Taxing Lessons From Court Decisions

Decisions — Separation Issues

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When you’re married and file a separate federal income tax return, section 6013 of the internal revenue code says you can change to a joint return later (within certain limitations).

One of the limitations to “filing a joint return after filing a separate return” is that you can’t switch if you received a notice of deficiency and filed a petition with the tax court.

That seems clear.

But what if you mistakenly file your return as head of household and later want to change to married filing joint? Does the initial return qualify as a “separate” return? Or does “separate return” as used in the code section mean only a return that was originally filed as married filing separately?

The tax code contains no definition of “separate return.” But the meaning was important in T.C. Memo. 2014-8 (Ibrahim) because the taxpayer would lose his claim to a substantial earned income credit if he couldn’t change his filing status.

In this case, the taxpayer, a Somalian immigrant, was married and lived with his wife and eight children. Based on the advice of a tax service, he claimed the head of household filing status on his 2011 federal income tax return.

The IRS said, correctly, that the taxpayer was not eligible for the head of household filing status. Instead, since he was married and did not file a joint return with his wife, the taxpayer’s correct filing status was married filing separately. In addition, the taxpayer could not now choose to change to married filing joint because he had already received the notice of deficiency and filed the tax court case.

The taxpayer argued he had not filed a “separate” return. He says the term “separate return” as used in the code section refers only to returns filed using the married filing separately status.

The court agreed with the IRS. “Although [the] case produces an unfortunate result, we cannot depart from the clear bar of section 6013(b)(2)(B) and must apply the law as it is written. Thus, [the taxpayer] is ineligible to elect to amend his return to file jointly with his spouse.”

The taxpayer appealed.

The appeals court looked at the same issue. Does a “separate return” as used in internal revenue code section 6013(b)(1) include a head-of-household return?

If the taxpayer’s head-of-household return was a “separate return” under section 6013(b)(1), he could not make a joint return because he received and challenged the notice of deficiency.

However, if his head-of-household return was not a separate return, the limitations of section 6013(b)(2)(B) did not apply.

Here’s the relevant part of code section 6013:

(b) Joint return after filing separate return

(1) In general

Except as provided in paragraph (2), if an individual has filed a separate return for a taxable year for which a joint return could have been made by him and his spouse under subsection (a) and the time prescribed by law for filing the return for such taxable year has expired, such individual and his spouse may nevertheless make a joint return for such taxable year. A joint return filed by the husband and wife under this subsection shall constitute the return of the husband and wife for such taxable year, and all payments, credits, refunds, or other repayments made or allowed with respect to the separate return of either spouse for such taxable year shall be taken into account in determining the extent to which the tax based upon the joint return has been paid. If a joint return is made under this subsection, any election (other than the election to file a separate return) made by either spouse in his separate return for such taxable year with respect to the treatment of any income, deduction, or credit of such spouse shall not be changed in the making of the joint return where such election would have been irrevocable if the joint return had not been made. If a joint return is made under this subsection after the death of either spouse, such return with respect to the decedent can be made only by his executor or administrator.

(2) Limitations for making of election

The election provided for in paragraph (1) may not be made—

(A) after the expiration of 3 years from the last date prescribed by law for filing the return for such taxable year (determined without regard to any extension of time granted to either spouse); or

(B) after there has been mailed to either spouse, with respect to such taxable year, a notice of deficiency under section 6212, if the spouse, as to such notice, files a petition with the Tax Court within the time prescribed in section 6213; or

(C) after either spouse has commenced a suit in any court for the recovery of any part of the tax for such taxable year; or

(D) after either spouse has entered into a closing agreement under section 7121 with respect to such taxable year, or after any civil or criminal case arising against either spouse with respect to such taxable year has been compromised under section 7122.



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Right answer!
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For the Taxpayer.

The code’s plain language is that “separate return” refers only to married filing separately. See sections 1(d), 6654(d)(1)(C)(ii), 7703(b).

Since the taxpayer did not file a separate return within the meaning of section 6013(b)(1), section 6013(b)(2)(B) does not prohibit him from amending his status to married filing jointly.

Thus, the taxpayer is entitled to the resulting credit and refund.

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