Hiramanek v. Comm’r, T.C. Memo. 2016-92, 2016 WL 2763870 (2016)
Facts: The husband prepared a joint tax return for tax year 2006 and asked the wife to sign it. She refused to sign without reading it, and he permitted her to take a quick glance at the return. She noticed that the return contained a $35,000 casualty loss deduction for a break-in to the couple’s car while they were on vacation in Hawaii. Believing the deduction overstated, she refused to sign. The husband threatened and physically abused her for several hours, and she finally made a scribble on the signature line. The husband’s physical abuse was consistent with other physical abuse which the wife endured during the marriage.
The next day, the husband presented the wife with a new report with the $35,000 deduction omitted. The wife, fearful of further abuse, signed the return.
Six days later, the wife reported the abuse to the police. Two weeks later, she filed for divorce. But the parties eventually reconciled.
The IRS investigated the parties’ tax return. The husband did not permit the wife to participate in the investigation. During negotiations, the wife refused to sign documents which would have given the husband exclusive authority to settle the tax dispute. The husband began yelling, a neighbor called the police, and the husband was arrested. The wife then filed a second divorce complaint, which eventually resulted in entry of a divorce by a California state court.
In 2009, while the investigation was continuing, the wife filed for innocent spouse relief. The IRS eventually assessed a deficiency. Before the IRS ruled on her petition, she filed an action in Tax Court, arguing that the joint tax return was invalid because her consent was procured by duress. The husband intervened in the action.
The wife and the IRS agreed that the joint tax return was invalid for duress, but the husband contested the issue. The Tax Court agreed with the wife and the IRS, as did the Ninth Circuit, and the Supreme Court denied review. Hiramanek v. Comm’r,
T.C. Memo. 2011-280, 2011 WL 5921512, aff’d sub nom. Hiramanek v. Hiramanek, 588 F. App’x 681 (9th Cir. 2014), cert. denied, 136 S. Ct. 167 (2015).
The husband then filed a petition seeking innocent spouse relief from the same tax liability.
Issue: Was the husband entitled to innocent spouse relief?
Answer to Issue: No
Summary of Rationale: Innocent spouse relief is available only if the party seeking relief signed a joint tax return. A joint tax return which is filed under duress is invalid, and therefore not a proper subject for innocent spouse relief.
The husband argued that the wife did not sign the return under duress. But this was the same argument raised in the case arising from the wife’s request for innocent spouse relief. The husband was a party to that case. He litigated his position all the way up to the U.S. Supreme Court, but lost. The decision in that case is binding in the present case under principles of collateral estoppel.
Because the wife signed under duress, “the return [husband] filed for [2006] was not a joint return. He thus has no claim for relief under section 6015; in fact he has no joint and several liability from which to be relieved.” 2016 WL 2763870, at *5.
Lessons:
A joint tax return signed under duress does not give rise to joint and several liability. The signature of the coerced spouse is invalid, and the coercing spouse is solely liable for taxes due.
As noted in the 2012 version of this outline, Hiramanek is a textbook illustration of why Congress forced the IRS to abandon the former regulatory statute of limitations and to start considering spousal abuse as a factor in making innocent spouse determinations. The wife did not consent in any real way to the filing of the tax return at issue.
If you coerce your spouse into filing a joint tax return, don’t expect to be granted innocent spouse relief.