Taxing Lessons From Court Decisions

Decisions — Red ink and silence

Thanks for sharing!
8 minute read
Image source:
Image source:

What happens when you file a joint federal income tax return signed by only one spouse? Does silence necessarily mean “yes,” as in the nonsigning spouse consents to filing a joint return?

In T.C. Memo. 2015-199 (Reifler), the taxpayer and his wife had been married since 1988 and had always selected “married filing jointly” for the filing status of their federal income tax return.

They received an extension for their 2000 tax return, and mailed it to the IRS in October of 2001 after receiving the return from their tax preparer. The wife did not sign the return and there was no date beside the husband’s signature.

The IRS sent the return back. The taxpayers say they received an original return from the IRS stamped with the date “October 15, 2001.” The return had red ink marks but no attached correspondence. Because the taxpayer needed a copy of the tax return to submit to a board of directors that he was joining, he believed the return was a copy he had requested (as he had done in the past), so he did not send the original return back to the IRS.

In July 2002, the IRS sent a notice telling the taxpayers the return for 2000 had not been received. The taxpayers discussed the notice with their tax preparer, signed a second return that they dated August 25, 2002, and sent it to the IRS.

The taxpayers considered this a copy of the original return, but they did not include any correspondence to that effect with the return. The IRS treated the second return as if it were the taxpayer’s original return.

In 2005, when the IRS was conducting an audit, the taxpayers said that the return filed in October of 2001 was the original return for tax year 2000, and was therefore outside the statute of limitations.

The IRS said the October 2001 return was not valid and therefore the statute of limitations began running with the return filed in August 2002.

The taxpayer disagreed and presented two arguments.

Argument 1

The taxpayer said that under the rule of substantial compliance, a return need not be perfect to be valid.

This theory is based on the “Beard test” which arose from a 1984 case, Beard v. Commissioner. The Beard test includes four distinct elements, one of which is a requirement that a taxpayer execute the return under penalties of perjury. Other elements of the Beard test are: (1) the return must have sufficient data to calculate tax liability; (2) the document must purport to be a return; and (3) there must be an honest and reasonable attempt to satisfy the requirements of tax law.

The taxpayers said that under the substantial compliance doctrine their original 2000 return was valid because it met all of the requirements of the Beard test except being signed by the wife.

The IRS contended that the lack of a signature on the original 2000 return was fatal to finding it valid under the Beard test.


Make your selection, then hover your mouse
over the link beneath “The Court’s Decision”

For the or for the


For a full explanation, hover your mouse over the link below

Argument 2

In their second argument in support of the validity of the original 2000 return, the taxpayers argued the “tacit consent doctrine,” saying “[i]t is well-established by a long line of cases that a joint Form 1040 filed with the signature of only one spouse is valid if both the husband and wife intended to file a joint return.”

The taxpayers said they were entitled to a finding that the original 2000 return was valid without the signature of the wife because they intended to file a joint tax return. The wife stated in an affidavit dated May 16, 2012, that she relied on her husband to handle the family tax matters and acquiesced to the filing of the original 2000 return.

The IRS argued that the tacit consent doctrine is relevant only to the issue of determining whether the spouses are jointly and severally liable for the income tax return that they intended to file jointly. But the tacit consent doctrine has no bearing on the question of whether a Form 1040 signed by one spouse but not the other is an income tax return.


Make your selection, then hover your mouse
over the link beneath “The Court’s Decision”

For the or for the


For a full explanation, hover your mouse over the link


Note: Taxing Lessons provides a summarized version of sometimes lengthy court decisions. The full case may include facts and issues not presented here. Please use the link provided in the post to read the entire case.

This information should not be considered legal, investment or tax advice. Taxing Lessons and Top Drawer Ink Corp. do not provide legal, investment or tax advice. Always consult your legal, investment and/or tax advisor regarding your personal situation.


Other posts you might enjoy

Decisions — Gifting business   Image source: Joanna Kosinska on Unsplash   When is a gift not a gift? According to the US supreme court, "determination in each individual case as to whether the transaction in question was a "gift" must be based ultimately on the application of the factfinding tribunal's expe...
Decisions — Counting the days Image source: Marcelo Leal on Unsplash All good things must end, including the amount of time the IRS is allowed to assess tax. That time frame is called the statute of limitations. In T.C. Memo. 2018-182 (Namm Trust), the taxpayer says the IRS did not mail a notice of deficiency before the e...
Decisions — Incoming Gift   Image source: lucas Favre on Unsplash   Pastors get by with a little help from parishioners. But is that help a gift? Or taxable income? In T.C. Memo. 2018-168 (Felton), parishioners gave their pastor over $200,000 in cash and personal checks in addition to regular church of...
Decisions — To be fair   Image source: Library of Congress Public domain, via Wikimedia Commons   All may be fair in love and war, but that's not necessarily true in taxes. In TC Memo 2018-117 (Grainger), the taxpayer made noncash charitable donations and claimed a deduction for what she believed wa...
Sorry, wrong answer :(
Right answer!
For the IRS.

We agree with the IRS. Signature under penalty of perjury and an honest and reasonable attempt to satisfy the requirements of the tax law are two distinct and separate requirements under Beard.

Sorry, wrong answer :(
Right answer!
For the IRS.

The wife testified that she trusted her husband to take care of the financial and tax matters and intended to file a joint return with him for the 2000 tax year. Yet there is no adequate explanation in the record as to why the regular procedures the taxpayers had followed for many years–and which had worked well for them before and after 2000–did not work for the 2000 tax year.

It is also not clear from the record why the taxpayer, a sophisticated businessperson, did not check for his wife’s signature before mailing in the original 2000 return. The taxpayers do not recall whether they discussed the original 2000 return or whether the taxpayer ever asked his wife to sign it.

There is also no explanation why the taxpayers did not produce the original 2000 return in response to the notice of delinquency in 2002. Instead, they executed a clean return, dated it, and sent it to the IRS.

In sum, the taxpayer’s actions after they received the original 2000 return back from the IRS seem inconsistent and illogical in the light of their later testimony that in October 2001 they desired and intended to file a joint return.

We find that the facts surrounding both the signing and submitting of the original 2000 return contain too many blanks to preclude the existence of alternative explanations as to the absence of the wife’s signature on the original 2000 return. Silence does not necessarily mean “yes”. There may be numerous reasons a spouse fails to sign a joint tax return, ranging from oversight to express refusal to file a joint return.

Both the original return and the second 2000 return showed a net loss of over $1 million. The taxpayers did not claim a refund, but it was still in their best interest to perfect the return and mail it back to the IRS as soon as possible. Yet their lack of action in this respect leaves us with too many unanswered questions.

Under the circumstances, we cannot take the taxpayer’s self-serving testimony at face value. We are reluctant to extend the reasoning from the cases discussing “valid on their face” tax returns purportedly signed by both taxpayers to situations when one of the required signatures is missing. This would place a high administrative burden both on the IRS and on the courts, making us play the guessing game every time we see a purported joint return signed by only one spouse.

Although some evidence may weigh in favor of finding that the taxpayers intended to file a joint return, we find it insufficient in the light of gaps in the record and subsequent treatment of the original 2000 return by the taxpayers.

Extending the application of the tacit consent doctrine to cases such as the current case has the potential of creating an exception that would swallow the rule.

We believe sufficient administrative mechanisms are already in place to deal with such situations. Existing procedures described in the regulations and the Internal Revenue Manual provide how to handle documents when one of two required signatures is missing.

At the very least, a nonsigning spouse who did not intend to file a joint return may be alerted that something is wrong. Existing regulations also provide an option for more “traditional” families like the taxpayers. If a spouse wants to delegate his or her authority to sign a joint tax return to another spouse, section 1.6012-1(a)(5), Income Tax regulations, provides procedures to designate that spouse as an agent.

The taxpayers’ argument that it is the intent of the spouses that counts when it comes to filing tax returns is somewhat tempting in that it would allow us to resolve the case before us easily.

However, a signature under penalty of perjury has additional significance when it comes to determining the issue of liability for any unpaid taxes or related penalties. It would be unfair to expose a nonsigning spouse who never intended to sign a joint tax return to the burdens of litigation that could span many years when that spouse did not in fact attest to the veracity of the statements on the tax return.

We believe the intent to file a joint return is different from signing a document under penalty of perjury, and the two do not supplement or replace each other. Using the tacit consent doctrine in cases when a tax return is rejected by the IRS for lack of compliance with the most basic requirements would only create chaos.

Tagged , , , ,