09-3345 Lantz v. CIR

Listen to this article

Tax
Innocent spouses

A taxpayer seeking relief as an innocent spouse must seek relief within 2 years of the notice of intent to levy.

"Lantz points out that the circumstances bearing on the equities of a claim for equitable relief may change over the course of the ten years in which the IRS may be trying to collect unpaid taxes. Maybe when the IRS makes its first effort to collect them the innocent spouse is wealthy, and so while innocent doesn't have a compelling equitable claim for relief, but that later, with the IRS doggedly persisting in its collection efforts, she is in poverty but past the two-year deadline for seeking innocent-spouse relief. But this argument is really a quarrel with Congress, because it is equally an argument against the two-year statutory deadline in subsection (b). The guilty spouse may have understated his income on the joint return and the innocent spouse may not have sought (or, if she did seek, may not have obtained) relief under (b) because she was wealthy, but five years later she is poor but no longer eligible because of the two-year deadline. So the taxpayer's argument reduces to: Congress knew it was fixing an unfair deadline in subsection (b), so it said to taxpayers (in an 'audible silence'), 'don't worry about the two-year deadline because after two years you can seek the identical relief under (f).' That would be an odd way to legislate."

Reversed and Remanded.

09-3345 Lantz v. CIR

Appeal from the United States Tax Court, Posner, J.

Full Text