Unsigned joint return was not valid; 10th Cir. reverses own decision and affirms Tax Court.

After 15 years of marriage, H and W were divorced in 1996. After obtaining two extensions, they filed their 1995 return on Oct. 15, 1996. The return was not signed by either H or W, but included the signature of their paid preparer. (H and W did file joint state tax returns.) The IRS processed this return as a joint return and, in 1997, H paid the taxes due.

In 1997, W declared bankruptcy. The Service, during a review of her returns, informed W that she and H had failed to sign the 1995 return. At the IRS's suggestion, she signed and filed a separate 1995 return in 1998.

In 1998, the Service notified H that he had not filed a valid 1995 return. In two meetings with IRS agents, H asked to sign the original return to correct the problem, but was not allowed to do so (apparently because W had filed her separate 1995 return).

In 1998, the Service reversed its original processing of the 1995 return and, in 1999, issued a deficiency notice to H.

In a memorandum decision, the Tax Court held for the IRS. In January 2001, the Court of Appeals reversed, ruling that, given H's actions and his efforts, he intended to file a joint return for 1995. On the Service's petition for rehearing, the appellate court (opinion McKay, J.) withdrew its prior opinion, and affirmed the Tax Court.

Return Signature Requirements

The Internal Revenue Code states that "any return ... required to be made under any provision of the internal revenue laws or regulations shall be signed in accordance with forms or regulations prescribed by the Secretary." Sec. 6065 also requires that "except as otherwise provided by the Secretary, any return ... required to be made under any provision of the internal revenue laws or regulations shall contain or be verified by a written declaration that it is made under the penalties of perjury."

The Code clearly states that, in order to be valid, a tax return must be signed. Additionally, Regs. Sec. 1.6013-1 (a) (2) provides that "[a] joint return of a husband and wife (if not made by an agent of one or both spouses) shall be signed by both spouses." The 1995 Form 1040 (the form filed by the H and W) states on its face, "If a joint return BOTH must sign." The Treasury has not created any applicable exception to Sec. 6065's verification requirement. Because H and W did not file electronically, the Code exception for electronically filed returns does not apply in this case.

The general rule when a tax return is unsigned is that it is invalid. There is one exception. If one spouse on a joint return signs, there is an inquiry as to the intent of the other spouse; see In re Hanesworth, 936 F2d 583 (10th Cir. 1991). However, the Hanesworth exception is not applicable here, because neither party signed the joint return.

Even if H had been allowed to sign the return at a later date, the Hanesworth exception would not be available to him. His own evidence showed that at the time he offered to sign the return, W had already filed a separate return and refused to sign the joint return. Accordingly, as a matter of law, he could not meet the standard of proof required.

Waiver 

H's argument that the "acceptance" of his return by the IRS can cure the lack of signatures must fail. Even though the Service processed H and W's joint return, accepted H's payments and failed to return the Form 1040 for the H and W to sign, acceptance cannot cure an invalid return.

Administrative Practice--Duty

The duty to sign a tax return is on the taxpayer. In a case like H's, when the IRS discovers the error, the Service usually returns the tax return to the taxpayer for his signature. The IRS apparently inadvertently missed the lack of signatures on H's return. While it may be the Service's administrative practice to return unsigned tax returns to taxpayers, the Code does not place such a duty on the IRS. Rather, the Code places the duty to sign a tax return solely on the taxpayer. The Service's operating procedures do not create rights in the taxpayer.

NATHAN OLPIN, 10TH CIR., 11/5/01, AFF'G TC MEMO 1999-426

REFLECTIONS. For a discussion of the Tenth Circuit's earlier opinion, see TTA, May 2001, p. 353.