Williams v. Commissioner

In October 1984, Stephen Williams (plaintiff) submitted an unsigned Internal Revenue Service (IRS) Form 1040 (original 1040) for 1991, which he altered to indicate that he owed no tax. The IRS treated Williams’s original 1040 as a frivolous return. In November 1996, Williams filed a second Form 1040 for 1991 (disclaimer 1040), which showed a total tax of $41,586 and $36,621 in tax owed. Williams did not alter the disclaimer 1040’s language, but he placed an asterisk next to the amount owed, along with the explanation that he (1) declined to volunteer assessing and paying any tax balance due on the return or any determination of such tax and (2) denied any tax liability and did not admit that the stated amount of tax was due and collectable. Williams signed the disclaimer 1040’s jurat, which stated that the return was “true, correct, and complete” and was submitted “under penalties of perjury.” The IRS issued a deficiency notice to Williams and imposed an accuracy-related penalty pursuant to 26 U.S.C. § 6662(a). Williams filed a petition against the IRS commissioner (defendant) in the United States Tax Court challenging the IRS’s deficiency determination, arguing that (1) he did not volunteer to self-assess or pay any taxes, (2) his income was not from a taxable source, and (3) the deficiency notice was invalid because he disclaimed tax liability. Williams’s deficiency challenge echoed claims made by tax protestors. Williams also contended that the disclaimer 1040 was a valid return because he signed the jurat and his added language was outside the jurat box. The IRS argued that Williams’s asterisked language made the disclaimer 1040 an invalid return.