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MATZ v. UNITED STATES

March 19, 1984

JAMES T. MATZ, PLAINTIFF,
v.
UNITED STATES OF AMERICA AND THE COMMISSIONER OF INTERNAL REVENUE, DEFENDANTS.



The opinion of the court was delivered by: Bua, District Judge.

ORDER

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 penalty 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.

FACTS

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 against self-incrimination.

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 unconstitutional.

DISCUSSION

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 provides:

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
    incorrect; and
    (B) contains information that on its face indicates that the
    self-assessment is ...

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