Rev. Rul. 80-355

ISSUE

Is the addition to the tax for underpayment of estimated tax based on the tax shown on the separate returns of the taxpayers or the tax shown on a joint return filed after the due date prescribed by law for the filing of the return?

FACTS

The taxpayers filed separate income tax returns for a taxable year by the due date, although they were eligible to file a joint return. Both were assessed the addition to the tax for underpayment of estimated tax since both taxpayers' estimated tax payments throughout the taxable year were less than 80 percent of the tax shown on each separate return. After the due date they filed a joint return, which resulted in less tax shown on the return than the total tax that had been shown on the two individual returns. Their estimated tax payments throughout the taxable year were more than 80 percent of the tax shown on the joint return.

LAW AND ANALYSIS

Section 6654(a) of the Internal Revenue Code provides that in the case of underpayments of estimated tax by an individual there shall be added to the tax an amount determined at an annual rate established under section 6621 upon the amount of the underpayment for the period of the underpayment.

Section 6654(b) of the Code provides that the underpayment shall be the difference between the amount paid on or before the last date prescribed for such payment and the amount that would be required to be paid if the estimated tax were equal to 80 percent of the tax shown on the return for the taxable year.

Section 6013(b) of the Code provides that if an individual has filed a separate return for a taxable year for which a joint return could have been made and the time prescribed by law for filing the return for such taxable year has expired, a joint return may be filed before expiration of the statute of limitations. The joint return shall be the return of the spouses for such taxable year. It also provides that for purposes of assessment and collection, where both spouses have filed separate returns, the joint return is deemed filed on the date the later separate return was filed (but not earlier than the last date prescribed by law for filing the return of either spouse).

The intent in allowing taxpayers to change their elections and file joint returns at any time within the period of the statute of limitations was to enable married taxpayers to minimize their tax liability. See S. Rep. No. 781, 82nd Cong., 1st Sess. 48 (1951), 1951-2 C.B. 458, 492.

Thus, in the case of a joint return following separate returns, any addition to the tax is based upon the joint return. Compare the case of amended returns where for purposes of determining the underpayment of estimated tax under section 6654(b) of the Code, the return for the taxable year is the original return of the taxpayer rather than any amended return filed after the due date and extensions thereof.

HOLDING

The addition to the tax for underpayment of estimated tax is based on the tax shown on the joint return of the taxpayers filed after the due date prescribed by law for the filing of the return when the joint return replaces the previously filed separate returns of the taxpayers.