STOP IRS ACTION – “My spouse forged my signature on a tax return—What now?”
On occasion a client comes in who has been a victim of signature fraud. This usually occurs when one spouse has all or a majority of the income and the other spouse has no income or very little. The spouse with the income is the one signing for the one with little or no income.
The IRS has taken the position that if the spouse has given “tacit consent” then it doesn’t matter if their signature is not theirs. For example, if previously filed joint returns were signed by just one spouse for both, then it is implied that consent was given and in this case, the IRS would not consider this fraud. The determination of a jointly filed return is based on the intent of the parties, not the presence or absence of their signatures.
If there has been a history of separate filings and if one year is filed jointly with a forged signature, it is easier to show that there was no tacit consent and the IRS will usually side with the offended spouse.
There is one other hook to consider if you live in a community property state like Arizona. Technically, both spouses are considered liable for one half of the combined income. The Arizona Department of Revenue has taken this position in recent years and the IRS can also make this claim if it is to their advantage. If this is the case then filing married filing separate would still include one half of both spouse’s income and filing jointly may still be the best way to file.
Before any decision is made it, is best to consult with an IRS representative experienced in these matters. If the marriage is intact, then filing jointly is probably still the best way to file. If there has been a divorce, filing separately can be a better option even if you have to claim one half of the offending spouse’s income. At least you have limited your exposure to one half instead of all of the taxes due on a jointly filed return, if you spouse is unable to pay his or her share.
Scott Allen E. A.
Tax Debt Advisors, Inc