Opinion
99 Civ. 2602 (NRB)
September 9, 2000
OPINION AND ORDER
Plaintiff Joseph Letscher ("Letscher") has brought this action pro se for a refund of federal income taxes for the 1995 tax year in the amount of $723.00, and for relief from defendant United States of America's (the "Government") assessment of a $500.00 penalty for plaintiff's allegedly frivolous 1995 tax return. Now pending is the Government's motion, pursuant to Fed.R.Civ. p. 56, for summary judgment, asserting that plaintiff's 1995 return, which contained a qualified jurat, did not constitute a valid claim for a refund, and that as a result, this Court lacks subject matter jurisdiction over the action. Also pending is plaintiff's cross-motion for summary judgment, on the ground that the return was indeed a valid claim for a refund. For the reasons stated below, defendant's motion for summary judgment is granted, plaintiff's motion is denied, and his complaint is dismissed.
BACKGROUND
On April 13, 1996, Letscher dated and mailed a document purporting to be a tax return for 1995, entitled "1995 1040PC FORMAT U.S. INDIVIDUAL INCOME TAX RETURN." He alleged in it that he was due a refund of $723.00 in taxes. Declaration of Sarah Thomas, dated April 12, 2000 ("Thomas Decl."), Ex. 1 (plaintiff's complaint, "Compl."), Ex. A ("Form 1040PC" or "1995 tax return") The return also contained a printed jurat which states, in relevant part:
In the Form 1040PC, Letscher claimed an adjusted gross income of $6,240 (line 32), the standard deduction of $3,900 (line 34) and one exemption of $2,500 (line 36). Accordingly, he claimed no tax was due for 1995 (line 37). Furthermore, he claimed that $493 was wrongly withheld from his salary (line 55), that he was entitled to an earned income tax credit of $230 (line 57), and thus, that a total refund of $723 was due him (line 63). See Def.'s Mem. at 2.
Plaintiff's motion to strike the Thomas Declaration is denied, as the Declaration complies with the general requirements applicable to attorney affidavits submitted in connection with a motion for summary judgment. See 11 James Wm. Moore, Moore's Federal Practice § 56.14[1] [c] (3d ed. 2000).
The jurat is the portion of the return which provides for the taxpayer's and the preparer's signatures and a declaration that the return has been made "under penalties of perjury." See infra.
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete.
Compl. Ex. A.
Below the jurat and above his signature, however, Letscher added the following qualifying language: "Without prejudice, See attachment dated 4/13/96." Id. The attachment, a single typewritten page entitled "First Amendment Right for a Redress of Grievances: Attachment to 1995 Federal Tax Return" (the "Attachment"), contained the following statement:
I affirm that any information, marks and signature that appear on the 1995 tax return are provided without prejudice and under duress due to the fact that I have a first amendment right to petition for a redress of grievances that includes the filing of a tax return.
The full text of the Attachment reads as follows:
I affirm that any information, marks and signature that appear on the 1995 tax return are provided without prejudice and under duress due to the fact that I have a first amendment right to petition for a redress of grievances that includes the filing of a tax return.
My first amendment right includes, but is not limited to:
1. my religious belief that I not accept any " marks or numbers" (e.g. social security number); and,
2. my belief that any remuneration I may have received, in exchange for my labor, does not constitute " income"; and,
3. my right that I not be compelled to perform under or to enter into contracts which would make me part of the federal United States. My use of the words " without prejudice" is my remedy to change the commercial jurisdiction of the alleged 1040 contract back to a common law jurisdiction — that jurisdiction being outside the jurisdiction under which the administrative agencies of the federal government are authorized by statute to administer.
Judge Weinstein in Lawrence P. McCormick v. Shirley D. Peterson. et al., CV93-2157 (E.D.N.Y. Dec. 1993) concluded that:
"The first amendment to the Constitution provides explicitly: `Congress shall make no law respecting . . . the right of the people . . . to petition the Government for redress of grievances.' What is prohibited to Congress is forbidden to the Tax bureaucracy. See California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508 (1972) (right to petition extends to all departments of the Government). A protest is an expression of grievance, seeking redress that the Internal Revenue Service may not throttle or mute by threats of penalties."
Letscher then proceeded to list his alleged First Amendment rights, namely: (1) that his religious beliefs do not permit him to accept any "marks or numbers," such as a social security number; (2) that "any remuneration [he] may have received, in exchange for [his] labor, does not constitute `income'" and (3) that he cannot be compelled to enter into a contract which would make him part of the United States or subject him to the "commercial jurisdiction of the alleged 1040 contract." Id. Lastly, the Attachment cited the decision of Judge Weinstein in McCormick v. Peterson, No. CV93-2157, 1993 WL 566334, at *1 (E.D.N.Y. Dec. 1, 1993) which held that the addition of the phrase "under protest" was a permissible exercise of a citizen's first amendment right to protest the government and "did not alter the meaning of the jurat."
By letter dated June 26, 1996, the Internal Revenue Service ("IRS") advised plaintiff that it deemed the return frivolous, due to the altered jurat, and threatened to assess a $500.00 penalty if he did not correct the return within 30 days. Compl. Ex. B. Letscher did not file another return for the 1995 tax year, however. See Thomas Decl. ¶ 9 Ex. 3. As a result, on September 16, 1996, the IRS assessed a $500.00 penalty, pursuant to 26 U.S.C. § 6702. See Id. ¶ 6 Ex. 2.
Letscher filed the present action on April 9, 1999, seeking a refund in the amount of $723.00, plus interest, and relief from the $500.00 penalty. He claims, inter alia, that his 1995 return was not frivolous and constituted a valid claim for a refund. After exchanging preliminary discovery, the parties served and filed the present cross-motions, which are now fully submitted.
DISCUSSION
Pursuant to 28 U.S.C. § 1346 (a)(1), federal district courts have original jurisdiction, concurrent with the United States Claims Court, over actions for the alleged overpayment of federal taxes. To bring a refund suit, however, a taxpayer must have first filed a "claim for refund or credit . . . with the [IRS]." 26 U.S.C. § 7422 (a); see United States v. Forma, 42 F.3d 759, 763 (2d Cir. 1994); see also Flora v. United States, 362 U.S. 145, 177 (1960) (tax must be paid before claim for refund can be filed). In certain circumstances, a "properly executed individual . . . original tax return" can itself function as a claim for refund, 26 C.F.R. § 301.6402-3, but to be valid, the return must, among other things, "be verified by a written declaration that it is made under the penalties of perjury." 26 U.S.C. § 6065; see Lucas v. Pilliod Lumber Co., 281 U.S. 245, 248 (1930) (unsworn tax return fails to satisfy the requirements of law). Failure to satisfy the prerequisites for initiating a refund suit deprives the district court of subject matter jurisdiction, regardless of the suit's potential merits.Forma, 42 F.3d at 763-64; see Magnone v. United States, 902 F.2d 192, 193 (2d Cir.), cert. denied, 498 U.S. 853 (1990). Thus, if the return constituting a refund is invalid, the Court is without jurisdiction to hear the suit.
In full, the relevant section provides:
The district courts shall have original jurisdiction, concurrent with the United States Claims Court, of:
(1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws.28 U.S.C. § 1346 (a).
This section provides:
No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof.26 U.S.C. § 7422 (a).
The relevant regulatory provisions state:
(1) In general, in the case of an overpayment of income taxes, a claim for credit or refund of such overpayment shall be made on the appropriate income tax return.
. . .
(5) A properly executed individual, fiduciary, or corporation original income tax return (on 1040X or 1120X if applicable) shall constitute a claim for refund or credit within the meaning of section 6402 and section 6511 for the amount of the overpayment disclosed by such return or amended return.26 C.F.R. § 301.6402-3 (a)(1)-(5).
To facilitate a taxpayer's compliance with this requirement, the Form 1040 contains a preprinted jurat, which states "Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete." Williams v. Commissioner of Internal Revenue, 114 T.C. 136 (T.C. Mar. 1, 2000). By signing the jurat included within the Form 1040, a taxpayer typically satisfies the requirement that his return be executed under penalty of perjury. Id. (citing Sloan v. Commissioner, 102 T.C. 137, 146-147 (1994), aff'd, 53 F.3d 799 (7th Cir. 1995)).
The question presented on this motion, therefore, is whether Letscher's additions to the jurat in his return invalidated the return and precluded its use as a claim for refund. Based on our review of the relevant caselaw, we find that the return was indeed invalid, and accordingly, we lack subject matter jurisdiction.
First, this case is distinguishable from McCormick, the only relevant precedent in this Circuit, on which plaintiff heavily relies. 1993 WL 566334, at *1. In that case, the taxpayer-plaintiff merely wrote the words "under protest," and nothing more, beneath the jurat and his signature. As Judge Weinstein reasoned:
The words "under protest" did not alter the meaning of the jurat. The return was filed under penalties of perjury. It was not frivolous. [Plaintiff] properly exercised his first amendment right to protest to the [IRS] while still complying with his statutory obligation to file a timely tax return.Id. at *1.
Here, Letscher went much further. Not only did he write the words "without prejudice" beneath the jurat, he also attached statements which called into question the truthfulness and accuracy of his return. The statement that "any information, marks and signature that appear on the 1995 tax return are provided . . . under duress raises serious doubt as to whether his return was truly made and signed under penalties of perjury. Similarly, the statement that "any remuneration that [he] may have received, in exchange for [his] labor, does not constitute `income'" also raises questions as to whether the income entries on the form were accurate.
As Judge Weinstein noted in McCormick, the requirement that a return be signed under penalties of perjury is paramount. 1993 WL 566334, at *1.See Buck v. United States, 967 F.2d 1060 (5th Cir. 1992), reh'g, en banc, denied, 974 F.2d 1337 (5th Cir. 1992); Hettig v. United States, 845 F.2d 794 (8th Cir. 1988); Mosher v. Internal Revenue Service, 775 F.2d 1292 (5th Cir. 1985), cert. denied, 474 U.S. 1123 (1986). Unlike in that case, however, Letscher's additions to the jurat may well have altered the jurat's meaning, at least as to whether his declaration was made under the penalty of perjury. It cannot be said, therefore, that his statement was a proper exercise of his right to protest, "while still complying with his statutory obligation to file a [valid] tax return."Id.
We are not saying that, in the abstract, a taxpayer cannot permissibly add language or attach a statement to a tax return without breaching the sanctity of the jurat. A taxpayer should be able to exercise his First Amendment right to protest the Government, and he may do so, in certain circumstances, on his tax return or in an attachment. What is impermissible, however, is the addition of language that seriously calls into question the validity of the taxpayer's declaration that the return is truthful and accurate. It is precisely this prohibition that Letscher is found to have violated, his protestations to the contrary notwithstanding, see Pl.'s Mem. at 7-8.
We believe this case more closely resembles several cases from outside this Circuit, where courts have found the addition of qualifying language to alter a jurat's meaning. See Sloan v. Commissioner, 102 T.C. 137, 146-147 (1994), aff'd, 53 F.3d 799 (7th Cir. 1995)); In re Schmitt v. United States, 140 B.R. 571, 572 (W.D.Okla. 1992) (holding the addition of the words "signed under duress see statement attached" to the jurat invalidated the return); Williams v. Commissioner of Internal Revenue, 114 T.C. 136 (T.C. Mar. 1, 2000) (holding that attached disclaimer and denial statement invalidated return). In Sloan, for example, the taxpayer wrote "Denial and Disclaimer attached as part of this Form" immediately following the jurat and above his signature. In the attachment, he wrote:
I submit this "Denial and Disclaimer" as an attachment to the IRS Form 1040 for the year stated above. I deny that I am liable or made liable for any "1040 income tax" for the above stated year. I claim all of my rights and waive none of them merely for exercising my right to work. I submit the 1040 form to prevent the further theft of my property and loss of my liberty. My signature on the form is not an admission of jurisdiction or submission to subject status. I "disclaim liability" for any tax shown on the form.Id. at 141. In finding the return invalid, the Tax Court stated that the attached language "[raised] serious questions about whether petitioner [was] `denying' the accuracy of the information contained in the return, `disclaiming the jurat altogether, or simply protesting the tax laws."Id. at 145.
As the Seventh Circuit stated in its affirmance, "[t]he Sloans' denial and disclaimer could be interpreted to deny that their signature [had] any more significance than the signature on a coerced confession. It would surely complicate the government's task of proving perjury." Exactly the same could be said of Letscher's Attachment.
We do not go as far as Judge Posner does, however, in striking the balance between the IRS's administrative interests and taxpayers' right to protest the government. Nor do we share entirely his sympathy for the tax bureaucracy, at least where it is at odds with citizens' First Amendment rights. See Sloan, 53 F.3d at 800 ("[W]e think that the [IRS] should be entitled to construe alternations of the jurat against the taxpayer, at least where there is any doubt . . . The government receives tens of millions of tax returns and if taxpayers start embehishing the jurat the staggering task of processing all these returns may become entirely unmanageable.)
In sum, we find that Letscher's additions to the jurat altered its meaning, calling into question the veracity and accuracy of the return, and violated the requirement that a return be made under penalty of perjury. As his return was invalid, Letscher failed to make a valid claim for a refund. Accordingly, this Court lacks subject matter jurisdiction to adjudicate his refund action.
We similarly lack jurisdiction with respect to plaintiff's claim for declaratory or injunctive relief from the Government's assessment of the $500 frivolous return penalty, pursuant to Flora v. United States, 362 U.S. at 164 (the Court is precluded from entertaining requests for declaratory relief in matters relating to federal taxes) and the Anti-Injunction Act, 26 U.S.C. § 7421 (a). Plaintiff has failed to establish any of the narrow, well-settled exceptions to these rules.
CONCLUSION
For the foregoing reasons, defendant's motion for summary judgment is granted and plaintiff's cross-motion is denied. The Clerk of the Court is directed to dismiss plaintiff's complaint and close the case on the Court's docket.IT IS SO ORDERED.