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Can a Michigan court force me to file a joint tax return?

tax return.jpgMost divorces involve the division of many assets and liabilities, making them complicated legal undertakings. When you mix in painful emotions - perhaps anger, resentment or distrust - it can be extremely difficult for divorcing spouses to find common ground and agree on the division of assets.

In such a trying situation, something that previously seemed routine - such as filing a federal tax return - can become a source of legal contention. This was the situation in a November 2014 Michigan Court of Appeals case, Butler v. Simmons-Butler.

In Butler, the Michigan Court of Appeals had to decide whether a Michigan trial court judge can compel, or force, divorcing couples to jointly file a tax return. After careful analysis, the Court of Appeals ruled that Michigan courts can compel divorcing spouses to file jointly in specific, unusual circumstances.

It is an intriguing case to Michigan family law attorneys, potentially impacting many clients. We summarize the factual background and pertinent analysis of Butler below.

Factual Background

The plaintiff-husband and defendant-wife met through an online dating site and got married. They soon had two young children. The husband was the primary income earner while the wife stayed at home to raise the children. Their marriage began deteriorating quickly and both spouses were accused of domestic violence. The parties filed for divorce, but decided to reconcile.

Their relationship continued on its rocky path and the wife once took the children without the husband's knowledge. He filed for divorce in 2011. Hearings regarding temporary child custody and other matters took place until the trial court issued an opinion in late 2013. During the ongoing divorce litigation, the trial court ordered the parties to file joint tax returns in 2011 and 2012 - something the defendant argued it didn't have the authority to do.

Analysis

In deciding whether a Michigan trial court judge has the authority to order a divorcing couple to jointly file taxes, the Court of Appeals reviewed the law in many other states.

Most married people agree to file jointly because of its numerous tax advantages, but there is a reason it could be undesirable in deteriorating marriages. When taxes are filed jointly, both parties potentially carry liability for inaccuracies or fraud. Divorcing spouses often also have trouble communicating or agreeing, so the process of filing taxes may prove difficult.

The court stated, in part:

"...The general default rule is for a court to redistribute the property at its disposal to make up any additional tax liability incurred as a result of an individual filing. But, if that is not possible because of insufficient property available for the court to make up for the additional taxes or because of some other exceptional circumstance, as a last resort a trial court has the discretion to order the signing of a joint tax return."

How Could This Affect Your Divorce?

Chances are you will not be compelled to file a joint tax return during the divorce process if you do not want to. Still, the Michigan Court of Appeals carved out a clear exception to the general rule that courts shouldn't interfere with divorcing parties' decisions on whether to file jointly or individually.

The court opined:

"Compelling a party to sign a joint tax return should be limited to cases

(1) where the parties do not have sufficient assets available for the court to shift in order to make up the difference in tax liability,

(2) where there is no history of tax problems with the other spouse,

(3) where the parties have a history of filing joint tax returns during the course of the marriage, and

(4) the parties either agree, or the court orders, that the reluctant spouse be indemnified and held harmless by the other spouse for any tax liability."

If you are contemplating divorce and believe the above situation may apply, be sure to discuss it with your divorce attorney. It could be a situation where cooperation with your spouse during tax season may be in your best interest.

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