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Book part
Publication date: 19 October 2021

W. Brian Dowis, Ted D. Englebrecht and Mike Wiggins

Married couples receive tax benefits such as favorable tax rates, higher exclusions, higher phase-outs, and combined deductions. However, joint and several tax liability is a…

Abstract

Married couples receive tax benefits such as favorable tax rates, higher exclusions, higher phase-outs, and combined deductions. However, joint and several tax liability is a major issue facing these taxpayers. The term innocent spouse relief, within the Internal Revenue Code, is a direct result of one spouse failing to satisfy the joint liability for the married couple. Since both individuals are jointly and severally liable for the combined liability, the innocent spouse may be responsible for the liability in whole or in part. Our study examines this highly litigated arena of innocent spouse relief. To assist in this area of taxation, the Internal Revenue Service has provided taxpayers and tax practitioners with guidance. Revenue Procedure 2003-61 (2003-2 CB 296) outlines factors useful in determining whether innocent spouse relief should be granted. Additionally, this study creates a predictive model containing only three significant factors (economic hardship, knowledge/reason, significant benefit) capable of predicting with approximately 89% accuracy. These same three variables are significant after running multiple regression with p-values of 0.002 (economic hardship), 0.000 (knowledge/reason to know), and 0.001 (significant benefit). These factors provide valuable insight to practitioners when advising clients on challenging or accepting the Internal Revenue Service's decision. Additionally, abuse is marginally significant in the regression model. Also, judge gender and political affiliation are analyzed. However, the gender of the judge and political affiliation fail to be statistically significant using the chi-square test and regression model.

Book part
Publication date: 8 August 2014

Karen Pierce, Ted D. Englebrecht and Wei-Chih Chiang

This study examines whether Revenue Procedure 2003-61 is an improvement over Revenue Procedure 2000-15, in the areas of taxpayers’ expectations for IRS equitable relief decisions…

Abstract

This study examines whether Revenue Procedure 2003-61 is an improvement over Revenue Procedure 2000-15, in the areas of taxpayers’ expectations for IRS equitable relief decisions and gender-related in-group bias. The survey instrument includes a vignette adapted from a judicial decision. The results show that Rev. Proc. 2003-61 does improve upon Rev. Proc. 2000-15. Furthermore, taxpayers perceive different expectations of what the IRS should do and what the IRS would do in equitable relief decision making. Also, gender-related in-group biases are found to be present for both genders. Tax policy implications regarding equitable relief are discussed.

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Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-78190-838-9

Keywords

Book part
Publication date: 13 November 2006

Gerald E. Whittenburg, Ira Horowitz and William A. Raabe

This paper examines the decision criteria used by federal courts to adjudicate equitable innocent-spouse relief, when such relief has previously been denied by the Internal…

Abstract

This paper examines the decision criteria used by federal courts to adjudicate equitable innocent-spouse relief, when such relief has previously been denied by the Internal Revenue Service (IRS). Empirical logit/probit regression is used, rather than traditional legal analysis. Specifically, we determine which of the equitable-relief criteria detailed in the innocent-spouse rules did affect judicial decisions during our sample period. We also determine the relative importance of the factors. Using these data, taxpayers and their advisors can better decide whether to pursue further litigation, and how best to tailor the pertinent arguments.

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Advances in Taxation
Type: Book
ISBN: 978-1-84950-464-5

Book part
Publication date: 20 January 2010

Gary M. Fleischman, Sean Valentine and Don W. Finn

Ethical issues and moral reasoning are important in the tax policy context because shared moral values create good societies (Paul et al., 2006). This study of the equitable relief

Abstract

Ethical issues and moral reasoning are important in the tax policy context because shared moral values create good societies (Paul et al., 2006). This study of the equitable relief subset of the innocent spouse rules is a good example of Congressional and IRS policy that has been substantially reformed twice (and continues to be reassessed) to create tax law that effectively treats innocent spouses equitably (Fleischman & Shen, 1999). The purpose of this study was to evaluate the degree to which subjects' moral reasoning, using the first two steps of Rest's (1986) ethical reasoning model, is related to perceived moral intensity (Jones, 1991) in several tax-based equitable relief situations. Integrative social contracts theory provides the study's theoretical lens.

Subjects evaluated a mailed-questionnaire containing two separate equitable relief scenarios about a spouse who was unaware of her husband's tax evasion – one scenario included verbal abuse and the other scenario contained no such abuse. The survey also contained a variety of ethics and attitudinal measures used to measure the study's focal variables. The results support the a priori hypotheses that moral intensity is positively related to recognition of an ethical issue, judgment that the ethical scenario is unethical, and judgment to grant equitable relief. In addition, the scenario containing emotional abuse was associated with increased levels of moral intensity as compared to the scenario that did not contain abuse. The paper concludes with a discussion of both professional and public policy implications.

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Research on Professional Responsibility and Ethics in Accounting
Type: Book
ISBN: 978-1-84950-722-6

Book part
Publication date: 22 August 2014

Charles F. Kelliher

This chapter presents a seven-part case developed for use in a graduate-level tax planning class. The case is organized in a taxpayer/business “life-cycle” approach. Over the…

Abstract

This chapter presents a seven-part case developed for use in a graduate-level tax planning class. The case is organized in a taxpayer/business “life-cycle” approach. Over the semester the case follows a married couple as they consider a number of investments, start a business, and expand the business. As the case progresses, the couple faces increasingly complex tax and business issues. The couple eventually winds down their involvement in the business and begins to plan for their retirement years. This chapter also provides a review of behavioral tax research published in the top accounting journals over the period 2004–2013. The chapter concludes with a discussion of how the case could be adapted by behavioral tax researchers in their research programs and perhaps by accounting firms in their training programs.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-78350-445-9

Keywords

Content available
Book part
Publication date: 19 October 2021

Abstract

Details

Advances in Taxation
Type: Book
ISBN: 978-1-80071-674-2

Book part
Publication date: 21 November 2018

Ted D. Englebrecht and W. Brian Dowis

Worker classification continues to be a highly litigated area of taxation. That is, the status of a worker as an employee or independent contractor remains a topic closely…

Abstract

Worker classification continues to be a highly litigated area of taxation. That is, the status of a worker as an employee or independent contractor remains a topic closely scrutinized by the Internal Revenue Service. This study examines factors that the judiciary deems relevant in ruling whether a worker is an employee or independent contractor. A backward stepwise logistic regression model is implemented to categorize the factors that best predict the court’s decision on whether a worker is either an employee or independent contractor pursuant to the factors in Revenue Ruling 87-41 (1987-1 CB 296), judge gender, and political affiliation. The results indicate three factors (supervision/instructions, continuing relationship, and the right to discharge) are capable of accurately predicting 93 percent of the decisions made by the US Tax Court. Other findings support notable statistical differences between male and female judges rendering decisions and reaching conclusions. Also, there is a statistically significant difference based on the type of industry. Political affiliation appears to have no significant impact on judicial rulings.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-78756-543-2

Keywords

Abstract

Details

Advances in Accounting Education Teaching and Curriculum Innovations
Type: Book
ISBN: 978-1-84950-868-1

Article
Publication date: 1 September 1992

Wanda James

Married couples who elect to file a joint US federal income taxreturn may possibly benefit from a lowered combined tax burden, but eachspouse individually assumes the obligation…

Abstract

Married couples who elect to file a joint US federal income tax return may possibly benefit from a lowered combined tax burden, but each spouse individually assumes the obligation of joint and several liability, which survives even the dissolution of their marriage. Recognizing that the power and control over financial affairs may not be evenly shared between partners, and being presented with evidence of spousal victimizations, Congress passed remedial legislation to “bring the government tax collection practices into accord with basic principles of equity and fairness” (Senate Report 91‐1537). The Innocent Spouse Act of 1971 limits available relief to petitioners who can meet specified requirements. The statutory language is imprecise and has allowed counterintuitive judicial interpretations. Critically examines these provisions by comparing and contrasting current case law to illuminate the discrepancies in the application of justice and the obfuscation of Congress′ original intentions.

Details

Accounting, Auditing & Accountability Journal, vol. 5 no. 3
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 1 January 1978

The Equal Pay Act 1970 (which came into operation on 29 December 1975) provides for an “equality clause” to be written into all contracts of employment. S.1(2) (a) of the 1970 Act…

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Abstract

The Equal Pay Act 1970 (which came into operation on 29 December 1975) provides for an “equality clause” to be written into all contracts of employment. S.1(2) (a) of the 1970 Act (which has been amended by the Sex Discrimination Act 1975) provides:

Details

Managerial Law, vol. 21 no. 1
Type: Research Article
ISSN: 0309-0558

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