Innocent Spouse Relief is available to taxpayers who sign a valid joint tax return. A joint tax return is valid when it was signed voluntarily by both spouses. But what if the taxpayer signed the joint tax return under duress? In that case, the tax return is invalid and cannot be subject to innocent spouse relief. As for separate liability relief, actual knowledge of any item giving rise to the deficiency will not disqualify the taxpayer if they signed the return under duress.
Signature Under Duress
Under the Internal Revenue Manual 22.214.171.124.3, a signature under duress occurs when the taxpayer cannot resist the demand to sign the tax return due to the coercion of the other spouse. For the taxpayer to claim to have signed the return involuntarily or under duress, the taxpayer must establish that they could not resist the demand to sign the return; they would not have signed it if not for the constraint applied by the other spouse.
Suppose the joint return was signed involuntarily or under duress. In that case, the signature of the claiming spouse is not valid, and thus, the election to file a joint tax return is not valid. Therefore, they will not be jointly or severally liable for liabilities arising from such a return that they signed under duress. Also, they will not be liable if the other spouse’s income solely caused the tax debt.
Married Filing Separate
Based on their records, the IRS would adjust the account to reflect a married filing separate tax return filed by both the taxpayer and their spouse. If a return is required for a certain period, or the taxpayer may have been entitled to a refund, the IRS will likewise request that the taxpayer secure a married filing separate tax return.
Despite raising the signature under duress, the taxpayer who raises the issue may opt not to pursue married filing separate status if they determine they’ll owe more tax if they filed separately.
Tacit or Implied Consent
It is also important to note in proving signature under duress that there is an absence of tacit or implied consent on the claiming taxpayer’s part. Therefore, any action the taxpayer took must have been done under duress or by force, furthering the other spouse’s ability to file the return.
Under the IRM 126.96.36.199.3.1, there is tacit or implied consent when the taxpayer did not give any specific authorization but knew that their spouse would sign the return for them, or supplied information needed to complete the return under the assumption that it would be used to file the return.
In short, signature under duress can relieve a taxpayer from joint or severally liability caused by an invalid joint return. However, there must not be tacit or implied consent on the taxpayer’s part