Tax authorities and tax honesty advocates have been at odds for many years over whether filing a Form 1040 Individual Income Tax Return is voluntary or mandatory. The Service has jailed people for “failure to file.” Many who have studied the matter still believe there is a lawyerly bamboozle in involved. Why? Because you can’t be forced to sign an affidavit of any kind. A tax return is an affidavit.
I’m not going to plunge any deeper into the voluntary/mandatory mud pit right now. However, I want to examine a statement made by the IRS Chief Counsel concerning the validity of a tax returns with the signature statement changed. It sheds a little light on the issue of whether filing is required or whether we are fooled into doing it.
Form 1040 Returns with Altered Jurats
Filers who have doubts about their liability for the tax have often filed returns where they have changed the “jurat.” The jurat is the little statement above the signature that says the signer is telling the truth “under penalties of perjury.” The court’s have determined that if the alteration has the effect of negating the declaration, for example “Signed under Duress, Wages are not Taxable” then the return isn’t valid. The attachment essentially contradicts the sworn statement. (Schmitt v. U.S., 140 B.R. 571 (Bank W.D. Okl. 1992)
If the filer attaches a statement that is a protest, however, but does not negate the meaning of the jurat, then the return is valid. For example, one a filer who wrote “under protest” beneath his signature did not negate the jurat, and so had filed a valid return. ( See McCormick v. Comm’r, 94-1 U.S.T.C. ¶ 50,026 (E.D.N.Y. 1993) and Todd v. U.S., 849 F2d 365 (9th Cir. 1988)
Chief Counsel Memo 1998-053
The IRS Office of Chief Counsel used these cases to advise his minions in a Memo dated July 29, 1998 of what the Service considers valid and invalid tax returns. It is that Memo that has the statement about returns that I found so very curious in that it appears to confirm the voluntary nature of filing a return in most cases.
“In agreeing with the Service, the court pointed out that the voluntary nature of our tax system requires the Service to rely on a taxpayer’s self-assessment and on a taxpayer’s assurance that the figures supplied are true to the best of his or her knowledge. Id. Accordingly, the penalties of perjury statement has important significance in our tax system. The statement connects the taxpayer’s attestation of tax liability (by the signing of the statement) with the Service’s statutory ability to summarily assess the tax.” (emphasis added) CC Memo 1998-053, pg. 3
The Filing Requirement
The problem is that the filing statute only requires “any person made liable for any tax imposed by this title,” to file a return. But if signing a Form 1040 is indeed “the taxpayer’s attestation of liability” as the IRS Chief Counsel says above, then filers generally are not liable until they have actually declared themselves to be by filing.
They were not “made liable for any tax imposed by this title” they made themselves liable by their own declaration under penalty of perjury.
The lack of a liability statute in the income tax portion of the Internal Revenue Code has long been known. Any mention of it before a federal judge, however, is clubbed down with the “frivolous” hammer. The Chief Counsel in Memo 1998-053 seems to confirm that no liability statute is necessary because filers declare themselves liable.
So filing voluntary or not? Civil comments welcome. Patriot or Progressive ranting, name calling, or whatever I in my sole discretion decide is trolling will not be approved.
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Lysander is not an attorney and it is not his intent to offer legal advice.
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