-IR- Database Guide
-IR- Database: Indiana Register

DEPARTMENT OF STATE REVENUE
01-20120062.LOF

Letter of Findings Number: 01-20120062
Individual Income Tax
For the Year 2009


NOTICE: Under IC § 4-22-7-7, this document is required to be published in the Indiana Register and is effective on its date of publication. It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register. The publication of this document will provide the general public with information about the Department's official position concerning a specific issue.
ISSUE
I. Individual Income Tax – Filing Status.
Authority: IC § 6-3-4-2
Taxpayer protests the assessment of individual income tax.
STATEMENT OF FACTS
Taxpayer is an individual. For the year at issue, Taxpayer was married to Husband. According to Taxpayer, she filed individual federal and Indiana income tax returns as a married individual filing separately (the "Separate Return"). The Separate Return reported a negative income as the result of a business loss and zero tax liability.
According to Taxpayer, after the Separate Return was filed, Husband filed an individual federal income tax return as married filing jointly with Taxpayer (the "Joint Return"). The Joint Return reported a positive federal adjusted gross income. As a result of comparing state tax records with federal tax records, the Department determined Taxpayer should have reported her income and exemptions consistent with the Joint Return. As a result, the Department issued a proposed assessment against Taxpayer for tax based on the Joint Return. Taxpayer protested the assessment, the Department conducted an administrative hearing, and this Letter of Findings results. Further information will be supplied as necessary.
I. Individual Income Tax – Filing Status.
DISCUSSION
Taxpayer protests the assessment of individual income tax. The issue is whether Taxpayer's return filing status is "married filing separately" or "married filing jointly."
Under IC § 6-3-4-2(d):
Where a joint return is made by husband and wife pursuant to the Internal Revenue Code, a joint return shall be made pursuant to this article. Where a joint return is filed by a husband and wife hereunder, one spouse shall have no liability for the tax imposed by this article upon the income of the other spouse.
Likewise, under IC § 6-3-4-2(e):
Where separate returns are made by husband and wife pursuant to the Internal Revenue Code, separate returns shall be made pursuant to this article.
In Taxpayer's case, Taxpayer has stated that she has raised similar issues with the Internal Revenue Service. In Taxpayer's case, the proper resolution of her filing status necessarily depends on her proper federal filing status. At this stage, the final resolution of her filing status is dependent on the federal determination. Thus, Taxpayer's liability cannot be abated at this time.
However, if the Internal Revenue Service determines that her filing status should have "married filing separately," the Department will follow the federal resolution and make any appropriate adjustments to Taxpayer's liability. Further, in the event that Taxpayer's filing status should have been "married filing jointly," Taxpayer's portion of the resulting liability will be determined under IC § 6-3-4-2(d).
FINDING
1. Taxpayer's protest of the liability is denied at this time.
2. If the Internal Revenue Service determines that her filing status should have been "married filing separately," the Department will follow the federal resolution and make any appropriate adjustments to Taxpayer's liability.
3. If the Internal Revenue Service determines that Taxpayer should have filed as "married filing jointly," Taxpayer's liability shall be adjusted to reflect her share of the overall tax liability as provided under IC § 6-3-4-2(d).

Posted: 08/29/2012 by Legislative Services Agency

DIN: 20120829-IR-045120468NRA
Composed: Sep 01,2014 10:58:35PM EDT
A PDF version of this document.