For all of those reasons, it’s important to know if you are a mere signatory on an account without a beneficial interest in it. That could mean you have FBAR filing obligations but that you don’t have income when the account earns interest. That could mean, for example, that you might need to file some back FBARs and disclose the account to the IRS, but might not need to go into the IRS voluntary disclosure program (since you don’t owe any tax). See Is Closing Foreign Bank Accounts An Alternative To Disclosure?

How do you know if you meet this fact pattern or how these accounts are evaluated? If A and B have a joint interest-earning bank account producing $100 of income, who pays tax on it? Perhaps it only seems fair for each person to have $50 of income, but it is often not that simple.

If A’s Social Security number is linked to the account, won’t A receive a Form 1099-INT from the bank for all the interest? If so, A may feel forced to pay all the tax. Yet some taxpayers finesse the situation by reflecting the Form 1099 on their return but showing a deduction for the interest paid to their co-account holder. http://goo.gl/BOhXiV

I must assume you are asking about the IRS, not "IRC."

The IRS rules state that you are responsible for the taxes on the portion of the money you invested.

However, the IRS doesn't get 2 1099s for a joint account, they get one. In this case you state that your name was listed first even though it wasn't your money.

When some of the income/sales belong to each person, the IRS requires the person whose name is first on the account to report the income and then subtract out the part that isn't theirs because they are the nominee.

To respond to the AUR/CP2000 letter, you need to fill out the forms correctly and submit them with an explantion. Also identify the other account holder by name, address and SSN.

There are nominee instructions for schedule D on page 2 (for capital gains distributions) and form 8949 (on page 6).

no worries then - person B can prove to the auditor that they paid all applicable taxes. You'll probably get flagged year after year for auditing (since it raises red flags) so learn all there is to know this time.

I have a question. I have join account with another person B (close relative), with me being the first person on that account. However, since B has most of the money there, he been paying majoring of taxes for stocks sales. I pay taxes on my small share (on about 1/9 of what person B pays).

Recently I received email from IRC claiming that I didn't report all those stock sales and gains for last 3 years, which been reported by person B in his taxes.

What can I and my relative do in this situation? Can person B provide confirmative information that he been paying for those stock gains and that he and me have joint account?