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1328 95th Avenue

Kenosha, WI 53144-7718,




P.O. Box 8907

Madison, WI 53708-8907,


DOCKET NO. 05-I-107



This matter comes before the Commission for a ruling on the motion to dismiss filed by respondent, Wisconsin Department of Revenue ("Department"), for petitioner's failure to state a claim on which relief can be granted pursuant to Wis. Stat. 802.06(2).

Petitioner, Daniel G. Callahan, appears pro se and has submitted a petition, affidavits, and exhibits in opposition to the motion. The Department is represented by Attorney Lili Best Crane, who has submitted an affidavit with exhibits, a brief, and a letter reply brief in support of the motion.

Having considered the entire record herein, the Commission finds, rules, and orders as follows:


1. Petitioner was a resident of Wisconsin during the year 2000.

2. According to a W-2 form, petitioner received wages of $27,689 in the year 2000 from Outboard Marine Corporation. FICA tax withheld from his wages was $1,774, and Medicare Tax withheld was $414. No state income taxes were withheld from this income. (Affidavit of Lili Best Crane, Ex. 5.)

3. Petitioner did not file a Wisconsin income tax return for the year 2000.

4. By notice dated November 22, 2004, the Department issued to petitioner an estimated assessment of income tax for the year 2000 in the amount of $5,008, including tax, delinquent interest, 25% negligence penalty, and fees. The assessment was issued due to the failure of petitioner to file an income tax return for the year 2000. (Crane Aff., Ex. 1.)

5. By letter dated January 19, 2005, petitioner filed a petition for redetermination with the Department objecting to the assessment because:

. . . I did not have any income from "taxable sources within the Internal Revenue Code during the taxable year 2000. I do not anticipate having any income from "taxable sources within the scope and meaning of the Internal Revenue code in any future years. Therefore I am not required to file any Federal or State Tax forms by Federal Statutes. (Emphasis in original.)

(Crane Aff., Ex. 2.)

6. By notice dated May 9, 2005, the Department issued a Notice of Action denying the petition for redetermination. (Crane Aff., Ex. 3.)

7. Petitioner filed a timely petition for review with the Commission on July 6, 2005. (Crane Aff., Ex. 4.)

8. On July 27, 2005, the Department filed its motion to dismiss.

9. On September 1, 2005, petitioner filed "Petitioner's Affidavit in Support of Motion for Redetermination." This document generally alleged that petitioner did not have taxable income for the year 2000 as defined by federal and state law because he was neither a Federal employee nor a corporate officer, that a W-2 form is not evidence of income, and that the Department was required to provide discovery to petitioner that he had demanded.

10. Attached to "Petitioner's Affidavit in Support of Motion for Redetermination" is a federal Form 4852 (Rev. 10-98) "Substitute for Form W-2" prepared by petitioner that lists Outboard Marine Corporation as his employer, but states that his wages are "0." This form is signed by petitioner and dated August 31, 2005. Although this form list wages as "0", it also states that Social Security was withheld in the amount of $1,774 and Medicare Tax was withheld in the amount of $414. (Affidavit of Daniel G. Callahan, Ex. 1.)


Because both parties have submitted briefs and affidavits with exhibits, the Commission treats respondent's motion as a motion for summary judgment. See Wis. Stat. 802.06(3) and 802.06(2)(b). See also City of Milwaukee v. Dep't of Revenue, Wis. Tax Rptr. (CCH) ¶ 400-405 (WTAC 1999); Mrotek, Inc. v. Dep't of Revenue, Wis. Tax Rptr. (CCH) ¶ 400-315 (WTAC 1997). Summary judgment is warranted where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Wis. Stat. 802.08(2).

Assessments made by the Department are presumed to be correct, and the burden is upon petitioner to prove by clear and satisfactory evidence in what respects the Department erred in its determination. Edwin J. Puissant, Jr. v. Dep't of Revenue, Wis. Tax Rptr. (CCH) ¶ 202-401 (WTAC 1984); Wis. Stat. 77.59(1). Petitioner has failed to meet his burden, there is no genuine issue of material fact in this case, and the Department is entitled to judgment as a matter of law.

Wisconsin Statutes 71.02(1) provides that "there shall be assessed, levied, collected and paid a tax on all net incomes of individuals . . . residing within the state . . . ." Wisconsin Statutes 71.74(3) provides that "[a]ny person required to file an income . . . tax return, who fails, neglects or refuses to do so . . . shall be assessed by the department according to its best judgment."

Petitioner has failed to establish that he was not subject to the Department's income tax assessment under these statutory provisions. Instead, petitioner has made assertions that he has no taxable income for the year 2000 because his income is not defined as taxable income under state and federal law.

Petitioner argues that the federal and state law states that the government can tax only employees of the government; therefore, all other employees in the private sector are immune from income tax liability. This argument is based on an apparent misinterpretation of 26 U.S.C. 3401, which imposes responsibilities to withhold tax from "wages." That section establishes the general rule that "wages" include all remuneration for services performed by an employee for his employer. Section 3401(c) goes on to state that the term "employee" includes "an officer, employee, or elected official of the United States, a State, or any political subdivision thereof . . . ." This language does not address how other employees' wages are subject to withholding or taxation. 26 U.S.C. 7701(c) states that the use of the word "includes" "shall not be deemed to exclude other things otherwise within the meaning of the term defined." Thus, the word "includes" as used in the definition of "employee" is a term of enlargement, not of limitation. It clearly makes government employees and officials a part of the definition of "employee," which generally includes private citizens. See United States v. Latham, 754 F.2d 747, 750 (7th Cir. 1985)[1], and Peth v. Breitzmann, 611 F.Supp. 50, 53 (E.D. Wis. 1985)[2].

The definition of employee as found in 26 U.S.C. 3401(c) is almost identical to Wis. Stat. 71.63(2):

"Employee" means a resident individual who performs or performed services for an employer anywhere or a nonresident individual who performs or performed such services within this state, and includes an officer, employee or elected official of the United States, a state, territory, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of these entities . . . .

As with the federal definition of "employee", the word "includes" is a term of enlargement and not of limitation. Therefore, since petitioner was a resident of this state and performed services for an employer in 2000, he was an employee. Any income he received from his employer in 2000 was taxable income. Wis. Stat. 71.02(1) and 71.03(1)-(2).

Petitioner argues that the W-2 form cannot be relied upon as evidence of his income since it is hearsay evidence. However, he does not dispute that he received income from his employer in 2000. He simply argues that this income was not "taxable" income. Petitioner even prepared his own version of what he believed the W-2 form should have stated and attached this form to his response to the Department's motion to dismiss. This form states that his employer was Outboard Marine Corporation and that certain amounts were withheld from his income for Medicare and Social Security. Again, he is only arguing that the income received from this employer is not "taxable." He has never argued that he did not receive this income from this employer.

Petitioner also argues that the Department's motion should not be granted until his discovery requests have been answered, but has not identified with any specificity the discovery requests that must be answered. He has not shown that these vague discovery requests would lead to any relevant or material evidence as it relates to the Department's motion to dismiss his petition for review. Again, petitioner's only argument is that his income is not "taxable" under state and federal law.

Petitioner appears to be attempting to delay or avoid paying his 2000 state income taxes by asking frivolous questions and arguing that the State of Wisconsin has no authority to impose taxes on him. These arguments and ones like them have been consistently rejected in prior cases before the Commission and the courts. They are groundless and frivolous, and have never prevailed in Wisconsin, nor, as far as the Commission is aware, in any court in the country. See Bierman v. C.I.R., 769 F. 2d 707, 708 (11th Cir. 1985) (finding similar arguments "patently frivolous" and noting that they "have been rejected by courts at all levels of the judiciary."). See also Tracy v. Dep't of Revenue, 133 Wis. 2d 151 (Ct. App. 1986); Boon v. Dep't of Revenue, 1999 Wisc. Tax LEXIS 7 (WTAC 1999), aff'd on other grounds (Milwaukee Co. Cir. Ct. 1999); Norskog v. Dep't of Revenue, 1999 Wisc. Tax LEXIS 19 (WTAC 1999); Lonsdale v. C.I.R., 661 F. 2d 71 (5th Cir. 1981).
Dismissal of petitioner's petition is warranted since there is no genuine issue of material fact in this case, and the Department is entitled to summary judgment as a matter of law.


1. The Department's motion is granted, and its action on petitioner's petition for redetermination is affirmed.

2. An additional assessment of $300.00 is imposed on petitioner pursuant to Wis. Stat. 73.01(4)(am).

Dated at Madison, Wisconsin, this 9th day of January, 2006.


Jennifer E. Nashold, Chairperson

Diane E. Norman, Commissioner

David C. Swanson, Commissioner


February 15, 2006 Petition for rehearing denied pursuant to Wis. Stat. s.227.49(3)

March 16, 2006 Appealed to Kenosha County Circuit Court (06CV405)

June 27, 2006 - Kenosha County Circuit Court Case No. 06CV0405 - Oral order dismissing the case for "lack of competency to proceed."

[1] Calling the instructions the taxpayer wanted given to the jury "inane," the Court said, "[the] instruction which indicated that under 26 U.S.C. 3401(c) the category of 'employee' does not include privately employed wage earners is a preposterous reading of the statute. It is obvious within the context of [the law] the word 'includes' is a term of enlargement not of limitation, and the reference to certain entities or categories is not intended to exclude all others."

[2] The Court rejected the taxpayer's argument "that he is not an 'employee' under I.R.C. 3401(c) because he is not a federal officer, employee, elected official, or corporate officer," stating, "[he] mistakenly assumes that this definition of 'employee' excludes all other wage earners."