text:
With 18,000 pages of law and regulation, the maddening vagueness of the tax code has led to the emergence of a myriad of anti-tax programs that promise to take advantage of obscure loopholes allegedly buried in the code. There are a number of programs using a variety of arguments and strategies all built on the premise that the promoter has "discovered" a secret provision of the tax code which, when properly followed, operates to eliminate all taxes for his clients. In short, he promises to "untax" you.
To the untrained eye, the claims appear valid—particularly when "backed up" by the alleged "legal authority" that promoters offer to support their programs. Many even tell you—with photocopies to back them up—that their clients "get refunds" from the IRS after using the plan. Often, it’s hard to argue with the compelling "evidence" presented to support the claims.
Many people shell out thousands of dollars to peddlers of these programs—not realizing that by doing so they are inviting the IRS to hit them with civil penalties, compound interest and possibly criminal charges.
The sad truth is, however, that the untax arguments simply do not work. The general themes upon which these claims are built have been around for years. They have been tested by the courts at all levels and they have all failed—without exception. Despite my repeated challenges to these various promoters over the years, not one has ever been able to point to a court case in which his plan was approved by the courts.
Conversely, there is court authority against every plan out there. But because the promoters do not discuss the fact that their plan or others like it have failed, they lead you to believe that you face no risk by following the program. The reality is the risk is substantial. I cannot tell you how many people I spoke with over the years who followed one plan or another, only to have their lives destroyed by the resultant IRS assessment and collection action. And surely as you breathe you need to know that IRS assessments and collection action will follow any attempts by you to "untax" yourself through any of these various programs.
This report exposes the untax plans and schemes that constitute a dangerous tax trap and you’ll discover how to identify the leading tax-protest arguments that have led to jail time for thousands of well-meaning but misguided citizens.
There a number of different claims untaxers make. I address some of the more common ones in detail below.
A recurring claim with untaxers is that ordinary wages earned by persons performing services do not constitute taxable income. The origin of this claim dates to the late 1978, when researchers Pete Soehnlen and Robert Golden published a book entitled, Are You Required? Soehnlen and Golden were the first to assert that the Sixteenth Amendment did not and legally could not tax wages or other compensation for personal services.
The Soehnlen and Golden work was something of an anomaly in the tax protest movement in that it was thoroughly researched and well-reasoned. Up to that point, most protest material had little legal authority to back it up and even less logical presentation. Consequently, the wages vs. income theory of tax exemption caught on quickly and many began structuring their IRS defenses around that claim.
The argument was popularized on a more massive scale by Irwin Schiff. In 1982, he released a book entitled, How Anyone Can Stop Paying Income Taxes. Schiff was a master promoter and salesman. His book was distributed to bookstores on a broad scale by a major publishing company and Schiff appeared on radio and television interviews across the nation. Schiff’s arguments were a hybrid of the wages vs. income presentation, suggesting also that the income tax was in fact voluntary. Schiff reasoned that the laws could not be mandatory since if they were, they would violate various provisions of the Constitution. The voluntary argument still features prominently in contemporary tax protester claims.
Before long, thousands of people were following what they came to believe was the Schiff argument, but what in fact was developed by Soehnlen and Golden. It did not take the IRS long to respond. It began a systematic program of challenging the claims and dragging the protesters, including Irwin Schiff, through all manner of legal proceedings. Because of these early cases, there is an abundance of judicial precedent on the question.
Before examining the specific precedent, however, let me briefly address the merits of the argument itself. Promoters cite several cases decided under the Corporation Excise Tax Act of 1909 to support their claim. These cases raise the question whether corporate revenue of one kind or another constituted income subject to taxation. In no case was the question addressed of an individual citizen’s liability for tax under the personal income tax created by virtue of the Sixteen Amendment. The reader is left with the impression that the cases must by inference exclude from taxation all compensation for personal services received by an individual.
However, we do not have to speculate on the question. The fact is, the Supreme Court squarely addressed the issue in more than one case over time. The first such case was that of Lucas v. Earl, 281 U.S. 111 (1930). In that case, Earl, an attorney, attempted to avoid taxation by transferring the proceeds of his personal services to his wife. The court ruled squarely that income derived from personal services, such as attorney fees, was taxed to the person that earned it. This case is the touchstone from which most income cases flow.
Many promoters, including Schiff, claim that code section 61, which lists items of gross income, excludes wages and salaries from taxation. Schiff and others claim that because the list does not include wages or salaries, the income tax cannot apply to individuals. Rather, they say, the items listed are items received only by corporations.
Is it fair to say that because the terms "wage" and "salary" do not appear on the list that wages and salaries are not taxable? Item number one plainly states that compensation for services is included as gross income. Are corporations the only entities that receive compensation for services? Certainly not. Black’s Law Dictionary, Fourth Edition, defines "salary" as "a reward or recompense for services; a periodical compensation paid for services rendered." The term "wage" is defined as "security given for service to be performed." Surely, any person compensated for services draws a wage or salary.
How can a reasonable person argue that only corporations perform personal services? Do not receptionists perform the personal service of answering telephones? Are not carpenters performing the personal service of building structures? Do not physicians perform personal services related to the treatment of injury and illness? Whether or not these persons are incorporated, they derive compensation for the performance of services.
A more careful review of section 61 further illustrates the folly of claiming that it speaks only to items received by corporations. Each of the items on the list can be and are earned by individuals acting outside a corporate environment. Item number eight, for example, refers to alimony or separate maintenance payments. These are payments made by one spouse to another under the terms of a divorce or separation agreement. Under what circumstances does one corporation divorce another and become liable for alimony payments? Item number eleven refers to pension payments. A pension is a payment made to a person who is retired and deriving benefits under a specific contract. Under what circumstances does one corporation make pension payments to another corporation retired from service? As you can see with just these simple examples, there is simply no merit to the claim that section 61 is limited to corporate activity.
But if that’s not enough, let us turn to the Supreme Court for guidance. A good history of the question of income is presented in the case of Commissioner v. Kowalski, 434 U.S. 77 (1977). The case involved a wage earner arguing that his fringe benefits did not constitute income. The court in Kowalski stated that section 61 is intended to be an "all-inclusive list, with no exceptions" other than those expressly stated in the code itself. There is no exception in the code for wages or salaries paid to an ordinary citizen in exchange for personal services. Moreover, the Kowalski court plainly defined the term "income," stating that it is "any accession to wealth, clearly realized and over which the citizen has complete dominion." How can it be said that ordinary wages and salaries fall outside the sweep of this definition?
The most recent Supreme Court decision on the topic was that of Cheek v. United States, 498 U.S. 192 (1991). This case addresses the question squarely, since Cheek was an airline pilot performing services for his employer, American Airlines. Cheek asserted that his wages were not income under the theory in question here. Cheek was prosecuted for tax evasion and failure to file returns. His case landed before the Supreme Court after his conviction. The court ruled not only that wages are taxable income but that such a conclusion is the "application of tax law in its most elementary and basic concept." The court stated that the very idea that wages were not taxable was "silly" and that it was "incomprehensible that a person of reasonable intelligence could assert that wages were not income more than 70 years after the institution of the federal income tax system."
Thousands of people came before Cheek arguing that their wages were not income. Many more have come after him. The law books are loaded with case precedent on the issue. In every case—without a single exception—where this issue was presented to a court, the citizen lost the legal issue. Most promoters, including Schiff, claim that if a person sends the IRS a recommended letter or undertakes a suggested strategy in response to a potential but unlikely challenge, the agency will just go away. This is both untrue and horrifically naive. The IRS does everything but go away in these cases because it never loses them.
Irwin Schiff, the self-styled father of the tax protester movement, knows this first hand, yet he continues to suggest that people will not get into trouble following his plan. Schiff was personally convicted and did three separate stints in a federal prison and lost before the Tax Court on the income tax aspects of his claims. Please read the cases of United States v. Schiff, 780 F. 2d 210 (2nd Cir. 1986); United States v. Schiff, 801 F.2d 108 (2nd Cir. 1986); United States v. Schiff, 876 F.2d 272 (2nd Cir. 1989); United States v. Schiff, 919 F.2d 830 (2nd Cir. 1990); Schiff v. Commissioner, 751 F.2d 115 (2nd Cir. 1985); and Schiff v. Commissioner, 47 TCM 1706 (US Tax Court 1984) (the last two decisions address the pure income tax aspects of Schiff’s arguments).
This list is by no means exhaustive. If it were, I would have to list literally hundreds of cases. Suffice it to say that every federal court, up to and including the Supreme Court, has heard and rejected this argument. In fact, the courts have grown so weary of hearing this argument that they have turned to imposing sanctions—excessive fees and costs—against those making the argument. Schiff himself was hit with double fees and costs for presenting the argument a second time after the court initially rejected it as frivolous. See United States v. Schiff, 919 F.2d 830 (2nd Cir. 1990).
In the case of Connor v. Commissioner, 770 F.2d 17 (2nd Cir. 1985), the Second Circuit affirmed the Tax Court’s judgment holding Connor liable for a $5,000 sanction assessed under code section 6673. That section allows the Tax Court to assess sanctions (in addition to the tax and regular penalties) of up to $25,000 when it is shown that "the taxpayer’s position in such proceeding is frivolous or groundless." The Connor court stated that "the argument that [wages] are not [income] has been rejected so frequently that the very raising of it justifies the imposition of the sanction."
The suggestion that the IRS just turns a blind eye to this argument if one follows the suggestions of the promoter is either an outright lie or a product of manifest naiveté. Not only does the IRS not ignore these cases but it pursues them with all the legal enforcement tools at its disposal. Consider the case of United States v. Rowlee, 988 F.2d 1275 (2nd Cir. 1990), where a citizen was prosecuted and convicted for tax fraud and evasion, including conspiracy to defraud the United States. Likewise, United States v. Burdett, 962 F.2d 228 (2nd Cir. 1992), involves a man prosecuted for tax evasion. In that case, Burdett defended himself unsuccessfully upon the ground that he relied upon Schiff’s book as the basis of his philosophy. United States v. Bonneau, 970 F.2d 929 (1st Cir. 1992), is similar. A citizen argued these issues and ended up convicted of tax evasion.
Civil law enforcement tools allow the IRS to assess taxes without regard to the claims in a return or in the absence of a return. Code section 6020. The law also allows civil penalties for failure to file a return or for filing a false or fraudulent return. Code sections 6651 and 6662. There are also penalties for underpaying estimated taxes. Code section 6654. To top it off, interest is assessed on the entirety of the tax and penalties. Code section 6621. In fact, when the act is said to be a "tax motivated" stance, that is, one having only to do with tax considerations and no bona fide business elements, interest is assessed at the rate of 120 percent the normal rate. This has the combined effect of increasing the tax assessment by eight to ten times what it normally would be if one followed the proper procedures.
To suggest the IRS has no enforcement tools or it will simply go away is dangerously childish. In United States v. Gardell, 94 TNT 101-22 (1st Cir. 1994), the court enforced the IRS’ summons power over Gardell’s wages v. income argument. The summons, issued under code section 7602 and enforced under code section 7604, allows IRS access to all third-party information from sources such as banks, employers, lenders, etc. Gardell’s banks were forced to release all his financial information to the IRS so the agency could assess and collect taxes against him.
After determining and assessing one’s liability for tax, the IRS has the authority to enforce collection with tax liens against and seizure of all one’s "property and rights to property." Code sections 6321 and 6331. In the case of In re Haggert, 93 TNT 27-20 (1st Cir. 1992), the court specifically rejected Haggert’s "well-worn tax protester arguments" suggesting his wages were not income. The court allowed the IRS to enter Haggert’s property for the purpose seizing the items found to satisfy his debt.
One common untax scheme claims there is no law requiring you to file tax returns or pay income taxes. The argument contends that filing income tax returns and paying taxes is entirely voluntary. To support the claim, promoters point to selected statements of current or former IRS Commissioners. The statements are usually found in the introduction to tax return instruction packages. The statements usually declare that our tax system is "based upon voluntary compliance."
In this context, does the use of the term "voluntary" mean you have the option of either paying or not paying your taxes? What do you think the IRS would say if you asked this question? The answer lies in IRS Publication 7285, Income Tax Compliance Research, at page 1. There we see the IRS’ definition of "voluntary compliance." It is said to be the payment of taxes "without actual enforcement action, such as examination, collection or criminal investigation."
It is clear from this that the act of filing a return and paying taxes is voluntary only in the sense that nobody holds a gun to your head to force the act. However, the law provides serious civil and criminal penalties should you fail to act when required. And as the IRS’ definition clearly states, if you do not file "voluntarily," the agency will resort to enforcement action to force you to. The phrase "enforcement action" implies the power to lien, levy and seize property. It also implies the power to audit returns and assess additional taxes. Finally, it implies the power to criminally prosecute and imprison those who willfully fail to comply with the law.
The claim that tax return filing is voluntary is not new. The first time I saw the argument presented as a legal defense to paying income taxes was in Irwin Schiff’s book, mentioned above. Schiff contends that filing a tax return is a violation of the Fifth Amendment. He contends that because the IRS can and often does use your tax return information against you for civil and criminal purposes, filing a return cannot legally be compelled. Schiff contends that because you cannot be compelled to waive your Fifth Amendment right against self-incrimination, you cannot therefore be compelled to file a tax return.
Schiff concludes that filing a return must therefore be entirely voluntary. He claims that the IRS uses a vast system of bluff and intimidation to make Americans believe they are required to file when in fact they are not. Schiff also claims that if you elect not to file a return, the IRS is powerless to do anything about it. Schiff presents carefully excised portions of the tax code to support his proposition. He makes his case using carefully crafted sections of the code and equally selective passages from various court decisions. To the legally untrained or inexperienced, Schiff’s position seems not only sound but incontrovertible.
Years ago, Schiff offered a substantial reward to anyone who could show him any law that required the filing of a tax return. His challenge was publicized on radio in every city. I took him up on it. In a letter to Schiff in about 1984, I detailed the statutory scheme requiring the filing of a return and payment of taxes. My letter explained the tax code is an intentionally complex compilation of statutes that must be read together, not individually. Only in rare instances can a particular code section stand alone. When considering whether one must file a return and pay taxes, a series of code sections must be read together. Let me illustrate.
Code sections 6011 and 6012 establish the requirement to file a return by any person who receives sufficient income. The term "income" is defined in code sections 61, 62 and 63. The tax liability itself is imposed under code section 1. That section specifies the amount of tax based on your filing status and income brackets. The tax liability is "imposed upon the taxable income" of each person within the specified categories. See code section 1.
Let us now address more clearly the "voluntary" nature of the matter. Code section 6651 establishes a civil penalty of up to 75 percent of the tax due, for failure to file a required return in a timely manner. In addition, code sections 6653 and 6661 (other sections may apply depending upon the time period involve) impose civil penalties for failure to pay on time and failure to pay the correct amount of tax. The penalties are based upon a percentage of the tax due. They increase as the underpayment increases.
Criminal sanctions for failure to file a return or pay the tax are found in code section 7203. That provision makes it a criminal misdemeanor for any person to willfully fail to file any return required by law or fail to pay any tax due. Upon conviction, you could be fined up to $25,000 or imprisoned for up to one year. Section 7201 is the felony "tax evasion" statute. It provides a penalty of up to five years in prison and a $100,000 fine for willfully attempting to evade or defeat payment of the tax. Without going into detail, the code provides over 150 civil and criminal penalties addressing all imaginable actions and failures to act. The IRS issues some 34 million civil penalties each year and prosecutes about 2,500 citizens for various crimes, including failure to file returns and tax evasion.
But, for those taxpayers who don’t accept our encouragement, we will use a more direct approach. For example, during 1993, over 1200 examiners will audit the books and records of non-filers, including high income non-filers. Through coordination between IRS and the Department of Justice, we are also employing criminal sanctions in appropriate cases. About 300 criminal cases involving failure to file tax returns have been brought within the past few months. We expect that this number will increase as we identify more taxpayers who persist in willfully failing to comply with the law.
It is a legal impossibility for any person to be prosecuted, never mind convicted, of failure to file a tax return if the matter were purely voluntary. The reality is, there is nothing voluntary about the filing requirement. As I point out above, specific statutes mandate the filing of returns when income exceeds specified levels. If you fail to file, the IRS is adequately equipped with over 150 civil and criminal penalty provisions to enforce the law.
Please carefully read the case of Ficalora v. Commissioner, 751 F.2d 85 (2nd Cir. 1984). That case answers the question once and for all whether filing tax returns is voluntary. Using precisely the argument I outline above as to the code’s construction, the Second Circuit Court of Appeals held that section 1 of the code "provides in plain, clear, and precise language that a tax is imposed on the taxable income of every individual." Ficalora takes the guesswork out of the voluntary argument.
If you still doubt it, read United States v. Stafford, 93-1 USTC 50,235 (5th Cir. 1993). Stafford failed to file returns and was convicted of three counts of felony tax evasion under code section 7201. He was sentenced to three years’ probation with six months served in a halfway house. Stafford’s claim that filing a return was purely voluntary got him nothing more than a felony conviction.
The Tax Court has ruled literally hundreds of times against this argument. And the court is losing its patience here too. Under the authority of Code section 6673, the Court is fining citizens up to $10,000, for wasting the Court’s time raising arguments that have failed time and again. In various cases, the Court has referred to the "voluntary" argument as frivolous, meritless, groundless and patently ridiculous. Schiff’s own litigation history, which I reference above, makes it clear that the "voluntary" argument cannot be successful.
You might ask, "how can Schiff offer a reward if he cannot back up his position?" The answer is simple: he just refuses to pay anybody who claims it. In 1984, Schiff refused to pay me and I know that others have also claimed the reward. For example, Schiff offered his reward in 1983 on a national television broadcast. He said, "If anybody calls this show and cites a section of the code that says an individual is required to file a tax return, I’ll pay them $100,000."
An attorney named John Newman saw the show and the next day, penned a letter to the TV network in which he cited the relevant code sections and claimed Schiff’s reward. The network forwarded the letter to Schiff. Schiff said that the claim was invalid because the offer was to anybody who "called the show." Newman did not call the show. He wrote a letter. Newman sued Schiff in federal court to recover the reward. See Newman v. Schiff, 778 F.2d 460 (8th Cir. 1985).
Although Newman has not "won" his lawsuit in the traditional sense of recovering a reward that he sought, he has accomplished an important goal in the public interest of unmasking the "blatant nonsense" dispensed by Schiff. For that he deserves great commendation from the public.
In a radio debate that aired in Los Angeles in February 2000, I confronted Schiff about his offer, reading to the listening public the court decision quoted above. Schiff’s response was that he "changed his offer." Schiff began advising people to file so-called "zero" returns. That is, a return that shows zero income. He argues that by filing a return, the IRS cannot charge you with failure to file. What he doesn’t say is that by claiming you earned zero income, you can be prosecuted for filing a false statement with the IRS, which is a felony. Failure to file is only misdemeanor.
In the best-case scenario, Schiff followers are routinely hit with the penalty for filing a "frivolous tax return," under code section 6702. See Blanchard v. United States, Docket No. CV-S-01-1083-KJD (RJJ) (D.C. Nev. 2002); Lemieux v. United States, Docket No. CV-S-02-0274-RLH (PAL) (D.C. Nev. 2002); and Hoffman v. United States, Docket No. C02-5023RJB (D.C. Wash. 2002).
You should also know that on February 10, 2003, fifteen armed IRS investigators showed up at Schiff’s Las Vegas office with a search warrant. Several hours later, the agent’s drove off with a moving van loaded with dozens of boxes constituting the entire contents of Schiff’s office. It is undeniable that Schiff will be charged yet again with a wide variety of tax law violations. The government is also pursuing civil action against Schiff to prevent the sale of his tax scam plans.
And most notably, on March 12, 2003, Schiff was sued by the United States in a case that can only be considered the last straw for him. The suit is brought under code section 7408, which authorizes federal courts to enjoin promoters from marketing an "abusive tax shelters," defined as a "plan or arrangement" known by the promoter to be "false or fraudulent" in any material way. Code section 6700. Already, the court issued a temporary restraining order preventing the promotion and sale of Schiff’s materials. The case is United States v. Schiff, Docket No. CV-S-03-0281-LDG-RJJ (D.C. Nev. 2003).
The Tax Laws do not Apply to "Sovereign Citizens"
Another argument suggests that an unincorporated person living in a state other than the District of Columbia is not a citizen of the United States and therefore, is not subject to the federal income tax. This conclusion is drawn from code section 7701, which provides an extensive list of the definitions of terms used in the code. Subsections 7701(a)(9) and (10) define the terms "United States" and "State." Those subsections provide that the term United States "includes the States and the District of Columbia" (subs. 9) and the term state "includes the District of Columbia" (subs. 10). On the basis of this language, many promoters conclude that the word "state" in the tax code means only just the District of Columbia, and nothing else.
The terms "includes" and "including" when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined.
It is argued that the definition of the terms "United States" and "State" is limited. In fact, however, code section 7701(c) expands the definition. That is to say, when section 7701(a)(10) provides that the definition of a "state" includes the District of Columbia, section 7701(c) teaches that such definition is not limited to DC, but includes "other things otherwise within the meaning of the term defined," such as the states of Florida, Minnesota, California, etc. It is flatly unreasonable to hold that because the District of Columbia is the only jurisdiction specifically named in the statute, everything else is thereby excluded from the definition.
Unlike the wages v. income argument, which is at leased grounded in some element of truth (Corporation Excise Tax Act of 1909 did provide the starting point for determining the definition of income), the sovereignty/citizenship argument is simply nonsense. There is no legal basis for it. The claims with respect to it are simply figments of the imagination of those asserting it.
These claims have circulated in the tax protester movement for years. The first place I saw them was in a 1992 book, written under a pseudonym, entitled Good-Bye April 15th!, by "Boston T. Party." Later it surfaced in a pamphlet written in 1994, entitled "Sui Juris," by Nord Davis. (Sui Juris is defined by Black’s as "possessing full social and civil rights; not under any legal disability;" i.e., a "freeman.") This same theory also appears in a 1994 book entitled, Vultures in Eagle’s Clothing, by Lynne Meredith.
"Party," Davis and Meredith all put their individual twists on the argument. Davis claims the argument came to him some twenty years earlier, presented by a mystery IRS agent named "Lucy" who retired from the IRS and decided to "tell all." (Why she went to Davis with the story and not 60 Minutes is not explained.) But, she swore Davis to secrecy until her death, at which time he was free of the bond. She allegedly died in 1994 and Davis promptly published "Sui Juris," telling Lucy’s "story."
The same kind of mystery IRS story appears in material published by Sleeping Eagle Press, in two books entitled, Organic Sovereign American Freedom Compendium. In a section called "The IRS Pink Pages," we find what purports to be an IRS document exclaiming that wages are not taxable income and that IRS employees know this and themselves do not file tax returns or pay taxes on wages. The source of this memo is not given nor is it reproduced in its allegedly original form. It purports to be a statement law to aid the defense of the agents’ tax exempt status.
That memo is a fake. It does not exist. It was not written by any IRS employee, current or former. Whether the unknown author of the Compendium wrote it I do not know, but it is unquestionably a fake.
This argument has exactly the same track record as the wages v. income and voluntary arguments. It has never won on the merits of the legal claim. Every time it was presented to a judge, the court ruled against the argument, holding the citizen liable for civil or criminal penalties, often imposing substantial sanctions for even making the argument. Why would a person follow in the path of total failure? After hearing these and other similar arguments, the Tax Court, in the case of Nilson v. Commissioner, TC Memo 1985-535 (1985), observed that it was "struck that otherwise intelligent and reasonable people set forth on this folly."
It is noteworthy that the Sleeping Eagle Press Compendium is nothing more than a compilation of every tax protester argument that has ever been presented. In one way or another, it touches all the issues tax protesters ever argued, beginning when Arthur Porth and Jerome Daly stopped filing tax returns in the mid 1960s claiming that it was a violation of their Fifth Amendment rights. See United States v. Porth, 426 F.2d 519 (10th Cir. 1970) and United States v. Daly, 481 F.2d 28 (8th Cir. 1973).
The Form 1040 is not valid because it contains no OMB number.
Each of these arguments has been rejected as frivolous and none has any hope of prevailing in the courts. Anyone who pursues them does so at his own, very substantial, risk. That risk includes potential charges of misdemeanor failure to file tax returns, code section 7203; felony tax evasion, code section 7201; and felony submission of false claims (either Forms W-4, claims for refund or "zero" tax returns), code section 7206. It also includes the myriad of well over one hundred civil penalties, including sanctions for frivolous returns (code section 6702) and frivolous Tax Court proceedings (code section 6673).
The first cousin to the above argument is a variation based upon section 861 of the code. This argument has been in vogue for the past several years and like the others, has led to a great many problems for those victimized by the scam.
Section 861 falls under subchapter N of the tax code, which deals with the income tax liability placed on foreign and non-foreign source income. A simple summary is that the code section explains and defines the income that is and is not subject to United States tax laws. The code section is pointed at foreign corporations with both foreign and US source income.
Certain promoters have somehow gotten it into their heads that section 861 operates to exclude U.S. source wage income from taxation; that income from sources within the United States is taxed only to nonresident aliens and foreign corporations. These promoters claim that if a U.S. citizen earns income from a source within the United States, that income is not subject to taxation. The conclusion is that you have no duty to file a tax return or pay taxes on your U.S. source income.
Section 61(a) defines gross income generally as "all income from whatever source derived," including, but not limited to, compensation for services and interest. Sec. 61(a)(1), (4). Section 63 defines and explains the computation of "taxable income." Section 1 imposes an income tax on the taxable income of every individual who is a citizen or resident of the United States. Sec. 1.1-1(a)(1), Income Tax Regs.; see Habersham-Bey v. Commissioner, 78 T.C. 304, 309 (1982).
The Tax Court upheld the IRS’ tax liability determination and imposed penalties for failure to file and failure to pay, stating that Aiello "offered no plausible explanation for his failure to file."
In a later case, Takaba v. Commissioner, 119 T.C. No 18 (2002), the court rejected the section 861 argument, saying that it was "meritless." During the course of the proceedings, the IRS attorney advised Takaba that if he continued to assert the argument, the IRS would seek the penalty under code section 6673, for maintaining a frivolous position before the court. That section allows the assessment of an additional penalty of up to $25,000.
Not only did Takaba not abandon his argument but he found an attorney willing to help him advance it. IRS counsel wrote a letter to the attorney, Paul Sulla, Jr., advising that if he advanced the frivolous argument, the IRS would likewise seek an assessment of the penalty against him. In a lengthy letter, the IRS attorney explained to Sulla that "he misread section 861 and the associated regulations." The IRS attorney provided citations to the Tax Court cases rejecting the argument, including the Aiello case and pointed out that this argument is "reminiscent of tax-protester rhetoric that has universally been rejected the Tax Court and other courts."
Neither Takaba nor Sulla backed off. Not surprisingly, the Tax Court ruled against Takaba on the tax liability issue, rejected his legal arguments and imposed penalties for failure to file and failure to pay. But it didn’t stop there. The court fined Takaba $15,000 under code section 6673 and popped his attorney Sulla with a separate fine of $10,500 for asserting the argument.
One of the chief promoters of the section 861 argument came under attack by the IRS in 2001. Douglas P. Rosile, Sr., of Florida, actively promoted the argument, sold a package of material to citizens which he purported would untax them and assisted them in the preparation of tax returns based upon the argument. In 2002, the IRS sued Rosile, seeking a permanent injunction under code section 7408, preventing Rosile from continuing to promote the scheme.
Rosile knew or should have known that the Sec. 861 argument is frivolous because 1) the argument is absurd on its face; 2) judicial decisions dating back to 1993 have universally rejected the argument; and 3) the IRS issued numerous public documents describing the invalidity of the argument. United States v. Rosile, Docket No. 8:02-CV-466-T-17MSS (CD Fla. 2002).
Similar results were reached in the injunction case of another section 861 promoter, David T. Bosset. See United States v. Bosset, Docket No. 8:01-CV-2154-T-17TBM (DC Fla. 2002). Though Rosile and Bosset have been shut down, other promoters continue selling the section 861 bogus tax scam to those who don’t know better.
A very common argument is that the Sixteenth Amendment, the source of the current income tax law, was never properly ratified. As such, the IRS has no legal authority to collect the income tax. Let me provide some history of the Sixteenth Amendment argument.
In 1984, Bill Benson, a former investigator for the Illinois Department of Revenue, began a sweeping research project into the ratification of the Sixteenth Amendment. The project took him into the archives of every state capital in the nation where he obtained certified copies of ratification records of each state. The evidence revealed first-hand information on how the various legislatures voted on ratification.
Benson’s research unearthed several serious flaws in the ratification process, including at least one state that reportedly ratified the amendment when in fact, it did not. The research showed that then Secretary of State Knox falsely certified to Congress that the requisite number of states ratified the amendment. After Benson completed his research, he presented his findings to Attorney Larry Becraft. At that time, Becraft was defending Jane Ferguson who was charged by the IRS with failure to file income tax returns and filing false Forms W-4 with her employer. Her case was set for trial on January 15, 1985. Becraft decided to use the ratification issue as a defense in the Ferguson case.
On January 15, 1985, Becraft argued a motion to dismiss the case. To support it, he presented evidence to the court through the testimony of Benson. The next day, the trial judge ruled the matter to be a "political issue." As such, it could not be addressed by the court and the motion to dismiss was denied. Ferguson went to trial and was found guilty. Becraft appealed the case to the Seventh Circuit Court of Appeals.
In the meantime, two fellows by the name of Thomas and Foster got wind of the ratification issue. They too were charged with tax crimes growing from their tax protester actions. As part of their defense, they filed pro forma motions to dismiss the charges using Becraft’s argument in the Ferguson case. However, they did not support the argument with any evidence. Their motion was also denied and they too were eventually tried and convicted. They appealed their cases to the Seventh Circuit, arguing the ratification issue.
At the outset, we note that the Sixteenth Amendment has been in existence for 73 years and has been applied by the Supreme Court in countless cases. While this alone is not sufficient to bar judicial inquiry, it is very persuasive on the question of validity.
In order to challenge the amendment, the court stated, "we would require, at this late hour, an exceptionally strong showing of unconstitutional ratification. Foster has not made such a showing... He offers no support for his claim." United States v. Foster, 789 F.2d 457 (7th Cir. 1986). See also United States v. Thomas, 788 F.2d 1250 (7th Cir. 1986).
Those two decisions established a precedent and that precedent was used to kill Becraft’s argument in the Ferguson case. See United States v. Ferguson, 793 F.2d 828 (7th Cir. 1986). The precedent then quickly spread throughout the court system. Each time the issue was presented, the Thomas, Foster and Ferguson decisions of the Seventh Circuit were used to quell them. See, for example, United States v. Stahl, 792 F.2d 1438 (9th Cir. 1986), United States v. Sitka, 845 F.2d 43 (2nd Cir. 1988), United States v. Hairston, 819 F.2d 971 (10th Cir. 1087).
We conclude that the Secretary of State’s certification under authority of Congress that the Sixteenth Amendment has been ratified by the requisite number of states and has become a part of the Constitution is conclusive upon the courts.
Please note that the cases cited here date back to the late 1980s. Since that time, hundreds of citizens from all walks of life have used the ratification argument as a defense against criminal charges or civil tax claims growing from tax protest behavior. All have failed. In the hundreds of documented cases where the ratification of the Sixteenth Amendment was questioned, not a single court ruled favorably on the issue. This is vitally important to understand if you are considering basing tax protester behavior upon this claim. The fact is, the ratification issue is not an effective defense.
Nobody is more qualified to speak to that issue than Larry Becraft, the attorney who presented Benson’s evidence to the Seventh Circuit in the Ferguson case. Becraft has probably handled more of these cases than any other attorney. Becraft simply does not encourage anybody to stop filing income tax returns. He told me flatly, "The courts are not going to allow the ratification issue to fly as a defense to not filing tax returns."
Likewise, Bill Benson, the man who did the research and exposed the problems with the ratification, specifically told me, "I do not encourage people to stop filing tax returns." And while Benson is frustrated that the courts have ignored the plain evidence he developed, he is realistic. "The IRS can come after you," he declared, his tone seasoned with the bitter spice of experience. Based upon my personal experience of more than two decades of dealing with the IRS, I would add that they will come after you.
Benson himself was prosecuted for failure to file income tax returns and tax evasion. Benson attempted to prove the ratification issue to the trial court but was denied the right to present his voluminous evidence. As such, the case was not fully developed. On appeal, Benson contended that his conviction should be overturned on any of several grounds, including the trial court’s failure to allow him to present evidence. Benson argued that since he was the person who did the research, he was uniquely qualified to make the showing that the ratification was improper, despite the courts’ "repeated rejection of Benson’s Sixteenth Amendment argument." He asserted that it was error for the trial court to deny him the right to make the case.
Benson is wrong. In Thomas, we specifically examined the arguments made [by Benson] and concluded that "Benson . . . did not discover anything." We concluded that Secretary Knox’s declaration that sufficient states had ratified the Sixteenth Amendment was conclusive and that "Secretary Knox’s decision is now beyond review." United States v. Benson, 91-2 USTC para. 50,437 (7th Cir. 1991).
True, Benson’s conviction was reversed by the Seventh Circuit but not on grounds of the ratification issue and not before Benson served more than fifteen months in a federal prison. If Benson—the man who developed the issue—cannot make the argument work in court, and if Becraft—a skilled and experienced trial attorney—cannot persuade a court as to its validity, what makes anybody else believe they can do? In fact, Becraft reported to me years ago that he has stopped using the issue in tax cases because of the long line of judicial precedent against it. In short, it will not work as a legal defense.
Do not be persuaded by those who claim they have "not filed for years" and the IRS has "not come after them." The fact is, one way or the other, sooner or later, the IRS does come after those who do not file. And though it is true the IRS does not criminally charge every person, it is just a matter of time before it pursues civil collection. Moreover, the simple fact that the IRS has "left a person alone" for several years is no guarantee he will be left alone forever. The federal law places no statute of limitations on the IRS’ ability to pursue non-filers in a civil context. So whether the IRS has not contacted you for three years, five years, ten years—it doesn’t matter. It always has the right to do so. As Benson put it, "You are never out of the woods and I tell people this." Who in his right mind wants to spend the rest of his life looking over his shoulder for the IRS?
This scam is the very latest in tax scams and specifically targets African-Americans. The idea is that Congress passed a law giving a tax credit to African-Americans as a means of granting reparations for the slavery imposed upon their ancestors. In fact, there is evidence that the scheme is broadening to Native Americans as well, under much the same theory.
In 2001 alone, more than 80,000 African-American citizens filed tax returns claiming a credit or refund of anywhere between $40,000 to $80,000 for slavery reparations. The problem is there is no provision of law allowing anybody a credit or refund for slavery reparations. Unscrupulous promoters deceive people into paying money for advice on how to claim the non-existent credit. The claimants end up in trouble with the IRS.
Consider the case of James and Katherine Wilkins, who filed their 1998 federal income tax return claiming an $80,000 credit for slavery reparations. The IRS disallowed the credit and the Wilkins’ challenged the determination in Tax Court. On February 26, 2003, the Tax Court disposed of the claim in an order that is succinct and clear. It stated, "The Internal Revenue Code simply does not provide a tax deduction, credit, or other allowance for slavery reparations." Wilkins v. Commissioner, 120 T.C. No. 7 (2003).
In January 2002, the IRS announced that it is sending warning letters to anybody filing claims for slavery reparations. Internal Revenue Service, New Release No. IR-2002-08, January 24, 2002. Those who make the claim face a penalty of up to $500 for filing a frivolous tax return.
Robert L. Foster was a key promoter of this scam, operating out of Virginia. He was sued by the IRS in 2002 in an effort to obtain an injunction preventing his continued promotion of and preparation of tax returns claiming the non-existence slavery credit. The court referred to Mr. Foster’s conduct as "fraudulent or deceptive" and that it "substantially interferes with the proper administration of the Internal Revenue laws." The court issued the injunction, effectively shutting him down. See United States v. Foster, Docket No. 3:02CV133 (DC Vir. 2002).
The thing about this case is that the government proved that Foster prepared just thirteen tax returns claiming this fake credit. But over 80,000 such claims were made in 2001 alone. Obviously, there are still a great number of these promoters out there, getting otherwise honest people like James and Katherine Wilkins into trouble with the IRS.
One of most common schemes involves the use of trusts to avoid taxes. Many proponents claim that trusts are not subject to income tax and therefore, using trusts to operate a business, hold assets, etc., provides legal protection from the IRS.
The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
As such, in every place where the tax code places upon a person the burden to file a return and pay a tax, that burden is also born by a trust. IRS Form 1041, the fiduciary tax return, is a trust tax return. Trusts share the same duty to report income, claim deductions and pay taxes on profits as any other business entity. There is no legislative or judicial tax exemption for trusts and there never had been one. Trust promoters fail to cite any clear authority for their claim that trusts are tax-exempt.
For decades, tax protesters have used trusts to hide their assets from the IRS. The trusts have gone by all kinds of names, such as Family Trusts, Pure Trusts, Constitutional Trusts, Common Law Trusts, Inter Vivos Trusts. Other schemes involve offshore trusts, situated in tax haven nations such as the Bahamas, the Cayman Islands, the Turks and Caicos Islands, Costa Rica, etc. Regardless of their name or location, they all have one thing in common. They are used to transfer ownership of income from the citizen to a third party in the attempt to place that income beyond the reach of the IRS.
By now it should come as no surprise that the courts have rejected this strategy as well. However, this scheme has achieved such wide scale acceptance that I have written a separate report, entitled "Why Trust Don’t Work," to address this issue. That report is a thorough analysis of the trust scheme and I recommend it for anybody either involved in a trust or considering it. What I present here is just a sketch of the broader analysis in that report.
The case of United States v. Klimek, 952 F. Supp. 1100 (E.D. Pa. 1997) is just one example how the court handle trusts. There the court rejected the Klimek’s act of transferring property to a trust to avoid IRS collection. The trust was called a "sham" and the IRS was allowed to reach the property for collection of the assessments. In the case of United States v. Schiefen, 926 F. Supp. 877 (D. SD 1995), the court rejected the transfer of assets to the trust, calling the trust a mere nominee for the citizen. A sham transaction is one having no legal basis. A nominee is one who holds the property of another. Thus, a trust can be an otherwise legal entity but be acting as a nominee for another person. The mere fact that "trusts are legal" does not prevent the IRS from reaching property held in trust.
For years, the agency has used code sections 7408 and 6700 as a means of obtaining injunctions against promoters, preventing them from marketing their trust packages and there are innumerable examples of trust promoters whose activities have been shut down. The problem is, every time the IRS closes down one operation, more pop up. And with the ubiquity of the Internet, promoters are able to reach more people faster than the IRS can shut them down.
Still, the IRS has approximately 300 audits pending of promoters of trust schemes. Under the IRS’ new commissioner, Mark Everson, you can expect more of this activity since he promised the Senate Finance Committee that "enforcement will be a principle responsibility of the IRS" under his leadership.
What About the "Success Stories"
I have stated repeatedly that nobody has even won a case on the merits of these various arguments. However, many proponents point to cases involving IRS litigation in which it is alleged that the participants "beat" the IRS and that you too can win using the same strategies. Notwithstanding the so-called "victories," I repeat my claim that nobody has ever won on the merits of these legal claims. Every time a promoter or advocate claims "victories," I make one statement: Show me a court opinion in which a federal judge at any level ruled favorably on the merits of the case. The answer is always the same: There is none—period.
Often, as proof that their arguments are effective, promoters point to cases involving criminal prosecutions where the defendant is found not guilty. However, it is important to understand that in a criminal case, the questions before the jury are much different than they are in a civil case and do not involve determining whether your legal position is valid or not.
In a criminal case, the jury does not decide the legal issues. Those issues are decided by the judge alone. The jury determines only factual questions. In a criminal tax case, the main fact question is whether the defendant deliberately set out to break the law. Under federal criminal tax statutes, you can be convicted of a tax crime only if the government can prove beyond a reasonable doubt that you both knew the requirements of the law and you deliberately set out to violate them.
On the other hand, if you can show that, 1) you did not know your legal duty, 2) you misunderstood the requirements of the law, 3) you were negligent in discharging your legal duties, 4) there was some kind of uncontrollable impediment that prevented the discharge of your duties, or 5) some other good faith reason why you did not fulfill your legal duties, you cannot be convicted of the crime. That is not to say that you do not owe the tax. It merely says that you are not to be adjudged a criminal for violating the tax law. For more details and information on this legal concept, please see chapter three of my book, How to Get Tax Amnesty.
In every criminal tax case that resulted in an acquittal for the citizen, the defense was based upon the individual’s good faith misunderstanding of the law. That is to say, the defendant believed that what he was doing was legal. As such, he is not a criminal, even though he turned out to be mistaken. Often, citizens charged with tax crimes take the witness stand and testify that they were mistaken in their opinions, but held them in good faith based upon the promotional material they reviewed.
Because of this important distinction, criminal acquittals do not constitute judicial approval of the legal issues involved in the case. In all criminal cases, the courts instruct the juries involved that there is a legal obligation to file returns, that wages are taxable income, that the tax laws are constitutional, etc. But juries are further instructed that they could find the citizen not guilty if they find that the accused believed in good faith that he was not required to file, etc. So a jury verdict is merely a finding that the citizen acted in good faith. It is not a ruling that the legal theory prompting him to act is in fact valid.
In every criminal case, whether the defendant wins or not, he is presented with a tax bill upon completion of the trial. Even if the jury finds that he did not set out to break the law does not mean he is free of the tax debt. Remember, tax crimes and tax debts are two different things.
Whether you win or lose a criminal case, if charged with a crime you face years of costly and stressful legal proceedings. Defendants often pay many tens of thousands of dollars for their legal defense. And for the period they are in trial, they never knew from one minute to the next whether they would end up in jail or not.
How much of your life and liberty are you willing to risk to make these points? Never mind the money it will cost you to fight the IRS. How much stress and uncertainty are you willing to inflict upon yourself and your family? Even if you win a potential criminal case (which is not likely given the track record of these arguments), the tax liability question is a guaranteed losing battle. Why risk jail and a lifetime of financial misery over an issue that you cannot win?

matches: v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v. v.


text:
The complainant is Yahoo! Inc. of 3420 Central Expressway, Santa Clara, California 95051, United States of America. The respondent is M & A Enterprises, of 31 Diamond Street, Lahug, Cebu 6000, The Philippines.
The domain name in dispute is "visayahoo.com" and the registrar is Network Solutions, Inc. of Herndon, Virginia, United States of America.
The complaint was received by the Center by email on July 7, 2000. On July 14, 2000, registration details were confirmed by the registrar. The Center satisfied itself that the complainant had complied with all formal requirements, including payment of the prescribed fee, and on July 18, 2000, the Center formally notified the respondent by post/courier, fax and email of the complaint and of the commencement of this administrative proceeding and sent copies to the complainant, the registrar and ICANN.
At the request of the respondent and with the consent of the complainant, the Center extended the time for a response to September 6, 2000. On September 4, 2000, the response was filed. The complainant filed an unsolicited reply on September 21, 2000, and the respondent filed an unsolicited rejoinder on October 5, 2000. The Center made it clear to the parties that the panel would decide, in its discretion, whether to admit any of the unsolicited submissions. On September 21, 2000, the Center invited Alan L Limbury to serve as panelist. That day Mr. Limbury accepted the appointment and submitted a Statement of Acceptance and Declaration of Impartiality and Independence. On October 9, 2000, the Center transmitted the case file to the panel and notified the parties of the projected decision date of October 23, 2000.
The panel is satisfied that the complaint was filed in accordance with the requirements of the Rules and Supplemental Rules; payment was properly made; the panel agrees with the Center’s assessment concerning the complaint’s compliance with the formal requirements; the complaint was properly notified to the respondent in accordance with paragraph 2(a) of the Rules; the response was filed within the extended time and the administrative panel was properly constituted.
Except where sought by the panel under Rule 12, no provision is made in the Policy, the Rules or the Supplementary Rules for further submissions after the response. For the reasons given in Toyota Jidosha Kabushiki Kaisha d/b/a Toyota Motor Corporation v. S&S Enterprises Ltd. (Case No. D2000-0802) this panel does not interpret Rule 12 as precluding acceptance of additional uninvited submissions under the panel’s general powers conferred by Rule 10, particularly having regard to the panel’s duty under Rule 10(b) to ensure each party is given a fair opportunity to present its case.
In this case the panel admits both the reply and the rejoinder in the interests of fairness to the parties, pursuant to Rule 10(b).
The name "YAHOO!" has been used by the complainant since 1994. The complainant currently has a market capitalization of approximately U.S. $70 billion and is a global Internet communications, media, and commerce company offering a network of searching, directory, information, communication, and shopping services to millions of Internet users daily.
One of the complainant’s partners is the credit card company Visa International Service Association ("Visa"). The VISA logo appears at the bottom of the main page of the "http://www.yahoo.com" website of the complainant.
Since July 1997, Yahoo! and Visa have jointly offered an online shopping service called "Yahoo! Shopping with Visa". The VISA logo is featured on the YAHOO! Shopping site. Since February 1998, Yahoo! and Visa have offered a co-branded YAHOO! VISA credit card at the URL "http://visa.yahoo.com". The YAHOO! VISA credit card features both the YAHOO! and VISA trademarks.
Yahoo! carried the advertisements of more than 3,500 companies during 1999. The complainant’s income, which is primarily derived from the sale of advertising and co-branding or sponsorship agreements with other companies, increased from $US1,666,000 in 1995, to $US 588,608,000 in 1999.
The number of visits to the YAHOO! website are tens of millions every month. As of March 31, 2000, Yahoo! had over 145 million unique registered users worldwide, i.e., users who register with Yahoo! in order to participate in Yahoo!’s registered member services, including email, chat rooms, shopping, auctions, classifieds, clubs, calendars, message boards, and more. As of February 1999, when the respondent registered the disputed domain name, the complainant had over 47 million registered users worldwide.
In addition to the services offered at the complainant’s main site located at the domain name "yahoo.com", the complainant operates many additional sites under the YAHOO! mark and using YAHOO-formative trademarks and domain names, including specific to particular countries or regions, such as China ("yahoo.com.cn"), Taiwan "yahoo.com.tw"), Hong Kong ("yahoo.com.hk"), Japan ("yahoo.co.jp"), Canada ("yahoo.ca"), Mexico ("yahoo.com.mx"), the United Kingdom ("yahoo.co.uk"), France ("yahoo.fr"), Korea ("yahoo.co.kr"), Australia and New Zealand ("yahoo.com.au"), Denmark ("yahoo.dk"), Germany ("yahoo.de"), Norway ("yahoo.no") and Sweden ("yahoo.se"). There are also sites directed to particular U.S. cities, including New York City ("nyc.yahoo.com"), Washington, D.C. ("dc.yahoo.com"), Miami ("miami.yahoo.com"), Atlanta ("atlanta.yahoo.com"), Boston ("boston.yahoo.com"), Los Angeles ("la.yahoo.com"), Seattle ("seattle.yahoo.com").
Although there is no current site directed solely to the Philippines, there are categories in the main YAHOO! directory containing travel information and other content about the Philippines. As of February 1999, when the disputed domain name was registered, the complainant had more than 300,000 registered users that identified the Philippines as their country of residence. The complainant currently has more than 1,220,000 unique registered users that identified the Philippines as their country of residence.
The complainant also offers a wide variety of services using the YAHOO! mark together with a descriptive name of its services, including YAHOO! Mail, YAHOO! Chat, YAHOO! Messenger, YAHOO! Finance, YAHOO! Auctions, YAHOO! Photos, YAHOO! Address Book, YAHOO! Calendar, YAHOO! Bill Pay, and YAHOO! Store. The standard procedure for identifying the URL for such sites is to use a term describing the content of the site or the partner’s name, followed by the "yahoo.com" domain name, separated by a period (e.g., "http://chat.yahoo.com", "http://finance.yahoo.com", and "http://visa.yahoo.com").
h Registration No. 2,040,222 for the mark YAHOO!, issued February 25, 1997, in International Classes 9,16, 35 and 42.
h Registration No. 2,040,691 for the mark YAHOO! (stylized), issued February 25, 1997, in International Class 42.
h Registration No. 2,076,457 for the mark YAHOO!, issued July 1, 1997, in International Class 16.
h Registration No. 2,159,115 for the mark YAHOO!, issued May 19, 1998, in International Class 38.
h Registration No. 2,187,292 for the mark YAHOO!, issued September 8, 1998, in International Class 42.
h Registration No. 2,243,909 for the mark YAHOO!, issued May 4, 1999, in International Class 25.
h Registration No. 2,273,128 for the mark YAHOO!, issued August 24, 1999, in International Classes 9, 21 and 35.
h Application No. 75/536,236 for the mark YAHOO!, filed August 13, 1998, in International Classes 9, 35, 39, and 42.
The complainant also owns the domain name "yahoo.com", which was registered with NSI on January 18, 1995, and has been used to identify the YAHOO! website since then.
The respondent registered the domain name "visayahoo.com" on February 5, 1999. Its website entitled VISAYAHOO offers web directory and searching services, free email, and content promoting the Philippines, its government, its people, its tourist spots, and its business and commercial enterprise/s.
Thus both the complainant and the respondent offer web directory and searching services, as well as free email services and content about the Philippines.
The respondent is not and has never been a licensee of the complainant and is not and has never been otherwise authorized by the complainant to use the YAHOO! mark.
During the course of correspondence between counsel for the parties before the complaint was lodged, the respondent’s counsel indicated that the respondent would consider turning over the domain name to the complainant "if our client is properly compensated." The complainant offered to compensate the respondent $2,500 for the domain name to avoid the cost of litigation. The respondent offered to sell the domain name to the complainant for $2,000,000.
By virtue of the arbitrary nature and hence the inherent strength of the YAHOO! mark as applied to Yahoo!’s vast array of web-based services; the millions of visitors to the YAHOO! network of websites every day; the millions of links to the YAHOO! site from third-party websites; and Yahoo!’s extensive use, promotion, and registration of its YAHOO! mark, the YAHOO! mark and "yahoo.com" domain name have become famous. Indeed, the United States District Court for the Eastern District of Virginia has specifically held that the YAHOO! mark is famous. See Yahoo! Inc. v. Buffalo Wu, CA-00-00178-A (memorandum decision at p. 8); see also Yahoo! Inc. v. David Ashby, Case No. D2000-0241 (administrative panel decision) and Yahoo! Inc. v. Eitan Zviely, Case No. D2000-0273 (administrative panel decision).
The domain name is confusingly similar to the world famous trademark YAHOO! in which the complainant has rights which predate the registration of the disputed domain name by the respondent; the respondent has no rights or legitimate interests in respect of the domain name and the domain name was registered and is being used in bad faith.
Yahoo! is not confusingly similar to Visayahoo. They are very different. Of the more than 150 million clients of the complainant, not one will ever mistake Visayahoo as Yahoo!, or vice versa; not one will ever surf Visayahoo, believing that it is surfing Yahoo!, or vice versa.
Since more than 1,220,000 unique registered users identified the Philippines as their country of residence, practically all pc/internet users in the Philippines are Yahoo! users, and therefore there is no way a Yahoo! user in the Philippines will mistake Yahoo! as Visayahoo; they will and can always distinguish between Yahoo! and Visayahoo, and will and can always understand that Yahoo! is entirely different and distinct from Visayahoo; neither will they ever make a mistake on the distinction between the two.
"Hoo" is a generic term, which in Philippine language, means a sign of respect to a parent, superior or an elderly. So that when a Filipino says "Magandang Gabi Hoo!", it means "Good Evening, with due respect"; when somebody asks anybody from what geographical region in the Philippines does he come from, and he answers "Visaya, hoo", it means "I am from the Visayas, with due respect". The complainant does not own and cannot appropriate to itself all the words in the world which end with "hoo".
The respondent does not need any authority from the complainant in order to use the domain name Visayahoo. On the contrary, after (and only after) it received a letter from complainant’s Philippine counsel advising it to discontinue the use of the domain name Visayahoo, it promptly placed a disclaimer in its website that "Visayahoo is in no way affiliated with Yahoo!"; this is a clear sign of good faith on the part of the respondent, and a clear and manifest pronouncement that Visayahoo is entirely and absolutely different from Yahoo!
The respondent’s Visayahoo is local in nature, and Filipino by origin. It caters primarily to Filipinos as it was created by Filipinos and for the use and comfort of the Filipinos. The respondent is developing its own website to the best of its ability, using the local talent of Filipinos; it is putting more and more information on its website about the Philippines, with emphasis on Cebu City and the Visayas and it will, as it does, trade on its own goodwill to do its business. So far, it has survived on its own, and may perish only now in view of the filing of this baseless and unfounded complaint by the complainant.
The respondent has legitimate interests in the domain name Visayahoo. Its company is organized and existing under and by virtue of the laws of the Republic of the Philippines; its website "www.visayahoo.com" was created by its staff of Filipino web designers and encoders; it was duly registered with Network Solutions, Inc.; moreover, complainant acknowledges that the respondent lawfully and legitimately owns the domain name Visayahoo by sending a draft agreement to the respondent for a possible settlement acknowledging that "…. Assignor is the owner of the domain name "visayahoo.com" which was registered with Network Solutions, Inc."
A pc/internet user surfing Yahoo! will NEVER be diverted to Visayahoo. The respondent challenges any self respecting pc/internet user to try going to the website "www.yahoo.com", and see if indeed he will be diverted to "www.visayahoo.com"; a "dot" or a "letter" in the internet world is so significant that any addition and/or absence of it will not bring you to the website that you intend to surf; a "dot" or a "letter" in the internet world will mean a "world apart".
The respondent registered the name Visayahoo in good faith. Visayahoo promotes the Philippines, its government, its people, its tourist spots, and its business and commercial enterprise/s, the company being organized in Cebu City, which is well within the geographical region of the Visayas in central Philippines. The respondent and NSI firmly believed at the time of registration that it did not interfere with or infringe upon the rights of third parties, much less the complainant. The respondent and NSI likewise firmly believed that it was registered for a lawful purpose, as indeed it was.
It was proper for the respondent’s counsel to advise its client to consider turning over its domain name to the complainant "….if respondent is properly compensated", as nothing is free in this world. Since complainant made an outrageously low offer of US$2,500.00 as consideration for the turning over of the domain name to the complainant, the respondent likewise made an outrageously high counter-offer of US$2,000,000.00, which in effect is tantamount to a NO answer.
Intentionally attracting Yahoo! users to Visayahoo is far from the minds of respondent; it never happened, it is not happening, and it will never happen. No commercial, business, monetary gains have redounded to the benefit of the respondent, as access to Visayahoo is free, and all information that one gets from Visayahoo are free; not one, repeat, NOT ONE advertiser at Yahoo! ever advertised in Visayahoo, mistaking it to be Yahoo!.
When it registered its domain name Visayahoo, the respondent never intended to sell, rent or transfer it to anybody. The offers and counter-offers came about only when the complainant entered into the picture and were all initiated by complainant, not by the respondent.
The respondent never attracted pc/internet users from Yahoo! to Visayahoo. It never disrupted, it is not disrupting, and it will never disrupt the business of complainant.
The respondent is offering legitimate goods and services to all, but more particularly to Visayans or Filipinos. It is making a legitimate non-commercial or fair use of the domain name, which was registered long before the filing of the complaint. The respondent registered not a series of names but only one domain name, visayahoo. Both of these circumstances negate the existence of bad faith.
The contested domain name "visayahoo.com" is not identical to the trademark YAHOO!, nor does the complainant so submit. The issue in this case is whether the domain name is confusingly similar to the trademark.
The respondent argues correctly that no-one intending to reach the complainant at "www.yahoo.com" would be likely to type "www.visayahoo.com". However, this does not resolve the issue. Some Internet users attempting to access the "http://visa.yahoo.com" website would be likely inadvertently to arrive at the respondent’s "visayahoo.com" website simply by omitting the dot after "visa".
Registration of a domain name and the creation of an active website establish a presence on the Internet accessible to all Internet users. Access cannot be restricted to those within any particular country. The respondent implicitly acknowledges this when stating it is offering legitimate goods and services to all, but more particularly to Visayans or Filipinos. The issue of confusing similarity must be considered in this context.
Amongst Philippinos unfamiliar with the trademarks VISA and YAHOO!, the disputed domain name may appear to be a combination of the words VISAYA and HOO, meaning "I am from the Visayas, with due respect".
The parties agree that more than 1,220,000 residents of the Philippines are registered YAHOO! users. The respondent accepts that this means that practically all pc/internet users in the Philippines are Yahoo! users. Having registered with the complainant as YAHOO! users, they must be taken to know of the YAHOO! trademark. No doubt many will also know the famous VISA mark. To many, if not most pc/internet users in the Philippines, therefore, the domain name "visayahoo.com" would be likely to convey both that it is a combination of the VISA and YAHOO! trademarks and that it is also a combination of the words VISAYA and HOO.
To Internet users beyond the Philippines unfamiliar with the words Visaya and hoo and their meaning, especially those familiar with the complainant’s joint offerings with the Visa credit card company, the disputed domain name would convey only the combination of the VISA and YAHOO! marks.
Insofar as the domain name conveys (both within and beyond the Philippines) that it is a combination of the VISA and YAHOO! trademarks, the Panel finds it to be confusingly similar to the complainant’s trademark YAHOO!
The complainant has proved the disputed domain name is confusingly similar to its YAHOO! mark.
The incorporation of the respondent in the Philippines under the name M & A Enterprises does not establish a legitimate interest in the disputed domain name. Neither does the creation of the web site by Filipino designers and coders. Nor does the registration with NSI of the disputed domain name, since such registration is governed by the registration agreement, which incorporates the Policy, thereby rendering the registration subject to challenge by an aggrieved trademark owner. The terms of the proposed settlement agreement do not amount to a concession by the complainant that the respondent’s ownership of the disputed domain name was not subject to challenge by the complainant under the Policy.
Given the fame of the YAHOO! mark, the fact that the respondent offers services on the Internet where the complainant’s fame originated and the similarity between the respondent’s services and some of those of the complainant, the Panel finds that, even though the disputed domain name has a particular meaning in the Philippines, the respondent must have known of the registration and use of the complainant’s mark YAHOO! at the time it registered the disputed domain name.
The Panel concludes that the respondent’s use of the disputed domain name was intended misleadingly to divert Internet users from the complainant to the respondent and that, although the services it offers on its website are genuine services, its use of the disputed domain name is not legitimate.
In SportSoft Golf, Inc. v. Hale Irwin’s Golfers’ Passport (Case FA94956) a finding of bad faith was made where the respondent "knew or should have known" of the registration and use of the trademark prior to registering the domain name. Likewise Marriott International, Inc. v. John Marriot (Case FA94737); Canada Inc. v. Sandro Ursino (Case AF-0211) and Centeon L.L.C./Aventis Behring L.L.C. v. Ebiotech.com (Case FA95037).
The Panel has found that the respondent must have known of the registration and use of the complainant’s mark YAHOO! at the time it registered the disputed domain name.
Despite the particular meaning to Filipinos of the words Visaya hoo, in the context of the Internet, with which virtually all Filipino pc users are familiar, there is no plausible explanation for the respondent’s registration of the disputed domain name other than to benefit from the goodwill of Yahoo! and its famous YAHOO! mark and name (as well as the name and mark VISA). See Telstra Corp. Ltd. v. Nuclear Marshmallows (WIPO Case No. D2000- 0003) and Cellular One Group v. Paul Brien (WIPO Case No. D2000-0028.
It is true that no Internet user would be likely to type "visayahoo.com" when intending to type "yahoo.com". But mistakenly typing the name is not the only way by which Internet users may find themselves at the respondent’s website. Knowledge, however derived, of the disputed domain name would be likely to lead to confusion with the complainant’s mark as to the source, sponsorship, affiliation and endorsement of the web site conducted under the disputed domain name and of the services offered at that site. Once there, despite the disclaimer added by the respondent after the complainant’s counsel complained, some proportion of the traffic generated as a consequence of this confusion would be likely to stay, preferring the respondent’s services those of the complainant.
Intentional diversion of trade in such circumstances is evidence of both bad faith registration and use: Policy paragraph 4 (b)(iv). See The Channel Tunnel Group Ltd. v. Powell (WIPO Case No. 2000-0038) and Shirmax Retail Ltd./D¢ etaillants Shirmax Lt¢ ee v. CES Marketing Group Inc.(Case AF-0104) as elaborated in Passion Group Inc.v. Usearch, Inc. (Case AF-0250). Given the fame of the complainant’s mark and the knowledge of it that the respondent must have had when registering the disputed domain name, the Panel finds the respondent must have anticipated and intended to benefit from the very confusion that was likely to arise. It is not necessary that the respondent trade with those diverted Internet users in order to gain that benefit, since the increased traffic attributable to that diversion would make the respondent’s site more attractive for advertisers.
The Panel does not find that the respondent registered the domain name primarily to sell, rent, or otherwise transfer it for valuable consideration in excess of its documented out-of-pocket costs. The respondent’s offer to sell the domain name to the complainant for $2,000,000 in response to the complainant’s offer to pay Respondent $2,500 to cover the respondent’s costs for changing its site and domain name constituted an offer for sale in excess of the respondent’s documented out-of-pocket expenses but the Panel is not persuaded that this was the respondent’s intention at the time of registration.
As mentioned, some Internet users attempting to access the "http://visa.yahoo.com" website would be likely inadvertently to arrive at the respondent’s website (by omitting the dot after "visa"). Once there, some proportion of them would be likely to stay despite the disclaimer, causing the complainant to lose revenue and thereby disrupting the complainant’s business.
The complainant has proved bad faith registration and use.
Pursuant to Paragraphs 4(i) of the Policy and 15 of the Rules, the panel directs that the domain name "visayahoo.com" be transferred to the complainant. The Panel notes that Visa International Service Association, the owner of the VISA trademark, consents to this course.

matches:
v.
Application No. 75
v.
v.
v.
v.
v.
v.
v.
v.
v.
v.
v.


text:
UNITED STATES of America, Plaintiff–Appellee v. Veronique ZsaZsa Antique MUCKLE, Defendant–Appellant.
Before MURPHY, MELLOY, and BENTON, Circuit Judges. F. Clayton Tyler, Minneapolis, MN, for Defendant–Appellant. Allen A. Slaughter, AUSA, Minneapolis, MN, for Plaintiff–Appellee.
Veronique ZsaZsa Angelique Muckle was convicted in April 2013 on one count of witness retaliation. Her presentence report applied a cross reference under U.S.S.G. § 2J1.2(c)(1) for obstructing a criminal prosecution, which led to a sentencing range for her offense of 121 to 151 months in prison. The district court1 sentenced Muckle to 121 months after applying the United States Sentencing Guideline § 2J1.2(c)(1) cross reference. Muckle appeals, and we affirm.
Veronique Muckle and Angelique Vos were both members of a prescription drug trafficking conspiracy in Duluth, Minnesota and Superior, Wisconsin. One of the conspiracy's leaders, Lawrence Colton, had recruited Muckle to manage drug distribution in the area. Muckle eventually became a high ranking member of the organization as well as Colton's girlfriend. Vos was the girlfriend of another conspiracy leader, Jeffrey Liddell, with whom Muckle claims also to have had a romantic relationship. Muckle, Vos, and Colton were arrested along with dozens of alleged coconspirators in September 2011.
Vos began cooperating with the government immediately after her arrest by confirming the conspiracy's leadership and identifying the sources, costs, and transporters of the prescription drugs. Rather than hiding her cooperation with law enforcement, Vos made it known to her codefendants, including Muckle and Colton. Beginning in February 2012, Muckle, Vos, and Colton were all held in the same Minnesota jail. Muckle and Vos awaited sentencing in the women's wing of the Sherburne County jail, while Colton was housed in the men's wing.
Colton's trial began in early August 2013, and Vos testified against him on August 14. At the end of that day, Vos and Colton were returned separately to their respective wings of the jail. Muckle was at that time being detained for disciplinary reasons in an intake unit separated from the rest of the jail by a security door. Videotape showed that on August 14 while walking to his housing unit at approximately 6:30 p.m., Colton paused briefly outside the security door to speak to Muckle and continued talking to her over his shoulder after passing the door. Muckle then sat down on a chair, put on her shoes and socks, and tucked the cuffs of her pants into the tops of her socks. Jail officials testified at trial that this behavior was consistent with someone preparing for a “jail fight.” Muckle then stood up and paced the cell until the next scheduled check when the door between the intake unit and the women's wing would be opened.
Muckle was charged with one count of witness retaliation in violation of 18 U.S.C. §§ 1513(b)(1), 1513(c), and 1515(a). At her trial in April 2014, the government introduced evidence showing that Muckle had told other inmates that Vos was a snitch. Vos herself testified that in addition to being a witness in Colton's trial, she was providing testimony to a grand jury in a case against four other conspirators. Witnesses for Muckle testified that her assault on Vos was also motivated by jealousy over Liddell. The jury convicted Muckle on April 12.
Muckle's presentence investigation report calculated a base offense level for obstructing justice under U.S.S.G. § 2J1.2. It also suggested that § 2J1.2(c)(1) triggered a cross reference to § 2X3.1 for obstructing the prosecution of a criminal offense because the resulting base offense level was greater than under § 2J1.2. Over Muckle's objection, the district court applied the cross reference, bringing the total offense level to 30. Combined with a criminal history category of III, the resulting sentencing range was 121 to 151 months imprisonment. Muckle was sentenced to 121 months, to be served consecutively to the term she received for her underlying drug offense. She now appeals.
We review the sentencing court's construction and application of the sentencing guidelines de novo and its factual findings for clear error. United States v. Pappas, 715 F.3d 225, 228 (8th Cir.2013). Section 2J1.2(c) directs the sentencing court to apply a cross reference to § 2X3.1 if a defendant's conduct involved obstructing the prosecution of a criminal offense. U.S.S.G. § 2J1.2(c). Muckle argues that a § 2J1.2(c)(1) cross reference to § 2X3.1 would require evidence that she intended her attack to affect the progress of Colton's prosecution. Because Muckle attacked Vos after knowing that she had completed her testimony in the trial, Muckle asserts the attack could not have been intended to obstruct the prosecution. At that point Muckle claims she could not have prevented or changed Vos' testimony.
While § 2X3.1 is more commonly applied for being an accessory after the fact, it also serves as a tool for calculating the base offense level for a particularly serious obstruction offense like witness retaliation. See United States v. Gallimore, 491 F.3d 871, 875 (8th Cir.2007). In Gallimore, we rejected an argument that was nearly identical to the one Muckle now makes. There, we affirmed the district court's application of a § 2J1.2(c)(1) cross reference to § 2X3.1 where the defendant had been aware of a witness's grand jury testimony and “carried out the assault [on the witness] in direct retaliation against it.” Id. at 875. Although Gallimore argued that retaliation against a grand jury witness would only trigger the § 2J1.2(c) cross reference if it had some effect on a criminal proceeding, the commentary for § 2J1.2 lists “causing a witness bodily injury ․ in retaliation for providing testimony ․ in a federal proceeding” as an example of an obstruction of justice warranting a cross reference to § 2X3.1. Id. at 876 (internal quotation marks omitted). As we observed in Gallimore, “the Sentencing Commission was concerned that retaliation against a witness for past testimony was likely to interfere with the effective administration of justice.” Id. The trial record establishes that Muckle intentionally attacked and injured Vos for testifying in a federal trial, and we conclude that the district court did not err in applying the § 2J1.2(c)(1) cross reference to calculate her guideline sentencing range.
Muckle's argument that her case is more like United States v. Galaviz, 687 F.3d 1042 (8th Cir.2012), than Gallimore is without merit. The enhancement at issue in Galaviz was for obstruction of justice under U.S.S.G. § 3C1.1, not obstructing a criminal prosecution under § 2J1.2(c)(1). Moreover, the Galaviz court applied the § 3C1.1 obstruction of justice enhancement after finding that the defendant had engaged in a conspiracy to murder a confidential informant. Id. We reversed because the already convicted defendant had had no reason to think that the informant would have intended to testify against him at sentencing. Id. at 1043. As in Gallimore, and in contrast to Galaviz, Muckle knew Vos had testified in a federal proceeding which could harm her lover and attacked the other woman for it at the first opportunity.
Based on the record here, the guideline commentary for § 2J1.2(c)(1), and our precedent in Gallimore, we conclude the district court did not err at Muckle's sentencing by applying a cross reference to § 2X3.1 for obstructing a criminal prosecution.

matches:
v.
§ 2
§ 2
§ 2
§ 2
§ 2
§ 2
v.
§ 2
§ 2
§ 2
§ 2
§ 2
v.
§ 2
§ 2
§ 2
§ 2
§ 2
§ 2
v.
§ 3
§ 2
§ 3
§ 2
§ 2


text:
James Finkelstein, Albany, Ga., for plaintiff-appellant.
John G. Skinner, Smith, Currie & Hancock, Atlanta, Ga., for defendant-appellee.
Before VANCE and HATCHETT, Circuit Judges, and NESBITT*, District Judge.
Aretha Baker appeals the district court's order denying her motion for a preliminary injunction on the grounds that the court should have held an evidentiary hearing. Although Fed.R.Civ.P. 65(a) does not require a hearing on every motion for injunctive relief, we hold that on the facts of this case the court erred in not conducting a hearing.
In July 1985 Aretha Baker filed a charge with the Equal Employment Opportunity Commission (EEOC) alleging that her employer, Buckeye Cellulose Corporation had discriminated against her because she is black. After the EEOC issued a right-to-sue letter, she filed this civil rights action, claiming violations of the Civil Rights Act of 1866, 42 U.S.C. Sec. 1981, and of Title VII of the Civil Rights Act of 1964, 42 U.S.C. Secs. 2000e to 2000e-17. Her complaint had been pending for four months in the district court when she filed a motion for a preliminary injunction, seeking to enjoin certain alleged retaliatory actions taken by Buckeye as a result of her filing suit. The motion was set for a hearing, which was cancelled and never rescheduled. The district court denied the motion in a brief order, stating, "Plaintiff has failed to establish to any degree of certainty that she has been legitimately harmed or even threatened with harm. The court finds that this issue is not ripe for pretrial adjudication."
On appeal, Baker argues that the district court erred in denying the motion for preliminary injunction without first having an evidentiary hearing. Buckeye contends that the trial court did not even have jurisdiction over the motion because it contained allegations that had not been presented to the EEOC and were not a part of the original charge or complaint. Alternatively, Buckeye contends that Baker failed to establish that she was entitled to injunctive relief, and that the district court did not abuse its discretion in denying the motion without a hearing.
In its order denying Baker's motion for a preliminary injunction, the district court did not address the issue of subject-matter jurisdiction. Buckeye argues that the court did not have jurisdiction to consider the motion because she had not asserted the retaliation claim either before the EEOC or in her complaint. Under Buckeye's theory, Baker would have to file a new charge with the EEOC alleging retaliatory actions, obtain a right-to-sue letter, and either file a new complaint in the district court or amend the complaint in the pending case.
In Gupta v. East Texas State Univ., 654 F.2d 411 (5th Cir. Unit A Aug. 1981), the court held thatit is unnecessary for a plaintiff to exhaust administrative remedies prior to urging a retaliation claim growing out of an earlier charge; the district court has ancillary jurisdiction to hear such a claim when it grows out of an administrative charge that is properly before the court.
There are strong practical reasons and policy justifications for this conclusion. It is the nature of retaliation claims that they arise after the filing of the EEOC charge. Requiring prior resort to the EEOC would mean that two charges would have to be filed in a retaliation case--a double filing that would serve no purpose except to create additional procedural technicalities when a single filing would comply with the intent of Title VII.
Id. at 411.1 In Gupta, the district court had allowed the plaintiff to amend his complaint to add allegations of retaliatory discharge, even though he had not filed charges with the EEOC. Although Baker did not seek leave to amend the complaint in this case before she filed the motion for injunctive relief, the court's reasoning in Gupta still applies. It has long been established in this circuit that the scope of a judicial complaint is defined by the scope of the EEOC investigation that "can reasonably be expected to grow out of the charge of discrimination." Sanchez v. Standard Brands, Inc., 431 F.2d 455, 466 (5th Cir.1970); see also Turner v. Orr, 804 F.2d 1223, 1226-27 (11th Cir.1986). Because a claim of retaliation could reasonably be expected to grow out of the original charge of discrimination, the district court had jurisdiction over the motion for injunctive relief.
As both parties recognize, a district court's order granting or denying a preliminary injunction is reviewable only for abuse of discretion. See United States v. Jefferson County, 720 F.2d 1511, 1519 (11th Cir.1983). A district court may grant injunctive relief if the movant shows (1) a substantial likelihood that she will ultimately prevail on the merits; (2) that she will suffer irreparable injury unless the injunction issues; (3) that the threatened injury to the movant outweighs whatever damage the proposed injunction may cause the opposing party; and (4) that if issued, the injunction would not be adverse to the public interest. Id. (citing Shatel Corp. v. Mao Ta Lumber and Yacht Corp., 697 F.2d 1352, 1354-55 (11th Cir.1983)).
In the instant case, the district court found that Baker had not established any harm, or even any threatened harm. In this circuit, however, courts are to presume irreparable harm in Title VII cases. Jefferson County, 720 F.2d at 1520; Middleton-Keirn v. Stone, 655 F.2d 609, 611 (5th Cir. Unit B 1981). On the facts of this case, we hold that the district court erred in not conducting an evidentiary hearing to determine whether Buckeye could overcome that presumption, or whether Baker had met the other requirements listed above.
Federal Rule of Civil Procedure 65(a) states, "No preliminary injunction shall be issued without notice to the adverse party." The United States Supreme Court has noted in passing that "[t]he notice required by Rule 65(a) before a preliminary injunction can issue implies a hearing in which the defendant is given a fair opportunity to oppose the application and to prepare for such opposition." Granny Goose Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 432 n. 7, 94 S.Ct. 1113, 1121 n. 7, 39 L.Ed.2d 435 (1974). The intended purpose of the rule is to give the party opposing the motion for injunctive relief an adequate opportunity to prepare; however, Baker asserts that the moving party is also entitled to an opportunity to prove up the motion at a hearing. Rule 65(a) does not expressly require a hearing on every motion for injunctive relief; however, where there is a presumption of irreparable harm, as in this case, the court should conduct an evidentiary hearing before granting or denying the motion.
The order denying Baker's motion seems to rely solely on her failure to prove irreparable harm. On remand, the district court should conduct an evidentiary hearing to determine not only whether Buckeye has rebutted the presumption of irreparable harm but also whether Baker has satisfied the other three requirements for the issuance of a preliminary injunction. See Middleton-Keirn, 655 F.2d at 612.
The district court's decision denying Baker's motion for a preliminary injunction is reversed and remanded for further proceedings.

matches: v. v. v. v. v. v. v.