Appeal from the United States District Court for the Northern District of California. D.C. No. CV-90-03352-DLJ. D. Lowell Jensen, District Judge, Presiding.
Before: Alfred T. Goodwin, Diarmuid F. O'Scannlain and Andrew J. Kleinfeld, Circuit Judges. Opinion by Judge Kleinfeld.
KLEINFELD, Circuit Judge:
The Estate of one spouse sued in district court to challenge the IRS determination that the other spouse was "innocent" of liability on the joint returns.
Silvio and Martha Ravetti were divorced in 1982. They agreed to share tax liability arising out of past returns, and specifically provided for how to apportion liability if Martha were determined to be an "innocent spouse." Silvio died in 1986. Meanwhile, Martha and the IRS stipulated, and the Tax Court decided pursuant to their stipulation, that she had no liability for additional taxes for 1976, 1977 and 1978, because she was an "innocent spouse" pursuant to 26 U.S.C. § 6013(e)(1), with regard to the deficiencies. The Ravettis had filed jointly, and underpaid their taxes because of subsequently disallowed deductions arising out of tax shelters. The IRS allowed Martha the innocent spouse relief on the ground that she relied on her husband and their accountant to assure that the returns were properly prepared, and "she did not benefit from the understatement of tax because the unpaid tax money was spent on his new wife or previous affairs."
Silvio's estate sued in district court for a tax refund of amounts paid under protest, and declaratory and equitable relief. The estate claimed that the Tax Court decision in favor of Martha deprived Silvio's estate of procedural due process of law, because it received no notice or opportunity to be heard. By sworn declaration of counsel, the estate claimed that Martha did in fact receive substantial benefit from the disallowed deductions during the marriage and in the division of property in the divorce.
The district court dismissed the Estate's case for lack of jurisdiction, on the ground that the government had not waived its sovereign immunity. On appeal, the government argues that Silvio's estate lacked standing to challenge the innocent spouse exemption for Martha. This ground was not argued below. We can nevertheless consider it, because lack of standing, as an aspect of lack of subject matter jurisdiction, may be raised for the first time on appeal. See Associated General Contractors of California, Inc. v. Coalition for Economic Equity, 950 F.2d 1401, 1405 (9th Cir. 1991). We affirm the dismissal for lack of jurisdiction. We analyze the question in terms of standing, because in this case that analysis is simpler, and we therefore do not reach the issues of sovereign immunity, the Anti-Injunction Act, and the tax exception to the Declaratory Judgment Act, which were dispositive below.
Silvio's estate lacked standing to challenge the innocent spouse relief granted to his ex-wife, because he would owe the same amount of money regardless. He was liable jointly and severally on their joint returns. "If a joint return is made, the tax shall be computed on the aggregate income and the liability with respect to the tax shall be joint and several." 26 U.S.C. § 6013(d)(3). That means the IRS could take all the money owed from Silvio, whether Martha was an "innocent spouse" or not. Even if Martha owed the money jointly and severally, Silvio's estate would not be entitled to a refund. See Conklin v. Commissioner, 897 F.2d 1027, 1029 (10th Cir. 1990).
Martha escaped liability under the innocent spouse provision:
Under regulations prescribed by the Secretary, if -
(A) a joint return has been made under this section for a taxable year,
(B) on such return there is a substantial understatement of tax attributable to grossly ...