Unpublished Dispositionnotice: Tenth Circuit Rule 36.3 States That Unpublished Opinions and Orders and Judgments Have No Precedential Value and Shall Not Be Cited Except for Purposes of Establishing the Doctrines of the Law of the Case, Res Judicata, or Collateral Estoppel.in Re Mona Hanesworth, Debtor.mona Hanesworth, Appellant, v. United States of America, Appellee, 936 F.2d 583 (10th Cir. 1991)

After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed. R. App. P. 34(a); 10th Cir.R. 34.1.9. The case is therefore ordered submitted without oral argument.

Debtor Mona Hanesworth appeals from the district court's affirmance of the decision of the bankruptcy court determining debtor liable for unpaid income taxes, interest, and penalties for the year 1978. Debtor's motion to determine tax liability ensued after she filed a Chapter 7 bankruptcy petition in response to the IRS levy and seizure of her home for nonpayment of the 1978 assessment.

The single issue presented for review is whether the 1978 tax return, signed by debtor's husband and the tax preparer, was intended to be a joint return despite the absence of the debtor's signature. Debtor presents two interrelated arguments in support of her position that the 1978 tax return was not intended to be a joint return: (1) the government did not meet its burden of proving the debtor's intent to file a joint tax return, and (2) the IRS' destruction of the records and reports related to the 1978 tax return precluded the government from meeting its burden of proof.

Debtor and her ex-husband, Alan Hanesworth, were married on August 17, 1956. They were separated on October 24, 1977, and ultimately divorced in February, 1984. The facts in this case point to the maintenance of a legal marriage during 1978, even though the relationship was less than harmonious. Although occupying separate residences, neither party instituted divorce proceedings until several years after the filing of the disputed return. During the period of time in question, the husband continued to be the sole financial support of the debtor. She remained unemployed outside the home and had no independent income during that year. It is undisputed that the couple filed joint tax returns during the years of their marriage including 1976, 1977, and 1979, even though they were living apart during the latter part of 1977 and during all of 1979.

The determination as to whether the nonsigning spouse intended a joint return is one of fact and must be affirmed unless determined to be clearly erroneous. O'Connor v. Commissioner, 412 F.2d 304, 309 (2d Cir. 1969), cert. denied, 397 U.S. 921 (1970). Generally, "a finding of fact is 'clearly erroneous' if it is without factual support in the record, or if the appellate court, after reviewing all the evidence, is left with the definite and firm conviction that a mistake has been made." LeMaire ex rel. LeMaire v. United States, 826 F.2d 949, 953 (10th Cir. 1987).

"A husband and wife may make a single return jointly of income taxes," I.R.C. Sec. 6013(a), if it "shall be signed by both parties." 26 C.F.R. Sec. 1.6013-1(a) (2). Spouses filing a joint income tax return incur joint and several liability as to any tax deficiencies. I.R.C. Sec. 6013(d) (3); Tavery v. United States, 897 F.2d 1032, 1034 (10th Cir. 1990). The failure of one spouse to sign the return does not negate the intent of filing a joint return by the nonsigning spouse. Snyder v. Commissioner, 47 T.C.M. (CCH) 667, 669 (1983); Estate of Krock v. Commissioner, 46 T.C.M. (CCH) 1330, 1332 (1983); Frank v. Commissioner, 43 T.C.M. (CCH) 1149, 1155 (1982) (citations omitted); Estate of Campbell v. Commissioner, 56 T.C. 1, 12 (1971).

The commissioner's determination that a tax return is joint is accorded a presumption of correctness. If the evidence indicates that one of the spouses did not sign the return, the commissioner's presumption of correctness is defeated and the burden shifts to the government to present additional evidence of intent. Cassity v. Commissioner, 53 T.C.M. (CCH) 514, 516 (1987); O'Connor v. Commissioner, 412 F.2d at 309. If mutual intent is not apparent on the face of the return, the finder of fact may look to other sources. Wills Corp. v. Commissioner, 28 T.C.M. (CCH) 174, 185 (1969).

Here, a copy of the 1978 income tax return, placed into evidence by the debtor, was marked as "married filing jointly." Debtor's name and social security number appear at the top of the form along with those of her husband. Debtor, her husband, and the couple's two children are claimed as exemptions. See R.Vol. I, Tab 1 at 35.

The government presented evidence that debtor signed two IRS form 900 waivers of collection, one on January 3, 1985, and the second on August 11, 1986. Addendum to Appellee's Brief, Defendant's Exh. A. Therefore, it can be assumed that, although the exact point at which debtor received notice of the tax assessment is unclear, she was definitely placed on notice at the time she signed the first waiver in 1985. However, there is no evidence that she objected to her liability for the assessment until February, 1989, more than four years later, when she learned that she could not avoid the levy and seizure of her home through her bankruptcy action.

In debtor's original motion to determine tax liability, she claimed protection pursuant to I.R.C. Sec. 6013(e),¹  the "innocent spouse" provision. At the time of hearing in the bankruptcy court, debtor withdrew this argument in favor of her claim that the 1978 return was not a joint return. Tr. at 3-4. The government argues that because the innocent spouse defense requires the filing of a joint return, by so initially claiming, debtor admitted her joint intent. We do not agree. Parties have been allowed to plead these two defenses in the alternative without incurring the kind of prejudice which the government seeks to impose. See Cassity v. Commissioner, 53 T.C.M. (CCH) at 514; Snyder v. Commissioner, 47 T.C.M. (CCH) at 669; Klayman v. Commissioner, 39 T.C.M. (CCH) 277, 278 (1979). Although not dispositive of intent, debtor's original request for innocent spouse protection, along with her unexplained delay in challenging her liability, leads us to question whether her claim of lack of intent to file a joint return may have been an afterthought born of desperation.

The necessary intent to file a joint tax return can be established by the conduct of the nonsigning spouse rather than the presence or absence of a signature. Walsh v. United States, 56 A.F.T.R.2d 85-5370, 85-5371 (1985). The debtor testified that her husband handled all of the family's financial affairs, and that she knew very little of his business dealings. Tr. at 9. She further testified that she was in the habit of signing anything he asked her to sign. Tr. at 12. The couple had established a consistent pattern of filing joint tax returns. Debtor signed a joint return for the tax year ending December 31, 1979, the year following the one in dispute, even though she had some independent income during that year and could have filed a separate return. Id. Debtor offered no reason why she would not have signed a joint return for 1978 had she been requested to do so, and in fact, testified that she thought she had to file a joint return with her husband in 1978 because she was not working. Tr. at 11. The fact that debtor began filing separate returns in 1980 indicates that she was aware of her obligation to file a separate return once she acquired independent taxable income and ceased filing joint returns with her husband.

In Shea v. Commissioner, 780 F.2d 561, 567 (6th Cir. 1986), the Tax Court had set forth factors to be considered in determining intent as, (1) whether a separate return was filed by the nonsigning spouse, (2) whether the nonsigning spouse objected to the joint filing of the return, and (3) whether the parties had established a pattern of joint filings. The Sixth Circuit opined that, while these factors were important, the main focus should not be on "petitioner's intent to file any joint return, but whether she intended to file and be bound by the particular return in question." Id. (emphasis in original). Using these criteria, the court reversed the Tax Court and decided the wife had not intended to file a joint tax return. However, the facts in Shea are distinguishable from debtor's circumstances. In Shea, the disputed tax return was not signed by either the husband or the wife. It only carried the signature of the tax preparer. The court determined that the wife in Shea never authorized anyone but her husband to sign on her behalf, and the absence of a signature by either party negated the requisite intent. Id. at 568.

Debtor argues that the Tax Court's determination in Snyder is dispositive in this case. In Snyder, the court refused to find a joint return was intended. Snyder v. Commissioner, 47 T.C.M. (CCH) at 670. However, unlike the present case, the wife in Snyder had refused to sign the disputed return when asked to do so. Id. at 669. Also distinguishable is Cassity, where, under similar facts, the court concluded the wife was not liable because the parties failed to establish a continuous pattern of joint filings, and the wife had demonstrated a propensity to question her husband regarding the need for her signature on various documents. Cassity v. Commissioner, 53 T.C.M. (CCH) at 517.

We are inclined to agree with the district court, that the facts of Frank v. Commissioner, 43 T.C.M. (CCH) 1149 (1982), more closely align with the facts of this case. In Frank, the wife was not employed outside the home, had no income of her own, and was totally uninvolved in her husband's business affairs. Id. at 1150. Debtor argues that Frank is distinguishable in that the husband and wife maintained an intact marriage during the period in question, whereas debtor's marriage was estranged. We do not find this persuasive in light of the fact that during the year in question, neither debtor nor her husband took any steps to legally dissolve the marriage. Although maintaining separate residences, they continued to represent a financial unit which could benefit from filing a joint return.

Debtor further argues that because the reports and work papers regarding the 1978 return had been destroyed by the IRS, the government was unable to meet its burden of proof as to intent. Appellant's Brief at 28; tr. at 25-27. The cases cited by debtor in support of this argument relate to challenges of the validity and amount of tax assessments, issues never raised by debtor. Debtor never explained the import of these documents to her claim of lack of intent and we fail to see the relevance. Also, it is apparent that the unavailability of the documents is attributable to debtor's long delay in challenging her liability. Regardless, it appears the destroyed reports and work papers would only be relevant to a challenge of the validity and amount of the assessment and would not, in our opinion, have supported debtor's claim of lack of intent.

Debtor also argues, in her brief, that she did not receive notice of the assessment until she was asked to sign the first form 900 waiver of collection in January, 1985. The record supports this claim as it is void of any additional evidence of notice. Although we question the government's statement that "presumably" debtor received notice of assessment (Appellee's Brief at 12), the issue of adequate or timely notice was never raised until debtor argued it in her opening brief. We, therefore, do not reach this issue. Baker v. Penn Mut. Life Ins. Co., 788 F.2d 650, 663 (10th Cir. 1986).

Although the bulk of the evidence is circumstantial, it weighs heavily on the side of the government. Debtor's failure to object to her liability until she realized her home was actually in jeopardy, the established pattern of joint filings both before and after the year in question, and debtor's history of acquiescence in her husband's handling of the family's financial affairs, coupled with the facial declarations on the return, lead to the conclusion that debtor tacitly consented to the filing of a joint tax return for 1978.

We therefore conclude that the bankruptcy court's determination of tax liability is not clearly erroneous. The parties' respective requests for oral argument are DENIED, and judgment of the United States District Court for the District of Wyoming is AFFIRMED.