Married filing separate

[JColeCares]

I have a client who wants their taxes done.  Married filing separate but absolutely no information for spouse.  Is that even possible?

[sjrcpa]

They must know the spouse's name.

Is this in a community property state?

[JColeCares]

Yes I am in California.  She does not want to disclose any information about her husband.  I explained the regulations of filing and they insisted they have filed like this before and had no problems.  However, I know now she is in fact married therefore I feel that I can not prepare her taxes knowing that she is not disclosing all information to me or the IRS.  For whatever reason I have no clue, but to my knowledge if you are married you must file with spouse information even if filing separate.  I've never heard of a work around for that.

[BobKamman]

Are they still living together?  If not, the community has ended.  If so, do they have an agreement to disregard community property law?  I'm not sure it has to be in writing, but a paragraph signed by both of them would probably work.  And then there is Code Section 66(b), which allows IRS to go after the spouse who is benefiting from non-disclosure, but it's better than nothing.  Following is from the Internal Revenue Manual.  I'm not one to turn away taxpayers who are trying their best to comply. 

25.18.2.3.1.2 (02-23-2018)

IRC 66(b) - Denial of Community Property Benefits Where Spouse Not Notified

1. IRC 66(b) provides an exception to the general rule that community income is taxed one-half to each spouse. IRC 66(b) authorizes the Service to disregard community property laws by denying the benefits of income splitting between the spouses. IRC 66(b) may be applied under the following conditions:

   1. The spouse acted as if they were solely entitled to the community income, and

   2. The spouse failed to notify the other spouse of the nature and amount of the income before the due date of the return (including extensions) for the taxable year in which the income was derived.

2. IRC 66(b) entitles the Service to shift the item of income and assess additional tax against the spouse earning the income. The tax must be assessed in accordance with IRC 6212 (deficiency procedures). Where IRC 66(b) is asserted, it must be clearly reflected on the notice of deficiency. The determination must be supported by evidence that IRC 66(b) applies. If the notice fails to do this, the burden of proof may be shifted to the Service. Shea v. Commissioner, 112 T.C.183 (1999). See IRC 66(b) and 26 CFR 1.66-3(b).

3. Only the Service can invoke IRC 66(b). It is not a relief provision that can be invoked by a taxpayer to escape liability. Hardy v. Commissioner, 181 F.3d 1002 (9th Cir. 1999); Drummer v. Commissioner, T.C. Memo,1994-214, aff’d without published opinion, 68 F.3d 472 (5th Cir. 1995).

4. Solely entitled to income: to determine whether a spouse has acted as if he or she was solely entitled to the income, consider the facts and circumstances focusing on whether the spouse used, or made available, the item of income for the benefit of the marital community. See 26 CFR 1.66-3(a). For instance:

   • Where the community property at issue is deposited into a joint account or an account over which both spouses have signature authority, the spouse who deposited the funds did not act as though he or she was solely entitled to the funds. Cox v. Commissioner, T.C. Memo. 1993-559; Drummer v. Commissioner, T.C. Memo. 1994-214, aff’d without published opinion, 68 F.3d 472 (5th Cir. 1995).

   • Where a spouse sends a portion of the funds to the other spouse, that spouse has not acted as though he or she was solely entitled to the funds. Mischel v. Commissioner, T.C. Memo 1997-350; 26 CFR 1.66-3(c), Example 1(ii).

   • If the community income is retained by one spouse and spent at his or her discretion, that spouse has acted as though he or she was solely entitled to the income. See 26 CFR 1.66-3(c), Example 1(i).

5. Notification of nature and amount of income: a spouse who provides a copy of a Form 1099 or Form W-2 to the other spouse satisfies the notification of the nature and amount of income requirement. If notification is done before the due date of the return (including extensions), IRC 66(b) is inapplicable. See 26 CFR 1.66-3(c), Example 2, for additional information.

[BobKamman]

My guess is that he has everything a woman would want for a husband and father, except a green card.   Here is the law:

Internal Revenue Code Section 66(b)Secretary may disregard community property laws where spouse not notified of community income

The Secretary may disallow the benefits of any community property law to any taxpayer with respect to any income if such taxpayer acted as if solely entitled to such income and failed to notify the taxpayer’s spouse before the due date (including extensions) for filing the return for the taxable year in which the income was derived of the nature and amount of such income.