Was a separated spouse liable for a joint Virginia return her spouse electronically filed without her agreement?

Plain-English summary

Virginia canceled the assessment because the taxpayer never agreed to file the joint return. Her spouse electronically filed a 2008 joint Virginia return and received a refund after the couple separated. She separately filed her own return and paid the balance due.

Virginia did not generally follow the federal innocent-spouse rule because the state statutes did not use that concept. When spouses validly filed a joint Virginia return, each was jointly and individually liable for the full tax.

This case was different: the evidence showed no consent to the joint return. Because she had appropriately filed separately, the unauthorized return did not create joint liability for her, and the refund-recovery assessment was abated.

What this means for you

• Joint liability requires an actual joint filing, including consent.
• Preserve separate returns, payment proof, correspondence, and evidence of nonconsent.
• Virginia's analysis is not the same as federal innocent-spouse relief.
• Act promptly if a spouse files an unauthorized electronic return.

Common questions

Q: Does Virginia generally apply IRC § 6015 innocent-spouse relief?
A: The ruling said no.

Q: Why did this taxpayer still win?
A: She never agreed to file jointly and had filed and paid separately.

Q: What happened to her assessment?
A: It was abated.

Citations and references

• Va. Code §§ 58.1-301 and 58.1-341(B)(1).
• 23 VAC 10-110-240(C)(3)(b).
• IRC § 6015.
• Virginia Public Document 08-44 (April 17, 2008).

Subject

Taxpayer never agreed to file a joint Virginia income tax return with spouse.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 11-144

Original ruling text

August 5, 2011

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek correction of an individual income tax assessment issued to * (the "Taxpayer") for the taxable year ending December 31, 2008. I apologize for the delay in responding to your letter.

FACTS

The Taxpayer separated from her spouse during 2008 and divorced in 2010. The spouse electronically filed a joint Virginia individual income tax return for the 2008 taxable year and a refund was issued. The Taxpayer filed a separate Virginia individual income tax return and paid the balance due. The Department processed the Taxpayer's return and issued an assessment to the Taxpayer to recover the refund issued from the joint return. The Taxpayer appeals the assessment, contending she did not agree to file a joint 2008 return and is not liable for the balance due related to the filling of the joint Virginia return.

DETERMINATION

Innocent Spouse

Virginia's conformity to federal law is set forth in Va. Code § 58.1-301, which provides that the terms used in the Virginia income tax statutes will have the same meanings as used in the Internal Revenue Code (IRC). As such, Virginia's conformity to federal law is limited to the actual use of a specific term in a Virginia statute. Conformity does not extend to terms, concepts, or principles not specifically provided in Title 58.1 of the Code of Virginia .

Under federal law, a husband and wife are jointly and severally liable for the entire income tax on a joint return. Under IRC § 6015, relief from joint liability is accorded to an innocent spouse in certain circumstances when a spouse intentionally hides income or otherwise falsifies a return.

The Code of Virginia does not contain a provision that includes the term that addresses an "innocent spouse." Accordingly, the Department is not required to follow the federal innocent spouse rules. See Public Document (P.D.) 08-44 (4/17/08).

Joint Liability

Virginia Code § 58.1-341 B 1 provides that a husband and wife who file a joint tax return are liable jointly and individually for their tax liabilities. Title 23 of the Virginia Administrative Code (VAC) 10-110-240 C 3 b provides that joint and several liability means that each party to the return is individually liable for its contents and the entire tax liability arising therefrom and further entails "a joint or several obligation." Therefore, the tax liability may attach to one spouse individually or to both spouses jointly.

Evidence provided by the Taxpayer demonstrates that she never agreed to file a joint Virginia income tax return with her spouse. Because the joint return was filed without her permission and she appropriately filed a separate Virginia return reporting her separate tax liability, the Taxpayer would not be jointly liable for any assessment resulting from the joint return. Accordingly, the assessment issued to the Taxpayer for the 2008 taxable year has been abated.

The Code of Virginia sections and public documents cited are available on-line www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-4618317771.E