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Thursday, April 03, 2003


Nancy B. Doyle wanted relief from joint liability for tax debts incurred on returns filed jointly with her husband. The tax deficiencies arose due to tax shelters the Doyles bought, and after Tax Court ruled against then on the shelters, the Doyles took a couple of trips to Europe and engaged in many acts designed to avoid collection by the IRS, such as putting money in accounts under their kid�s names and selling their home to one of their kids for $1. Several of these acts seemed to require Nancy�s cooperation. The Doyles are still married, and the case did not mention a separation. Nancy relied on her husband for the preparation of the taxes, and did not review them before signing, but there was no evidence of deception or coercion on her husband�s part.

Tax Court easily decided this case on the facts and equities for the IRS. I would like to note that while whether the couple is still married is just listed as one factor of many to be considered (and one not even discussed in Tax Court�s opinion in this case), it seems to me that it would be very difficult to get relief from joint liability if the couple is still married and not separated. The theory behind joint liability is that the two individuals were one entity when they incurred the tax, and neither should escape liability because they decided to become two again. Relief is offered on theory that in some cases, one individual unfairly dominated the joint entity through deception or coercion. But how can you claim deception or coercion if you chose to remain one entity with the other individual? In a country of 300 million people there is bound to be a set of facts somewhere that would answer the previous question. But my guess is that such circumstances would be exceedingly rare, and a court would be justified in viewing the application for relief from liability by one spouse of a couple still married and living together with extreme suspicion.

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