Paul Caron reports that the Tax Court has denied a gay couple’s claim that it should be able to file a joint tax return.
Judge Diane Kroupa wrote:
Petitioner was not married during the years at issue. He was not married under the laws of the State of his domicile, North Carolina, nor in any other State. Moreover, petitioner did not file a return for the years at issue and, therefore, is not entitled to married filing joint status.
Every married individual who makes a single return jointly with his spouse under section 6013 is subject to married filing joint return status. The determination of whether an individual is married shall be made as of the close of the taxable year. Sec. 7703(a)(1).
Whether a taxpayer is married for Federal income tax purposes is determined by reference to the laws of the State of the taxpayer’s marital domicile. . . .
Petitioner admits he was not legally married for either of the years at issue but argues, nonetheless, that he should be allowed to file joint returns because he was in a long-term committed relationship with his gay partner and North Carolina did not recognize same-sex marriage.
Read the whole case: Charles Merrill v Commissioner of Internal Revenue, T.C. Memo 2009-166 (July 13, 2009)
Statute is Clear On its Face
Clearly, Judge Kroupa had no choice in ruling as she did. The statute is plain on its face.
She likewise had no choice but to uphold the IRS’s imposition of late filing, late payment and estimated tax penalties.
But it’s what Judge Kroupa didn’t do that interests me
Why No Frivolous Appeal Penalty?
IRC § 6673(a) provides,
(a) Tax court proceedings
(1) Procedures instituted primarily for delay, etc.
Whenever it appears to the Tax Court that—
(A) proceedings before it have been instituted or maintained by the taxpayer primarily for delay,
(B) the taxpayer’s position in such proceeding is frivolous or groundless, or
(C) the taxpayer unreasonably failed to pursue available administrative remedies,
the Tax Court, in its decision, may require the taxpayer to pay to the United States a penalty not in excess of $25,000.
Regardless of what you think about gay marriage or the constitutionality of the Defense Against Marriage Act (DOMA), Merrill’s claim that he should be allowed to file a joint tax return even though he was not married was wholly without merit at the time he petitioned the tax court. In other words, it was frivolous.
So why did Judge Kroupa fail to assess the frivolous appeal penalty? Moreover, why did she fail to address the issue at all?
Tax Protesters, Charles Merrill & Equal Protection
The frivolous appeal penalty is regularly imposed by the Court in tax protester cases.
I see little difference between a tax protester who has challenged the constitutionality of the entire tax code and Mr. Merrill who has challenged the constitutionality of a specific provision of the code where in both cases there is no basis in law that would indicate the challenge could succeed.
In other words, the tax protester’s challenge and Mr. Merrill’s challenge are equally frivolous and the Taxpayer Bill of Rights (and perhaps even the U.S. Constitution) demands that similarly situated taxpayers be treated similarly.
The frivolous appeal penalty should have been assessed against Mr. Merrill.
Questions for Readers
- Should Judge Kroupa have imposed the frivolous appeal penalty?
- If the circumstances of this case did not involve the culturally sensitive issues of gay marriage and homosexual rights, do you think she would have imposed the penalty?
8 responses so far ↓
1 Wakefield solicitors // Jul 31, 2009 at 8:10 am
Its really walking a tightrope in this situation. If the Judge didnt impose the penalty then people will say she was being too soft and should have done. But the other minority would have said she was being homophobic. Personally i don’t think anybody should be treat any different to each other no matter what age, culture, etc and by not giving the same punishment anybody else would have got this has been done. Very very tough decision though.
2 Peter // Aug 1, 2009 at 12:38 am
Wakefield,
Thanks for the visit and the comment.
I agree, but as a judge she should have the cojones to do the right thing. That means treating similar taxpayers similarly.
This was a frivolous case and the frivolous appeal penalty should have been opposed.
3 Christopher // Dec 16, 2009 at 3:31 pm
Judge Kroupa shouldn’t be criticized for not raising the penalty sua sponte; the Service typically seeks the frivolous penalty in cases which it believes are frivolous. Since the Service didn’t believe the case to be frivolous, why should Judge Kroupa raise the issue on her own when the parties didn’t believe it to be an issue?
4 Peter // Dec 16, 2009 at 8:05 pm
Christopher,
A frivolous appeal penalty can and often is assessed by the Judge regardless of whether or not the IRS requests it. That’s because the time that the frivolous appellant is wasting is the Court’s.
5 bob saget // Jun 16, 2011 at 1:49 pm
Peter,
Is there case history about two homosexuals trying to file a joint return? If not, then the lawsuit is not frivolous.
Think about it.
If you have tax protestors filing the same lawsuit over and over again with the same result. That is frivolous. If it is the first time, then it is not.
Seems pretty straight forward. (pun intended).
Bob
6 Peter // Jun 16, 2011 at 3:06 pm
Hi Bob,
What makes the claim frivolous is that the couple isn’t married and the law only allows joint return filings for married individuals. That’s why it’s called “married filing jointly.”
By the way, there has never been a lawsuit claiming that if you were born in the month of July you don’t have to pay taxes, but if you filed a lawsuit alleging that, it would also be frivolous.
7 bob saget // Jun 16, 2011 at 6:37 pm
Peter,
You missed my point. In no instance, to my knowledge at least, has anyone claimed special privileges for being born in the month of July and been successful at claiming those privileges. There is a huge case history of people living together being treated in the eyes of the law as a married couple. You are referencing something (being born in July) that has no history of transforming into something else. So you would be correct in saying that a lawsuit filed to avoid paying taxes because one is born in July is frivolous seeing as there is no case history. It would be downright silly though to draw a comparison to a gay couple living together seeing as many couples’ status (be it heterosexual) has changed in the eyes of the law by them living together. Seeing as many developed countries and even some of our states have allowed homosexuals to get married, it is pretty logical that a couple might file this case. Especially since the IRS is federal and not based on individual state’s rights. So there is a logic to the lawsuit that is not present in your ‘born in July’ example. You just randomly made that up.
I know your post is primarily about tax law and I do understand you are probably just upset that other people protesting taxes are being charged penalties as being frivolous. These are the assumptions I am making about you as I hope you don’t just want to pick on homosexuals. I think you are going to have to try a bit harder than your ‘born in July’ argument for the reasons stated above.
bob saget
ps. Please have the respect to get my fake name correctly as it is Bob and not Bog.
8 Peter // Jun 17, 2011 at 12:27 am
Bob,
I don’t think I missed your point. Perhaps you missed mine.
You have to be married to file a tax return and check off the box “married filing jointly.”
If you check off the box that says you are married and you aren’t married, you perjured yourself.
I only pick on homosexuals who take friviolous tax return positions.
Tax Court isn’t the proper forum to be challenging the marriage laws.
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