Court Opinion

ID: 9531094
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:07:25.40283+00
Date Added: 2024-06-11T13:28:20.467971
License: Public Domain

PAGE, Justice
(concurring specially).
I concur in the result, but differ as to the rationale. This is a review on writ of certiorari to the tax court, which affirmed an order assessing tax liability, interest, and a frivolous return penalty. The relevant facts are not at issue. During the calendar year 2000, Bond received $48,638 in wages, $183 in taxable interest, and $678 in dividends. On March 25, 2001, Bond filed his state income tax return (Form Ml) for tax year 2000, modifying the form to serve as a trust income tax return and claiming $0.00 in taxable income and a refund for the full amount of state income taxes withheld. Bond submitted a Form W2 Wage and Tax Statement reflecting that his employer, Honeywell, Inc., withheld $2,304.53 in state income tax. Bond based his state income tax return on his federal income tax return for estates and trusts (Form 1041) on which he reported that all of his earnings had been paid to a trust, identified himself as trustee, and claimed a deduction equal to his gross income as fiduciary fees.
According to the tax court, an audit of Bond’s state income tax return was per*840formed and on November 21, 2002, the Minnesota Commissioner of Revenue notified Bond that he had incorrectly reported his tax liability and could be assessed a $500 penalty for filing a frivolous return unless he filed an amended return within 20 days.1 The record reveals that an amended return was not filed. On December 13, 2002, the Department of Revenue issued an audit report assessing Bond $3,749.86 in taxes, interest, and penalties. By notice of December 24, 2002, the commissioner modified the order, adjusting the calculation of interest, and assessing total liability for taxes, interest, and penalties at $3,690.48. The tax court affirmed on appeal, rejecting Bond’s claim that his income was exempt from taxation as lacking in merit. Bond asserts error in the tax court’s application of law.
In apparent reliance on a theory floated on an Internet website, Bond advanced the position that the Social Security Administration (SSA) had created the FREDERICK OGAN BOND trust in March 1963, “offered” the position of trustee to him by sending him a social security card, and instructed him “to sign [the card] for acceptance”; and that by signing the card he acted as trustee in all of his dealings with the trust. Bond purported to “secure” the trust with an “indenture” by submission of form letters and documents, made available on the Internet website, to the SSA; and he thereafter filed the federal Form 1041 (trust income tax return) instead of the federal Form 1040 (individual income tax return).
The primary objective of the old age and disability aspects of the social system is to “provide workers and their families with basic protection against hardships created by the loss of earnings due to illness or old age.” Mathews v. De Castro, 429 U.S. 181, 185-86, 97 S.Ct. 431, 50 L.Ed.2d 389 (1976). Social security is an earnings-based insurance program funded by wage earnings and is set up as a trust fund administered by the Social Security Administration. Doe v. Heckler, 568 F.Supp. 681, 683 (D.C.Md.1983). Under the current system, employers withhold payroll taxes from their employees’ wages and pay those taxes, together with the employer’s share, to the federal government to fund the Social Security Trust Fund. Paukstis v. Kenwood Golf & Country Club, Inc., 241 F.Supp.2d 551, 560 (D.Md.2003). Assets in the Social Security Trust Fund, however, are not segregated for particular classes of beneficiaries. “Rather, the trust funds are accounting entries in the federal budget to which Social Security contributions and certain other accruals and payments are attributed and from which Social Security benefits and certain other expenses are paid.” Howell E. Jackson, Accounting for Social Security and Its Reform, 41 Harv. J. on Legis. 59, 69 (2004).
Bond received taxable income from wages, interest, and dividends in the year 2000. His claim that his income was exempt from state income tax was subject to summary judgment as it was without factual or legal basis. Moreover, Bond’s state tax return was substantially incorrect and frivolous, thus making him liable for the frivolous return penalty. Cf. Bradley v. United States, 817 F.2d 1400, 1404 (9th *841Cir.1987) (test for frivolous federal tax return is met when the position taken by the individual has no basis in fact or law). I see no need to further refute Bond’s assertions “with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some col-orable merit.” Crain v. Comm’r of Internal Revenue, 737 F.2d 1417, 1417-18 (5th Cir.1984).

. Minnesota Statutes § 289A.60, subdivision 7 (2000), assigned liability in the amount of $500 to a person filing a frivolous tax return. The provision has since been amended to provide a “penalty of the greater of $1,000 or 25 percent of the amount of tax required to be shown on the return” for returns filed after December 31, 2003. Act of May 25, 2003, ch. 127, art. 3, § 5, 2003 Minn. Laws 780.