NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted May 27, 2009*
Decided May 27, 2009
Before
FRANK H. EASTERBROOK, Chief Judge
ANN CLAIRE WILLIAMS, Circuit Judge
JOHN DANIEL TINDER, Circuit Judge
No. 08‐3366
DANIEL G. CALLAHAN and MARY E. Appeal from the United States Tax
CALLAHAN, Court.
Petitioners‐Appellants,
Nos. 10256‐04, 10257‐04, 23879‐04
v.
COMMISSIONER OF INTERNAL Joseph H. Gale,
REVENUE, Judge.
Respondent‐Appellee.
O R D E R
Daniel and Mary Callahan petitioned the United States Tax Court for
redetermination of tax deficiencies and additions to tax assessed by the Commissioner of
Internal Revenue after they failed to file income tax returns for four years. At trial, the
*
After examining the briefs and the record, we have concluded that oral argument is
unnecessary. Thus, the appeal is submitted on the briefs and the record. See FED. R. APP. P.
34(a)(2).
No. 08‐3366 Page 2
Callahans contended that their income was not taxable because the Internal Revenue Code
taxes only “the gain from wages” and not the wages themselves. The tax court rejected the
Callahans’ theory, characterizing it as a “frivolous tax‐protester argument,” and ordered
them to pay the back taxes, additions, and sanctions of $1,500 because their litigation
conduct had “wasted the time and resources” of the court.
On appeal, the Callahans principally renew their contention that their wages are
exempt from tax under 26 U.S.C. § 61. The argument is beyond frivolous. See, e.g., United
States v. Cooper, 170 F.3d 691, 691 (7th Cir. 1999) (such arguments are “frivolous squared”);
Coleman v. CIR, 791 F.2d 68, 70 (7th Cir. 1986). It is well established that compensation
received for labor is income subject to taxation. Cooper, 170 F.3d at 691.
The Callahans also advance several other equally frivolous arguments. First, they
contend that they were denied due process because the IRS never issued a valid assessment
and instead issued only a notice of deficiency. However, the government cannot issue an
assessment while a taxpayer’s challenge to a notice of deficiency is still pending. 26 U.S.C. §
6213(a); Reynolds v. CIR, 296 F.3d 607, 613 (7th Cir. 2002). Second, the Callahans complain
that the IRS perpetrated a fraud when it created substitute 1040 forms for the years in which
they failed to file tax returns. But the tax code authorizes the Commissioner to make a
“return” from available information in order to calculate the tax liability of those who do
not file returns. See 26 U.S.C. § 6020(b); Carlson v. United States, 126 F.3d 915, 926 (7th Cir.
1997). Next, the Callahans argue that they are exempt from filing tax returns because IRS
Form 1040 lacks a valid “control number” in violation of the Paperwork Reduction Act of
1980, 44 U.S.C. §§ 3501‐21, which requires agencies to obtain advance approval from the
OMB before they can collect information. See 44 U.S.C. §§ 3507, 3512(a)(1). The Callahans,
though, have given us no reason to doubt that the OMB control number that appears on
Form 1040 is valid. Finally, the Callahans insist that the tax court judge denied them their
Sixth Amendment right to confrontation by not requiring counsel for the Commissioner to
testify at trial. But the Sixth Amendment does not apply to civil proceedings. See United
States v. George, 403 F.3d 470, 473 (7th Cir. 2005).
The Commissioner has moved for sanctions against the taxpayers. See FED. R. APP. P.
38. We agree that the Callahans’ appeal is frivolous. We therefore grant the motion and
impose sanctions of $4,000, the presumptive sanction for filing a frivolous appeal in a tax
case. See Szopa v. United States, 460 F.3d 884, 887 (7th Cir. 2006).
AFFIRMED.