Rev. Rul. 71-324

Advice has been requested whether, under the circumstances described below, the provisions of section 6402(a) of the Internal Revenue Code of 1954 authorize the crediting of an overpayment of income tax on a joint return filed by a husband and his current wife against an outstanding income tax liability on a joint return filed in a prior year by the husband and his former wife or the issuance of a refund check to the husband and his current wife.

A husband and wife filed a joint income tax return for the taxable year 1966, but did not pay all of the tax due. In 1968 they were divorced. In 1969 the husband remarried and filed a joint income tax return with his second wife which showed an overpayment of tax.

Section 6402(a) of the Code provides that, in the case of an overpayment, the Secretary or his delegate, within the applicable period of limitations, may credit the amount of such overpayment, including any interest allowed thereon, against any liability in respect of an internal revenue tax on the part of the person who made the overpayment and shall refund any balance to such person.

Revenue Ruling 56-92, C.B. 1956-1, 564, provides that an overpayment of income tax on a joint return may be credited against a prior year's unpaid income tax liability on a separate return of either spouse. It also provides that both spouses are jointly and severally liable under section 6013 of the Code for the tax shown on a joint return and, in the event of an overpayment of tax by a husband and wife pursuant to their joint and several liability, both the husband and wife, jointly and severally, represent the "person" who made the over-payment of tax within the meaning of section 6402 of the Code.

However, the facts in Revenue Ruling 56-92 are distinguishable from those in the instant case since Revenue Ruling 56-92 only considered the situation in which there was the continued existence of the same "person" in the form of the same husband-and-wife unit during all of the years involved, whereas, the instant case involved a change of "person" in the form of a change of spouse. For purposes of section 6402(a), a husband-and-wife unit becomes a different "person" when divorce and remarriage occur.

Under the facts in the instant case, it is held that the provisions of section 6402(a) of the Code do not authorize the crediting of the 1969 overpayment of income tax on a joint return filed by one "person" in the form of the husband and his second wife against a 1966 underpayment of income tax on a joint return filed in a prior year by another "person" in the form of the husband and his first wife.

Accordingly, under section 6402(a) of the Code a joint refund check will be issued to the husband and his second wife in the amount of the 1969 overpayment plus interest to a date preceding the date of the refund check by not more than 30 days.

The rationale of Revenue Ruling 56-92 does not extend to the period prior to the marriage of the taxpayers who filed the joint return giving rise to the overpayment. Such Revenue Ruling is hereby modified to remove any implication that it extends to the period prior to the marriage of the taxpayers.