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IRS prepared returns.

When a taxpayer fails to file a return, Code Section 6020(b) authorizes the IRS to make the return on the basis of available information. The IRS used this authority to prepare returns for a taxpayer and his wife. For each year the returns were allowed one exemption and one standard deduction. Tax was computed using married filing separate status. Several months later, the taxpayer and his wife filed returns for each of these years electing joint status. The joint tax rates produce a lower tax for the taxpayers than did the filing-separate rates.

In Millsap v. Commissioner, the Tax Court changed its position and overruled its earlier Goldberg findings. According to the Millsap court, taxpayers have the initial right to select their filing status. And where the IRS has the right to prepare substitute returns for taxpayers who fail to do so themselves, the substitute return should in no way preempt the taxpayer's right to choose filing status.

Generally, a married couple can choose either to file a joint return or file separate returns. Once a separate return has been filed, the Code permits the election of a joint return only under specified circumstances. Taxpayers for whom the IRS has prepared substitute returns on a separate basis should consider filing amended joint returns if this will produce a lower tax. (James Millsap v. Commissioner, 91 TC 926)

Peter M. Berkery, Jr., Director of Federal Affairs/Tax Counsel and Gary L. Green, Jr., NSPA Staff Tax Analyst
COPYRIGHT 1992 National Society of Public Accountants
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Tax Talk
Author:Berkery, Peter M., Jr.; Green, Gary L., Jr.
Publication:The National Public Accountant
Date:Feb 1, 1992
Words:247
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