Vanderbilt Law Review

First Page



Husbands and wives who elect to file joint federal income tax returns are jointly and severally liable for the entire tax due. Ninety-nine percent of married couples who file income tax returns make the election to file jointly, and each spouse thereby incurs personal liability for the other spouse's income taxes.' This Article argues that the rule is unfair and unjustified and should be repealed.

Part II of the Article describes the nature and scope of the problems caused by joint and several liability of spouses filing joint re-turns (hereinafter "joint return liability"). When separation or divorce is involved, the rule of joint return liability often causes an unfair shifting of tax liability from (ex-)husbands to (ex-)wives. Although the stat-ute itself is gender-neutral, the actual effect of the law is not. An estimated ninety percent of collections from the "wrong" or non-earning spouse penalize women. The Internal Revenue Service (IRS) may collect from either spouse at its pleasure, and apparently chooses its target simply from the point of view of ease of collection.

If the wife is forced to pay her husband's taxes in such a situation-and women apparently are forced to do so in thousands of cases each year-the effect is a coerced transfer of wealth from wife to husband, as if the IRS arbitrarily had chosen the husband's side in the couple's property settlement. The wife may be harmed seriously by such collections, because the amount of her joint return liability can easily exceed any reasonable measure of her ability to pay.

Part III of the Article will describe and discuss the origins of the rule of joint return liability. Before Congress enacted joint return liability in 1938, the Treasury sought to impose the rule by administrative decision. Taxpayers challenged the rule in the Ninth Circuit case Colev. Commissioner.' In Cole the Government unsuccessfully argued that the rule was required by administrative necessity, because the Government would be unable to determine the separate incomes and expenses of the spouses from the aggregated numbers reported on joint returns. The Cole court held that, at least in cases in which the spouses could demonstrate their respective net incomes, joint return liability would deny unjustifiably each taxpayer's right to be taxed only in proportion to his or her own income, in accordance with ability to pay.'Three years after the government's 1935 defeat in the Ninth Circuit, Congress overruled the Cole decision by enacting the rule of joint return liability, and offered as its sole 'explanation the same claim of administrative necessity that the Ninth Circuit had rejected. This section will argue that the Ninth Circuit's reasoning was correct and that the rule of joint return liability was not then, and cannot now be, justified by the government's arguments.

Part IV of the Article analyzes and criticizes the innocent spouse rules that Congress enacted in 1971 as section 6013(e) of the Internal Revenue Code (the Code).1 0 These rules exonerate the wife from the general rule of joint return liability under certain very limited circumstances. Relief is available only for omissions of income and for illegal claims of deduction, credit, or basis, and then only if the deficiency is substantial.' In addition, the wife must prove that she did not know and had no reason to know of the husband's illegal claims in order to obtain relief.. This innocence requirement has proved particularly troublesome in application, and has led to inconsistent and unpredictable case law.