no powers except those specifically given.

On the scope of the federal taxing power, the government should read Mrs. Bartley’s complaint and Madison’s lips in Federalist 41:

It has been urged and echoed that the power “to lay and collect taxes . . . to . . . provide for the common defence and general welfare of the United States,” amounts to an unlimited commission to exercise every power which may be alleged to be necessary for the common defence or general welfare.  No stronger proof could be given of the distress under which these writers labour for objections, than their stooping to such a misconstruction.

Yet it is precisely that same distressed “misconstruction” to which the government has here “stooped”.  Or as Hamilton said in Federalist 83 of the strict limitation on the federal taxing power:  “This specification of particulars evidently excludes all pretension to a general legislative authority, because an affirmative grant of special powers would be absurd, as well as useless, if a general authority was intended.”  And the government should read Jefferson’s lips, which lip sync with Madison’s and Hamilton’s:  “[The common defense and general welfare clause was] intended to lace [Congress] up strictly within the enumerated powers.”  Or as Jefferson put it in 1798, “Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated.”[6]

“[C]ompletely f********”, eh?  If anything, what’s “completely f********” was the government’s claim that Mrs. Bartley’s claim is “completely f********”—for it is “f********”, in and of itself, to claim that another’s valid or even merely plausible claim is “f********”.  The use of “f********” in the case is much like the use of the other, more common “F” word in the country at large—a plague, a blight on civil discourse.

Moreover, whatever happened to the doctrine of enumerated powers?  Really, as we have seen and contrary to what the government said, the applicable rule is not that the government has a particular power unless the constitution specifically negates that power, but its opposite, namely that the government doesn’t have that power unless specifically enumerated; or as scholar, Stephen Moore of the Cato Institute has put it, “[I]f the Constitution doesn’t specifically permit the federal government to do something, then it doesn’t have the right to do it.”[7]

The enumerated powers doctrine is confirmed in the text of the constitution, repeatedly in The Federalist, and even in some contemporary supreme court decisions.  The 10th Amendment is the best evidence of the doctrine of enumerated powers:  “The powers not delegated to the United States by the Constitution . . . are reserved to the States respectively, or to the people.”  Moreover, the 9th Amendment points in the same restrictive direction:  “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.”

The effects of the two amendments are on the one hand to reserve the mass of government powers, not enumerated as federal powers, to the state governments (10th); and to limit federal power even further by setting up a universe of unspecified individual rights as additional checks on that power (9th).#  When one contrasts the open-ended nature of powers reserved to the states and the open-ended nature of rights reserved to individuals with the close-ended federal powers and the doctrine of enumerated powers, one can only conclude that federal power, far from being the norm it has become, exists only in the exceptional circumstances specifically defined in the constitution.  Indeed, even before the 9th and 10th amendments and the rest of the bill of rights existed, the doctrine of enumerated powers was thought to be a wholly-adequate check against federal overreaching.  To the framers, the idea that federal powers were highly circumscribed was second nature.

For example, Madison in Federalist No. 14 said, “[The general government’s] jurisdiction is limited to certain enumerated objects, which concern all members of the republic”.   And Hamilton in Federalist No. 17:  “The . . . supervision of agriculture and of other concerns of a similar nature . . . can never be desirable cares of a general jurisdiction.”   At the time, both men were convinced that the doctrine of enumerated powers, standing alone and unguarded by a bill of rights, was an entirely sufficient mechanism to keep the federal government out of unenumerated jurisdictions.[8]

The principle of enumerated powers is not vestigial, as is proven by its recent reaffirmation in U.S. v. Lopez.[9]  There Chief Justice Rehnquist, for the majority, wrote:

“We start with first principles.  The Constitution creates a Federal Government of enumerated powers.  See U.S. Const., Art. I, §8.  As James Madison wrote, ‘[t]he powers delegated by the proposed Constitution . . . are few and defined.  Those which are to remain in the State governments are numerous and indefinite.'”

Was the government in Suzanne Bartley v. U.S. saying that the Chief Justice and all the other members of the Lopez majority are f********?

The government also completely ignored the Thomas concurrence in Lopez, where Justice Thomas criticized the same inversion of the enumerated powers doctrine that the government asked the court to accept here.  As Justice Thomas put it: “Our construction of the scope of congressional authority has [come] close to turning the Tenth Amendment on its head.  Our case law could be read to reserve to the United States all powers not expressly prohibited by the Constitution.”[10]      Is Justice Thomas “f********” too?  Will the real “f********” litigant please stand up?

The truth here is that far from what the government says, the constitution strictly limits the taxing power to raising taxes to carry out the enumerated powers and those powers alone.  The government has no general power of taxing.  Thus the federal taxing power is, in the main, limited to the ART. I, §8, purposes which in summarized form are taxes to fund:  national defense, postal operations, federal courts, coining and borrowing operations, administration of laws on bankruptcy, naturalization, patents, trademarks, counterfeiting, weights and measures, crimes on the high seas, violations of international law, District of Columbia and other federal properties, and regulating commerce with foreign nations, with Indian tribes, and among the states.  That’s it.

If there is anything at all “f*********” in Suzanne Bartley v. U.S., it is the idea that the government has carte blanche to tax for whatever Congress decides is for general welfare or common defense.   That sort of mentality and “rationale” has given rise to all manner of truly “frivolous” federal projects, which by anyone’s standards, are beyond the pale of legitimate power, spilling over into the realm of what might be called the “federal porcine power”.  We can only cite a few recently reported examples of these federal mackerels rotting in the moonlight:

$160,000 to study whether one can “hex” an opponent by drawing an X on his chest.

$2,000,000 to construct an ancient Hawaiian canoe.

$6,000 for a document on Worcestershire sauce.

$10,000 to study the effect of naval communications on a bull’s potency.

$1,000,000 to preserve a New Jersey sewer as an historic monument.

$752,000 in FY 1993 to study fermented vegetables (i.e. pickles and sauerkraut).

$219,000 to teach college students to watch television.

$19,000,000 to examine gas emissions from cow flatulence.

$84,000 to find out why people fall in love.

$150,000 to study the Hatfield-McCoy feud.

$500,000 to build a replica of the Great Pyramid of Egypt in Indiana.

$ ???? on studying the causes of rudeness on tennis courts and examine smiling patterns        in bowling alleys.

$144,000 to see if pigeons follow human economic laws.

$ ???? to study the sexual preference of the prairie vole.

$100,000 to study how to avoid falling spacecraft.

$1,000,000 to study why people don’t ride bikes to work.

$107,000 to study the sex life of the Japanese quail.

$ ????  to study the nasal cavities of hamsters during sexual intercourse.

$ ???? to study why transsexuals change their minds before going ahead with sex change operations.

$3,100,000 to convert a ferry boat into a crab restaurant in Baltimore.

$6,400,000 to build a Bavarian ski lodge in Idaho.

$194,000 in FY 1993 to build a warehouse for storing vidalia onions in Georgia.

$66,000,000 for a railroad museum in Pennsylvania

$12,000,000 in FY 1993 for a high- resolution microwave survey as part of NASA’s search for extraterrestrial intelligence.

$ ???? to operate a House of Representatives office to run souvenir U.S. Flags up and down the flagpole over the U.S. Capitol.[11]

These, alas, appear to be only the epidermis of the federal pork underbelly.  The abridged federal budget of _____ # is about 1500 pages[12] (which itself tells us a whole lot), and at that suffers from an amazing lack of detail.  Pork like what we’ve described above is often aggregated and buried under some innocuous or even noble-sounding entry.

In any event, there is one area of major federal activity that has been identified by the U.S. Supreme Court as at least presumptively unconstitutional.  In Adarand Constructors, Inc. v. Pena [13] the court held that racial preferences in the form of federal set asides were subject to strict judicial scrutiny, a standard from which no classification has ever survived.[14]  The government, according to The Wall Street Journal, is currently spending about $6,400,000,000 a year on these set asides.[15]

If that $6.4 billion represents the total cost of racial set asides, as opposed to the total cost of the contracts awarded, and if the $6.4 billion holds true for FY 1991-93, that program alone amounts to $19.2 billion of spending that is presumptively unconstitutional, and some $15.6 billion of taxes presumptively unconstitutional, and subject to refund to the class.  To paraphrase again the late Senator Everett Dirksen, “A few billion here and a few billion there, and pretty soon you’re talking about real money.”

Apart from the presumptively unconstitutional taxing related to “affirmative action”, there is one area of federal taxing that has been held flatly unconstitutional, not even subject to strict scrutiny—that done in FY 1991-93 in relation to the “Gun-Free School Zones Law” that the supreme court in April 1995 held unconstitutional in Lopez.  It goes almost without saying that because the “law” was unconstitutional, the related spending and taxes were also unconstitutional, and the unconstitutional taxes must be refunded pronto.

But the main point here is more basic—the government has misrepresented, indeed inverted, our organic law.  What the government here is saying is the same as saying that the government has the power to spend money to study a hamster’s nostrils while in flagrante delicto unless there is a contrary provision in the constitution specifically providing that a hamster has a right to sexual privacy—in other words, just the converse of the venerable doctrine of enumerated powers, the doctrine on which Mrs. Bartley’s case in principal part rests.

Federal taxpayers have no standing to sue for tax refunds????  Although the government attacked Mrs. Bartley’s claim as “frivolous” on the merits, it sought to have the case dismissed on two other incredible grounds:  Mrs. Bartley and the other 115 million plaintiffs had have no standing (meaning legal status) to sue; and on the further grounds that she had filed this case prematurely.

The standing argument took a singularly amazing government somersault—the assertion that 115 million federal taxpayers don’t have standing to sue for tax refunds.  It’s hard to know where to begin with that one, but perhaps the best immediate retort is to ask, “If federal taxpayers don’t have standing to seek refunds for massive overcollections of taxes, who does?”  Citizens who don’t pay taxes?  Foreign nationals?  The extraterrestrials the government is microwaving?  Hamsters?  Fermented vegetables?

One does not need a battery of Philadelphia lawyers to discern the inanity of this claimed lack of standing.  Common sense tells us that it can’t be so.  Of course taxpayers have standing to claim tax refunds.  It could be no other way.

But, alas, common sense is a slippery slope on which to evaluate this sort of Alice in Wonderland “logic”, this pettifoggery, this inside-the beltway Pecksniffian doublespeak.  Speaking of fog, the government’s argument that taxpayers don’t have standing reminds me of the fog that surrounded Chancery in the opening scenes of Bleak House.  Maybe it’s even Kafkaesque in that the statutes explicitly provide taxpayers a right of action and a remedy, but the rights and remedy are window-dressing only, that is if one were to take the government’s claim seriously.

Of course Mrs. Bartley and the others have standing, for they are taxpayers seeking tax refunds, under various federal statutes, including: 26 U.S.C. §7422, providing specifically for taxpayer refund suits for taxes “illegally . . . collected”; and 28 U.S.C. §1346(a)(1):  “The district courts shall have original jurisdiction . . . of (1) [a]ny civil action against the United States for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected . . . .”

What could be more plain?  Mrs. Bartley, a taxpayer, sought “recovery of . . . a tax” she alleges to have been “illegally . . . collected.”  If taxpayers can’t sue for tax refunds, why did congress enact these statutes?  Are they just a smokescreen to make taxpayers feel better, to create an appearance of substantial rights, a hollow shell of legal protection much like the constitution of the former Soviet Union?

Beyond the obvious, none of the six cases the government cited to support non-standing came close to holding that taxpayers don’t have standing to claim refunds of unconstitutionally-assessed taxes.  Far from being “exactly the type of action that the supreme court has held fails for lack of standing”, as the government claimed, Mrs. Bartley’s case is exactly not the same type of action; the cited cases are all easily distinguished.

In the first place, four of the cases were neither tax refund or tax mitigation suits; rather, each sought to enjoin or set aside a particular federal expenditure.[16]   In contrast, Mrs. Bartley and her fellow classmates sought set aside of no expenditure, but only money “damages”, namely a refund of approximately 70% of the taxes they paid in FY 1991-93.

It is true that Mrs. Bartley also sought an injunction, but the injunction sought is against future overcollections of taxes; she did not ask the court to enjoin spending, as did plaintiffs in the cases the government cited.  Moreover, Mrs. Bartley flatly stated she did not intend to seek the injunction until after the court had ruled that the back taxes at issue here are unconstitutional, after the Anti-Injunction Act[17] ceases to apply.

The fifth case, Crowe v. Commissioner,[18] did at least involve taxes, but the case doesn’t work for the government, because it was not a standing case.  There the court dismissed taxpayer’s complaint, not because taxpayer was without standing, but because it rejected taxpayer’s argument that the income tax itself was unconstitutional.  Indeed taxpayer there was allowed standing.

The sixth case in the government’s sextet of irrelevance was Clark v. United States.[19]   Although Clark was a tax refund suit that was dismissed for lack of standing, the court characterized the action as a challenge to the spending power of the government.   Again, Mrs. Bartley’s challenge was brought against the abuse of the taxing power.

Clark is also inapplicable for two other reasons.  There the challenge was that the executive branch was violating a statute, not the constitution.  The court explained that because the statute was “a regulation solely effecting [sic] conduct between the coordinate legislative and executive branches, only those branches could bring suit to enforce it.”[20]   Clark is thus doubly irrelevant, because Mrs. Bartley’s action is a constitutional challenge against both branches of government.

We should also note one other important difference.  Explicit in three of the five cited cases where the courts found no standing was the finding of no cognizable or measurable injury to the taxpayers involved, each taxpayer’s interest having been secondary, or too speculative, remote, or indirect to afford standing.[21]   In contrast in Suzanne Bartley, the injury is real, direct, measurable, and to say the least, hardly de minimus—in fact, de maximus, staggering; the injury in all cases is about 70% of all taxes collected, which in Mrs. Bartley’s case, amounts to about $16,000 for her for FY 1991-93, and some $2.4 trillion for the class.

The “most applicable” case the government cited is Flast v. Cohen,[22]  for that case at least articulates some taxpayer standing requirements, albeit in cases where the taxpayer was seeking to block federal spending.  According to the court, to show standing, the taxpayer must bring his suit as a challenge to the exercise of the taxing and spending power of congress; and must show that the challenged legislation exceeds specific constitutional limitations on the taxing and spending power; and not merely that the enactment is beyond the ART. I, §8, powers of Congress.

Flast, of course, is not applicable to the suit here, because in Flast the suit was to stop federal spending, and Mrs. Bartley’s suit is for a tax refund and to enjoin only illegal federal taxing.  Mrs. Bartley does not seek to prohibit federal borrowing necessary to fund unconstitutional federal spending.[23]

However, even if we were to apply the Flast test[24] here, Mrs. Bartley and the others would pass with A+s, for the challenge is plainly directed to the abuse of the taxing power, and is based on several “specific constitutional limitations” on the taxing power—principally the textual limitations explicit in ART. I, §8, especially the limitations in CL. 1 (the taxing power limitations identified by Madison and Hamilton in The Federalist), but also those in CL. 18 (the necessary and proper clause), as well as those in the bill of rights, in particular, as we have discussed, the 9th and 10th Amendments, and the 5th Amendment takings clause; and in certain other provisions, such as ART. I, §9.[25]

What is plain is that Mrs. Bartley’s standing was also supported by a variety of specific constitutional limitations, none of which rest on the bare allegation that the taxation has exceeded the government’s authority under ART. I, §8.

In the final analysis, standing in the case is not governed by the case law presented by the government or by any case law at all, but by statute which, as a matter of law, explicitly gives taxpayers standing to sue for refunds of taxes that have been “illegally collected”.   “Illegally collected” and “unconstitutionally collected” are synonymous.  Why then, except to obfuscate, would anyone want to go beyond the statute?

Waiting for IRS to refund $2.4 trillion—as futile as the labor of Sisyphus:  The government also argued that taxpayers’ claims should be dismissed on the grounds that none of them have exhausted their administrative remedies—meaning Mrs. Bartley and the class had to wait for the IRS to rule on the claims before filing suit, the claims not having then ripened for suit.

The veneer of the argument is nice and smooth—suits ought not be brought until after the agency has had a crack at the issues.  But the core of the argument is as weak as balsa wood.

Here the point skirted by the government is that the IRS cannot and will not grant the class’s claims.  Waiting for the IRS to act favorably is holding a farthing candle to the sun.  Even filing the refund claims with the IRS was a snipe hunt.  The IRS cannot grant the claims, because IRS is an administrative agency with no authority to refund taxes unconstitutionally assessed.  “The law has long been clear that agencies may not nullify statutes.”[26]   The IRS, like other administrative agencies, has no power to hold an act of congress unconstitutional.

Because the IRS lacks the power to grant any part of the refund sought on the grounds claimed, the “proceedings” before the IRS were truly feckless.  Indeed, it’s hard to think of a better case to invoke the doctrine of futility.  Taxpayers ought not to have to fritter away six months waiting for IRS to do something the law has said it absolutely cannot do.  Under those circumstances, exhaustion is not required.

That IRS will not grant the refund, even if it had the power to do so, is also proven out by the hostile attitude its counsel exhibited toward Mrs. Bartley and her claims.  Apart from asserting that taxpayers have no standing to seek tax refunds, she has nary a kind word to say on the merits of the claim.

Indeed that’s understatement, for the government’s lawyer said things like, “[I]t is beyond question that plaintiff’s narrow characterization of the taxing and spending power is completely unsupported.”   Or, “The authorities cited above clearly establish that plaintiff’s claims are not only meritless, but so completely unsupported and contrary to well-established legal principles as to be f********.  * * *  [P]laintiff’s complaint should be dismissed with prejudice.”

That kind of rhetoric, coupled with a request for dismissal with prejudice, isn’t exactly warm and fuzzy.  It didn’t augur well for the fate of Mrs. Bartley’s refund claim in the hands of the IRS, which, we may rightly assume, would have taken its attorney’s views and advice to heart.

The four cases the government cited to support its required futile exhaustion didn’t do it.  Flowers v. United States,[27] where the plaintiff didn’t wait for IRS to act, was unavailing, because there is no indication in the case that the IRS wouldn’t have granted the refund claim if given time.  United States v. Felt & Tarrant Mfg. Co.[28]  is inapt, because there the rejection of the refund claim was only “anticipated” on the grounds that IRS had in the past rejected similar claims.  Similarly in Sutherland v. Egger,[29]  there was only a probable rejection in the offing.  Likewise in Wiltshire v. United States,[30]  there was only likely rejection.  Moreover, in Wiltshire, the taxpayer filed no refund claim at all.

In Mrs. Bartley’s case, there were no greys of probability, only the pitch blackness of certain rejection.  And Mrs. Bartley, unlike the taxpayer in Wiltshire, did file the claim, for whatever that might have been worth.

The government argued further that the class members haven’t exhausted their remedies or filed the proper refund claims.  “A class action cannot be maintained”, said the government, “where ‘there is no showing that any other members of the purported class filed the requisite demands for refund.'” “[A]n unauthorized agent may not ‘claim an unspecified refund for unknown principals.'”

The government’s “reasoning” is hopelessly circular, for it begins and ends with the planted conclusion that Mrs. Bartley is unauthorized to represent the class.  Because here, as in any class action, the question of the scope of the lead plaintiff’s authority is never resolved until after the opt-out period has expired and the opt-outs are tallied, the scope of Mrs. Bartley’s authority is as yet unsettled.  To the extent that putative class members opt out of the class,  it is true that Mrs. Bartley will have been “deauthorized” by those taxpayers.

However, the remaining members of the class, those who don’t opt out, will in effect ratify Mrs. Bartley’s authority nunc pro tunc, back to the time she first purported to act on their behalf, here the time when the refund claim was filed.   Consequently Mrs. Bartley, until the process ran its course, had to be regarded as authorized, and it was premature to say she was unauthorized.

To the related government point that there was no showing of all the class having filed claims for refund, the answer is that all have filed claims, through Mrs. Bartley’s claim, at least until those claims are withdrawn by subsequent opt-outs.  Here again, that question turns on what the future holds, not what had then happened so far.

Moreover, the government altogether ignored the futility doctrine.  Like Mrs. Bartley, the class members need not have gone to the bother of filing vain refund claims, claims that hadn’t a chance on earth of being granted administratively.

Three of the four cases the government cited (Heisler, Agron, and Harkins),[31] in support of its claim that each member of the class must file an individual claim, do say that; but two of those three of clearly did not involve futile constitutional claims, and the third, Heisler, a six sentence opinion, is not exactly clear as to the nature of the bizarre claim turned down.

In Heisler, taxpayers on behalf of themselves and others apparently claimed that “their bodies and skills” were “natural deposits” subject to the percentage depletion allowance, an interesting metaphysical question that the court didn’t care to analyze.  The court found that the Heislers’ bodies were not natural deposits and that the Heislers didn’t have standing to sue.  The last sentence of the opinion, which spoke of the need for other class members to file individual refund claims, was gratuitous dicta.  The court could just as easily have said that because the lead plaintiff had no “natural deposit” standing, the bodies of the others were not natural deposits with depletion standing either.

It’s just not clear where Heisler leads, if anywhere.  But it can at least be said that it doesn’t knock out the Suzanne Bartley class claim, because there were two issues in the case:  the weird statutory question whether plaintiffs’ bodies were natural deposits; and an unspecified constitutional question.  In theory at least, the IRS would have had power to decide the statutory question in plaintiffs’ favor—thus there was no certainty of rejection, as in Mrs. Bartley’s case where there was no statutory claim, only one constitutional claim  which the IRS was legally obliged to reject.

Agron, Harkins, and the fourth case, Lac Courte Orielles[32] were all different in that there was no constitutional issue at stake in them; thus their individual refund claims would have held out some hope for the class members had each of them filed.  Also in Lac Courte Orielles the plaintiffs weren’t even taxpayers, according to the court.  Because of the different context, i.e., no futile constitutional claim, those three cases, like Heisler were all beside the point.

Beyond arguing that the class members were barred from participating in any refund for failing to have filed separate claims, the government also argued that Mrs. Bartley filed a defective claim, because she didn’t file it on IRS-approved forms and didn’t file a separate claim for each type of tax for each tax year.

Leaving aside the point that there is no claim that the “defects” were jurisdictionally fatal, one has to ask how the government can reasonably expect Mrs. Bartley to have filed roughly 345,000,000 pieces of paper to perfect 115 million refund claims that aren’t going to be granted anyway.  (Mrs. Bartley, let it be said, is usually most efficient.)  But even with the magic of word processing and with her toiling non-stop, 24 hours a day, and allowing just one minute per claim, and even if she knew every taxpayer’s tax liability, social security number, etc., it would still take Mrs. Bartley 2,777 days or 7.6 years to prepare the claims, not to speak of filing them.  (How she would file, God only knows: by certified mail; by a fleet of dump trucks?)

But even if she could do all that, by the time she finished, the 3-year statute of limitations would have run out, in most cases two times over, on all the claims, making her labor truly the labor of Sisyphus.  Fast as she is, she could never work fast enough to beat the statute of limitations clock.  To have asked ask for individual claims here was, to say the very least, to ask the impossible, for no good reason—and even more stupid than the idea of the 25,000 separate cases the Wisconsin Department of Revenue insisted on in the federal pension case discussed in Chapter #.

Moreover, even if Mrs. Bartley were Wonder Woman, she would be ultimately foiled in the filings.  For one thing, the aggregate dollar amount of the claim cannot as yet be determined precisely; that had to await the completion of discovery, to see the distant perimeters of the vast wasteland of the government’s overtaxing.

For another, even if now she could somehow formulate the precise borders of legitimate taxing and could thus calculate the aggregate refund percentage and amount, the allocation of that dollar amount among all the class would be impossible without knowing each taxpayer’s putative liability against which to apply the percentage.  That must await the damages phase of the case, when class members individually or the IRS will have to calculate the refunds.

If taxpayers themselves filed their own damage claims, essentially all each taxpayer will have to do for each of the refund years is to multiply the taxes putatively owing, by the determined illegitimacy factor (which we now believe to be approximately 70%).  In any event, it makes no sense to have taxpayers file individual claims twice, as the government would in effect require.

So even if the futility doctrine hadn’t excused Mrs. Bartley and the class from having filed 345,000,000 separate refund claims, the doctrine of impossibility did.  The maxim is “Lex non cogit ad impossibilia“—”The law does not compel the doing of impossibilities.”[33]   Perhaps even the IRS recognizes the principle of impossibility and substantial compliance in Reg. §301-6402-3(a)(1) (don’t you love the numbering?) when it says, “[I]n general” refund claims must be filed on “the appropriate income tax return.”

To summarize:  standing existed, basically because Mrs. Bartley and the others were federal taxpayers seeking a tax refund under a federal statute that explicitly grants standing. Compliance with the IRS administrative refund process was not required, because the IRS does not have the power to grant the refunds.

When we filed our brief on the government’s motion to dismiss, we sent interrogatories to the government, that were designed to find out just how much the government had spent on hamster nostrils, hexing studies and the like.  For those readers who want a good laugh, the interrogatories have been included in Appendix #.

On July 19, IRS wrote Mrs. Bartley advising that it had received her letter of April 17 on June 19, some 63 days later, in its “Disclosure Office”.  The IRS denied the claim.  The denial letter is peculiar, and comically so.  (Appendix #).

It begins by saying, “This is in response to your letter dated April 14, 1995, and received June 19, 1995, in this Disclosure Office”—apparently Mrs. Bartley’s letter took about two days from Milwaukee to arrive in IRS’s mailing room in Kansas City, and another 63 or so to work its way up from the mailing room through the labyrinth, to the Disclosure Office, where another 30 days later, it was finally unearthed—well sort of unearthed, to be more precise.

After advising Mrs. Bartley that IRS “is not required to respond to interrogatories” (there were none sent to IRS) or “engage in doctrinal discussions” (none was solicited); that it is IRS’s “policy not to respond to a letter of the type written by [Mrs. Bartley] on a point-by-point basis [only in government would a disclosure office have a policy of non-disclosure], since that approach only precipitates further endless questions”; and that “[t]hese letters (there you people go again) almost always reflect personal opinions and frustrations . . .  which the Service is unable to address”, IRS goes on to disclose to Mrs. Bartley these fascinating revelations:  the 16th Amendment authorizes the income tax (mirabile dictu); the IRS administers the tax code (wonder of wonders); the code is available at fine bookstores and libraries across the nation, in the Freedom of Information Reading Room in Washington (Christian Scientists, please take note), or on written request satisfying 26 C.F.R. Section 601.702 (on the tip of everyone’s tongue), or which may be obtained at a cost of $500 (a bargain compared to most other sedatives).

This caring and sensitive letter [letter no. D9500002190Z] concludes with the friendly advice:   “Please be advised that nothing contained in the type of correspondence (what type was Mrs. Bartley’s—the typical Madison-Hamilton-Jefferson cult groupie wacko type?) received could in any way diminish any taxpayer’s responsibility to file any return or to pay any tax required by law.  No further response will be made regarding the issues addressed in your letter.”


Carol Spencer

Disclosure Officer

TEAM MIDWESTPeople Who Care! KCSC #   “KCSC” in the IRS letter means Kansas City Service Center. # FOCUS:Optimum Customer Service!

Although the letter is the nicest “Take a nice hike, pal”, letter Mrs. Bartley has ever received, and although Mrs. Bartley is certain that IRS really, really cares for her as a customer, she wonders whether the letter was the “optimum” in “customer service”, given its enigmatic statements, statements which shall probably forever remain a mystery.       One thing at least is clear.  The IRS turned thumbs down (however caringly) on Mrs. Bartley’s claim, thus mooting its counsel’s argument that Mrs. Bartley and her fellow taxpayers (hereinafter, “customers”) haven’t been patient enough in waiting for IRS to respond.

The (now mooted) exhaustion and the standing issues could now, we thought, be quickly decided without the court agonizing over each and every point the government made in its reply.  We answered anyway, one-by-one:[34]

Government‘s assertionUnited States v. Felt & Tarrant Co. . . . [established] that the futility exception does not apply to [the requirement that taxpayers file refund suits with IRS] because “[i]t is not within the judicial province to read out of the statute the requirement of its words. ”

Response:  Apart from the facts that IRS has now officially denied the refund claim, and that Tarrant involved a taxpayer claim that IRS would only probably deny, as opposed to the certain denial here, it is clearly within the province of the court “to read out” the useless refund claim requirement.  That’s the essence of the futility doctrine.  “Lex neminem cogit ad vana seu inutilia peragenda—“The law compels no one to do vain or useless things.”[35]  “Cessante ratione legis, cessat et ipsa lex—“The reason of the law ceasing, the law itself also ceases.”[36]

Here the refund claim “requirement” is dispensed, because the reason for it has ceased.  The immediate reason for the requirement is to give the IRS a crack at claims before suits are filed.  To the extent IRS grants claims, cases that might have been filed in court are eliminated.  The ultimate reason for the requirement is to keep cases out of court, to promote judicial economy.  That reason can never be promoted here, because the IRS has no power to grant Mrs. Bartley’s claim.  Therefore, the one may rightly ignore the “requirement”, its reason having ceased to exist.

No further response will be made regarding [this] issue.

Sincerely,      Suzanne M. Bartley et al      Customers

Government‘s assertion: [T]he futility exception does not apply to [taxpayer refund claims] even when based on . . . issues concerning the constitutionality of a statute.  See, e.g. Heisler v. United States . . . .

Response:  Now the most notorious 6-sentence case in the history of jurisprudence, Heisler, the human-bodies-as-depletable-natural-resources case, was not wholly-based on a constitutional claim.  There was also a statutory claim that the IRS in theory could have granted, mooting the constitutional issue.

Government‘s assertionHarvey v. Early and United States v. Wiltshire show that Mrs. Bartley must exhaust despite the fact that her claim is a constitutional challenge.

Response:  Both cases did involve constitutional challenges and both did require the customers to go through the motions of filing a claim that was “probably” useless, as both courts put it.  But neither of the plaintiffs in those cases actually did file a claim; Mrs. Bartley did.  And as we have said, that claim has now been denied anyway.

To the extent that the cases stand say that customers who present only constitutional claims must always exhaust administratively, the cases ought not be followed, for the “customer“-plaintiffs in them, unlike the customers here, must have failed to argue that IRS had no power to grant their claims.

Government‘s assertion: Plaintiff . . . has cited no cases in support of her assertion that a class representative need not be authorized to file a claim on behalf of [other class members].

Response:  Whatever happened to the motto, “The customer is never wrong?”  In any case, Mrs. Bartley never said that she didn’t need authorization.  What she said was that the authorization to act for the class need not be furnished now, for the other customers can ratify her authority later on, retroactively, under principles of agency and case law as well.

Government‘s assertion:  [The agency principle of subsequent ratification] cannot dispense with or modify the jurisdictional requirements of [the statutory refund claim procedures] “for [the rule of procedure on class actions does] not enlarge the jurisdiction of [the district courts].”  * * *  Therefore, a purported class representative cannot make an administrative refund claim on behalf of other taxpayers unless [documentation of his authority is presented].

Response:  The class action procedural rule does not enlarge jurisdiction, it is true.  But that begs the question.  Here the real question is whether Mrs. Bartley has authority to file the claims.  Again, that’s a question that must await the notification and opt-out procedures.  Moreover, the “requirement” that the agent present documentation to the IRS of her authority comes from a regulation, not a jurisdictional statute.  The jurisdiction IRS has comes from statute; and an agency cannot, by mere regulation, diminish its own jurisdiction by adding its own more stringent, “jurisdictional” requirements.

Government‘s assertion:  [C]ourts recognize that a tax refund claim is ‘particularly ill-suited’ for maintenance as a class action.

Response:  This is no way for a business  to speak to a group of valued customers, especially when the group, as here, constitutes the business’s entire customer base.      Apart from the fact that the propriety of the class action mechanism is not yet at issue here, the statement is far too sweeping, for here the claim is, if anything, perfectly suited for a class action.  Here the sole issue is the extent to which the government has overcollected taxes, a question common to every taxpayer, and a question the answer to which does not depend on varying individual facts or circumstances.  Once the court arrives at the percentage by which the government has overcollected, all that will remain is for the individual taxpayers or the IRS to calculate the individual refunds by multiplying that same percentage times each taxpayer’s putative tax liability.

None of the cases the government relies on to show the disutility of the class action mechanism involved the sort of common question involved here.

Government‘s assertion:  The Anti-Injunction Act prevents injunctive relief here unless Mrs. Bartley can show that the United States cannot possibly win.

Response:  One important rule of “OPTIMUM CUSTOMER SERVICE!” is “Don’t make customers repeat themselves.”  To repeat, Mrs. Bartley is not asking for immediate injunctive relief.  Her request will be delayed until after the court makes its decision on the extent of the overcollections, in other words at the point at which it will have been established that the government has lost.

Government‘s assertion:  Mrs. Bartley has no standing to sue, because she has failed the Flast test by neither identifying the specific expenditures which she claims are beyond the government’s taxing power, nor the specific constitutional limitations prohibiting the taxing.

Response:  As a general rule, Mrs. Bartley doesn’t “engage in doctrinal discussions.”  However, we need to remember that Flast doesn’t even apply, because Flast was not a tax refund suit, but a suit to enjoin federal spending.   But even if we were to assume that the Flast doctrine does apply, Mrs. Bartley complies.  She has identified the expenditures which are illegal, namely those that make up the 70% in the government’s pie chart attached to the complaint.   Moreover, she has now three times identified the specific constitutional limitations on which she relies.

Government‘s assertion:  Neither Lopez nor Adarand involved taxpayer standing.

Response:  Mrs. Bartley never said they did.  She cited them only as examples of federal programs recently held unconstitutional.   “Don’t misrepresent what your customers have really said—you might lose them as customers.”

Government‘s assertion: [P]laintiff cannot claim that 26 U.S.C. §7422 confers standing in this case because . . . she and the other class members have not fulfilled [its] jurisdictional requirements.

ResponseSee 26 CFR §601.702 on how to get a copy of 26 U.S.C. §7422; or go to the Freedom of Information Reading Room on Constitution Avenue in Washington.  The statute explicitly says that taxpayers may sue for a refund of taxes “illegally . . . collected.”

The government’s argument is in any case bootstrapped.  Standing is a separate issue, the outcome of which does not turn on the so-called jurisdictional issue.  Moreover, as Mrs. Bartley had already explained, Mrs. Bartley and the others have fulfilled the jurisdictional requirements.

If Mrs. Bartley and the other IRS customers have no standing, then IRS has no customers.

Government‘s assertion: [P]laintiff has failed to explain the relevance of [the distinction that hers is a challenge to the taxing power, not the spending power].

Response:  As Mrs. Bartley said in the initial brief, the relevance is that Mrs. Bartley doesn’t seek to prohibit federal spending.   The government can go on spending like a drunken sailor all it wants if it can find lenders willing to finance its spending sprees.

Government‘s assertionClark holds “that the taxpayer standing requirements apply where a taxpayer seeks a refund of taxes that the taxpayer claims have been ‘illegally spent.'”

ResponseClark is, as Mrs. Bartley said, “doubly irrelevant”, because it was an action based on the  claim that the executive branch was violating a congressional statute.  The court said that only congress could sue.  In contrast, Mrs. Bartley’s action is a constitutional challenge against both branches.

Government‘s assertion: Plaintiff’s analysis of the scope of the injury to be considered in evaluating standing is, however, completely incorrect.  It is not the totality of the injury of the class members combined that is relevant . . . .  Rather it is the measure of the injury of each class member that must be direct and substantial enough to confer standing on each class member.

Response:  Is the government trying to say that each customer’s interest here is de minimus?  If so, that’s a singularly odd assertion by “PEOPLE WHO CARE!” so much about their customers.  To Mrs. Bartley, $16,000 is a whole lot of money, even if only plankton in the voracious belly mouth of the federal spending whale.  Likewise, we have no doubt that 70% of the taxes that each member of the class has individually paid is equally important to each of them.

Government‘s assertion: [P]laintiff has not cited a single case establishing that the constitutional provisions upon which she purportedly relies are limitations on the taxing and spending power . . . .

Response:  This argument reflects “personal frustrations and opinions [Mrs. Bartley] is unable to address”, except perhaps to say, “True, but what of it?”  If there were any case, there would have been no reason to file this one.  In any event, the authority cited to show the government has overtaxed—the words of the constitution and The Federalist are far better authority than any case could ever be.

The government complained that Mrs. Bartley hasn’t fleshed out how the specific constitutional limitations, beyond ARTICLE I, §8, apply in this case.  That is only partly true.  In her initial brief, Mrs. Bartley showed how the 9th and 10th Amendments serve as limitations.  Those amendments are specific limitations on the government’s taxing authority, for they operate to define the universe of lawful federal taxing power.  The same is true of the other constitutional limitations—the 5th Amendment takings clause and ARTICLE I, §9, which serve as limitations on the federal taxing power.

The takings clause prohibits the taking of property “without just compensation”.  That has an obvious application here.  The government may not, through a tax, take one’s property unless it gives value in return.  Value is that which is in the nature of legitimate public services, i.e.,  defense, post office, court system, etc.  Thus if the government taxes for something that is not a legitimate public purpose, i.e., studying hamster nostrils, it is not giving just compensation for the taxing and thus is violating the takings clause.

* * *

And ARTICLE I, §9, also operates here to show the limitations on the federal commerce power:  “No preference shall be given by any regulation of Commerce or Revenue to the ports of one state over those of another . . . .”  As Professor Richard Epstein has pointed out, this further shows that “commerce“ in the commerce clause and the purported justification for many taxing and spending measures,  means only trade, not manufacturing, agriculture, etc.:

The term “commerce” is used in opposition to the term “revenue,” and seems clearly to refer to shipping and its incidental activities; this much seems evident from the use of the term “port.”  The clause itself would sound odd if it referred, for example, to preferences “given by any Regulation of Commerce, Manufacture, or Revenue to the ports of one State.”  The term commerce in this commerce provision does not carry with it the extensive baggage placed upon it by the better-known New Deal cases concerning the commerce clause.[37]

Government‘s assertion:  “‘The due process clause of the Fifth Amendment does not protect taxpayers against increases in tax liability.'”

Response:  No one claimed otherwise.

Government‘s assertion:  “[T]he claim that the Tenth Amendment was a constitutional limitation on the taxing and spending power was rejected in Frothingham v. Mellon.”[38]

Response:  No, not really.  Whatever it was that Frothingham said doesn’t apply here, because Mrs. Frothingham, unlike Mrs. Bartley, was seeking an injunction against federal spending on one program, not a tax refund.  Also, Mrs. Frothingham’s monetary interest as a taxpayer was minuscule, while Mrs. Bartley’s and that of the other customers, both individually and collectively, is whopping.

* * *

Mrs. Bartley concluded her brief:

Mrs. Bartley is a taxpayer, as well as a valued customer.  She is not now, nor has she ever been, a member of any paramilitary groups, though she does have a pair of pants that look somewhat like fatigues.  In fact, she once voted for George McGovern, though she confesses to having voted Republican regularly since that weak moment in 1972.  Her claim has virtually nothing to do with the Internal Revenue Code and absolutely nothing to do with the 16th Amendment. (She accepts the validity of an income tax.)  She does not want to pay $500 for the code, nor read it in the Reading Room in Washington.  She seeks no records from IRS, nor did she send it any interrogatories.  All she sent IRS was a refund claim that IRS predictably has now trashed into oblivion, in the process mooting the government’s claim that Mrs. Bartley should have waited longer.

The remaining issue, standing, is as much a non-issue as exhaustion.  For the government to say that taxpayers don’t have standing to bring tax refund suits is the same as saying that $16,000 lost due to excessive taxes is not an injury or that $2,400,000,000,000 collectively is not an injury; the assertion defies even the most miserly concept of standing, and in truth is beneath contempt and, dare we say, f********.

This case is serious business.  It raises a serious claim that ought at least be heard on the merits, not dispatched, as the government would have, on the non-standing concoction.       Indeed the case takes us right back to 1787 when Madison and Hamilton were preoccupied with assuring everyone that the federal government could not possibly ever become the behemoth that many feared.

* * *

Consider again what Madison said in Federalist No. 45:

“The powers delegated by the proposed Constitution to the federal government are few and defined.  Those which are to remain in the State governments are numerous and indefinite.  The former will be exercised principally on external objects, as war, peace, negociation, and foreign commerce; with which last the power of taxation will for the most part be connected.  The powers reserved to the several States will extend to all the objects, which, in the ordinary course of  affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and  prosperity of the State.”

And Madison in 46:  “[A]ll those alarms which have been sounded, of a meditated and consequential annihilation of the State governments, must, on the most favorable interpretation, be ascribed to the chimerical fears of the authors of them.”

Likewise, Hamilton in 31:  “The moment we launch into conjectures about the usurpations of the federal government, we get into an  unfathomable abyss, and fairly put ourselves out of the reach of all reasoning.  Imagination may range at pleasure till it gets bewildered amidst the labyrinths of an enchanted castle, and knows not on which side to turn to extricate itself from the perplexities into which it has so rashly adventured.  Whatever may be then limits or modifications of the powers of the Union, it is easy to imagine an endless train of possible dangers; and by indulging an excess of jealousy and timidity, we may bring ourselves to a state of absolute skepticism and irresolution.  [A]ll observations founded upon the danger of usurpation ought to be referred to the composition and structure of the government, not to the nature or extent of its powers.  The state governments, by their original constitutions, are invested with complete sovereignty.

Shouldn’t we give Madison and Hamilton standing here?  Don’t they deserve it?  And ought we not pay attention to what they said?

Judge Robert Warren, listed on The Federalist Society’s letterhead as an advisor to the group, on December 22, ruled against plaintiffs on the improper refund claim grounds and on the grounds that plaintiffs were barred from seeking an injunction.   His sole reason was that Mrs. Bartley could not bring the suit before the IRS acted on the refund claim.   (The Federalist Society ought to be more discriminatory about its letterhead.)  Saint Suzanne appealed, and the appeal still pending at publication, under consideration for some 15 months now.

Shortly after filing the appeal, I happened to being doing some research in another tax case along with Bil Fisher, one of the law clerks in Steiner’s law office.  We stumbled across a passage in a rather obscure IRS document—a passage that confirmed what we had argued on the futility of filing a refund claim.  The IRS Audit Manual advises taxpayers that it won’t even consider refund claims “based solely on the alleged unconstitutionality of Revenue Acts.”   When the IRS receives such a claim, IRS will issue “Letter 916 (C/DO/IO) (with applicable box checked) advising the taxpayer that no consideration can be given to the claim.”  We had them, or at least so we thought.

In briefing in the court of appeals, however, the government in its usual disingenous way, tried to argue that Mrs. Bartley was still required to file a refund claim, notwithstanding IRS’s policy that it won’t even consider claims that are “based solely on alleged unconstitutionality of Revenue Acts.”  Mrs. Bartley’s claim, said the government, “does not meet [that] criterion, because she does not argue that the internal revenue acts are unconstitutional, but that they are used to gather revenue that is then expended unconstitutionally”; and because Mrs. Bartley “‘accepts the validity of the 16th Amendment'”—in other words, because Mrs. Bartley is not a full-fledged, card-carrying tax protestor.  Moreover, said the government, the Audit Manual calls for a “‘no-consideration’ letter” from IRS, and that letter is a jurisdictional necessity.

We replied. The fact that Mrs. Bartley “accepts the validity of the 16th Amendment” and is not a “tax protester”, at least in the more conventional sense of the term, we said, cannot and ought not be held against her.  The language of the IRS publication explicitly pre-rejects the type of claim she presents here.  Her claim, therefore, is “based solely on alleged unconstitutionality of Revenue Acts.”

It is true her claim alleges only partial unconstitutionality of the various revenue acts by which federal taxes of all kinds are collected.  In essence, she alleges that all the revenue acts are unconstitutional by a margin of roughly 70%, that amount being the approximate percentage by which taxes are being unconstitutionally overcollected.  But her claim is nonetheless “based solely” on that unconstitutionality and quite literally falls within the IRS pre-disqualification announcement.

The government argued that claims the IRS won’t even hear must still be filed.  That argument has to be the ne plus ultra of bureaucratic doublespeak; for it is the equivalent of saying, “Even if we tell you not to file, you must ignore what we say and file anyway, so that you can receive your official denial of your right to file.  Then and only then, may you pass “Go” and go to court.”

After the case was briefed, we had oral argument.  I had to go first.  I don’t have a transcript of the argument, but here is roughly what we said, though we didn’t say it all because there were many interruptions for questions:

May it please the court, I should like to introduce the sainted Suzanne Bartley, relative of mine by marriage, and the lead plaintiff in this case.  Mrs. Bartley has not only been the best client I’ve ever represented, but has been invaluable in helping write and edit the mound of briefs filed in this case.

I am not only indebted to Mrs. Bartley, but to Professor Raoul Berger for opening my eyes to the bankruptcy of the sort of “House-that-Jack-Built” reasoning that led to the vast federal overreaching that we have today.  While contemplating this suit, I spoke with Professor Berger, now 94, about it.  He said, “God Bless You, Sir.”  That was more than enough inspiration for me to file.

I’m delighted to be back here, though last time around Judges Posner and Easterbrook didn’t see things our way.  I’ve said a novena things will be different this time.  Maybe Professor Berger’s “God Bless” will be enough to carry the day.  As the court will recognize, and looking to the ultimate merits, the case presents extraordinarily interesting questions that to my knowledge haven’t ever been litigated, though they certainly were discussed and anticipated at the time of adoption of our constitution.

What makes the case interesting is not so much that the amount in controversy is out of this world; rather what have here is a case that reaches back to the most fundamental doctrine about the scope of the federal government’s legislative jurisdiction, the doctrine of enumerated powers, the meaning of “commerce” in the commerce clause, and the meaning of general welfare in ART. I, §8, CL. 1.  Despite the IRS’s letter to Mrs. Bartley advising her that the 16th Amendment permits income taxation, Mrs. Bartley is not a tax protester at least in the conventional sense of the term.  Mrs. Bartley’s claim is that the government, with its various taxing statutes and regulations, has far exceeded its lawful taxing authority.  The government, in short, has no general power of taxation, and may only levy taxes to carry out enumerated functions.

As Hamilton said in Federalist No. 83, “This specification [of enumerated powers] evidently excludes all pretension to a general legislative authority, because an affirmative grant of special powers would be absurd, as well as useless, if a general authority was intended.”

We are of course not here on the merits today, but I should like to say nonetheless that the case deserves a hearing on the merits, for to make that assertion is merely to recognize that Mrs. Bartley, sainted though she is, is merely a ventriloquist for Madison, Hamilton, and others who have already spoken eloquently enough on its subject matter.

The government in effect says that Hamilton and Madison, speaking through The Federalist Papers, don’t have standing. That’s not very generous coming from a government that owes its existence to those men.  The standing question (Issue 4) is easy.  The court need not look to case law at all on standing, for the issue is plainly resolved by statute * * * providing specifically for taxpayer refund suits for taxes “illegally collected” or “erroneously . . . collected”.  The statutes makes no exception for constitutional challenges like Mrs. Bartley’s.  It includes all sorts of cases, whether based on statute, common law, or constitution.

To adopt the government’s position that taxpayer’s with constitutional challenges must stay out of court would be to create the impossible anomaly that taxpayers who base their cases on statutory or inferior law have greater rights than taxpayers who base their claims on higher, paramount law.  According to the government, such taxpayers could never air their cases anywhere, for they are precluded by IRS rules from filing their claims with IRS, and again precluded from going to court. The other independent reasons why standing exists here are all laid in the briefs.  The lead case is Flast v. Cohen which explicitly endorses standing for taxpayers making constitutional claims.

There are three other issues.  One (Issue 3) is equally easy.  Victorious tax refund plaintiffs may always seek post-judgment injunctions against future overcollection of taxes.  Williams Packing, on which the government relies for the contrary position, allows injunctions after showing that “under no circumstances could the government ultimately prevail.”  If Mrs. Bartley wins, she will have shown to a certainty the government didn’t prevail and will be entitled to an injunction.  The government never deals with the other argument on the injunction issue: that the trial judge should not have dismissed the whole case based on Williams Packing—at most he should have dismissed the injunction request.

The remaining issues are more complicated but still easy.  On the first (Issue 1), the government argues Mrs. Bartley is out of luck, because she should have waited six months for IRS to deny her claim and in any event she didn’t file on the proper forms.  The court can resolve the waiting period issue on the simple basis that IRS has announced it won’t even consider claims like Mrs. Bartley’s:  it officially advises taxpayers asserting constitutional claims to forget it—don’t bother us.

Even if that pre-rejection policy did not exist, Mrs. Bartley would still be entitled to go right to court because of the futility doctrine.  IRS, the government has implicitly conceded, has no power to rule acts of congress unconstitutional.  Therefore IRS would have no power to grant Mrs. Bartley’s claim; consequently, filing of it is a vain and useless exercise that is legally excused.   Moreover, any duty to file was legally excused by the impossibility of filing separate forms for each of the 115 million or so taxpayers for each of the taxes involved, for each of the years involved.  Impossibility always excuses performance.  The closest issue is whether Mrs. Bartley’s claim was actually rejected.  We submit it was, because IRS told Mrs. Bartley, in a very nice way true, to take her claim for a long walk off a short pier.

The last issue (Issue 2) is whether refund claims, if they need be filed at all, must always be filed on IRS forms.  Even IRS virtually concedes that they don’t.  In any event, Mrs. Bartley’s claim was as complete as anyone could make and is validated by the doctrine of substantial compliance.  By letter to IRS she laid out the legal theory and identified the method by which the refund could be calculated.

This case deserves a hearing on the merits.  The government of course wants to avoid that exposure so it has raised every procedural barrier it can think of—to the point of taking the comical position that taxpayers with claims IRS won’t even consider must still file them and wait for a letter saying that the claim will be given no consideration, the equivalent of saying “Even though we tell you not to file, you must ignore what we say.”  That’s not very good customer service.

The case on the merits is serious business.  Although one could argue that ultimate victory for plaintiffs in the 7th Circuit is precluded by the doctrine of cases like United States v. Butler, this court could still call on the U.S. Supreme Court to review that case and others through the mechanism of this one even if it were to rule against plaintiffs on the merits when and if the case comes back.  The judiciary has been, by and large, a rubber-stamp for congressional taxing sprees, invoking the usual legislative deference language and verbiage about presumptions of constitutionality of economic legislation, while at the same time using presumptions of unconstitutionality, strict scrutiny, etc., for other more favored constitutional protections that those invoked here.

It’s time to end that double standard and return to first principles.  The court should revitalize the simple principle underlying this case and the founding of our government:  that government has no more power that specifically granted it in the constitution.  And as Raoul Berger would say, “God Bless You” as you deliberate on this case.

As the government lawyer approached the rostrum to make her argument, the judges pounced on her almost immediately with the question, “How can you justify government spending for hexing studies and the like?”  Suzanne and I couldn’t contain our belly laughs.  We knew at least that the court had read the briefs, and had some appreciation for our claims and arguments.

But then an even funnier thing happened—the government lawyer, Paula Speck from Washington, actually tried to justify that spending—as a public health and safety measure!!  It was very funny.

But when we’ve gotten to the point that the government maintains that funding for drawing an “X” on your opponent’s chest is a reasonable and lawful use of our tax dollars, one is tempted to say, “All is lost”.  But we need to wait and see what happens with the case before guzzling hemlock.

The issues in this case, and the staggering amounts involved, evoke Justice Holmes’s aphorism, “Great cases, like hard cases, make bad law.”[39]   The case is at once both a great and a hard case.  It’s a great case, not just because the amount in controversy is astronomical, higher than any case in history, and not because it involves a question common to all federal taxpayers, but because it seeks to reverse more than 60 years of egregious federal overreaching, 60 years of “swarms of officers to harass our people, and eat out their substance,”[40]  officers digging too deep into the pocketbooks of all taxpayers, citizens and non-citizens alike.

Though the case is a simple case in a legal sense, the case is also “hard” in the Holmesian sense, because its implications are so pervasive and sweeping.  It seeks in effect the massive downsizing of the federal government, the restoration of local sovereignty, and the revitalization of the simple, founding principle that the government has no more power than that specifically given in the constitution.  The case is grounded in our patrimony and is not f********.

But despite the case being both a great case and a hard case, the case does not seek to “make” bad law, but only to restore good law, namely the constitution, to its original position of primacy.  To the extent that the supreme court over the years has contributed to the vast federal overreaching, one can only say that the court  may now be at least headed in the right direction; and, in any event, as Justice Holmes also said of other supreme court error, those decisions are “an unconstitutional assumption of power by the courts of the United States which no lapse of time nor respectable array of opinion should make us hesitate to correct.”[41]

[1]       See pp. ___ – ___, supra.

[2]       See p. ____.

[3]     See IRS Pub. 17 (1993), p. ___.  The pie chart there shown shows that approximately 70% of all federal expenditures go for social welfare and other purposes beyond congress’s powers.

[4]       Bartley v. United States of America, Case No. 95-C-404 (E.D. Wis. 1995).

[5]      See Federalist No. 78.

[6]       Quoted in Moore, Stephen, “The Unconstitutional Congress”, Policy Review (Spring 1995), p. 25.

[7]       Id. at 23.

[8]       See Chapter 4, pp. ___ – ____.


[10]       Id. at _____.

[11]      Credit here belongs mainly to Martin L. Gross, The Government Racket—Washington Waste from A to Z, Bantam Books, New York, N.Y. (1992).  I am also indebted to Citizens Against Government Waste, a Washington, D.C., organization.



[14]      Id. at _____.


[16]       Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464 (1982) (to compel college to return property transferred to it by federal government for nothing); Frothingham v. Mellon, 262 U.S. 447 (1923) (to enjoin government from spending money under Maternity Act); Doremus v. Board of Education, 342 U.S. 429 (1952) (declaratory judgment action to have state statute requiring Bible reading in schools declared unconstitutional); Flast v. Cohen, 392 U.S. 83 (1968) (declaratory judgment action to block federal government from disbursing funds to religious and sectarian schools).

[17]       26 U.S.C. §7421 (a).

[18]       396 F. 2d 766 (8th Cir. 1968).

[19]       609 F. Supp. 1249 (D. Md. 1985).

[20]       Id. at 1251.

[21]      Valley Forge, 454 U.S. at 482 (“The crux of the interest at stake, the plaintiffs argue, is found in the Establishment Clause, not in the supposed loss of money as such.  As a matter of primary identity, therefore, the plaintiffs are not so much taxpayers as separationists . . . .'”); Frothingham, 262 U.S. at 488 (“remote, fluctuating, and uncertain” injury); Doremus, 342 U.S. at 433 (“indeterminable, remote, uncertain and indirect” injury).  Flast v. Cohen, 392 U.S. 83 (1968), held that taxpayers did have standing and even abandoned the remote, etc., concept.  And Clark was a post-Flast case that followed Flast and didn’t rely on the remoteness principle in its holding.  609 F. Supp. at 1250-51.

[22]      392 U.S. 83 (1968).

[23]      There is no good reason why a taxpayer cannot sue to block unconstitutional borrowing, as well as unconstitutional taxing, for the borrowing results in debt, and the debt must at some point along the way be retired with taxes.

[24]      Flast is another case like Butler—without constitutional warrant.  There is no constitutional requirement that a plaintiff rely on some specific limitation on government power to be eligible to sue for a refund.  The idea that one must rest his case on a right in the bill of rights, like the 1st Amendment in Flast, has everything upside down;  for it ignores the most important limitation on government power to those who formed our government—the doctrine of enumerated power.  It’s amazing that the most important limitation on government power is the one held in least regard by our judiciary.

[25]      In her suit, Mrs. Bartley also relied on the 5th Amendment due process clause as a limitation on the taxing power on the theory that due process requires that congress have valid subject matter jurisdiction, i.e., power to legislate, before it can tax to pay for the legislation.  The theory of subject matter jurisdiction is correct, but as we saw in Chapter Seven, the due process clause has nothing to do with acts of the legislature—only notice and an opportunity to be heard in judicial proceedings.

[26]      Davis, Administrative Law §26.6, citing a rash of U.S. Supreme Court decisions.

[27]      85-2 U.S.T.C. ¶90,020 (1985).

[28]      283 U.S. 269 (1931).

[29]      605 F. Supp. 28 (1984).

[30]      84-1 U.S.T.C. ¶9126 (1983).

[31]      Heisler  v. United States, 463 F. 2d 375 (9th Cir. 1972);  Agron v. Illinois Bell Tel. Co., 325 F. Supp. 487 (1970); and Harkins v. United States, 66-2 U.S.T.C. ¶9543 (1966).

[32]      Lac Courte Oreilles Band v. United States, 845 F. 2d 139 (7th Cir. 1988).

[33]      Black‘s Law Dictionary, 5th ed. at 821.

[34]      The government’s assertions and our responses are taken from the briefs.

[35]      Black‘s Law Dictionary, 5th ed. at 821.

[36]      Id. at 207.

[37]      See p. ____, supra.

[38]      262 U.S. 447 (1923).

[39]      Northern Securities Co. v. United States, 193 U.S. 197, 400-01 (1904).

[40]     Declaration of Independence.

[41]      Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab & Transfer Co., 276 U.S. 518, 533 (1928).

Published in: on March 12, 2012 at 4:36 pm  Leave a Comment  

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