"Homemade" income tax forms may constitute valid returns.

• Position: IRS rules

Some taxpayers file their own "homemade" income tax forms in lieu of the official Forms 1040. Taxpayers provide varying amounts of information on their income and deductions on these unofficial forms, and may or may not attach Forms W-2. These homemade income tax forms impede the IRS's ability to process returns in an efficient and consistent manner. Further, the Service is sometimes unable to immediately detect alterations to Forms 1040, resulting in taxpayers receiving tax refunds to which they are not legally entitled. There are a variety of issues about the status of these documents as "income tax returns." The issue is whether there is a "bright-line" test that might determine whether to treat a document as a return and whether to impose the frivolous return penalty on such documents.

Analysis

A document is a valid return if (1) there is sufficient data to calculate the tax liability; (2) the document purports to be a return; (3) there is an honest and reasonable attempt to satisfy tax law requirements; and (4) a taxpayer executes the return under penalties of perjury.

A taxpayer's homemade income tax form that complies with these requirements is a valid return. Unfortunately, because of the variety of documents that taxpayers might submit, it is impractical to attempt to provide a specific bright-line test for determining when a particular homemade income tax form constitutes a valid return. However, Regs. Sec. 1.6011-1(b) provides the proper approach for processing homemade income tax forms.

Regs. Sec. 1.6011-1(b) requires the IRS to analyze a homemade income tax form to determine whether it includes gross income or deductions. If so, the Service should accept the document as a tentative return and correspond with a taxpayer for a return properly made on Form 1040. If the taxpayer subsequently perfects the homemade income tax form with a return properly made on Form 1040, the IRS should accept the Form 1040 as a return filed as of the date the homemade return was filed. If the taxpayer does not perfect the homemade income tax form within a reasonable time, the Service should assess the tax shown on the tentative return and immediately initiate audit procedures to ensure that any deficiency is assessed within the limitations period.

On the other hand, if the homemade income tax form does not include gross income or deductions but simply protests the tax laws, the IRS should consider the homemade form a nullity and advise the taxpayer...