A federal appeals court has ruled that an employee-tax protester can’t sue his employer and individual employees for withholding taxes. The court also rejected the employee’s Title VII claim that he was unlawfully terminated for complaining about the withholding. (Bell v. J.B. Hunt Transportation Inc., et al., No. 10-12513, 11th Cir., 2011)
The appeals court made short work of the employee’s lawsuit. His court papers read like a greatest hits list of tax-protester arguments, which have failed to gain traction in any court, at any time. Among his baseless contentions:
- Only public employees are required to pay income taxes.
- Paying federal taxes is voluntary, and unless individuals complete Form W-4, they can’t be compelled to pay taxes.
- Federal income taxes apply only to interest and dividends.
- Complaining about taxes is protected speech under the First Amendment.
- His termination for complaining about the withholding amounted to illegal retaliation under Title VII.
So, sue me
It wasn’t clear whether the individual employees who were sued worked in the Payroll department, but it’s a logical conclusion. The case recaps the typical arguments that tax-protesting employees make, and illustrates that these lawsuits can be more than a mere nuisance by forcing the company and individual employees to pay for attorneys to answer their frivolous claims.
It’s also a reminder that you don’t have to employ disruptive employees. You can try to rebut these arguments, but it doesn’t pay to get into an extended argument you won’t win.
If employees rip up their W-4 forms, or refuse to file them, withhold at the single/zero rate until valid forms are provided.