United States of America v. Clement et al

Filing 28

Order Denying Defendant Clement's Jurisdictional Challenge 6 ; ORDER Granting government's Motion for Entry of Default Against Diamond Hawk Property Management LLC 13 . Signed on 2/6/2013 by Chief Judge Ann L. Aiken. (lg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

Case No.

UNITED STATES OF AMERICA,

6:12-cv-1902-AA

OPINION AND ORDER

Plaintiff,

v.
MALCOLM H. CLEMENT, JR, et al.,
Defendants.
AIKEN, Chief Judge:
Plaintiff United States of America (the government) filed suit
to reduce to judgment certain tax liabilities of defendant Malcolm
H.

Clement,

Jr.

(Clement)

and to foreclose

certain federal

tax

liens on parcels of property located in Douglas County, Oregon. In
response, Clement filed a "Jurisdictional Challenge" and affidavit
that the court construes as a motion to dismiss. 1

1

Clement objects to the consideration of his challenge as a
motion. However, his challenge must be construed as a motion or
1

- OPINION AND ORDER

In support of his
that he

is a

jurisdictional challenge,

Clement argues

sovereign "nontaxpayer" and that the

personal and subject matter jurisdiction in this
maintains that the Internal Revenue Code

court lacks

case.

Clement

(IRC) does not apply to

him or his property,

because the IRC does not impose a tax on

income,

contract,

is

based

on

must

be

apportioned,

and would

otherwise subject him to peonage. Clement's contentions misconstrue
the

law and have been rejected repeatedly by numerous

courts,

including the Ninth Circuit.
First,

the United States government may file

suit against

Clement to collect federal income taxes he has failed to pay, and
the court has jurisdiction to enter judgment against Clement. See
26 U.S.C.

§§

6502, 7401-7403. Further, the government may file suit

in the district where Clement resides or where the alleged tax
liabilities accrued. 28 U.S.C.
Clement

resides

in Oregon,

§

1396. It appears undisputed that

and the

government

has

effectuated

service on Clement. Docs. 6-7; Fed. R. Civ. P. 4(e); Or. R. Civ. P.
7D.

Therefore,

this court may assert personal jurisdiction over

Clement.
Second, . the

Sixteenth Amendment,

as

codified by the

IRC,

authorizes a direct non-apportioned income tax on United States

request in order for,the court to take action on it. Clement
challenges the jurisdiction of this court; if such a challeng~
was successful, the case would be dismissed. Thus, the court
construes Clement's challenge as a motion to dismiss.
2

- OPINION AND ORDER

citizens. See 26 U.S.C. 1(a); Wilcox v. Comm'r of Internal Rev.,
848 F.2d 1007, 1008 n.3
without

apportionment

(9th Cir.

under

the

1988)

("[I]ncome may be taxed

Sixteenth Amendment.") ;

Becraft, 885 F.2d 547, 548 (9th Cir. 1989)

In

re

("For over 75 years, the

Supreme Court and the lower federal courts have both implicitly and
explicitly recognized the Sixteenth Amendment's authorization of a
non-apportioned

direct

income

tax

on

United

States

citizens

residing in the United States and thus the validity of the federal
income

tax

laws

as

applied

to

such

citizens.").

Thus,

every

individual person who is a resident citizen of the United States
must pay a federal tax on "all income from whatever source derived"
and file an income tax return, where that income exceeds certain
minimal levels. 26 U.S.C.
Contrary

to

§

61; see also 26 U.S.C.

Clement's

assertions,

6012(a) (1).

§

personal

wages

are

encompassed by the IRC's broad definition of income. See 26 U.S.C.
§

61; see also Wilcox,

income")
1009

848 F.2d at 1008

(holding that "wages are

(citing Carter v. Comm' r of Internal Rev., 784 F. 2d 1006,

(9th Cir. 1986)). Further, the federal income tax system is

not based on contract, nor is it voluntary. 26 U.S.C.
Wilcox,

848

F. 2d

at

1008

(holding

that

"paying

§

6012(a);

taxes

is

not

voluntary"). Rather, each taxpayer who is required to file a return
must pay the income tax owed on or before the date the return is
due,

without

assessment,

notice,

or demand.

26 U.S.C.

§

6151;

McLaughlin v. Comm'r of Internal Rev., 832 F.2d 986, 987 (7th Cir.

3

- OPINION AND ORDER

1987)

("The notion that the federal income tax is contractual or

otherwise

consensual

in

nature

is

not

only

utterly

without

foundation but . . . has been repeatedly rejected by the courts.").
Finally, an income tax or the IRC does not force anyone to labor.
See Kasey v. Comm'r of Internal Rev.,
1972)

457 F.2d 369, 370

(9th Cir.

(requirement to file a return is not a form of involuntary

servitude); Del Elmer v. Metzger, 967 F. Supp. 398, 402 (S.D. Cal.
1997) .
As such,

courts have rejected as "frivolous" challenges to

federal income tax laws such as those raised by Clement. See United
States v.

Romero,

640

F.2d 1014,

1016

(9th Cir.

1981);

United

States v. Studley, 783 F.2d 934, 937 (9th Cir. 1986); United States
v. Jensen, 690 F. Supp. 2d 901, 914 (D. Alaska 2010). In fact, this
area of law is so well settled that pro se litigants have been
sanctioned for raising similar arguments on appeal. In re Becraft,
885 F.2d at 550; see also Studley, 783 F.2d at 937 n. 3 (9th Cir.
1986)

("[A]dvancement of such utterly meritless arguments is now

the basis for

serious

sanctions imposed on civil litigants who

raise them"). Clement's arguments, regardless of how phrased, are
similarly rejected here.
Also before the court is the government's motion for entry of
default against defendant Diamond Hawk Property Management,

LLC

(Diamond Hawk). The government presents evidence that service was
effectuated on this defendant through its registered agent, doc. 8,

4

- OPINION AND ORDER

and no answer or response has been filed. Clement objects to entry
of default and states that he appeared on behalf of himself and
Diamond Hawk. However, a pro se litigant cannot appear on behalf of
a corporation or any other entity; a company such as Diamond Hawk
must be represented by counsel. Simon v. Hartford Life, Inc., 546
F.3d 661,

664-65

Broadcasting Co.,

(9th Cir.
Inc.,

licensed attorney has

2008);

United States v.

3 F. 3d 1244,

1245

High Country

(9th Cir.

appeared on behalf of

1244).

Diamond Hawk,

No
and

default shall be entered against it. See Fed. R. Civ. P. 55(a).
CONCLUSION
Defendant

Clement's

Jurisdictional

Challenge

(doc.

6)

is

DENIED, and the government's Motion for Entry of Default against
Diamond Hawk Property Management LLC

(doc.

13)

is GRANTED.

The

Clerk is directed to issue an entry of default against Diamond Hawk
Property Management LLC.
IT IS SO ORDERED.
Dated this

of February, 2013.

Ann Aiken
United States District Judge

5

- OPINION AND ORDER