Court Says Tax Forms Invalid If Incomplete
Feb. 12, 1985
WASHINGTON (AP) _ A signed Form 1040, even if it is backed up with 100 pages of documents, is not a legal tax return unless it includes all the facts necessary to calculate your taxes.
Two recent Tax Court rulings involving tax protesters emphasized that point by upholding the right of the Internal Revenue Service to impose a failure-to- file penalty of up to 25 percent when vital information is missing.
J.F. Wilmar Johnson of Pine City, Minn., filed his 1040 and attached more than 100 pages of what he termed constitutional arguments against taxation. Instead of losing his income, he typed in an objection; in the spaces provided for listing his tax liabilities and payments, he inserted ''none.''
Donald G. and Shirley Tracy of Janesville, Wis., filed similar documents claiming wages are not taxable income but an equal exchange for labor. The court said that fell short of a 1957 Supreme Court holding that a return must contain enough information for the IRS to compute a tax liability.
Ruling against Johnson, the Tax Court said that ''in order to constitute a return a document need not be perfectly accurate or complete as long as it purports to be a return, is sworn to as such, and evinces an honest and genuine endeavor to satisfy the requirement for a return....''
The jojoba bean is used for shampoo and cosmetics. It takes up to six years for bushes to mature - a fact that appears to bring the jojoba under a 1976 law requiring that deductions for production expenses be spread out over a period of years until there is a commercial yield.
Losing rapid deductions is the worst possible fate for a tax shelter, so syndicates investing in jojobas are claiming the law does not cover the jojoba because it is the inedible seed of a fruit. The IRS has decided just the opposite, and the news for investors is getting worse: Rep. Fortney Stark, D- Calif., has introduced a bill stating flatly that jojobas are subject to the restriction.
If you bet on a horse with odds of at least 300 to 1 and win more than $1,000, the racetrack is required to withhold at least 20 percent for the IRS. Sen. Wendell Ford, D-Ky., cites estimates that $67 million a year is withheld from parimutuel winnings and says this causes wagering to drop by $235 million and denies $47 million a year to industries and states in which tracks are located. He has introduced a bill raising the withholding threshhold to $5,000.
Laws protecting the privacy of federal tax returns are strict. But the IRS says in a new ruling that an accountant does not run afoul of the law when he turns over a return for review by a state board that oversees licensing of accountants.
Rep. Andrew Jacobs Jr., D-Ind., received this essay from Heather Taylor of Indianapolis and inserted it into the Congressional Record ''in the interest of tax simplification'':
''Taxes are the little bills your Mom and Dad get in the mail. They also hate them. Doesn't everybody? The reason why you have to pay taxes is because teachers and other workers need money. Taxes are also for paying for the stuff that you use to build buildings. Taxes help the city buy new things for you and others.
''You could get thrown in jail if you didn't pay your taxes. Most of the time people say that they are fed up with taxes and they won't pay them, but most of the time they end up paying them. Just be glad you aren't a grown-up. Especially if you only got 60 cents for an allowance like me. In one way you should like taxes - like they help your city get new things for you and your friends and in another way you should hate them.