The Joint Filing Issue

      Joint filing is a huge problem.  Every time that you file a joint return, you make both you and your spouse liable for the taxes of each personally.  All of the assets of the couple can be attacked by the IRS for any alleged tax liability.  After divorce or separation, the IRS can pursue one or both spouses. Joint filing was adopted in 1948 as part of a large post-World War II peace dividend spending package designed to encourage women to return to their homes.  Before that, each American was taxed as an individual based on his or her earnings.  Joint filing gave traditional families a big tax break by giving the sole earner a "zero bracket" income.  Joint filing is not only not fair, it also creates huge problems for married couples with the collection division of the IRS.  Most of the other countries have dropped joint filing.  Italy dropped it in 1977 and England dropped it in 1990.  The marriage tax elimination movement has gotten nowhere.  The democrats think that the reform would lose the Treasury too much in taxes and the Republicans want to give more tax benefits to families with stay-at-home wives.  The two-earner families need to rebel against the tax system. 

Reliance on Counsel

      Here are some interesting cases on the reliance issue.          

      In Compton, 47 TCM 158, 83,647 P-H Memo, TC (1983) the court ruled that the taxpayer's reliance on his bookkeeper undermined the fraud charge determined by the IRS. In Williams, 35 TCM 919, 76,212 P-H Memo, TC (1976), the court determined that the taxpayers carelessness in relying on a bookkeeper did not amount to fraud.  In Camden Wall Paper Company, 26 TCM 254, 67,052 P-H Memo. TC (1967), the court ruled that the omissions were merely inadvertent oversights on the part of the CPA and were not intent on the taxpayer's part to defraud.  Since there was no fraud, the statute of limitations barred assessments for some of the earlier years.

      In Pelham, 66 TCM 820, RIA TC Memo: 93,441 (1993), the court took the position that reliance on an investment advisor excused negligence.  The taxpayers invested in a tax shelter that the IRS determined to be abusive several years later.  They claimed that they relied on the advice of their investment advisor who was a promoter of the shelter.  The court ruled that the taxpayers were not responsible for the penalty, as they were unsophisticated in financial matters.