In re Hicks

Decision Date30 March 2001
Docket NumberNo. 97-16513-8B3.,97-16513-8B3.
Citation261 BR 306
PartiesIn re Gerald Wayne HICKS, Debtor.
CourtU.S. Bankruptcy Court — Middle District of Florida

Gerald Wayne Hicks, Brandon, FL, pro se.

Terry E. Smith, Bradenton, FL, Chapter 13 Trustee.

Attorney General of United States, U.S. Dept. of Justice, c/o John A. Galotto, Trial Attorney, Tax Division, Washington, DC.


THOMAS E. BAYNES, Jr., Chief Judge.

THIS CAUSE came on to be considered upon the Order entered by the United States District Court on October 13, 2000, ("Remand Order") remanding the above captioned case for further consideration. See Hicks v. United States of America, (In re Hicks), 257 B.R. 354 (M.D.Fla. 2000). A review of the Remand Order reveals that the record on appeal apparently did not include the transcript of this Court's hearing held February 23, 1999, whereupon this Court made findings of fact and conclusions of law as to the Motion for Summary Judgment on the Debtor's Objection to Claim filed by the United States of America, a/k/a the Internal Revenue Service ("IRS"), and the IRS's Motion to Dismiss Adversary Proceeding.1 At the February 23rd hearing, the summary judgment motion was granted, the IRS's claim was allowed as filed, and the companion adversary proceeding was dismissed.2 The following constitutes this Court's Order on Remand, and includes findings of fact and conclusions of law consistent with this Court's oral ruling at the February 23rd hearing in accordance with Federal Rule of Civil Procedure 52(a). See Fed.R.Civ.P. 52; Fed. R. Bankr.P. 7052.


In October 1997, the Debtor filed his eighth bankruptcy case.3 In March 1998, the Debtor simultaneously filed an adversary proceeding and an Objection to Claim to the only claimant in the case, the IRS.4 As to the initial Objection to Claim,5 the Debtor did not state with specificity the basis for his objection, and the Court also determined he had failed to file tax returns for several years. The Objection was overruled without prejudice providing the Debtor filed the federal income tax returns that appeared to be delinquent. This Court by order in each Chapter 13 case requires the Debtor as a condition precedent to confirmation to file its tax returns.6

The Debtor filed a Motion to Establish Reservation of Rights in that the Debtor alleged he was not required to file his tax returns, but notwithstanding, the Debtor would file the returns for the years 1994, 1995, 1996 and 1997 "ostensibly under protest." Further, that if this Court ruled for him as regards to the Objection, then he would be allowed to withdraw his tax returns.7 The Debtor in June of 1998 filed his Amended Objection to Claim8 which was similar to the allegations in the adversary proceeding which, condensed, suggest the State of Florida and the IRS, somewhere around 1935, joined in a compact through the Social Security system which deprived the Debtor of his constitutional rights. Paragraph 19 of the Amended Complaint gives the best thumbnail sketch of the major allegations of the Debtor:

Hicks contends that the application and enforcement of the federal Internal Revenue laws, 26 U.S.C. §§ 1, et seq., by the Internal Revenue Service to himself and his private property, under the provisions of §§ 1, 1401, 3304, 6017, and 7701(a), or Chapter 21 and 23, are unconstitutional and invalid in its application to himself and his private property under the circumstances, because the authority of the Internal Revenue Service to enforce any federal Internal Revenue laws against Hicks himself, and his private property, or against Hicks as an artificial entity, exists as an assumed power incorporated in the unconstitutional federal Social Security Act of 1935, as amended, as that legislation was unconstitutionally adopted by the state of Florida in its general and statute laws identified above, and as each has been subsequently amended.9

In the second Objection to Claim,10 the Debtor was more specific as to the issues in the IRS's proof of claim to which he objected, including:

* * The unsecured claims for 1984 and 1985 in the sum of $10,102.98 were uncollectable as they were beyond the ten-year statute of limitations found in 26 U.S.C. § 6502.11

* * The penalties shown in the unsecured priority claim of $3,245.24 and the penalties in the unsecured general claim of $3,474.58 were not broken down as to how much of these are applicable to "what" years.12

* * The Debtor stated:

That on or about October 18, 1995, the IRS received monies owed to Hicks in the amount of $8,487.04, from Centex-Great Southwest Corporation, pursuant to a Notice of Tax Levy, however Hicks has never received a Notice of Seizure required by 26 U.S.C. § 6335, or credit for this amount against any alleged outstanding IRS debt. The claim of the IRS stated in the proof of claim should be reduced, to reflect such credit due Hicks.13

* * The Debtor took the position that the secured claim of the IRS was only worth $500.00 and, therefore, that should be the value of its secured claim.14

Ultimately, the Objection to Claim and the adversary proceeding came on for hearing on February 23, 1999.15 Prior to that point, the IRS filed its Motion to Dismiss16 the adversary proceeding and Motion for Summary Judgment17 as to the Debtor's Objection to Claim. The Court had already cautioned the Debtor at a previous hearing on the IRS's Motion to Dismiss the adversary proceeding that if the Debtor wished to proceed it was important he raise specific tax-related issues. As that was the case in the Objection, it was not with the adversary proceeding. On page 4 of the February 23rd transcript, the Court states, "there was something in the adversary. I didn't remember that. But, Mr. Hicks, you lose on the constitutionality of the IRS to tax you." The Debtor stated, "This is not a question about the constitutionality of whether or whether I can or cannot be taxed, Your Honor. This pleading deals with the Commerce Clause question."18 The Court went on to point out that several Federal Courts had come up with a non-exhaustive list of issues raised by tax protestors that had no legal merit and were patently frivolous.19 In response to the Court's initial admonishment, the Debtor asserted he was not making the argument about taxpayer sovereignty, nor that the authority of the United States is confined to the District of Columbia, nor that the tax is a direct tax.20 He also stated he was not making an argument as to the Sixteenth Amendment, or that the tax law is unconstitutional.21 The Debtor further noted he was not arguing the issues that wages are not income, or that no statutory authority exists for the income tax.22 His argument was based on the Commerce Clause and the exercise of Congress to put in place the Social Security program, and that was directly related to § 3304 of the Tax Code (Employment Tax).23 At this point, the Court advised the Debtor both as to the issue of the Objection to Claim and as to the adversary proceeding that:

. . . Under the Bankruptcy Code when the Internal Revenue Service files their proof of claim it is deemed to be absolutely correct and has efficacy as filed. So the only question is is it not being allowed or allowable under the Tax Code and Bankruptcy Code.
MR. HICKS: It\'s certainly allowable under the Tax Code, Your Honor, however, because of Title 26, Section 3304 there is an argument for my inclusion as an individual engaged in employment when, in fact, I\'m not.
THE COURT: It doesn\'t make any difference. You filed the tax returns. That\'s it.
MR. HICKS: I was compelled to file those returns.24
THE COURT: It is not compelled. You did not have to file those returns.
MR. HICKS: If I don\'t file the returns, I am treated as if I am a taxpayer. If I make the argument —
THE COURT: You are a taxpayer.
MR. HICKS: I\'m sorry. Tax protestor.
THE COURT: Sir, I don\'t care if you are a tax protestor or not. You can protest the taxes till the cows come home.
MR. HICKS: Your Honor, I\'m not a tax protestor. I\'m not coming from any those questions.
. . .
MR. HICKS: Section 3304 is directly related to the reason that I am compelled to file a return in the first instance.
THE COURT: Doesn\'t make any difference.
MR. HICKS: Your Honor —
THE COURT: When you filed the tax returns, you are it. If you don\'t want to file the tax returns, then you get kicked out of bankruptcy anyway because you have to file the tax returns in bankruptcy. So once you file the tax returns, you are here. And besides, Mr. Hicks, you have had since 1992 to resolve all these questions, and you keep filing bankruptcies and getting out of them.
MR. HICKS: That\'s not true, Your Honor. None of the other related bankruptcies had anything to do with this argument.
THE COURT: I know that, but you have taxes going back to 1984. You never stayed around in bankruptcy long enough to resolve your problems. What I am saying is is that, sorry.25

The Court then found there was no constitutional question and Title 26 and the Bankruptcy Code were both constitutional.26 Further, the Court found there was personal jurisdiction over the Debtor.27 Whereupon, the Debtor said, "Not personal jurisdiction in terms of this Court having jurisdiction over me; personal jurisdiction with regard to the Tax Code and its application to me through Section 3304."28 Upon which, the Court determined the Debtor was subject to the Tax Code.29 The colloquy that proceeded further from page 16 to page 36 of the transcript of the February 23rd hearing dealt with the Debtor's concept of constitutional law and the unconstitutionality of various known and unknown aspects of the federal government operation.

On page 37 of the transcript, the Court found as to the ramification of motions for summary judgment as found in the standards set forth by the United States Supreme Court. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106...

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