Tax Clinic Takes IRS Filing Status Appeal to 8th Circuit

February 2, 2015

On Feb. 11, the 8th Circuit Court of Appeals will hear arguments in a case that may help one family’s tax situation—and could lead to a change in the U.S. Tax Code. Representing the petitioner against the IRS will be Frank DiPietro (’14), who began working on the case while he was a student in the Law School’s Ronald M. Mankoff Tax Clinic.

The case revolves around filing status, a seemingly dry topic that can have big implications for personal tax liability. The Tax Clinic’s client, who does not speak English, used a tax preparation service that incorrectly filed his 2011 return under the Head of Household status. The client’s wife, using the same tax preparer, used the Single filing status for her 2011 return. The client received a “notice of deficiency” from the IRS regarding his 2011 taxes and filed a petition with the Tax Court to challenge the deficiency. He subsequently learned that he and his wife should have used the Married Filing Jointly status, as it would have made them eligible to receive the Earned Income Tax Credit and receive a refund, and sought to file an amended return. However, the tax code states that once you have filed a petition in Tax Court, you cannot change your filing status from separate to Married Filing Jointly.

But what does “separate” mean? That is the issue in this case. The IRS is arguing that it means any return that is not a joint return. The Tax Clinic and DiPietro are arguing that it refers specifically to taxpayers using the Married Filing Separately status. The client and his wife did file separate returns—as Head of Household and Single, respectively (and, due to bad advice from their tax preparer, erroneously)—but not under the Married Filing Separately status. Thus the client’s contention that he should be allowed to amend his status to Married Filing Jointly.

“The 5th Circuit is the only other circuit to have decided the issue, and they agree with our position,” points out Tax Clinic Professor Kathryn Sedo. The 11th Circuit follows the 5th’s precedent. Sedo adds that the National Taxpayer Advocate, in her 2014 report to Congress, mentioned the Tax Clinic’s case and recommended a legislative change that would give taxpayers the right to change their status to Married Filing Jointly even after filing a Tax Court petition in response to a notice of deficiency.

Professor Kathryn Sedo and Frank DiPietro (’14)
Professor Kathryn Sedo and Frank DiPietro (’14)

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