Via Andrew Mitchel as well as The Tax Times blog, we learn that the IRS has published Chief Counsel Advice regarding a U.S. citizen wife who tried to file a joint U.S. income tax return with her “nonresident alien” husband. Most likely this means the wife lives in her husband’s country, or the two together as expats in a third country (though they might also be living in the U.S. with the husband on a student visa). I reproduce the entire text of the advice (CCA 201325013) after the jump. If you’re thirsty for more, you can see all of the latest & greatest hits from the IRS at their Written Determinations page, which is updated about once per week.
Anyway, in February 2013, an IRS examiner combing over the couple’s return — probably in hopes of assessing penalties, since now the tax law rather than the nationality law must bear the burden of punishing Americans for the traitorous act of sleeping with foreigners — wanted to know whether the wife’s act of submitting a “married filing jointly” Form 1040 had accidentally turned the husband into a U.S. person, even if they had not explicitly made a § 6013(g) election for a nonresident alien spouse to be treated as a resident alien for tax purposes. Such treatment would saddle him with an obligation to file Form 3520 on what the IRS hilariously calls “foreign trusts” and what the husband probably thinks of as “my local & fully-tax-compliant retirement account” — and since the would-be joint return apparently didn’t include any 3520s for him, the couple would have been subject to penalties.