COMMONWEALTH OF KENTUCKY HENDERSON CIRCUIT COURT CASE NO.

James Orrahood d/b/a James Orrahood Rentals APPELLANT

v.

City of Henderson Board of Occupational License Appeals

APPELLEE APPELLEE

STATEMENT OF APPEAL 1. The style of the case in the Board of Appeal # appealed from is 2. The City was represented by???? 3. Some of the issues raised in this appeal have been before the Circuit Court and the Kentucky Court of Appeals. 4. The type of litigation is a civil appeal. 5. Because this appeal is based solely on questions of law Appellant does not see the need for oral arguments.

STATEMENT OF LEGAL QUESTIONS AND PROPOSITION The statement of appeal in this case consists of two primary grounds. Number one is the applicability of Ordinance 17-05 to the appellants tax year that ended December 31, 2005. The 2005 business license tax return ostensibly was required to be filed by April 17, 2006 for the preceding taxable year, and because the appellant was required to make a federal return his 2005 business license return had to be computed on the same basis and for the same taxable year as his federal return. The second ground for the appeal is based on the City of Henderson and Kentucky courts interpretations of the law and whether or not those interpretation and/or rulings are a derogation of Appellants rights secured him by the constitution of the United States, and State of Kentucky. This contention rests squarely on Section 171 of the Kentucky Constitution, and the Fifth and Fourteenth Amendment of the U.S. Constitution. FACTS / BACKGROUND/ SUMMARY OF EVIDENCE Ordinance 17-05 was enacted September ??? 2005, and became effective January 1, 2006. ( attached hereto and incorporated herein by reference as Exhibit 1 ) The new ordinance, 17-05, was an Occupational License Tax based on net profits levied upon both business that operated and its employees that worked within the City of Henderson and did not require a return before a new business started operating in the City of Henderson or any return during its first taxable year. It required a return only after a business taxable year ended, and naturally a return was to be filed after a business ceased to operate in the City. The new ordinance, 17-05, which became effective by its terms on January 1, 2006 repealed, in its entirety, the previous ordinance, 32-93, (attached hereto and incorporated herein by reference as Exhibit 2). (It should be noted that if the Hendersons City Commission intent were to keep any part of the old ordinance, the new ordinance would have to have retained those desired provisions.)(emphases added)

The previous ordinance, 32-93 was an Occupational License Tax based on gross profits levied upon businesses only and required a new business to pay a license tax before it conducted business in the City of Henderson, but without the requirement of a return after business ceased to operate in the City of Henderson. Under the old ordinance all taxpayers license tax years began May 1st of one year and ended April 30th of the next year. The tax was based on the gross income reported on businesses last tax return filed for federal income tax purposes. Therefore, the business license return filed by (April 30, 2005) by the appellant, was for the tax year that began May 1, 2005 and ended April 30, 2006. On March 10, 2011, the City of Henderson Occupational License Appeals Board heard its first ever case (#01-2011) that being the case of Appellant, James Orrahood d/b/a James Orrahood Rentals. The Appellant Orrahood appeal can general be stated as objections to the manner in which the City of Henderson, its attorney, finance department and other city staff and Kentucky Courts were arbitrarily interpreting and capriciously enforcing the occupational license ordinance 17-05, in particular to the year 2005. The Appellant asked the Occupational License Appeals Board, based upon the law and the facts and evidence he presented in that hearing, for a refund of his business 2005 net profits tax ($25) and penalty ($25) and interest (.02 cents) , $50.02 total, that his business paid under protest. (see attached cancelled check Exhibit 3 ) In addition to the refund, he asked that interest be paid on that amount, $50.02 , from the date said tax payment was received by the City of Henderson. The Appellant argued that when the new ordinance 17-05 was enacted to take effect on January 1, 2006, the City of Henderson (through its arbitrary interpretations and capricious enforcement) and Kentucky Courts (through its rulings) were arbitrarily accessing and capriciously collecting a 2005 net profits tax upon his business , the return for which was due by April 17, 2006.

The Appellant also argued that the language of the ordinance 17-05 did not require him to pay a 2005 net profits tax and file a return by April 17, 2006. That the $75 Gross Profits business license tax the City of Henderson collected from his business, May 1, 2005, granted his business the privilege of doing business in the City of Henderson up until April 30, 2006 and that the City of Henderson and Kentucky Courts had no authority what so ever to tax the Appellants business twice, once by its 2005 Gross Profits tax and another by its 2005 Net Profits Tax, over the same certain period of time (2005-2006) and for the same certain purpose, that being the privilege of doing business in the City of Henderson . In his appeal, the Appellant accuses the City of Henderson, (both previous and current) City Commissions, City Attorney, Joseph Ternes, City Finance Director, Robert Gunter and other city staff, of all conspiring with one another to intentionally ignore, for almost 5 years, the administrative provisions set up in the ordinance permitting an individual to challenge the City occupational license fee and net profits tax and also of deliberately ignoring the KRS mandated legal requirements and provisions of the ordinance (Sec. 21-33) which states: If any business entity, dissolves, ceases to operate, or withdraws from the city during any taxable year, or if any business entity in any manner surrenders or loses its charter during any taxable year, the dissolution, cessation of business, withdrawal, or loss or surrender of charter, shall not defeat the filing of returns and the assessment and collection of any occupational license tax for the period of that taxable year during which the business entity had business activity in the city. The Appellant introduced evidence and read into the record, a letter dated (June 27, 2006) to which the City sent the Appellant Orrahood ( attached hereto and incorporated herein by reference as Exhibit 4) and that was signed by City Attorney, Joseph E. Ternes, City Finance Director, Robert Gunter and the late City Manager, Ben Saag, (with copies of said letter going to the Mayor and Commissioners, at that time). The Appellant argued said letter, both proves and admits , the City of Henderson has been and/or is currently, illegally interpreting and capriciously enforcing its occupational license ordinance17-05.

As was stated in said letter (Exhibit 4); With regard to the Appellant Orrahood and James E. Phillips question , Why is the City not intending to collect this tax on businesses that have gone out of business in the year prior to the tax deadline?, staff offers the following response: Staff recognizes that the language of the model Ordinance adopted by the Commission does contemplate the collection of this tax from businesses that cease to operate in the previous year, however after Ordinance approval this question was raised and examined by staff and determination was made by staff that collection of this fee as prescribed would be in conflict with the intent of the Ordinance. Therefore, pursuant to the enforcement provisions given staff in Section 21-42 of the Ordinance, staff determined that it would not put forth effort in collection of this fee, from business that cease to operate in the previous year. It is and has been staffs intention to bring this issue, along with several other Ordinance issues, back to the Commission in the form of a clean up Ordinance. The Appellant further introduced evidence, and read into the record, a second City letter dated (July 12, 2010) signed by City Manager Russell Sights and a legal memorandum dated (June 30, 2010), from City Attorney, Joseph Ternes, (with copies of said letter/memorandum going to City Finance Director, Robert Gunter and Assistant Finance Director, Paul Titzer) that he obtained from another local businessman (said second letter and legal memorandum being attached hereto and is referenced as Exhibit 5) to which the City staff now claim, the law is clear on this issue, that being, the City of Henderson now has the legal authority to require a return and collect the tax due, from any and all businesses entity that cease to operate during any taxable year. On May 5, 2011, the Occupational License Board of Appeals did in fact, denied and dismissed the Appellants appeal (said Appeals Board decision being attached hereto and incorporated herein by reference as Exhibit 6). In denying the Appellants appeal, presiding board member, City Commissioner, Allan Taylor said, In essence, Mr. Orrahood makes the same argument as Mr. Phillips. Consequently, it is the opinion of this Board that it is bound to follow the judicial precedents established by the courts in regard to the first appeal brought by Mr. Orrahoood, and that this Board must reject his argument.

The Appeals Board concluded that the Appellant Orrahood first appeal is practically identical to the arguments made by James Phillips, local accountant, in his cases before the Henderson District and Circuit Courts and the Kentucky Court of Appeals. The Board further stated, that it was aware that all three courts rejected the arguments by Mr. Phillips, going so far as to recite the Kentucky Court of Appeals case of James E. Phillips, C.P.A. v. Commonwealth, No. 2009-CA-005-000551-DG; (said case final ruling being attached hereto and incorporated herein by reference as Exhibit 7). The court states as follows: In essence, Phillips objects to the provisions of the new ordinance that seek to measure the amount of his 2006 occupational license tax by reference to his 2005 taxable income, arguing that 2005 precedes the effective date of the ordinance. After examining the language of the ordinance, including the definition of taxable year, we are persuaded that the circuit court did not err by accepting the citys interpretation of its ordinance to require Phillips to file a 2006 return based on the 2005 net profits of his business. We see no legal impediment to the citys decision to measure the occupational license tax in this manner. Stated herewithin, are the actual sections of the ordinance 17-05 that Appellant Orrahood believes the City of Henderson (through its arbitrary interpretations and capricious enforcement) and Kentucky Courts (through its rulings) have illegally accessed and collected a 2005 net profits tax upon the Appellants business , the return for which was due by April 17, 2006. Such actions the Appellant argues are a derogation of his rights secured him by the constitution of the United States, and State of Kentucky: As was stated in the Commonwealth of Kentucky criminal complaint dated March 13, 2007 (attached hereto and incorporated herein by reference as Exhibit 8); James E. Phillips, a certified public accountant doing business in the City of Henderson, was convicted of violating city ordinance 17-05 by willfully failing to file his 2005 Net Profits return. The return due by April 17, 2006. The City of Henderson Occupational License Appeals Board sighted the Kentucky Court of Appeals case of James E. Phillips, C.P.A. v. Commonwealth, No. 2009-CA-005-000551-DG; In that case, the Appeals Court concluded that; we are persuaded that the circuit court did not err by accepting the citys interpretation of its ordinance to require Phillips to file a 2006 return based on the

2005 net profits of his business. We see no legal impediment to the citys decision to measure the occupational license tax in this manner. The Courts conclusion is, at the very least, puzzling? The Commonwealth of Kentucky charged the appellant, James E. Phillips, with willfully failing to file his businesses 2005 return, not his 2006 return. (See Exhibit 8) Judicial review relies on the generally accepted idea that appellate courts take the trial courts fact finding as given (except in the cases of clear error), but can reverse trial courts if the law was misapplied to the found facts. In the case of James E. Phillips v. The Commonwealth of Kentucky, the pivotal fact-issue in that case should not be; if the citys interpretation of its ordinance required Phillips to file a 2006 return based on the preceding 2005 years net profits of his business but rather if the citys interpretation of its ordinance required Phillips to file a 2005 return based on his business preceding 2004 years net profits of his business ? This issue of fact is unsettled in law. One can only assume that the Court must also see no legal impediment to the citys decision to measure Phillips 2005 return based on his businesses preceding 2004 years net profits. Both Court conclusions however are contrary to and/or are an unreasonable application of clearly established federal and state law. We need only apply the plain language of the statute and heed the warning of our Supreme Court: [L]ook to the language used, but no intention must be read into the statute not justified by the language. The primary rule is to ascertain the intention from the words employed in enacting the statute and not to guess what the Legislature may have intended but did not express. Resort must be had first to the words, which are decisive if they are clear. The words of the statute are to be given their usual, ordinary, and everyday meaning. Morrison v. Home Depot, 197 S.W.3d 531, 536 (Ky. 2006) quoting Gateway Const. Co.v. Wallbaum, 356 S.W.2d 247, 249 (Ky. 1962). Section 21-35,( F) of the ordinance 17-05 states; If a business entity makes, or is required to make, a federal income tax return, the occupational license tax shall be computed for the purposes of this ordinance on the basis of the same calendar or fiscal year required by the
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federal government and the entity shall employ the same methods of accounting required for federal income tax purposes. This Section(21-35) of the ordinance is not ambiguous. It clearly states, the occupational license tax shall be computed for the purposes of this ordinance on the basis of the same calendar or fiscal year required by the federal government. No interpretation of this provision of the ordinance 17-05 can eliminate this part of the law, and any interpretation by a Kentucky Court, that would suggest that this provision was not meant to be included in the new ordinance 17-05, violates rulings by both the United States and Kentucky Supreme Courts. The Supreme Court of Kentucky, in [Hale v. Combs, Ky., 30S.W.3d 146, 151 (2000)] and in quoting [ Commonwealth v. Allen, Ky., 980 S.W.2d 278, 280 (1998)] Further [w]here a statute is intelligible on its face the courts are not at liberty to supply words or insert something or make additions which amount as sometimes stated, to providing for a casus omissus, or cure an omission. Put another way, the U.S. Supreme Court, in quoting Connecticut Natl Bank v. Germain, 503 U.S. 249, 253-54, 112 S. Ct. 1146, 1149, 117 L.E.d.2d 391 (1992) , courts must presume that a legislature says in a statue what it means and means in a statute what it says [and] [w]hen the words of a statue are unambiguous then, this first cannon is also the last judicial inquiry is complete. Other sited cases: Commonwealth v. Harrelson, Ky., 14 S.W. 3d 541, 546 (2000), Billings v. U.S., 232 U.S. 261, 34 S.Ct. 421 (1914), Eidman v. Martinez, 184 U.S. 578, 583; United States v. Wigglesworth, 2 Story, 369, 374; Mutual Benefit Life Ins. Co. v. Herold, 198 F. 199, 201, aff'd 201 F. 918; Parkview Bldg. Assn. v. Herold, 203 F. 876, 880; Mutual Trust Co. v. Miller, 177 N.Y. 51, 57. The Appellant, James Orrahood Rentals, is a calendar year business just like James E. Phillips, CPA. As such, both are required by the written provisions Section 21-35, (F) of the ordinance 17-05, to file their respective 2005 net profits business return, using their respective businesses Federal 2005 year income information not, as the City of Henderson and Kentucky Courts claim to be, their preceding 2004 year income information. This significant legal impediment and subsequent violation of statute can be carried forward and would clearly apply to both the Appellant Orrahood and Phillips 2006, 2007, 2008, 2009, 2010, 2011 and so on, business license returns.
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The City of Henderson current year interpretation of the law and all subsequent Henderson District, Circuit and Kentucky Appeals Courts rulings that would require the Appellant business, James Orrahood Rental, to base/compute its business license return upon its preceding years income information are clearly in direct violation of Section 21-35, (F) of the ordinance and are therefore also in violation of Federal IRS codes and regulations. As is stated in the Department of the Treasury, Internal Revenue Service 2005 1040 instructions booklet , page 12, ( said copy of IRS booklet being attached hereto and incorporated herein by reference as Exhibit ) the Department of the Treasury, Internal Revenue Service codes and regulations do not permit the Appellant Orrahood business to file its Federal 2005 return and to base/compute the required Federal 2005 tax due upon its preceding 2004 years income information. The same would hold true to the Appellants 2006, 2007, 2008, 2009, 2010, 2011 and so on federal returns. Did you file your Federal 2006 tax return, in 2006, or did you file it in 2007. When will you file your Federal 2011 tax return? Is it possible to claim that there is no legal impediment for the city to make a business file its 2006 net profits return based on its preceding 2005 year net income information? If, as the Appellate Court concluded, a businesss 2006 return could be based on their 2005 net income information, then the contractors that worked on the new Lowes home improvement Store in 2006 would have been required to file their federal tax return by April 17, 2007 and they would have reported no City of Henderson income on its required City of Henderson occupational license return form , since they were not working in the City of Henderson during any part of 2005. The same could be said for the contractors that worked on the new Show Place Cinema in 2010. Those contractors would have been required to file their federal tax return by April 17, 2011 and they would have reported no City of Henderson income on its required City of Henderson occupational license return form, since they were not working in the City of Henderson during any part of 2009.

In the case of, George v. Scent, Ky., 346 S.W.2d 784 (1961) there is a powerful statement that goes to the very heart of what the Appellant claims the City of Henderson and Kentucky Courts are attempting to do, not only to his business, but to all businesses that operate within the City of Henderson; Taxing laws should be plain and precise, for they impose a burden upon the people. That imposition should be explicitly and distinctly revealed. If the Legislature fails so to express its intention and meaning, it is the function of the judiciary to construe the statute strictly and resolve doubts and ambiguities in favor of the taxpayer and against the taxing powers. This is particularly so in the matter of pointing out the subjects to be taxed. [citations omitted] Sec. 21-33 Occupational License Tax Payment Required states : (A) Except as provided in Sec. 21-34, every person or business entity engaged in any business, trade, occupation, or profession and any person or business entity that makes a filing with the Internal Revenue Service or the Kentucky Revenue Cabinet shall be required to file and pay to the city an annual occupational license tax for the privilege of engaging in such activities within the city. The occupational license tax shall be measured by one percent (1%) of: (1) All compensation paid or payable in the city for work done or services performed or rendered in the city by every resident and nonresident who is an employee; and (2) The net profits from business conducted in the city by a resident or nonresident business entity, or $25.00, whichever is greater. (B) If any business entity dissolves, ceases to operate, or withdraws from the city during any taxable year, or if any business entity in any manner surrenders or loses its charter during any taxable year, the dissolution, cessation of business, withdrawal, or loss or surrender of charter shall not defeat the filing of returns and the assessment and collection of any occupational license tax for the period of that taxable year during which the business entity had business activity in the city. Without doubt, this provision (Sec. 21-33) of the ordinance makes it clear that every person , employee-licensees and business-licensees are subject to the same tax, at the same rate, except for a minimum payment of $25 for businesses. Our legislature, by enacting KRS 68.197 intentionally treated employees
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(wage earners) and business owners identically, putting both in the same class of taxpayers. In Glenn R. Womack, M.D., P.S.C v. City of Flemingsburg, 102 S.W.3d513 (Ky.App. 2002): Kentucky courts have long held that occupational license taxes are subject to Section 171 [of the Kentucky Constitution]. In fact, this Court has observed that: During the approximate one hundred years of judicial interpretation of 171, two basic principles have emerged: (1) taxes imposed under 181 must be uniform within the class; and (2) Although there need not be uniformity amongst classes, there must be equality amongst sufficiently-related classes so that interclass discrimination cannot be said to be arbitrary, unreasonable, or capricious. In Preston v. Johnson County Fiscal Court 27 S.W. 3d 790, 794 (KY 2000) the test of the constitutionality of an occupational license fee ordinances is whether the ordinance applies equally to every employed or self-employed person within its territorial limits. After the passage of the new ordinance 17-05 , the City of Henderson began informing businesses (said instructions attached hereto and incorporated herein by reference as Exhibit 8) that the new ordinance 17-05 required calendar year-end businesses to file a 2005 occupational tax license tax return and to pay any taxes by April 17, 2006 as based upon their 2005 net earnings. This ostensible requirement for some reason was not enforced by the City of Henderson finance department and staff to: (1) Businesses in the City of Henderson that used a fiscal year that ended in any month other than December, or (2) to any business that ceased to operate in 2005, or (3) to employees of businesses subject to this tax. ( Employee - licensees were not required to pay their tax based on their 2005 net earnings as the Plaintiff business was required to do, but instead they used their 2006 earnings), (4) The City did not require a 2005 occupational license tax return for a new businesses 2006 tax , as they required the Appellant Orrahood business to do (5) Further more, those new businesses were also not required to file their 2006 occupational license tax until April 15, 2007. When new businesses filed their 2006 Occupational License Tax return the City of Henderson for some known/unknown reason, let those new businesses use their 2006 federal income tax information, not their preceding 2005 year income information as the City of Henderson claimed the law required of the
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Appellant Orrahood, and also ruled acceptable by the Kentucky Court of Appeals, but both in violation of the U.S. Constitutions Equal Protection clause and Section 171 of the Kentucky Constitution. On June 13, 2006 , after repeated attempts to get a reasonable explanation on; (1) what part of the ordinance stated that 2005 was a taxable year or (2) on the legality of an ordinance that would tax a businesss 2005 earnings twice (1Gross Profits and 1 Net Profits taxs) and (3) not apply to all taxpayers, the Appellant attended a City of Henderson commission meeting in which the following questions were asked: How can the City of Henderson claim that a 2005 return be required for businesses that are operating in 2006 but not for businesses that ceased to operate in 2005? If the Appellants business made $10,000 in both 2005 and 2006, but in 2006 ceased to operate, and the Appellant business had an employee that also earned $10,000 in both 2005 and 2006 and the employee retired in 2006, how is it possible that the Appellants business would owe $100 (1% of $10,000) in 2006 (for 2005) and $100 in 2007 (for 2006) but the employee only owe $100 (1% of $10,000) for 2006, paid through withholdings. The Appellants business and its employee, both have the same tax year, the same tax rate (1%), the same income, the same license purpose privilege to work in the City of Henderson, the same Net Profits tax ordinance 17-05, yet the City of Henderson required the Appellant business to pay twice as much as his employee. ( In this example, it should be pointed out that the Appellant business could not withhold from his employee wages, (as the City claims and as the Kentucky Courts ruled) the required 2005 net profits tax. ) As was quoted in the local Gleaner newspaper article dated June 14, 2006, City Commissioner Robby Mills said, If this needs to be changed and we havent been enforcing it correctly then we will do that. Then City Commissioner, now City Manager, Russell Sights said, Youve raised enough questions tonight that you deserve some answers. The Appellant received a letter from the City dated June 27, 2006 ( Exhibit 4) that stated, the intent of the ordinance was to create a current year tax based on or measured by the business-licensees preceding year net income. The letter further stated that the City had been meaning to clean up the ordinance . The Citys position (at that time) according to said letter (Exhibit 4) regarding the 2006 tax based on 2005 income was that because the tax was to be
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paid in 2006 it was a 2006 tax. Further, the letter admitted that the Citys interpretation that dealt with a business that ceased to operate during a current year, conflicted with Section 21-33 (b) of the new ordinance 17-05. However, Section 21-33(b) is mandated by Kentucky Revised Statute, and to date, the City of Henderson never sought to change clean up this provision. To date, the Kentucky courts have upheld the City of Henderson 2006 current year interpretation of the ordinance 17-05, however as of June 30, 2010, the City of Henderson reversed its position on occupational license taxes, to now require a return after a business ceases to operate. The City of Henderson first letter dated June 27, 2006 (Exhibit 4) is in direct contradiction to its second letter dated July 12, 2010 and legal memorandum dated June 30, 2010 (Exhibit 5). Also to date, it should be noted these two letters have been hidden and have never been seen by any Kentucky court and are unaware of the City of Henderson (Exhibit 5) new found interpretation of the ordinance 17-05. Upon review of both City letters (Exhibit 4) and (Exhibit 5) it is clear that the new ordinance 17-05 cannot be a current year tax and also require a return after a business ceases to operate. It is equally crystal clear that the letter written in 2006 (Exhibit 4) by the City of Henderson, knew this to be true. The said letter going so far as to give the following example: If, in fact, the net profits tax is a tax for the privilege of doing business in the city for the current year then it would be counter to this belief to charge the tax on a business that is not in operation during the tax year. Again, as example to demonstrate the logic. Business X ceases to operate in November 2005. The tax that is due from business X on April 15, 2006 is for the privilege of doing business in Henderson in calendar year 2006. Business X has done no business in calendar year 2006 therefore no tax should be due. The said City letter (Exhibit 4) concluded that no tax should be due from a business that ceased to operate during the current year. This conclusion is most puzzling? It is crystal clear to the Appellant Orrahood , simply by reading the law, that the ordinance requires, going so far as to use the term shall not defeat, the filing of a return and collection of the tax due, after a business ceases to operate. Furthermore, Section 21-33(b) of the ordinance is mandated by Kentucky Revised Statute.
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The statutes requirement to file a return after (past tense) a business ceases to operate in the City of Henderson clearly proves that the ordinance did not intend to create a 2006 current year tax as computed by its preceding 2005 years net earnings. If a company had gone out of business in 2006 by the very terms of the ordinance 17-05 would have required them to file their 2006 return in 2007 and tax by April 15, 2007. It would make no sense at all to require a license tax for a period that a business was not operating under the Citys current year interpretation of the law and Kentucky Courts preceding year rulings. The Appellant argues that, the City of Hendersons current year interpretations of the law and all subsequent Henderson District and Circuit Courts and the Kentucky Court of Appeals rulings that the tax is a 2006 current year tax based or computed upon a taxpayers preceding years income are all, irreconcilable with the law. The general rule is that a common law right to a tax refund exists: (1) when the taxing statute or regulation is invalid and the tax payments were submitted involuntarily,[or] (2) when the taxing authority has engaged in misrepresentation. The Court, in Inland Container v. Mason County, 6 S.W. 3d 374, 377 (Ky. 1999) only used two numbers to set forth the criteria that must be met before the common law right to a refund can apply. However, there are actually three criteria: First, the taxing statue or regulation must be found to be invalid; Second, the payment must be involuntary; or Third, the taxing authority must have made a misrepresentation to the taxpayer. There have been no changes in in the ordinance 17-05 or KRS that would lead any one to reasonably believe one thing in 2006 ( City letter sent to the Appellant Orrahood dated June 27, 2006, Exhibit 4) and yet another in 2010 (City letter and legal memorandum, sent to another local businessman, dated June 30, 2010 , Exhibit 5). What is the purpose of the law, if not to inform citizens as to what is expected of them.

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Ambiguous tax laws must be liberally construed in favor of the taxpayer. Section 21-37 of the new ordinance 17-05 clearly states that every business entity and employer required to obtain an occupational license from the City, shall file for the preceding taxable year. Because of the conflicting rulings in Kentucky Courts and the fact that Occupational License Taxes cant be both a current year tax and a tax for the preceding taxable year, Occupational License Tax laws must violate due process of law, because based upon the two City letters, (Exhibits 4 & 5) a reasonable person could reasonably believe no return is required after a business ceased to operate. The City of Henderson required the Appellant business to pay 2 (two) different 2005 business license taxs. ( 2005 Gross Profits tax and another 2005 Net Profits Tax), over the same certain period of time and for the same certain purpose; the privilege of doing business in the City of Henderson . There is no dispute that the Appellant Orrahood paid under the old ordinance 32-93, his business gross rental receipts tax due and owing for his 2005 Occupational License. In fact, under the gross profits ordinance 32-93, the Appellant business did in fact pay into the second quarter of 2006 as each business paid to 1 May of a given year with a return due on the 30 April of that same year. While it is true that a taxpayer, may be subject to a city and county ordinance levying occupational license fees, Preston v. Johnson County Fiscal Court, Ky. 27 S.W. 3D 790 (2000), there is no authority what so ever for the position that a taxpayer should be required to file a return for a tax year that was not within the realm or purview of the ordinance. Commonwealth of Kentucky Courts only have such powers as have been granted by the legislature, expressly or necessarily implied, by some provision of law , Kentucky Licensed Beverage Ass n v. Lousiville-Jefferson County Metro Government, 127 S.W. 3d 647 (Ky., 2004); Every such grant of authority carries with it the prohibition of exercising any authority in a manner different from that permitted, Boyle v. Campbell, 450 S.W. 2d 265, 268 (Ky., 1970) (emphasis added) nor should a taxpayer have to pay taxes twice, once under the Citys previous (Gross Profits) tax ordinance 32-93 and once again under the Citys new ( Net Profits) tax ordinance 17-05, for the same certain period of time, year 2005. In fact, Kentucky law is
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clear on this point. In Baker v. City of Corbin, Ky. App. 556 S.W. 2nd 449 (1977), the court held that the exercise of licensing power and taxation of businesses must be based on reasonable distinctions, uniform and must not be excessive, arbitrary, or prohibitive. 67. If the new ordinance 17-05 meant to tax 2005 it would have been retroactive and KRS 446.080.(3) requires that retro-active laws to be expressly so declared. The subject ordinance, 17-05, is totally devoid of any language concerning retroactivity of the ordinance as to tax year 2005. Although there is no constitutional provision forbidding double taxation, public policy dictates that taxation of the same property twice not be enforced except in cases where the legislature has clearly declared a contrary policy. City of Louisville v. Aetna Fire Ins. Co., 284 Ky. 154, 143 S.W.2d 1074 (1940). So strong is the public policy that if the legislative intent is less than clear, a statute should be construed so as to avoid double taxation in any form. Kentucky Power Company v. Revenue Cabinet, 705 S.W.2d 904 (Ky. 1985); in George v. Scent, Ky., 346 S.W.2d 784 (1961), statutes are to be construed in a manner which avoids double taxation in any form, even if the double taxation is the result of imposition of a tax by another governmental authority. On or about October 22, 2010 in the case of James E. Phillips v. Commonwealth of Kentucky , No. 2009-CA-005-000551-DG the Kentucky Court of Appeals reversed the conviction of James E. Phillips, C.P.A. and ruled in his favor, due to violations of his rights guaranteed by the U.S. Constitution. In summary, the Court concluded that Phillipss conviction was improper on two grounds. (1) the ordinance was unconstitutional as applied to him due to the failure of the City to appoint the board of administrative appeal and (2) the Commonwealth improperly imputed criminal intent to evade payment of payment of the tax from his failure to file a return without proving the requisite mens rea. The ordinance 17-05, by its very terms, called for a board of appeals to review disputes concerning the ordinance and the net profits tax, with any appeal from the board to be made to the City Commission. The City Commission, on or about November 2010, amended the new ordinance17-05 and eliminated this particular provision of the new ordinance. The Appellant Orrahood was in fact, the first person/business entity to be granted their due process rights to make appeal to
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City of Henderson Occupational License Appeal Board concerning the ordinance. At all times material, the administrative appeals board was never set up and put into place by the City Commission until sometime around November 2010, even though it was required in the ordinance, effective January 1, 2006 and only then after repeated attempts by the Appellant, requesting a hearing before both the first and the second duly appointed Occupational License Appeals Board. It should be noted that, on or about May 12, 2009, the Henderson City Commission passed a Board Appointment Ordinance, 3-2 vote, giving the commissioners the right to nominate board members if the mayor lets a vacancy stand for more than 60 days. The Board Appointment ordinance was amended at the suggestion of Commissioner Mike Farmer, who wanted the word shall replaced with may because he said there might come a time when the commission intentionally wants to keep a position vacant. (said quote is from the local Gleaner newspaper article dated May 14, 2009 ) In denying the Appellants May 5, 2011 appeal (Exhibit 6), the Occupational License Appeals Board concluded that Mr. Orrahoods first appeal is practically identical to the arguments made by James Phillips, local accountant, in his cases before the Henderson District and Circuit Courts and the Kentucky Court of Appeals and further ruled that it is bound to follow the judicial precedents established by the courts in regard to the first appeal brought by Mr. Orrahood, and that this Board must reject his argument. Our judicial system presumes innocence, which means that legally speaking, even the obviously guilty are treated as though they are innocent, until they are proven otherwise. The Kentucky Court of Appeals overturned Mr. Phillips jury criminal conviction on two grounds, the second ground being the Commonwealth improperly imputed criminal intent to evade payment of the tax from his failure to file a return without proving the requisite mens rea. How can the City of Henderson Occupational License Appeals Board, reject the Appellant Orrahood (civil) appeal arguments based solely upon Mr. Phillips arguments, all made in (criminal) court precedings. The Appellant Orrahood arguments were not the same as Mr. Phillips arguments. Even if they were, the Kentucky Court of Appeals ruled that the Commonwealth failed to prove Mr. Phillips willfully failed to file his 2005 net profits return, the return due by April 17, 2006.
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The Appellant is not a tax protester and has always supported, both old and new, City of Henderson Occupational License Tax ordinances. There is no dispute the Appellant Orrahood paid his (as the City claims) required 2005 Net Profits Tax, under protest (see Exhibit 3) and with interest and penalty, and he presented the City of Henderson Occupational License Appeals Board facts and evidence, based in law, that clearly proved the City of Henderson (through its arbitrary interpretations and capricious enforcement) and Kentucky Courts (through its rulings) had arbitrarily accessed and illegally collected a 2005 net profits tax from his business, the return for which was due by April 17, 2006. The City of Henderson Occupational License Board of Appeals is required to base its decision only on the facts and evidence presented at the hearing. Any Board decision, which is not based on evidence, exceeds a Boards jurisdiction, is considered arbitrary, and should be overturned in court. The Appellant Orrahood argues the City of Henderson Occupational License Appeals Board acted outside its jurisdiction by arbitrary imputing the Appellant Orrahood arguments to be those of James E. Phillips. Furthermore, the Board exceeded its authority by suppressing and/or dismissing credible, irrefutable evidence (Exhibit 4) and (Exhibit 5), introduced and read into the record in his appeal hearing, that clearly supported and affirmed the Appellants appeal. In fact, the two City letters (evidence) (Exhibit 4) and (Exhibit 5) have been hidden for some known /unknown reason, and were never seen by the jury in Mr. Phillips, Henderson District court case, both City letters (evidence) were hidden and were appearantly unseen or over looked by the Judge in Mr. Phillips Circuit Court case and further more and most importantly, both pieces of evidence were hidden and were appeantly unseen or over looked by all (3) three Appellate Court Judges in Mr. Phillips Kentucky Court of Appeals case .

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It is crystal clear the first City of Henderson letter, sent to the Appellant Orrahood (Exhibit 4) was not true, and the city attorney and the Henderson County Attorneys office misrepresented this fact in presenting its case against James E Phillips in Henderson District Court (site case). Additionally, courts have inherent power to dismiss an action when a party has willfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice in quoting Wyle v. R.J. Reynolds Phoceene Sous-Marine, S.A. v. U.S. Phosmarine, Inc. 682 F. 2d 802, 806 (9th Cir. 1982) When a law is ambiguous, it is unconstitutional and cannot be enforced under the "void for vagueness doctrine" because it violates due process protections guaranteed by the Fifth and Sixth Amendments as described by the Supreme Court in the following decisions: Origin of the doctrine ( Lanzetta v. New Jersey, 306 U.S. 451). Development of the doctrine (see Screws v. United States, 325 U.S. 91, Williams v. United States, 341 U.S. 97, and Jordan v. De George, 341 U.S. 223). By the new ordinance 17-05 , defining a crime as the willful failure to file a return with the intent to evade payment of any tax due under the ordinance, and by permitting arrests upon commission of that crime, such being the case in the criminal jury trial of James E. Phillips v. Commonwealth of Kentucky, No. 2009-CA-005-000551-DG, the City of Henderson (by its current year interpretation of the law) and Kentucky Courts ( by its preceding year rulings) are attempting to unconstitutionally distort and make meaningless the legislative purpose of this tax statute (ordinance 17-85) and also to compel what may not be compelled under both the United States and Commonwealth of Kentucky Constitutions. While it is amazing that, in 2006, the City of Henderson can admit to arbitrarily interpreting its written ordinance 17-05 and also to violating KRS statue, its even more amazing that our Kentucky courts do not see this obvious violations of law. Its outrageous, a violation of the Appellants due process rights and a miscarriage of justice, to allow the City of Henderson
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Occupational License Appeals Board to reject Appellant Orrahood appeal based solely upon the judicial precedents established by the courts. The City of Henderson Occupation License Appeals Board ruling, in the case of James Orrahood d/b/a James Orrahood Rentals case (#01-2001) is a derogation of Appellants rights secured him by the constitution of the United States, and State of Kentucky and therefor should be overturned.

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