The Seventh Circuit reverses the Tax Court and holds that innocent spouse claims must be made within two years of the beginning of IRS collection activity.
Lantz v. Commissioner, No. 09-3345 (7th Cir. June 8, 2010)
For more discussion on the Lantz decision and Sec. 6015(f) please click here.
Yes, I am (somewhat). Thank you for pointing out that article, I’ll definitely read through it when I get the chance.
Andrew, I don’t know if you’re still following Lantz closely but I just updated the original post to include a link to Prof. Bryan Camp’s latest article on Lantz.
Thanks again for the comment Andrew. Your argument as you have specified it – i.e., as applied to 1.6015-4(a) – makes much more sense to me now. I suppose you could extend Judge Goeke’s rationale in that direction though (as you noted) I think you may be swimming upstream. Case assignment will have a lot to do with your prospects too, as several judges did not support Judge Goeke’s opinion. If you’re looking for insight into the thinking behind Section 6015(f) and the supporting regulations, you might try to contact Rita Cavanagh at Latham & Watkins. I believe she was one of the principal drafters of this code section. Best of luck.
Thanks for responding so quickly (not that I’m in any rush for thoughts or answers but it’s appreciated). I’m not sure exactly what you’re saying and I’d like to clarify…
My thoughts are that Judge Goeke’s reasoning might allow for invalidating the “joint return” requirement of Treas. Reg. 1.6015-4(a). By his reasoning, it seems possible to argue that the “joint return” requirement of Treas. Reg. 1.6015-4(a) could be found invalid as an invalid extension of IRC 6015(f), by similar reasoning to that by which Judge Goeke found 1.6015-5(b)(1) to be an invalid extension of IRC 6015(f) – namely that neither the “joint return” nor the “2-year limitations period” are present in 6015(f), yet both are present in IRC 6015(b) and (c).
IRC 6015(a)(1) very clearly states that: “(1) an individual who has made a joint return may elect to seek relief under the procedures prescribed UNDER SUBSECTION (b)”. This code does mandate a specific filing status for IRC 6015(f) equitable relief (unless I am missing something, like the title of 6015 which creates an uphill battle for such an argument), and the Treas. Reg. regarding the same does not appear to be a valid extension of the Code’s Equitable Relief provision.
Are you thinking that Judge Goeke’s reasoning WOULD NOT allow invalidation of the joint return regulation?
Andrew, thank you again for your thoughtful comment. I would note first that the trial court was the U.S. Tax Court, not a federal District Court. In my humble opinion, it is exactly the reasoning of Judge Goeke’s majority opinion that would not allow invalidation of the joint return regulation you reference (presumably Treas. Reg. 1.6015-1(a)(1)). That is, unlike IRC 6015(f) where there is no statutory language regarding the applicable statute of limitations (so that the general governs the particular), the statutory language of IRC 6015(a)(1) very clearly states that the relief is only eligible for “an individual who has made a joint return.” Thus, I can see no reasonable basis upon which the Commissioner could promulgate a regulation to the contrary. I hope this is helpful.
What are your thoughts on using the reasoning of the District Court in Lantz to attempt to invalidate the regulation which requires the taxpayer to file a joint return to be eligible for equitable relief? I realize Section 6015 is “Relief From Joint and Several Liability on Joint Return”, but filing a joint return is notably excluded from 6015(e), though present in both (b) and (c). There are also other code provisions which allow an individual return to be treated as though it was filed jointly.
There are certainly situations where one spouse prepares the tax returns, be the married couple filing joint or individual returns where the unknowing spouse merely signs the return. Also, and especially in Ohio, there may be advantages to filing separately, such as because the state requires you to file the same way that you filed your federal return.
Just looking for thoughts.
First, thanks for the comment. I don’t know who is representing Ms. Lantz and/or whether she has the financial support to file a petition for certiorari. Certainly there is still plenty of time on the clock for that filing to happen. Given the sheer volume of innocent spouse cases that work through the U.S. Tax Court, I think we should not be surprised if we see this issue come up again in a different circuit.
Is Lantz v. Commissioner being appealed to the Supreme Court? What did you think of the 7th Circuit’s ruling?