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Married Taxpayers Who Received Separate Notices May File Joint Tax Court Petition

(Parker Tax Publishing July 2021)

The Tax Court held that married taxpayers who receive separate but substantially identical notices of certification arising from the same tax liability may file a joint petition in the Tax Court, in the same manner as in a deficiency case under Tax Court Rule 34(a)(1). The court further held that it lacked authority under Code Sec. 7345(e) to address the merits of the couple's offer-in-compromise. Garcia v. Comm'r, 157 T.C. No. 1 (2021).


In early 2020, the IRS issued Morris Garcia and his wife, Sharon Garcia, separate (but substantially identical) notices informing them that they had a delinquent tax debt of approximately $583,000 stemming from an unpaid joint federal income tax liability for 2012. The IRS also informed the couple that it had certified to the State Department that they were persons owing a "seriously delinquent tax debt," as described in Code Sec. 7345(b). On July 10, 2020, the Garcias jointly petitioned the Tax Court for review of the two notices. The couple, urging that the IRS had improperly rejected their offer-in-compromise, asked the Tax Court to determine that their certifications as persons owing a seriously delinquent tax debt were erroneous. They also requested declaratory relief to the effect that their offer-in-compromise was erroneously denied in violation of their rights.

On November 2, 2020, the IRS reversed its certification of the Garcias as persons owing a seriously delinquent tax debt, citing the receipt of the couple's amended 2012 return on October 31, 2019, and the couple's submission on December 4, 2019, of a processable offer-in-compromise of the liability referenced in the two notices. On January 29, 2021, the IRS filed a motion to dismiss on the ground of mootness, contending that the couple had received all of the relief to which they were entitled, that the Tax Court could afford no further relief at this juncture, and that the case was therefore moot. The couple objected to the granting of the motion, arguing that the certifications had been prematurely issued because they had submitted an offer-in-compromise that remained pending at the IRS prior to the issuance of the certifications.

The Tax Court noted that neither Code Sec. 7345 nor the Tax Court rules expressly authorize the joint filing of a petition in a passport case. Thus, the court said, it was confronting a threshold question as to whether the couple's joint filing was proper. Although the IRS did not challenge the joint filing, the court concluded that it was an issue that it needed to address since it was a question of first impression that may recur.

Code Sec. 7345, which was enacted in 2015, is captioned "Revocation or Denial of Passport in Case of Certain Tax Delinquencies." Code Sec. 7345(a) provides that, if the IRS certifies that an individual has a "seriously delinquent tax debt," that certification must be transmitted to the Secretary of State for action with respect to denial, revocation, or limitation of a passport." Under Code Sec. 7345(e)(1), a taxpayer aggrieved by such action may petition the Tax Court to determine whether the certification was erroneous or whether the IRS had failed to reverse the certification.

Tax Court Rule 34(a)(1) governs the filing of a petition in a "Deficiency or Liability Action." It provides that a separate petition ordinarily must be filed "with respect to each notice" but that "a single petition may be filed seeking a redetermination with respect to all notices of deficiency or liability directed to a husband and a wife individually." The Tax Court noted that, in appropriate circumstances, it may require a severance and a separate case to be maintained with respect to each notice. Under other circumstances, the Tax Court may order one (or both) taxpayers to ratify the petition. Under Tax Court Rule 62, the court observed, in either situation "[m]isjoinder of parties is not ground for dismissal of a case."


The Tax Court held that married taxpayers who receive separate but substantially identical notices of certification arising from the same tax liability may file a joint petition, in the same manner as in a deficiency case under Tax Court Rule 34(a)(1). Further, the court concluded, because the IRS had reversed its certifications as erroneous and so notified the Secretary of State, the Garcias' challenge in that respect was moot. The court also found that it lacked authority under Code Sec. 7345(e) to address the merits of the Garcias' offer-in-compromise.

Although Rule 34(a) explicitly addresses only deficiency and liability actions, the Tax Court concluded that its permission for joint filing extends by analogy to other types of cases in which the IRS issues separate notices to a married couple concerning the same tax liability. The court found that equity and common sense support that result. Marriage, the court said, affords its entrants certain benefits, among them the option of filing joint returns. The court concluded that it is natural for spouses to file a joint petition in these circumstances and to hold otherwise would occasion unnecessary delay and expense.

For a discussion of IRS collection procedures, see Parker Tax ¶260,501.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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