White v. Comm'r of Internal Revenue

• Decision Date: 20 September 1979
• Docket Number: Docket No. 9918-75.
• Citation: 72 T.C. 1126
• Parties: EDITH G. WHITE, PETITIONER v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

72 T.C. 1126

EDITH G. WHITE, PETITIONER

v.COMMISSIONER of INTERNAL REVENUE, RESPONDENT

Docket No. 9918-75.

United States Tax Court

Filed September 20, 1979.

Petitioner, as a tax protestor, filed Forms 1040 for the respective taxable years of 1972 and 1973 which disclosed only the names, address, and social security numbers of herself and her husband. They had paid an estimated tax for taxable year 1972 which petitioner seeks to recover as an overpayment. Held, the documents filed by petitioner were not returns and though she is entitled to a credit of the estimated tax against the deficiency for the taxable year 1972, she is barred from recovering any excess of the estimated tax paid as a refund or credit under secs. 6511 and 6512(b)(2)(B), I.R.C. 1954. Edith G. White, pro se.

John S. Ball, for the respondent.

FORRESTER, Judge:

Respondent has determined deficiencies in petitioner's Federal income tax for the taxable years 1972 and 1973 in the amounts of $106 and $79, respectively. The issues for our decision are:

(1) Whether petitioner's receipt of Federal Reserve notes constituted taxable income to her;

(2) Whether substantially blank, unsigned returns filed by petitioner and her husband were valid joint returns for purposes of section 6011(a);¹

(3) Whether an overpayment may be credited or refunded under section 6512(b) where petitioner failed to file a return and paid the tax more than 2 years prior to the mailing of the statutory notice of deficiency;

(4) Whether a statutory notice of deficiency, approved and signed by respondent's agent, was valid; and

(5) Whether petitioner is entitled to recover a 50-percent criminal penalty against respondent pursuant to section 7214.

FINDINGS OF FACT

Petitioner Edith G. White (petitioner) is a married individual who resided in Roseland, Va., at the time the petition was filed herein. For the taxable years in issue, petitioner and her husband filed, under protest, unsigned Federal tax return forms with the Internal Revenue Service Center, Memphis, Tenn. Said forms contained only the names, address, and social security numbers of petitioner and her husband.

Several documents were attached to the returns which set forth, in exhaustive detail, the position of petitioner and her husband to the effect that they had received no taxable income during the years in issue because they considered Federal Reserve notes to be fraudulent, larcenous, unconstitutional, and of no legal value. During the taxable year 1972, petitioner and her husband filed a joint declaration of estimated tax and in connection therewith made estimated income tax payments of $650.25.

On August 14, 1975, respondent mailed a statutory notice of deficiency to petitioner. The acting chief of respondent's review staff signed the District Director's name to the statutory notice under an authorization executed on August 11, 1975. The 1972 estimated tax credit was not shown on the statutory notice of deficiency. On September 17, 1975, petitioner and her husband filed a claim for refund for the taxable year 1972 in the amount of the estimated tax paid for that year of $650.25.

Respondent did not act on the refund claim but instead determined that since petitioner received dividend income she was required to file valid Federal income tax returns for the taxable years 1972 and 1973. He computed the deficiencies for the taxable years by using the tax tables applicable to a married person filing a separate return with a low income allowance.

OPINION

As to the first issue, it is petitioner's contention that the Federal Reserve notes which she received do not constitute income in that they are devoid of intrinsic value because they cannot be redeemed in gold. Thus, she concludes that having received no income she is not required to file a return.

Petitioner's argument against the Federal Reserve and monetary system of the United States is clearly frivolous. We have uniformly held, on numerous occasions, that Federal Reserve notes constitute legal tender which must be reported on a taxpayer's Federal income tax return in accordance with his method of accounting. Hatfield v. Commissioner, 68 T.C. 895 (1977); Gajewski v. Commissioner, 67 T.C. 181 (1976), affd. in an unpublished opinion (8th Cir., May 2, 1978); Cupp v. Commissioner, 65 T.C. 68 (1975), affd. in an unpublished opinion (3d Cir., June 10, 1977); see also United States v. Daly, 481 F.2d 28 (8th Cir. 1973), cert. denied 414 U.S. 1064 (1973); United States v. Porth, 426 F.2d 519 (10th Cir. 1970), cert. denied 400 U.S. 824 (1970).

Petitioner also argues that a dollar lacks monetary value because paper currency cannot be converted into gold. Petitioner ignores the fact that the Gold Reserve Act of 1934² heralded the end of the gold standard in this country. This act notwithstanding, petitioner's argument lacks any merit since we have held that the statutory gold content of the dollar is irrelevant for purposes of computing taxable income. Cupp v. Commissioner, supra at 80-81; see also Gajewski v. Commissioner, supra at 194-195. Therefore, we adhere to these decisions and reject petitioner's arguments.

Regarding the second issue, petitioner falls squarely within section 6011, which provides:

(a) GENERAL RULE.—When required by regulations prescribed by the Secretary any person made liable for any tax imposed by this title, or for the collection thereof, shall make a return or statement according to the forms and regulations prescribed by the Secretary. Every person required to make a return or statement shall include therein the information required by such forms or regulations. (Emphasis supplied.)

Under the regulations to that section, respondent prescribes, inter alia, the following guidelines on preparing a return at section 1.6011-1(b), Proced. & Admin. Regs.: “Each taxpayer should carefully prepare his return and set forth fully and clearly the information required to be included therein. Returns which have not been so prepared will not be accepted as meeting the requirements of the Code.”

We believe that the directive set out at section 1.6011-1(b) is clear. From the facts in this record, it appears that petitioner has willfully refused to file income tax returns in substantial compliance with respondent's regulation. The acid test for determining whether a document constitutes a valid tax return is whether it contains sufficient data from which respondent can compute and assess a tax liability. Commissioner v. Lane-Wells Co., 321 U.S. 219 (1944); Durovic v. Commissioner, 54 T.C. 1364, 1387-1388 (1970), affd. on this issue and revd. and remanded in part on other issues 487 F.2d 36 (7th Cir. 1973).

Petitioner and her husband did not disclose, in the Forms 1040 that they filed for the taxable years 1972 and 1973, their gross income, deductions, exemptions, taxable income, or credits for these years. The only items disclosed on these return forms were their names, address, and social security numbers. This information falls far short of that necessary to be shown on a return to enable the computation of petitioner's tax by respondent. Houston v. Commissioner, 38 T.C. 486, 491-492 (1962). Consequently, the Forms 1040 filed by petitioner did not constitute valid returns within the meaning of section 6011.

There is another fatal defect in the forms as filed by petitioner. Her signature fails to appear on either the Forms 1040 or on any of the many documents attached thereto. To file a valid return, petitioner must sign and verify her returns under penalties of perjury. Vaira v. Commissioner, 52 T.C. 986, 1005 (1969); Plunkett v. Commissioner, 41 B.T.A. 700, 710-711 (1940), affd. 118 F.2d 644 (1st Cir. 1941).

Petitioner further contends that her Fifth and Fourth Amendment rights were violated by the requirement that she file a return reporting her income to respondent. The law is well settled that the requirement that taxpayers file tax returns in accordance with the provisions of the Internal Revenue Code and respondent's regulations does not violate a taxpayer's privilege against self-incrimination under the Fifth Amendment. Cupp v. Commissioner 65 T.C. at 79; Hosking v. Commissioner, 62 T.C. 635, 639 (1974); see also United States v. Sullivan, 274 U.S. 259 (1927); United States v. Daly, 481 F.2d 28 (8th Cir. 1973); United States v. Porth, 426 F.2d 519 (10th Cir. 1970). It is further well settled that the requirement for filing ordinary and reasonable returns and respondent's inspection thereof, does not violate a taxpayer's protection against unreasonable search and seizure under the Fourth Amendment. Flint v. Stone Tracy Co., 220 U.S. 107 (1911); Hosking v. Commissioner, supra at 639.

We find no merit to any of these contentions of petitioner and therefore conclude that since petitioner filed return forms that disclosed no data from which respondent could compute and assess her tax liability, and did not sign the documents which petitioner claimed to be returns for the years 1972 and 1973, they do not constitute valid returns.

With respect to the third issue, petitioner seeks recovery of the entire sum paid as an estimated tax payment during 1972. Respondent is required to compute any deficiency owed by petitioner without regard to payments on account of estimated tax pursuant to section 6211(b)(1). The deficiency in the instant case is the amount of tax for the respective years of 1972 and 1973, since no return has been filed by petitioner for either year. Sec. 301.6211-1(a), Proced. & Admin. Regs.

Petitioner contends that respondent has “confiscated” her 1972 estimated tax payment in the amount of $650.25 by the specious application of the period of limitations set out at section 6511. It is respondent's position, first raised in his amended answer, that any overpayment which may be determined for the 1972 taxable year cannot be refunded or credited to petitioner due to restrictions contained in sections 6511 and 6512. Thus, respondent...