Opinion ID: 71983
Heading Depth: 2
Heading Rank: 1

Heading: Validity of the Forms 1040

Text: We review the questions as to the proper interpretation of the Internal Revenue Code de novo. Estate of Moore v. Comm'r, 53 F.3d 712, 714 (5th Cir.1995) (citation omitted). A federal income tax return, Form 1040, shall contain or be verified by a written declaration that it is made under penalties of perjury. 26 U.S.C. § 6065. Form 1040 contains a jurat that states, in part, [U]nder the penalties of perjury, I declare that I [the taxpayer] have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. A taxpayer's signature on a return with a jurat indicates that the taxpayer attests to the accuracy of the reported data. See Mosher v. Internal Revenue Serv., 775 F.2d 1292, 1294 (5th Cir.1985) (per curiam); Borgeson v. United States, 757 F.2d 1071, 1072-73 (10th Cir.1985) (per curiam). Without the certification, the IRS cannot assess the substantial correctness of [the taxpayer's] self-assessment. Mosher, 775 F.2d at 1294; see also Buck v. United States, 967 F.2d 1060, 1061 (5th Cir.1992) (per curiam) (failure to sign a Form 1040 precludes the IRS from assessing the form for substantial correctness). In cases involving the filing of frivolous tax returns, [2] courts have held that tax returns are not valid where a taxpayer has deleted portions of the jurat. See Ledbetter v. Comm'r, 837 F.2d 708, 709-10 (5th Cir.1988) (deletion of the phrase under penalty of perjury invalidated the tax return); United States v. Moore, 627 F.2d 830, 834 (7th Cir.1980) (obliteration of the jurat invalidated the return). Courts have also held tax returns to be invalid where a taxpayer fails to sign the jurat. Buck, 967 F.2d at 1060-61. This case presents us with a somewhat different question: whether Oden's addition of language on the tax return altered the jurat in such a way so as to invalidate the return. Other courts that have addressed this question have examined whether the additional language amends the meaning of the jurat or merely reflects the taxpayer's exercise of free speech. In Todd v. United States, a taxpayer filed a complete Form 1040 and added the phrase signed involuntarily under penalty of statutory punishment under the jurat. 849 F.2d 365, 367 (9th Cir.1988). Despite the additional language, the government conceded that this return was complete and accurate. Id. at 368. In contrast, the Seventh Circuit held that a taxpayer's attachment of a specific disclaimer of liability invalidated his Form 1040. Sloan v. Comm'r., 53 F.3d 799, 800 (7th Cir.1995). The taxpayer's disclaimer den[ied] that [he] [was] liable or made liable for any 1040 income tax for the above stated year and disclaim[ed] liability for any tax shown on the form. Id. (internal quotation marks omitted). The Seventh Circuit distinguished the holding in Todd by noting that there was no specific disclaimer of liability in that case. Id. In Beard v. Comm'r., 82 T.C. 766, 777-79, 1984 WL 15573 (1984), aff'd, 793 F.2d 139 (6th Cir.1986) (per curiam), the United States Tax Court also examined the question of when a document may be said to constitute a valid tax return for statute-of-limitations purposes. The Beard court held that, in order for a document to be considered a return, there must be sufficient data to calculate tax liability; ... the document must purport to be a return;... there must be an honest and reasonable attempt to satisfy the requirements of the tax law; and ... the taxpayer must execute the return under penalties of perjury. Id. at 777; see also Badaracco v. Comm'r., 464 U.S. 386, 396-97, 104 S.Ct. 756, 78 L.Ed.2d 549 (1984); Green v. Comm'r., 322 Fed.Appx. 412, 415 (5th Cir. 2009) (unpublished) (citing the Beard test with approval). We now turn to the language at issue in this case. Oden testified at trial that he did not know what the phrase without prejudice meant. He testified further that Davis told him that it was good practice to include the phrase, but he had no explanation as to why this was so. As the government notes in its brief, the phrase is ambiguous and does not, on its face, disclaim Oden's status as a taxpayer, call the accuracy of the data into question, or make a mockery of the return. Cf. Todd, 849 F.2d at 368; Beard, 82 T.C. at 778-79. Such a statement is more akin to a general statement of protest. See Todd, 849 F.2d at 368. [3] In cases such as this, where there is some ambiguity as to language's effect on the jurat, we agree with the Seventh Circuit that the IRS should be entitled to construe alterations of the jurat against the taxpayer, at least when there is any doubt. Sloan, 53 F.3d at 800. We refuse to require [the IRS] to engage in guessing games to determine what disclaimers like this one mean. To require such would drastically hinder the [IRS's] ability to process returns effectively and efficiently. Williams v. Comm'r., 114 T.C. 136, 142, 2000 WL 230343 (2000). Here, the IRS did not reject Oden's Forms 1040 based on the additional language. We therefore hold that the Forms 1040 were valid, though fraudulent, tax returns. [4]