Unhappy Marriage of Law and Equity in Joint Return Liability

Abstract

This column discusses what happens when Congress attempts to smooth out the sharp corners of the tax code with notions of equity, but does so with an inadequate understanding of, or appreciation for, the problems of tax administration. The statute discussed, section 6015, is not the worst-written part of that dismal effort called the Internal Revenue Service Restructuring and Return Act of 1998 (RRA 98), but it is darned close. Part I of the article explains the history and theory of joint liability, because to understand the need for equity one needs to understand what corners of the law are too sharp and why. Part II explains how and why the concept of "innocent spouse" came into tax, and how that concept has remained the bedrock idea underlying all forms of joint liability relief enacted since 1971. Part III looks at the mess made by Congress in RRA 98 when it tried to cure the problem of access to court review, but improperly conflated the tax determination process with the tax collection process, creating gaps and traps for taxpayers, no matter how wary they may be. Part III also offers some ideas on what the taxwriters should or could do to fix the mess.