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The Tacit Consent Rule and An Unsigned Tax Return

By Joel N. Crouch on January 10, 2022
In a recent memorandum opinion, Om P. Soni v. Commissioner, T.C. Memo 2021-137, the U.S. Tax Court discussed a rule rarely seen in tax cases: the “tacit consent rule.” The court held that although the taxpayer’s wife had not signed the tax return at issue and other related documents, her actions invoked the tacit consent rule and she was liable for the tax deficiency.

The taxpayers in Soni were a husband and wife who, as the court described, were in a “very traditional marriage.” The husband, Om Soni, was a very experienced business man who handled all of the couple’s financial affairs. Because she believed her husband would take care of her, Anjali Soni did not participate in any of the family’s financial matters. Anjali was afraid to sign any legal documents, including tax returns, for fear that there was something nefarious in the documents. The couple’s adult son, Kunal, regularly signed legal documents, including tax returns, on Anjali’s behalf. According to the court, “Om would often give documents to Kunal for Anjali to sign. Kunal trusted his father, did not wish to engage with his mother for her signature, and therefore signed for his mother out of convenience.”

During the IRS examination of the Sonis' 2004 income tax return, a Form 2848 Power of Attorney was provided to the IRS authorizing the Sonis’ CPA, Alan Grossman, to act as Anjali’s representative. Anjali’s signature was on the Form 2848, but she did not personally sign the Form 2848. In addition, during the examination eight Forms 872 extending the statute of limitations were provided to the IRS. The Forms 872 were signed by Alan Grossman as representative of the Sonis, by Grossman signing for both Om and Anjali or by Om with Kunal signing on behalf of his mother. The Forms 2848 and 872 were never discussed with Anjali.

In March 2015, the IRS issued a Notice of Deficiency to the taxpayers proposing additional income tax of $624,929 and penalties. In response, the taxpayers filed a timely petition with the Tax Court arguing that a valid joint return was not filed because Anjali had not signed the return and that the Notice of Deficiency was not timely because Anjali had not signed the Form 2848 and the Forms 872. Om also argued that he did not personally sign some of the Forms 872 nor did he authorize Mr. Grossman to be his representative.

In deciding that the Sonis had filed a joint return the court said, “the failure of one spouse to actually sign does not necessarily negate the intent to file a joint return by the nonsigning spouse….Intent may be demonstrated through consent; the “tacit consent rule” holds that the intent to file jointly may be inferred from the acquiescence or tacit approval from the nonsigning spouse.” The court then referenced the couple’s standard practice for Anjali not to sign tax returns and her failure to take affirmative actions to file separately from her husband. The court also noted that Anjali had a general awareness of the U.S. tax system but chose not to engage, relying instead on her husband and son to handle all tax matters.

With respect to the taxpayers’ statute of limitations arguments, the court found that implied consent applied to Anjali and that Om had provided insufficient evidence that the signatures on the Forms 872 were not his. In addition, “Om consistently acted as if Mr. Grossman was the Sonis’ representative regarding the tax year. Om continued to work with Mr. Grossman throughout the audit process and treated Mr. Grossman as his representative. Even if the Sonis did not personally sign the Form 2848 they gave implied authority to Mr. Grossman.”

For questions regarding this blog post or any other civil or criminal tax related matter, please feel free to contact Joel Crouch at (214) 749-2456 or jcrouch@meadowscollier.com.