United States District Court, Northern District of Illinois, E.D
March 19, 1984
JAMES T. MATZ, PLAINTIFF,
UNITED STATES OF AMERICA AND THE COMMISSIONER OF INTERNAL REVENUE, DEFENDANTS.
The opinion of the court was delivered by: Bua, District Judge.
This case involves a $500 civil penalty assessed against the
plaintiff in accordance with Section 6702 of the Internal
Revenue Code of 1954 (26 U.S.C.), which was added to the
Code*fn1 by Section 326(a) of the Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA), P.L. 97-248. The plaintiff
filed what purports to be a federal income tax return for the
year 1982, refusing to furnish any financial data on the
purported return on the basis of a claimed constitutional
privilege against self-incrimination. The Internal Revenue
Service determined that this purported tax return could not be
processed and that it constituted a "frivolous" return within
the meaning of Section 6702. Accordingly, the Section 6702
was assessed. The plaintiff has paid 15 percent of the penalty
and is therefore entitled to challenge the assessment of the
penalty in this Court pursuant to the provisions of Section
6703 of the Code. Jurisdiction is provided by 28 U.S.C.
Section 1346(a)(1).*fn2 The defendants have filed a motion
to dismiss or for summary judgment. For the reasons stated
herein, summary judgment is entered for the defendants.
The plaintiff, James T. Matz, filed an IRS Form 1040,
purporting to be a federal income tax return for the year 1982,
signed by him and dated April 15, 1983. The purported return
consisted of an IRS Form 1040, and a number of attached pages
including a 10-page letter to the Commissioner of Internal
Revenue in which the plaintiff asserted his claimed right
The plaintiff's purported return contains no information
regarding income, deductions, or tax owed, if any. The
plaintiff provided only his name, address, filing status and
claimed one exemption. All line items on the return contain the
typewritten words "OBJECT" or "NONE," except for line 60, where
the plaintiff claimed $3,830.36 withheld income tax and lines
67, 68 and 69, claiming a total withholding of $3,830.36 and an
overpayment and refund of the same amount. At the top of the
form the following words are typed: "The attached sixteen page
memorandum and exhibits is to be considered a part of this
return. The word "object" in response to a specific question
means on the grounds of self-incrimination."
The IRS assessed a frivolous return penalty of $500 against the
plaintiff under Code Section 6702. The plaintiff paid $75 of
the penalty and filed a claim for refund, which the IRS denied.
The plaintiff then filed this suit. The complaint requests this
Court to order a refund of the $75 on the grounds that the
plaintiff claimed the Fifth Amendment privilege on his
purported return in good faith and that Section 6702 is
In an attempt to deter the filing of frivolous tax returns,
Congress in 1982 added Section 6702 to the Internal Revenue
Code of 1954, providing for a $500 penalty against persons who
file such returns or purported returns. The legislative history
of TEFRA reveals that Section 6702 is designed to deter
taxpayers from filing returns or purported returns which
contain insufficient information for determining the
correctness of the taxpayer's self-assessment of tax, or which
contain information which on its face indicates that the
amounts of tax shown on the returns are substantially
incorrect. See, S.Rep. No. 494, 97th Cong., 2d Sess. 277,
U.S.Code Cong. & Admin.News 1982, p. 781. Section 6702
SEC. 6702. FRIVOLOUS INCOME TAX RETURN.
(a) Civil Penalty. — If —
(1) any individual 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 is substantially
(B) contains information that on its face indicates that the
self-assessment is substantially incorrect; and
(2) the conduct referred to in paragraph (1) is due to —
(A) a position which is frivolous, or
(B) a desire (which appears on the purported return) to delay
or impede the administration of Federal income tax laws,
then such individual shall pay a penalty of $500.
(b) Penalty in Addition to Other Penalties. — The penalty
imposed by subsection (a) shall be in addition to any other
penalty provided by law.
The Senate Report, at pages 277-278, provides four examples of
instances in which the Section 6702 penalty applies: First,
when a purported return appears to be an IRS Form 1040, but
contains "altered or incorrect descriptions of line items or
other provisions"; second, in the case of a return or purported
return in which "many or all of the line items are not filled
in, except for spurious constitutional objections"; third,
where the return or purported return contains insufficient
information by which to calculate the tax, or contains
inconsistent information, or otherwise reveals a frivolous
position or a desire to impede the tax laws; and finally, when
the return shows an incorrect tax due, or a reduced tax due,
because of the individual's claim of a clearly unallowable
This case clearly involves the type of purported tax return
discussed in the Senate Report's second example, quoted above.
The plaintiff's purported 1982 return is a return in which
"many or all of the line items are not filled in, except for
spurious constitutional objections."
The United States Court of Appeals for the Seventh Circuit
recently reaffirmed its position that a taxpayer may not use
the Fifth Amendment as a basis for refusing to provide any
financial data on his federal income tax return. See United
States v. Verkuilen, 690 F.2d 648 (7th Cir. 1982). In
Verkuilen, the court held that the Fifth Amendment does not
justify a refusal to provide any financial information on a tax
return unless the taxpayer makes "a colorable showing that he
is involved in some activity for which he could be criminally
prosecuted." The court held that when the information provided
on a purported return is so incomplete that tax liability
cannot be computed, the filed document does not even constitute
a tax return. Id. See United States v. Jordan, 508 F.2d 750
(7th Cir. 1975). Other courts have also held that the failure
to provide any information on a return amounts to a failure to
file a return. See, e.g., United States v. Heise,
709 F.2d 449 (6th Cir. 1983); United States v. Pilcher, 672 F.2d 875,
877 (11th Cir. 1982), cert. denied, 459 U.S. 973, 103 S.Ct.
306, 74 L.Ed.2d 286 (1982).
Recently, Judge Shadur of this Court dismissed the claim of a
taxpayer who made a Fifth Amendment claim to justify the filing
of a purported return similar to that in the case at bar.
Stamp v. Commissioner of Internal Revenue, 579 F. Supp. 168
(N.D.Ill. 1984). According to Judge Shadur, Verkuilen's
"colorable showing" standard requires "more than . . . vague
generalities . . . [or] hypothetical possibilities common to
the entire populace." Id. at 171. In the case at bar,
plaintiff asserts that "there is a crime that fits every one of
us" and that if he supplied false information to secure a
loan or Social Security, welfare, or other benefits (which he
does not actually admit to doing), the information supplied on
the tax return could be used to build a case against him.
Plaintiff's assertions fail to make a colorable showing that he
was involved in some activity for which he could have been
criminally prosecuted. Therefore, in light of Verkuilen, his
purported return is, as a matter of law, frivolous for purposes
of Section 6702 since it asserts a position which has no basis
in law and it does not contain information from which the
plaintiff's tax liability can be determined. Consequently, the
assessment of the penalty under Section 6702 was proper.
For the reasons stated herein, summary judgment is granted for
IT IS SO ORDERED.