The Lawletter Vol 37 No 4
Can state courts order divorcing parties to file joint federal income tax returns? Joint returns can be filed for any tax year, so long as the taxpayers were married, and not divorced or legally separated, on the last day of that year. See generally 13 William H. Byrnes et al., Mertens Law of Federal Income Taxation § 47:19 (Westlaw database updated July 2012). Ordinarily, a joint tax return will result in a significantly smaller amount of tax due than will two separate tax returns. But some divorcing spouses, often for selfish reasons, will refuse to sign such a return.
State court case law is split on whether the divorce court can actually order a party, under penalty of contempt, to sign a joint tax return. A typical case permitting such an order is the New Jersey decision in Bursztyn v. Bursztyn, 879 A.2d 129 (N.J. Super. Ct. App. Div. 2005):
We do not find persuasive the argument that individuals have a federal statutory right to choose whether to file joint or separate income tax returns which may not be abridged by state courts. In matrimonial actions, courts routinely issue orders which have significant effects on individuals' rights. For example, courts may infringe upon a parent's right to relocate from one state to another. Baures v. Lewis, 167 N.J. 91, 770 A.2d 214 (2001). By contrast, limiting an individual's statutory right to choose between filing a joint or individual federal income tax return seems a minor intrusion.
Id. at 136.
Typical of those cases reaching a contrary result is the very recent Nebraska decision in Bock v. Dalbey, 815 N.W.2d 530 (Neb. 2012). Bock identified four separate reasons for its holding.
"First, the U.S. Tax Court is not bound by orders compelling the parties to sign a joint return. It will look to the husband and wife's intent, and if one of them signed only because a state court ordered him or her to do so, the return may or may not be treated as a joint return." Id. at 535.
"Second, an order compelling the parties to file joint tax returns is a mandatory injunction. A mandatory injunction . . . is considered an extreme or harsh remedy that should be exercised sparingly and cautiously." Id. at 536.
"Third, a resisting spouse's exposure to liability under the federal tax code is too difficult to predict if compelled to file a joint return." Id. at 537.
"Fourth, the rules related to filing deadlines under the federal tax code create practical hurdles to allowing a trial court to compel the parties to file joint returns." Id. A decision to file a joint tax return cannot be revoked after the yearly tax filing deadline has passed, so that a spouse has no effective remedy if an order to file a joint tax return is reversed on appeal.
Be aware, however, that in States following the Nebraska position, the harm caused by filing a separate tax return can be considered as a factor in dividing marital property. "[I]f a party seeking an equitable adjustment presents the court with the tax disadvantages of filing separate returns, a trial court may consider a party's unreasonable refusal to file a joint return" as a division factor. Id. at 536. "A person may file her taxes as she chooses; however, if she unilaterally files separately, causes a larger tax liability for her husband, and is in the process of getting divorced, then she may find that the court in its discretion orders her to pay not only half of the marital tax liability but also the excess portion that is due to her unilaterally filing separately." Norris v. Norris, 7th Dist. No. 01 CA 173, 2002-Ohio-5211, at ¶ 18.
For a case holding a spouse responsible for the harm caused by filing a separate tax return, see Hardebeck v. Hardebeck, 917 N.E.2d 694, 702 (Ind. Ct. App. 2009) (where wife refused to file joint tax returns "out of spite," without good reason, "Husband's additional tax obligation of $8,600 was a significant waste").
For a case finding good reason to file a separate tax return, see Heywood v. Heywood, 12th Dist. No. CA2010-02-013, 2010-Ohio-3565, at ¶ 27 (wife did not act unreasonably in filing separate tax return, where separate return allowed her to avoid early withdrawal tax on husband's unreasonably large withdrawal of funds from his retirement account; withdrawal had been used for husband's sole benefit).
Given the division factor cases, the most prudent option for most divorcing parties is to file a joint tax return for as long as federal law permits. But the state courts may or may not be able to actually order the spouses to file such a return.