Fuller v. United States

• Decision Date: 12 August 1985
• Docket Number: S-83-1223 and S-84-373.,Civ. No. S-83-1148
• Citation: 615 F. Supp. 1054
• Parties: Steven A. FULLER and Karen M. Fuller, Plaintiffs, v. UNITED STATES of America, Defendant. Douglas W. SAMSKI, Plaintiff, v. UNITED STATES of America, Defendant. Thomas A. JOLLY, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Eastern District of California

615 F. Supp. 1054

Steven A. FULLER and Karen M. Fuller, Plaintiffs, v. UNITED STATES of America, Defendant.

Douglas W. SAMSKI, Plaintiff, v. UNITED STATES of America, Defendant.

Thomas A. JOLLY, Plaintiff, v. UNITED STATES of America, Defendant.

Civ. Nos. S-83-1148, S-83-1223 and S-84-373.

United States District Court, E.D. California.

August 12, 1985.

Steven & Karen Fuller, in pro per.

Douglas W. Samski, in pro per.

Thomas A. Jolly, in pro per.

Robert Kwan, Trial Atty., Tax Div., U.S. Dept. of Justice, Washington, D.C., Yoshinori H.T. Himel, Asst. U.S. Atty., Sacramento, Cal., for U.S.

ORDER

KARLTON, Chief Judge.

Plaintiffs in the three above-captioned cases are individuals whom the Internal Revenue Service ("IRS") has fined $500 for filing "frivolous" income tax returns for the 1982 taxable year. See 26 U.S.C. ("I.R. C.") § 6702(a). In timely compliance with the statutory requirements, plaintiffs paid 15% of the penalty ($75), and filed claims for refund with the IRS.¹ See I.R.C. §§ 6703(c)(1), 7422(a). The IRS denied the claims of each plaintiff. Plaintiffs then timely filed these actions seeking a determination of their liability for the penalties. See I.R.C. §§ 7422(a), (f)(1), and 6703(c)(2).

The United States sought dismissal, or in the alternative, summary judgment, in Fuller and Samski. The motions were denied on the basis that the penalty statute did not apply to these plaintiffs and therefore the plaintiffs could prove at trial that they are entitled to the refund relief they seek. Order of April 9, 1985. On its own motion, the court invited the parties to brief whether the plaintiffs in Fuller, Samski, and Jolly should be granted summary judgment, on the basis that the penalty statute does not apply to them. That motion is disposed of in this order.

I STANDARDS

The plaintiffs are entitled to summary judgment on their refund claim if there is no genuine dispute as to any material fact and if, upon the undisputed facts, plaintiffs are entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 468, 82 S.Ct. 486, 488, 7 L.Ed.2d 458 (1962); Retail Clerks Union Local 648 v. Hub Pharmacy, Inc., 707 F.2d 1030, 1033 (9th Cir.1983). Since, as to the issue tendered, there are no material facts in dispute in these cases, resolution turns on whether plaintiffs are entitled to judgment as a matter of law. See Dumdeang v. Commissioner, 739 F.2d 452, 453 (9th Cir.1984).

II RESOLUTION OF THE MOTION

Under the Tax Equity and Fiscal Responsibility Act, a $500 penalty is imposed upon:

any individual who files what purports to be a return of the tax imposed by subtitle A but which — (A) does not contain information on which the substantial correctness of the self-assessment may be judged, or (B) contains information that on its face indicates that the self-assessment is substantially incorrect....

I.R.C. § 6702(a)(1).

A. Undisputed Facts

Each plaintiff filed what purported to be an income tax return for the 1982 taxable year. In Fuller, the plaintiffs answered most of the questions, but wrote "OBJECT" as answers to certain, specific questions on the return.² The return explained that the word "OBJECT" meant that the taxpayers refused to answer the question on the basis that they were invoking their rights under the Fifth Amendment against forced self incrimination. In Samski, the plaintiff answered all the questions, except that he wrote "*" as answers to certain specific questions on the return.³ The return explained that "*" represented the taxpayer's objection on Fifth Amendment self incrimination grounds. In Jolly, the plaintiff wrote "object" to each and every question on the tax return, except that he answered the questions as to his name and address, his spouse's occupation, and the amount withheld from his income. The return explains that "object" represents the taxpayer's objection on Fifth Amendment self incrimination grounds.

In every case, where the tax return requested information as to the taxpayer's total tax liability, these plaintiffs "objected" on Fifth Amendment grounds, stating that they refused to answer in order that they not be forced to incriminate themselves.⁴

B. The Law

On these facts, the plaintiffs assert that they have not made a "self-assessment," and that therefore the penalty provision of TEFRA does not apply to them. As plaintiffs see it, they have not made a "self-assessment," but have instead specifically refused to make such an assessment. The Government on the other hand, argues that the plaintiffs have made a "self-assessment." In the alternative, the Government argues that even if the plaintiffs have not made a "self-assessment," such an assessment is not required under the statute. Resolution of the motion thus turns upon the correct interpretation of the statute, a pure question of law.

The goal of statutory construction is to "ascertain the congressional intent and give effect to the legislative will." Philbrook v. Glodgett, 421 U.S. 707, 713, 95 S.Ct. 1893, 1898, 44 L.Ed.2d 525 (1975). The tools for determining the legislative will are derived from established canons of statutory construction. Cf., Blackfeet Tribe of Indians v. Montana, 729 F.2d 1192, 1201 (9th Cir.1984) (en banc) (canons are guideposts to Congress' intent), aff'd, ___ U.S. ___, 105 S.Ct. 2399, 85 L.Ed.2d 753 (1985).

The starting point in any endeavor to construe a statute is always the words of the statute itself. American Tobacco Co. v. Patterson, 456 U.S. 63, 68, 102 S.Ct. 1534, 1537, 71 L.Ed.2d 748 (1982) (quoting Reiter v. Sonotone Corp., 442 U.S. 330, 337, 99 S.Ct. 2326, 2330, 60 L.Ed.2d 931 (1979)); Brothers v. First Leasing, 724 F.2d 789, 792 (9th Cir.), cert. denied, ___ U.S. ___, 105 S.Ct. 121, 83 L.Ed.2d 63 (1984). Unless the Congress has clearly indicated that its intentions are contrary to the words it employed in the statute, this is also the ending point of the interpretation. American Tobacco, 456 U.S. at 68, 102 S.Ct. at 1537 (quoting Richards v. United States, 369 U.S. 1, 9, 82 S.Ct. 585, 590, 7 L.Ed.2d 492 (1962)); Tulalip Tribes of Washington v. F.E.R.C., 732 F.2d 1451, 1455 (9th Cir.1984) (citing Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980)).⁵

1. What is a "Self-Assessment"?

As noted, the plaintiffs in these cases "objected," on Fifth Amendment grounds, when asked to state their income tax liability. The first question of statutory construction, therefore, is whether or not the plaintiffs made a "self-assessment" within the meaning of the statute. Neither party has been able to identify a textual definition of "self-assessment" in the Internal Revenue Code itself, nor has the court's own research revealed one.

The definition of "assessment," however, is readily at hand. The Secretary of the Treasury is charged with making all "assessments" under the Internal Revenue Code. See I.R.C. § 6201(a). This duty is discharged by "recording the liability of the taxpayer in the office of the Secretary in accordance with rules or regulations prescribed by the Secretary." I.R.C. § 6203 (emphasis added). "Assessment" therefore refers to the Secretary's calculation of the taxpayer's liability, and the recording of that liability in the manner prescribed by law. Cf. Rambo v. United States, 492 F.2d 1060, 1061 n. 1 (6th Cir.1974), cert. denied, 423 U.S. 1091, 96 S.Ct. 886, 47 L.Ed.2d 103 (1976); Cohen v. Gross, 316 F.2d 521, 522-23 (3d Cir.1963). This interpretation of "assessment" is specifically supported by Supreme Court authority in explaining the notion of an "assessment":

A tax is an exaction by the sovereign, and necessarily the sovereign has an enforceable claim against every one within the taxable class for the amount lawfully due from him. The statute prescribes the rule of taxation. Some machinery must be provided for applying the rule to the facts in each taxpayer's case, in order to ascertain the amount due. The chosen instrumentality for the purpose is an administrative agency whose action is called an assessment. The assessment may be a valuation of property subject to taxation which valuation is to be multiplied by the statutory rate to ascertain the amount of tax. Or it may include the calculation and fix the amount of tax payable, and assessments of federal estate and income taxes are of this type. Once the tax is assessed, the taxpayer will owe the sovereign the amount when the date fixed by law for payment arrives.

Bull v. United States, 295 U.S. 247, 259, 55 S.Ct. 695, 699, 79 L.Ed. 1421 (1935) (emphasis added).

Under the ordinary usages of the English language, a "self-assessment" would appear to be an "assessment" which is accomplished by the taxpayer himself. In Commissioner v. Lane-Wells Co., 321 U.S. 219, 64 S.Ct. 511, 88 L.Ed. 684 (1944), the taxpayer denied liability for income taxes on the form it filed with the IRS, and failed to provide thereon information from which the IRS could calculate the liability. The court stated:

"To obtain data on which corporations subject to the tax could be identified and assessed was the very purpose of requiring a separate return addressed to that liability.... ¶ Congress has given discretion to the Commissioner to prescribe by regulation forms of returns and has made it the duty of the taxpayer to comply. It thus implements the system of self-assessment which is so largely the basis of our American scheme of income taxation. The purpose is not alone to get tax information in some form but also to get it with such uniformity, completeness, and arrangement that the physical task of handling and verifying returns may be readily accomplished."

321 U.S. at 223-24, 64 S.Ct. at 513. The expected definition of "self-assessment" thus appears to be supported by the discussion in Lane-Wells. I therefore conclude that a self-assessment is the taxpayer's own representation on the...