Joint & Several Liability
Although most of us have grown up with joint returns and joint and several liability, our current tax system existed for five years without joint returns (introduced in 1918) and for another twenty years without joint and several liability (enacted by Congress in 1938). The Internal Revenue Service began pushing for joint and several liability in the early 1920's based on "administrative necessity" but this argument was rejected by the Ninth Circuit in 1935 as unjustifiably denying each taxpayer the right to be taxed only in proportion to his or her own income. Moreover, although joint and several liability is often argued as the price paid for the privilege of filing a joint return, this was not a factor weighed by Congress when it enacted joint and several liability in 1938. In fact, the favorable rates for joint filers that are derived from income splitting were not enacted until 1948, ten years after the enactment of joint and several liability.
Thus it appears that the privilege envisioned by Congress in enacting joint and several liability was not to the taxpayer, but to the Internal Revenue Service. Even with the favorable rates resulting from income splitting introduced in 1948, those rates are arguably less beneficial for today's two-income families because the benefit of income shifting to lower tax brackets is sometimes not achieved at all or in substantially reduced amounts when compared to one-income families, which were the norm in 1948.
Joint and several liability requires women to be sureties for their husband's income tax deficiencies, including those deficiencies that are not reflected on the returns or known to the women who sign them. Would any of us sign a note on behalf of another, even a loved one, for an undisclosed and unlimited amount. Even love has limits, and surely in some marriages this would be one of them. Unfortunately, many of the women I speak with would have signed the returns even if they had understood the magnitude of the liability. They would not have risked the marital discord that would have resulted from such an obvious expression of a lack of trust in their husbands. New York's recent domestic violence legislation recognizes the difficult predicament faced by women when asked by police officers if their spouses or lovers should be arrested. This legislation now requires an arrest unless a vehement objection is forged by the woman who is battered. Can Congress and the Courts continue to require women to object to signing income tax returns at the risk of marital harmony? More importantly, does Congress or the Service have a justifiable reason for doing so?
Bluestein & Muhlbauer, P.C.
333 International Drive
Williamsville, NY 14221
716.633.3200
