Taxpayer Must File Jointly to Qualify as Innocent Spouse

The Ninth Circuit has held that to be eligible for innocent spouse relief under Sec. 6015, a taxpayer must have filed a joint return with his or her spouse and that Sec. 6015’s equitable relief provision also requires that a joint return had been filed (Christensen, No. 06-71881 (9th Cir. 4/22/08)).

The taxpayer in the case requested innocent spouse relief from tax liabilities assessed against him for the years 1989–1992. The deficiencies arose from improper income reporting by his wife’s check-cashing business, and the taxpayer argued that since he was not involved in the business, the deficiencies should not be attributed to him.

The Service denied the taxpayer’s request on the grounds that innocent spouse relief is available only to joint filers, and the taxpayer had filed separately from his wife during the years at issue. The Tax Court granted summary judgment for the IRS on the issue, and the taxpayer appealed to the Ninth Circuit.

In its own words, Sec. 6015 applies to “an individual who has made a joint return” and provides procedures for relief from “liability applicable to all joint filers.” The few prior cases have consistently held that a joint return is required (see Raymond, 119 TC 191 (2002); Alt, 101 FedAppx 34 (6th Cir. 2004)).

However, the taxpayer argued that equitable relief was available under Sec. 6015(f) for taxpayers who live in community property states and do not file jointly. He argued that if Sec. 6015(f) requires joint filing, then it is redundant with Sec. 6015(b), which sets forth the procedures for relief of liability applicable to joint filers. Courts should avoid interpreting statutes in ways that make statutory provisions redundant (Spencer Enters., Inc. 345 F3d 683 (9th Cir. 2003)).

While paragraph (f) does not specifically mention joint filers, the court looked to the language of Sec. 6015 as a whole, including its title, “Relief from joint and several liability on joint return,” and to congressional intent to conclude that Sec. 6015(f) applies only to joint filers. Sec. 6015 was enacted as part of the IRS Restructuring and Reform Act of 1998, P.L. 105-206, along with Sec. 66(c), which addresses treatment of community income. Taken together, the court said, it was clear that Congress intended for Sec. 6015 to apply in cases of joint returns and for Sec. 66 to apply in cases in which spouses face joint liability under community property laws.

Furthermore, the court distinguished Sec. 6015(f) from Sec. 6015(b) to hold that they are not redundant, despite both requiring a joint return. Sec. 6015(b) provides relief where the spouse shows a lack of knowledge about the understatement; Sec. 6015(f) requires no showing of lack of knowledge.