The Internal Revenue Service (IRS) doesn’t often get involved in marital disputes. In this case, the federal agency was caught in the middle of a very difficult situation.
What was the case? The case involves a man who filed his taxes as married filing jointly and took personal exemptions both for himself and his wife. The man’s wife refused to sign the tax return, but the man filed the return with a letter noting that his wife was seriously mentally ill. The letter went on to explain that the IRS should ignore any information the wife would send in and that the agency should use the jointly filed return as her tax return. No other documents, such as a power of attorney, were included.
The wife did attempt to file her own tax return for that same year. In the return, the wife claimed that she was a victim of the “Madoff fraud” and that she lost $350,000 from the scheme. The IRS accepted her return, but not the figures she included in her calculations. Apparently the claim to be a victim of the Maddof fraud was delusional. Instead of agreeing with this claim, the IRS recalculated her return and claimed she owed $738. The agency then took the payments from a levy placed on her Social Security.
How can one spouse satisfy the married filing jointly requirement if the other spouse does not sign?
There are a number of different ways to file taxes when married. Generally, when filing as married filing jointly the return requires the signature of each spouse. There are some exceptions to this rule, such as when the taxpayer is serving as an authorized agent for the spouse or if there is sufficient evidence that the return is completed jointly.
In order to satisfy the authorized agent requirement, a filer generally must include a power of attorney document, a statement signed by the spouse consenting to the signing of the return or a request for permission from the appropriate IRS district director. This permission form states that good cause is present for the permitting agent to submit the form.
To satisfy the other evidence requirement, the Court has accepted proof that the husband has signed for the wife in the past to establish a pattern of signing on the spouse’s behalf.
Neither of these requirements was satisfied in this case. As such, a tax controversy over which return should be accepted for the wife developed.
What did the court decide?
In this case, Peter William Moss v. Commissioner of Internal Revenue, the court ruled in favor of the IRS. This led to a deficiency determination of $14,540 and additional penalties against the husband.
What can you learn from this case?
Tax laws are difficult to navigate. It is wise to seek legal counsel in the event the IRS contacts you and states that your filing was incorrect. Your attorney can advocate for your rights and better ensure a more favorable outcome to your tax issue.
