Opinion ID: 1852360
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Heading: Joint Liability Based on Joint Tax Return.

Text: Iowa Code section 422.21 (1993) prescribes the form of and time frame for filing tax returns. Our legislature amended the section in 1994 to add the following provision: If married taxpayers file a joint return... both spouses are jointly and severally liable for the total tax due on the return, except when one spouse is considered to be an innocent spouse under criteria established pursuant to section 6013(e) of the Internal Revenue Code. 1994 Iowa Acts ch. 1165, § 16 (codified at Iowa Code § 422.21 (1995)). The Clarks maintain that the absence of the amendment prior to 1994 indicates Iowa did not recognize joint liability for joint tax returns prior to that time. Contrary to the Clarks' contention, we do not believe this amendment created joint liability in Iowa. Instead, we believe the legislature intended to create an exception to the preexisting common law principle of joint liability for joint acts when it amended section 422.21, and merely stated the principle or rule of joint liability in the context of recognizing an exception to the rule. The general concept of joint liability has existed in Iowa for many years in various areas of the law. See, e.g., State, Dep't of Human Servs. v. Unisys Corp., 637 N.W.2d 142, 152-53 (Iowa 2001) (a party may seek contribution from another if they are jointly liable); Gremmel v. Junnie's Lounge, Ltd., 397 N.W.2d 717, 723 (Iowa 1986) (joint liability between the direct perpetrator and the aider and abettor of an assault); Wiedenfeld v. Chicago & N.W. Transp. Co., 252 N.W.2d 691, 695 (Iowa 1977) (master and servant both liable for servant's tort committed in course of employment); Turner v. Hitchcock, 20 Iowa 310, 316 (1866) (recognizing the existence of joint liability in tort law), overruled in part on other grounds by Dungy v. Benda, 251 Iowa 627, 637, 102 N.W.2d 170, 176 (1960) (overruling holding that full release from liability of one joint tortfeasor does not release other joint tortfeasors), overruled by Cmty. Sch. Dist. of Postville v. Gordon N. Peterson, Inc., 176 N.W.2d 169, 175 (Iowa 1970) (holding the release of one obligor does not automatically release the remaining co-obligors). Likewise, joint liability has existed in federal tax law for years. As a general rule, married taxpayers filing joint income tax returns are considered jointly and severally liable for taxes reported due on their combined income, and for additional amounts of tax relating to the initial returns later deemed to be owed. See 26 U.S.C. § 6013(d)(3) (1989); accord Furnish v. Comm'r of Internal Revenue, 262 F.2d 727, 731 (9th Cir.1958); Schwimmer v. Comm'r of Internal Revenue, 72 T.C.M. (CCH) 301 (1996); Estate of Molever v. Comm'r of Internal Revenue, 64 T.C.M. (CCH) 1662 (1992). However, if a spouse satisfies certain conditions, that spouse is labeled an innocent spouse and is relieved from the tax liability created by the other spouse. See 26 U.S.C. § 6013(e); see also Schwimmer, 72 T.C.M. (CCH) at 301; Estate of Molever, 64 T.C.M. (CCH) at 1662. The innocent spouse relief provisions were promulgated to remedy the injustice sometimes created by operation of the rule of joint liability. Estate of Molever, 64 T.C.M. (CCH) at 1662 (legislative history of federal act indicated innocent spouse relief provisions intended to prevent joint liability where a husband embezzles funds and omits the proceeds from gross income and the wife has no reason to know of the embezzlement activity). Joint liability for joint conduct is a longstanding legal principle that properly applies to obligations imposed under tax statutes. We also observe that the Department has specifically recognized joint liability of married taxpayers in tax cases predating the amendment to section 422.21. See In re Dennis R. Myer & Norma Jean Myer, Nos. 88-20-1-0179, 90-20-1-0076, 1992 WL 511440, at -5 (June 17, 1992) [hereinafter In re Myer ]. Although we do not consider previous decisions of the Department as precedent, they serve as guidance in our review of claims with no applicable case law. See 47A C.J.S. Internal Revenue § 10, at 55 (2002) (court may consider long-standing agency construction if reasonable). In In re Myer, the Department found the married taxpayers in that case had willfully filed false returns with the intent to evade payment of tax. Because the married taxpayers filed joint returns, they were subject to the principle of joint liability. As noted by the administrative law judge who denied Myers' protest, When married couples decide to take advantage of the tax laws by signing and filing only one return as a unit, they must also bear the concomitant statutory responsibilities and liabilities which accompany that decision. In re Myer, 1992 WL 511440, at . Thus, when married taxpayers file a joint tax return, they must realize they are sharing the liabilities as well as the benefits stemming from the combined return. In short, married taxpayers understand they are sharing responsibility for the tax reported due on the filed return. If an audit reveals additional tax is due from the joint return, married taxpayers also share responsibility for the additional tax. See Furnish, 262 F.2d at 731 ([Joint] liability covers not only the basic tax but also any addition to the tax on account of fraud....). The amendment to section 422.21 did not create this principle. On the contrary, it merely created an exception to the principle that joint filers assume joint liability for the return.