Tom Cryer

Tom Cryer is an attorney in Shreveport, Louisiana who was charged with and later acquitted of willful failure to timely file U.S. Federal income tax returns.

In October of 2006, Cryer was indicted on two counts of tax evasion (26 U.S.C. § 7201).[1] In March 2007, a grand jury added two counts of willful failure to timely file tax returns (26 U.S.C. § 7203). The indictment alleged that Cryer evaded over $73,000 in taxes in 2000 and 2001 by using a trust to receive payments of dividends, interests and stock income.

Cryer's arguments at the trial

In the trial, Cryer made several arguments about the validity of Federal income taxes. In a written memorandum in support of one of his motions to have the charges dismissed, Cryer made the argument:

that insofar as the government purports to apply the income tax law as imposing a tax on wages, salaries and fees personally earned, it is in conflict with Article I, § 9, cl. 4, of the Constitution, and is, as so applied, unconstitutional and not entitled to enforcement.

In the memorandum, Cryer also argued:

that defendant’s revenues, deriving solely from his own labor and effort in the pursuit of his chosen occupation, without involvement of corporate privilege or conduct of manufacturing or sale of commodities, is in conflict with the Constitution and therefore, invalid as so applied, and, accordingly, those revenues being exluded [sic] from taxation as such, “not constituting income within the meaning of the Sixteenth Amendment” or of the Constitution, there is no tax deficiency, an essential element of the charges against Mr. Cryer [ . . . .]

On March 19, 2007, the Court rejected these and other arguments made by Cryer and denied Cryer's motions to dismiss the charges against him.

Trial proceeds with altered allegations

The prosecution dropped its allegations of tax evasion against Cryer on July 9, 2007. Cryer was then tried on two counts of willful failure to file tax returns.

Cryer acquitted

Cryer did not make any of his arguments about the legality of the income tax to the jury itself. Instead he asserted that he really did not believe that he owed the taxes, so there was no criminal intent. According to the New Hampshire Union Leader:

Cryer convinced jurors that he genuinely believed he was not liable for the $73,000 in taxes the government says he owes for tax years 2000 and 2001. Absent proof of criminal intent, the jury acquitted him.

On July 11, 2007, Cryer was acquitted. [2]

Cryer's arguments and treatment by other courts

On an internet web site, Cryer claims that most wages are not taxable under existing income tax law under the theory that the income tax is a form of excise tax, a tax on a free exchange of labor for money does not conform to the definition of an excise. Cryer states:

The income tax law, although it is carefully written to APPEAR otherwise, does not actually tax your wages, salaries and fees that you earn yourself because the Constitution does not allow the federal government to tax those earnings.

The argument that wages and other compensation amounts are not taxable has been routinely rejected by courts as frivolous. Any amount the worker receives in exchange for his or her labor is received is an exchange of "equal value," since an exchange in any true "arm's length" fair market value transaction is, essentially by definition, an exchange of equal value. See, for example, the decision of the United States Court of Appeals for the Ninth Circuit in United States v. Buras, in which the taxpayer's theory -- that wages were not taxable because (1) "only profit or gain, such as that from the sale of a capital asset, constituted income subject to federal tax" and (2) "[w]ages could not constitute gain or profit because wages merely represent an equivalent exchange for one's labor" -- was rejected. See also the decision of the United States Tax Court in Link v. Commissioner, where the taxpayer's argument -- that pension income is "labor property" and that when taxpayer receives his pension income from his former employer for whom he once performed services (or labor), any amount he receives in exchange for his labor is a nontaxable exchange of equal value -- was rejected. See also Carter v. Commissioner, where the United States Court of Appeals for the Ninth Circuit stated: "The assertion that proceeds received for personal services cannot be given a 'zero-basis for the purpose of the assessment of taxation,' is frivolous. This is a variation of the 'wages are not income' theme, which has been rejected repeatedly by this court." See also Reading v. Commissioner (taxpayer's argument -- that gain from labor of self-employed individual cannot be determined until the "cost of doing labor" has been subtracted from the amount received -- was rejected; validity of 26 U.S.C. § 262, disallowing deductions for personal living expenses, was upheld). See also Burnett v. Commissioner (taxpayer's argument -- that wages represent an equal exchange of property and, therefore, are not taxable income -- was rejected).