Did Donald Rumsfeld Just Invalidate His Return?

On April 15th  of this year, Donald Rumsfeld performed his civic duty of filing his tax return, and sent the letter found at the bottom of this post to the Service to evidence what we all suspected, he is crotchety.  In the letter he states that “I have absolutely no idea whether our tax returns and our tax payments are accurate”, and “I know that I cannot have any confidence that I know what is being requested and therefore cannot and do not know…whether or not [my] tax return is accurate.”  He also complained that he was very upset Diagnosis Murder had switched nights.   All joking aside, this is a complaint shared by probably millions of Americans.  The Code is very complex.

Upon reading the letter, besides being mildly amused, I immediately wondered if the statements by Mr. Rumsfeld could actually have caused his return to be invalid.  When you execute your Form 1040, you sign off on a jurat stating, “[u]nder penalties of perjury, I declare that I have examined this return and the accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete.”   It would seem awful hard to swear something is true and correct if you “have absolutely no idea whether [it is] accurate.”  So, did Mr. Rumsfeld’s comments cause him to negate the jurat and fail to timely file his return?

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In general, to be a valid return a filed document must 1) be on the proper form, 2) contain sufficient information for the Service to perform the tax calculation, and 3) be properly executed under penalties of perjury.  That last bit is pure statute, found in Sections 6061 and 6064.  The test was somewhat restated in Beard v. Commissioner, and now referred to as the Beard test, and requires that the document must 1) purport to be a return, 2) be executed under penalty of perjury, 3) contain sufficient data to calculate tax, and 4) represent and honest and reasonable attempt to satisfy the requirements of the tax law.

I doubt the Service would contend that the Rumsfelds filing was not purporting to be a return, or that it did not contain sufficient data. Though, this conjecture is a known unknown, it is helpful to think about the implications of statement as it relates to tax procedure. [Aside: Rumsfeld’s statement at a 2002 Defense Department press conference about known and unknown unknowns has inspired the title of filmmaker Errol Morris’ documentary on Rumsfeld, entitled The Unknown Known.] I assume the Rumsfelds filed the document believing it was an honest and reasonable attempt to satisfy the requirements of the tax law, especially since the letter complains about having to hire and pay an accountant to prepare the return.  The question is whether the statement invalidates the execution under penalty of perjury.

The Service and Courts have held that where portions of the jurat are crossed out, or other language has been added to the jurat, that the return is not valid.  This can allow failure to file penalties to be imposed, potentially the frivolous return penalty, and can result in no statute of limitations starting to run.  For instance, saying you are signing subject to “denial and disclaimer”, but paying the correct amount shown due has resulted in the return not being valid.  In a 2005 Revenue Ruling, the Service stated that “striking or otherwise altering the jurat in a manner that negates or casts doubt on its validity invalidates the return.”

One of the somewhat recent important cases in this area is Williams v. Comm’r, where the taxpayer filed two returns, both of which were altered.  The first had aspects whited out, and zeroed out all liability –complete garbage.  The second showed the amount of tax due, but had an asterisk in the jurat stating “[t]he admitted liability is zero”, and a disclaimer attached stating:

The above named taxpayer respectfully declines to volunteer concerning assessment and payment of any tax balance due on the return or any redetermination of said tax.  Be it known that the above said taxpayer, therefore, denies tax liability and does not admit that the stated amount of tax on return is due and collectable.

The Court grappled with whether the disclaimer in that case invalidated the jurat.  It reviewed the prior case law, where the Court previously found that crossing out the jurat, or crossing out the “under penalties of perjury” and/or “true, correct, and complete” all result in invalid returns.  The next set of cases dealt with adding language to the jurat, and again most invalidated the returns, including “denying” the accuracy of the information.  Williams was, however, the first case where the court considered disclaimer language outside of the jurat.  The Court held that the disclaimer negated the meaning of the jurat, and altered the Service form.

Williams is an easier case than Rumsfeld’s given the asterisk within the jurat; what is unknown here is whether Rumsfeld similarly asterisked or referred to his disclaimer in his tax return. (another known unknown). All of the cases invalidating returns pertain to tax protestors, who are denying the taxing authority of the federal government or denying that they owe any tax due to frivolous positions.  I could not find a particular case on point (likely because the Service would be disinclined to challenge a letter similar to Mr. Rumsfeld’s letter), but I suspect a Court would find that even if there was a reference to the letter in the jurat Mr. Rumsfeld did not intend to amend the jurat, and “to the best of [his] knowledge and belief” the returns were correct, as he had paid a competent professional to provide guidance. Further, he was not denying he owed tax or that the government could impose the tax; he just wanted to be able to understand how his tax bill was computed.  Overall, not an unreasonable position, but perhaps a pipedream.

This letter is one more snowflake from Mr. Rumsfeld, and, though this one likely has no legal effect, it adds to the growing public dissatisfaction with the nation’s tax laws.  Rather than send it to the IRS though, he probably should have sent it to Congress. IRS takes the Code as is.

Rumsfeld letter