July 20, 2018

When Forged Signatures Suffice: The Tacit Consent Exception

Houston Tax Attorney Blog

Houston Tax Attorney

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A tax return has to be signed to be valid.  But what if the return is signed by someone else?  Is a tax return with a forged signature a valid tax return?  The court addressed this in Coggin v. United States, No. 1:16-CV-106 (M.D.N.C. 2018).

Facts & Procedural History

The taxpayer relied on her attorney to prepare and file tax returns.  While the taxpayer did not consent or know that the husband signed the tax returns for her, the taxpayer did not file her own tax returns.

Not only did the husband file the returns, he also saw to it that the taxes reported on the returns were paid.

After the husband’s death in 2011, she discovered that her husband had signed her 2001-2007 tax returns.  She then filed returns as married filing separate to request refunds of the amounts her husband had paid.

The IRS did not allow the refunds and litigation ensued.

Tax Return Signature Requirement

Sec. 6061 provides the general rule that a return has to be filed to be valid.  It says that the return must be signed according to the applicable IRS forms.

The instructions for the Form 1040, U.S. Individual Income Tax Return, explain:

Form 1040 isn’t considered a valid return unless you sign it. If you are filing a joint return, your spouse also must sign. If your spouse can’t sign the return, see Pub. 501. Be sure to date your return and enter your occupation(s). If you have someone prepare your return, you are still responsible for the correctness of the return. If your return is signed by a representative for you, you must have a power of attorney attached that specifically authorizes the representative to sign your return. To do this, you can use Form 2848. If you are filing a joint return as a surviving spouse, see Death of a Taxpayer, later.

Publication 501 sets out several examples where a spouse can sign a joint return, such as where the spouse is subject to an injury or disease that prevents them from signing or is mentally incapacitated.

It has a catch all provision which allows one spouse to sign if they have a valid Form 2848, Power of Attorney and Declaration of Representative, for the non-signing spouse.

The Tacit Consent Exception

Given the facts in this case, the IRS forms and publication–and by extension Sec. 6061–do not seem to authorize the taxpayers husband to sign on the taxpayer’s behalf.  The court did not consider these rules.  Instead, the court considered the prior case law that provides an exception for joint returns.  These cases refer to this as the tacit consent exception.

This exception holds that a joint tax return is valid if signed by one spouse if the non-signing spouse intended to file jointly.  This determination is based on whether there is any evidence the non-signing spouse objected to the signature, such as where the non-signing spouse files a separate return.

The Tacit Consent Factors

One of the leading court cases on the tacit consent exception, Heim v. Commissioner, 251 F.2d 44 (8th Cir. 1958), lists several factors that are to be considered in determining intent, including the following:

  • the lack of a reason for a refusal to file a joint return,
  • the absence of objection,
  • the delivery of the tax data to the filing spouse for the purpose of making the tax return, and
  • the apparent advantage in filing a joint return.

The court did not address these factors in this case, but concluded that:

Before 2012, Ms. Coggin never filed a separate tax return and she understood that her husband prepared and filed joint returns on her behalf. Doc. 47-2 at 20-21. Ms. Coggin did not herself file any other tax returns on her income when such returns were due, even though she worked part-time, Doc. 47-2 at 6-7, and she did not file separate tax returns for the 2002 through 2007 tax years until 2012. Doc. 47-2 at 20-21; Doc. 47-11.

While the court found this to be sufficient to trigger the tacit consent exception, the holding may have been different if there was some evidence that the taxpayer objected to the signature (which would require that she knew of it) or that she had taken steps earlier in time to file separate tax returns.

 

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