Executor May Not Elect Innocent Spouse Relief on Behalf of Deceased Spouse

W and H were married and filed joint returns for Years 1 and 2. During Years 1 and 2, W and H claimed deductions on joint returns relating to H's partnership interests. H died on Date 1 and W died on Date 2. The IRS made adjustments to the joint returns for Years 1 and 2. W's executor filed Form 8857, Request for Innocent Spouse Relief, electing relief under Sec. 6015(b) and (c). W's executor signed the Form 8857 on her behalf, claiming that W did not participate in the preparation of the joint returns and that W was unaware of H's partnership interests. The claim also indicates that H invested in the partnerships pursuant to a financial planner's advice.

Analysis

Sec. 6015 provides relief from joint and several liability to individuals who file joint income tax returns. Sec. 6015(b) (innocent spouse relief) and Sec. 6015(c) (allocation of liability) offer relief to certain joint filers from liability that arises as a result of a deficiency. The individual seeking relief under Sec. 6015(b) or (c) must affirmatively elect relief under those sections. Sec. 6015 does not indicate whether the executor of a deceased spouse's estate may elect relief under Sec. 6015(b) or (c) on behalf of a deceased spouse. Although there is no indication in Sec. 6015 as to whether relief was intended for deceased individuals, other Code sections may be helpful in determining the meaning of Sec. 6015.

Sec. 6013 allows a husband and wife to elect to file a joint return. The filing of such a return leads to the joint and several liability from which spouses seek relief under Sec. 6015. Unlike Sec. 6015, Sec. 6013 specifically provides rules for the availability of the joint election to deceased spouses: (1) Sec. 6013(a)(3) provides that, generally, in the case of the death of one or both spouses, the joint return with respect to the decedent may be made only by his executor or administrator or, in some cases, by the surviving spouse; (2) Sec. 6013(c) provides that a husband and wife may file a joint return after the death of one of the spouses for the tax year in which the spouse died; (3) Sec. 6013(d)(1)(B) provides that, if one of the spouses dies before the close of the tax year, the status as husband and wife is determined on the date of the spouse's death, and (4) Sec. 6013(f)(4) provides that an executor may revoke the joint election of a spouse missing in action. All references in Sec. 6013 as to the treatment of deceased spouses indicate that Congress considered and specifically provided that the Sec. 6013 joint-return election is available to deceased spouses, and that the deceased spouse's executor may make the election on behalf of the deceased spouse. The explicit reference in Sec. 6013 to deceased spouses and executors, in contrast to the omission in Sec. 6015 of any reference to deceased spouses and an executor's right to make an election on behalf of a deceased spouse, suggests that Congress did not intend for an executor to be able to make an election under Sec. 6015 on behalf of a deceased spouse.

Another provision that may be helpful is Sec. 1033, which allows a taxpayer who has had property converted into cash involuntarily to elect to limit the gain recognized on the involuntarily converted property if the taxpayer converts the cash into similar replacement property within two years. Sec. 1033 does not specifically indicate whether an executor may receive its benefits on behalf of a decedent. However, the cases that address the issue have concluded that, as long as the taxpayer makes a timely election during his lifetime, the executor of the taxpayer's estate may continue what the taxpayer started by converting the remaining cash into replacement property and receive the benefits of limited gain under Sec. 1033.

The language of Sec. 1033 is also helpful in interpreting Sec. 6015. Sec. 1033 uses the term "taxpayer," while Sec. 6015 uses the term "individual." Under Sec. 1033, the term "taxpayer" was interpreted broadly because, after the taxpayer's death, the estate is the entity responsible for paying the tax. Therefore, the estate is the "taxpayer," and the executor is the fiduciary of the estate responsible for payment. In contrast, under Sec. 6015, an "individual" is entitled to relief. "Individual" is a much narrower term than "taxpayer." Under Sec. 7701(a)(14), a taxpayer is defined as any person subject to any internal revenue tax. In Sec. 7701(a)(1), a person is defined as including an individual, a trust, estate, partnership, association, company or corporation. Because "individual" and "estate" are listed separately under the definition of "person," we conclude that the term "individual" does not include "estate."

As with Sec. 6015 itself, the legislative history to Sec. 6015 makes no reference to executors making elections on behalf of deceased spouses. The legislative history to Sec. 6015 indicates that it was intended to relieve spouses saddled with a joint and several liability attributable to a nonrequesting spouse who is inaccessible. The legislative history to Sec. 6015 is silent with respect to deceased spouses. It does, however, make a reference to widows. The legislative history to Sec. 6015(c)(3)(A)(i)(l) provides that "a taxpayer is no longer married if he is widowed." The legislative history does not say that a taxpayer is no longer married if he is deceased. Again, the omitted reference to deceased spouses indicates that relief was not intended for deceased individuals.

In comparing the lack of any reference to deceased spouses in Sec. 6015 with the explicit reference to deceased spouses in Sec. 6013, we conclude that an executor cannot make an election under Sec. 6015(b) or (c) on behalf of a deceased spouse. If a requesting spouse elects relief under Sec. 6015(b) or (c) during his lifetime, the requesting spouse's executor or personal representative may pursue the claim. However, if the spouse did not elect to be relieved of liability during his lifetime, the spouse's estate cannot make an election under Sec. 6015(b) or (c) on the deceased spouse's behalf.

Under the fact scenario presented, both W and H were deceased before Sec. 6015 was enacted. W did not seek relief from joint and several liability during her lifetime. Therefore, W's executor cannot elect the benefits of Sec. 6015(b) or (c) on W's behalf.

IRS Letter Ruling (FSA) 200117005 (1/12/01)