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Glasgow v. Department of Revenue

Supreme Court of Oregon, En Banc

November 20, 2014

Erma L. GLASGOW, Plaintiff-Appellant,
v.
DEPARTMENT OF REVENUE, State of Oregon, Defendant-Respondent

Submitted on the Briefs; Under Advisement October 13, 2014.

On appeal from the Oregon Tax Court No. TC 5183.[*] Henry C. Breithaupt, Judge.

Glasgow v. Dep't of Revenue, 21 OTR 316 (2013)

Erma L. Glasgow, appellant, Pro se, filed the briefs for herself.

Nate Carter, Assistant Attorney General, Salem, filed the brief for respondent. With him on the brief was Ellen F. Rosenblum, Attorney General.

OPINION

[356 Or. 512] WALTERS, J.

In this appeal from a decision of the Oregon Tax Court, Erma L. Glasgow (taxpayer) challenges the Tax Court's jurisdiction, its conclusion that she is liable for personal income taxes based on wages that she earned in tax years 2007 through 2010, and its assessment of a penalty for pursuing a frivolous appeal. See ORS 305.437(1) (authorizing penalty for frivolous or groundless appeals to Tax Court).[1] We affirm.

Taxpayer did not file Oregon tax returns for the tax years 2007 through 2010. Because taxpayer stated that she was exempt from taxation, her employer did not withhold any taxes from taxpayer's paycheck during that period. In 2012, the Department of Revenue (DOR) filed a Notice of Determination and Assessment (notice) for taxpayer's 2007 through 2010 tax years. DOR also filed a notice directing taxpayer's employer to change her withholding certificate to indicate that taxpayer was not exempt from taxation. Taxpayer filed a challenge to DOR's notice in the Magistrate Division of the Oregon Tax Court, arguing that she was exempt from withholding because, she contended, her wages are not " income." DOR filed a response that included a request for a penalty

Page 654

for filing a frivolous proceeding under ORS 305.437(1).

Taxpayer then filed a motion for change of venue to the United States Supreme Court; taxpayer argued that that Court had original jurisdiction over the matter under Article III, section 2, of the United States Constitution because the dispute was between a citizen and a state. The Magistrate Division of the Tax Court issued a decision concluding that it had jurisdiction to hear the case and denying taxpayer's motion for change of venue. The Magistrate Division determined that taxpayer's challenge to DOR's [356 Or. 513] notice was objectively unreasonable and therefore frivolous,[2] denied taxpayer's appeal of the notice, and awarded a penalty of $1,000 under ORS 305.437(1).

Taxpayer appealed the magistrate's decision to the Regular Division of the Tax Court. She continued to maintain that the Tax Court lacked jurisdiction, asserting that, although " the U.S. Supreme Court may not have original jurisdiction of this case, neither do the Oregon Tax Courts." DOR filed a motion to dismiss taxpayer's appeal under Tax Court Rule (TCR) 21 A(8) for failure to state a legally cognizable claim.[3] Taxpayer filed a written response arguing that the motion was " junk." The Tax Court held a hearing at which DOR warned taxpayer that DOR would seek further penalties for advancing a frivolous argument if taxpayer proceeded. Taxpayer nevertheless went ahead. After the hearing, taxpayer submitted an " additional response to defendant's motion to dismiss" in which she continued to dispute the Tax Court's jurisdiction. She also asserted that her wages were not " income" and that she was immune from taxation under the Internal Revenue Code (IRC). She further argued that DOR's assessment of her tax liability violated her right to equal protection.

The Tax Court granted DOR's motion to dismiss. The court concluded that it had jurisdiction over taxpayer's complaint and that taxpayer's arguments were frivolous. Accordingly, the court dismissed taxpayer's complaint and assessed a penalty of $2,000 in addition to the $1,000 penalty that had been assessed in the Magistrate Division.

Before this court, taxpayer again asserts that her wages are not " income" and that she is immune from taxation under the IRC.[4] This court has rejected similar arguments [356 Or. 514] as frivolous. See Combs v. Dep't of Revenue, 331 Or. 245, 248, 14 P.3d 584 (2000) (taxpayer's claim that wages were not " income" under the IRC was frivolous and groundless); Clark v. Dep't of Revenue, 332 Or. 236, 237, 26 P.3d 821 (2001) (" Taxpayer's views concerning the voluntary nature of the income tax system and the nontaxability of wages paid by private employers for an ...


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