United States Bankruptcy Appellate Panel of the Eighth Circuit
Submitted: April 19, 2017
from United States Bankruptcy Court for the Northern District
of Iowa - Cedar Rapids
SALADINO, Chief Judge, KRESSEL and NAIL, Bankruptcy Judges.
Kressel, Bankruptcy Judge.
Eugene Yuska appeals from an order of the bankruptcy court
granting the Iowa Department of
Revenue's motion for summary judgment and dismissing his
adversary proceeding. We affirm.
filed a Chapter 13 bankruptcy petition on September 29, 2014.
The case was later converted to a Chapter 7 case. On February
9, 2015, Yuska filed a complaint against the Iowa Department
of Revenue, asking the bankruptcy court to set aside the
department's tax assessments for tax years 2004-2013.
department filed an answer and asserted defenses of issue and
claim preclusion among others. It also filed a motion asking
the bankruptcy court to abstain from hearing the
constitutional question and the legality of the
department's assessment procedure. It filed another
motion asking the court to dismiss Yusuka's claim
regarding the 2007 tax assessment based on claim preclusion
because on November 29, 2012, an administrative law judge
already decided the issue and Yuska did not appeal that
decision. It later moved for summary judgment of the entire
proceeding arguing that there were no genuine issues of
material fact about the amount of taxes assessed.
filed numerous responses to the department's motions.
Yuska made general legal argument as to the constitutionality
of the Iowa income tax statute. He argued that the income tax
statute was unconstitutional under Article VII, Section 7 of
the Iowa constitution. He argued that Iowa Code 422.5 that
imposes taxes is unconstitutionally vague because it does not
state the object of the tax as required by the constitution
but instead another section of Chapter 422 provides the
object. He also argued that the department improperly relied
on information from the Internal Revenue Service because that
information doesn't show that it was derived from the
United States Internal Revenue Code and he doesn't owe
income tax under the Internal Revenue Code. He also argued
that he is no longer a citizen because he renounced his U.S.
citizenship and Iowa residency and appeared in court on
behalf of "ens legis, " a legal entity that does
not owe taxes.
many continued hearings and extensions for submissions
requested by Yuska and granted by the bankruptcy court, the
court held a hearing on April 26, 2016 and took the matter
under advisement. On May 12, 2016, before the court made a
determination of the motion, Yuska filed a motion to file new
evidence. The court denied the motion and entered an order
stating that no further briefing or supplements would be
considered by the court.
July 6, 2016 order, the bankruptcy court concluded that there
were no genuine issues of material fact. Yuska resided in
Iowa and received rental income, wages, salaries, interest,
dividends, capital gains and other income while living in
Iowa for the tax years in question, but he did not pay Iowa
bankruptcy court concluded that, in Iowa, an administrative
determination is given the same preclusive effect as the
judgment of a court. The court held that Yuska's claim
that he does not owe income tax liability for 2007 is barred
by claim preclusion because the bankruptcy court cannot
determine the taxes or the legality of the 2007 tax liability
that have been decided by the administrative law judge. The
court also held that Yuska's challenge to the
department's right and authority to tax or the
department's assessment procedure is barred by issue
preclusion because those arguments were also considered and
rejected by the administrative law judge.
bankruptcy court also considered and rejected Yuska's
other legal arguments. The court held that Yuska's
argument that the income tax statute is unconstitutional
because it does not state the object to which the tax is to
be applied and required looking to multiple sections to find
the tax and object, unpersuasive because Iowa income statute
has been upheld by the Iowa Supreme Court as constitutional.
court also rejected Yuska's argument that the department
did not properly calculate his tax liability because he
doesn't owe any taxes under the Internal Revenue Code.
The court held that the "Iowa income tax uses the
federal taxable income number to determine the amount of tax
owing" and Yuska's "Iowa tax liability is not
tied to his federal tax liability." The court also held
that the fact that Yuska declared that he renounced his U.S.
citizenship does not excuse tax liability and is ...