## Facts

- Stephen Williams, a pro se taxpayer, disputed the IRS’s determination of income tax liability and penalties for the 1991 tax year.
- In October 1994, Williams submitted an altered 1991 Form 1040 asserting no tax liability despite substantial wage income; the IRS treated it as frivolous and not a valid return.
- In November 1996, Williams submitted a second 1991 Form 1040 that listed a substantial tax amount and balance due but added an asterisked statement disclaiming liability.
- The disclaimer stated that Williams “declined to volunteer” to assess and pay any balance, denied liability, and did not admit the stated tax was “due and collectible,” while still signing the return’s penalties-of-perjury jurat.
- The IRS determined a deficiency for 1991 and asserted an addition to tax for failure to file under I.R.C. § 6651(a)(1) and an accuracy-related penalty under I.R.C. § 6662(a).
- Williams argued, among other things, that wages were not taxable and that the second “disclaimer” Form 1040 should be treated as a valid return.

## Issues

1. Whether Williams was liable for the 1991 income tax deficiency determined by the Commissioner.
2. Whether the second Form 1040, containing a written disclaimer of liability and refusal to self-assess, constituted a valid federal income tax return.
3. Whether Williams was liable for the failure-to-file addition to tax under I.R.C. § 6651(a)(1).
4. Whether Williams was liable for the accuracy-related penalty under I.R.C. § 6662(a) where the purported return was held invalid.

## Decision

- The Tax Court sustained the Commissioner’s determination of a 1991 income tax deficiency.
- The court held the second “disclaimer” Form 1040 was not a valid return because the disclaimer negated an honest and reasonable attempt to comply with the tax law.
- The court sustained the addition to tax under I.R.C. § 6651(a)(1) for failure to file a valid return by the due date and lack of reasonable cause.
- The court did not sustain the accuracy-related penalty under I.R.C. § 6662(a) because the penalty, as applied here, presupposed a valid return and the “disclaimer” filing did not qualify.

## Legal Principles

- A document is a “return” only if it (1) purports to be a return, (2) is executed under penalties of perjury, (3) contains sufficient data to compute tax, and (4) reflects an honest and reasonable attempt to satisfy tax-law requirements.
- A Form 1040 that provides numerical data but includes language disclaiming liability and repudiating the self-assessment regime fails the “honest and reasonable attempt” requirement and is not a valid return.
- Wages are gross income under I.R.C. § 61(a); arguments that wages are not taxable are meritless.
- The I.R.C. § 6651(a)(1) addition applies when a taxpayer fails to file a valid return by the due date absent reasonable cause.
- As applied in this case, the I.R.C. § 6662(a) accuracy-related penalty was not imposed where the taxpayer did not file a valid return.

## Conclusion

The Tax Court rejected Williams’s wage-based and “voluntary tax” arguments, sustained the 1991 deficiency, treated the “disclaimer” Form 1040 as not a valid return due to its repudiation of liability, imposed the failure-to-file addition under § 6651(a)(1), and declined to impose the § 6662(a) accuracy-related penalty because the asserted penalty theory depended on a valid return.


Williams v. Commissioner, 114 T.C. 136 (2000)