In Uncategorized on 03/19/2015 at 12:41

In a real estate closing all yesterday afternoon, so no posting. I sometimes must demean myself by doing useful work; or, if not exactly useful, then at least remunerative.

But, echoing the words of my blogpost of 8/20/14 echoing a former President of Our Republic, here’s a bit from a small-claimer that may be of use to the in-the-trenches preparer.

This is Maria Sanchez, 2015 Sum. Op. 20, filed 3/18/15, from STJ Lewis (“My Kind of Name”) Carluzzo.

Maria wants 6015 equitable relief, but the threshold question is whether what she signed for the year at issue makes Maria “an individual who signed a joint return”, per Section 6015(a).

Maria and loved-once Francisco A. were splitsville when Francesco A. sent in a 1040 showing “single.” While no court had decided that he was, Maria had filed for divorce, and Francesco A. was peeved, to put it mildly.

So he threw in the singleton, instead of the usual MFJ they had filed for each of the fifteen years theretofore.

Maria’s story: “Petitioner did not participate in the preparation of or sign Mr. Rodriguez’ return. As best we can tell from what has been submitted, other than the liability that can be traced to that return she had no Federal income tax liability for 2006. According to petitioner, Mr. Rodriguez’ return should be treated as her joint return ‘[b]ecause I thought my husband would do it since we were married and he was in the business’.” 2015 T. C. Sum. Op. 20, at p. 6.

Simple, right? Coulda-shoulda-woulda doesn’t fly in Tax Court; what could have happened, did happen.

But there’s a twist, or I wouldn’t be blogging this case.

Enter the helpful IRS examiner. Francesco A. got hit, and of course he was short.

“The revenue agent conducting the examination of Mr. Rodriguez’ return apparently concluded that Mr. Rodriguez and petitioner would benefit, at least as far as their Federal income tax liabilities were concerned, if they were to file a joint return. The revenue agent prepared a Form 4549, Income Tax Examination Changes (consent), as though they had, although they never actually did. The deficiency shown on the consent was computed as though petitioner and Mr. Rodriguez had filed a … joint return. Mr. Rodriguez signed the consent …; petitioner signed it …. See sec. 6213(d). The Federal income tax liability arising from her decision to do so is the liability to which her Form 8857, Request for Innocent Spouse Relief… relates.” 2015 T. C.Sum. Op. 20, at pp. 3-4.

So the only tax liability for which Maria is now being nailed relates to Francesco A. alone. But for Section 6015 purposes, the validity of the tax liability is not at issue.

Bad news, Maria: a Form 4549 is not a Form 1040 MFJ.

Now a 1040 MFJ need not necessarily be signed by both spouses, as long as both had the intention so to file. But Maria testified she had started to divorce Francesco A., and that he was angry at her. Oh Maria, those who tell too much truth…but you know the rest.

So Francesco A. clearly had no such intent.

Signing the Form 4549, Income Tax Examination Changes (Consent), though, is rather a new twist.

“Subject to a variety of limitations and conditions, spouses may elect to file a joint return after separate returns have been filed. See sec. 6013(b). According to petitioner, the consent should be treated as a joint return for purposes of section 6015. Considering that the consent was, in effect, treated as a joint return by the revenue agent who examined Mr. Rodriguez’ return, petitioner’s argument has more than a little attraction. Nevertheless, we are unable to fit the round peg of her argument into the square hole of technical requirements.

“Generally, pursuant to section 6011(a) a taxpayer obligated to file a Federal tax return must conform to the forms and regulations prescribed by respondent. See sec. 1.6011-1(a), Income Tax Regs. Even though signed by petitioner and Mr. Rodriguez, the consent is hardly a form described in section 6011 or section 1.6011-1, Income Tax Regs. Furthermore, a Form 4549 is not signed by the taxpayer under penalties of perjury, one of the critical requirements for a document to be treated as a Federal income tax return.” 2015 T. C. Sum. Op. 20, at p. 7. (Citations omitted).

So Maria and Francesco A. never filed a 1040 MFJ, and Maria will get stuck with a liability she doesn’t get a chance to contest, and which but for the “helpful” RA she would never have had.

Takeaway– Listening to an IRS RA can be hazardous to your tax health.

And the scariest words in the English language are as set forth at the head hereof.

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