Diane Fernandez v. Commissioner

114 T.C. No. 21

UNITED STATES TAX COURT

DIANE FERNANDEZ, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 16710-99. Filed May 10, 2000.

P submitted a request to R for innocent spouse
relief pursuant to sec. 6015(b), (c), and (f), I.R.C.
R mailed to P a determination which denied the
requested relief. P filed a timely petition with the
Court pursuant to sec. 6015(e), I.R.C. P seeks review
of R’s denial of relief under sec. 6015(b), (c), and
(f), I.R.C. R moved to dismiss for lack of
jurisdiction and to strike as to sec. 6015(f), I.R.C.
R further moved to strike certain allegations of fact
raised by P in the petition.

Held: We have jurisdiction to review a request for
innocent spouse relief under sec. 6015(f), I.R.C., when
P makes a requisite election under sec. 6015(b) and/or
(c), I.R.C., and files a timely petition with the Tax
Court pursuant to sec. 6015(e), I.R.C. See Butler v.
Commissioner, 114 T.C. ___ (2000). Accordingly, R’s
motion to dismiss for lack of jurisdiction and to
strike is denied. Held, further, allegations of fact
raised in the petition are relevant to P’s request for
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innocent spouse relief. R’s motion to strike P’s
allegations of fact is denied.

Francine K. Cardella, for petitioner.

Rose E. Gole, for respondent.

OPINION

COHEN, Chief Judge: This case was assigned to Chief Special

Trial Judge Peter J. Panuthos pursuant to the provisions of

section 7443A(b)(5). Unless otherwise indicated, section

references are to the Internal Revenue Code as amended, and all

Rule references are to the Tax Court Rules of Practice and

Procedure. The Court agrees with and adopts the opinion of the

Special Trial Judge, which is set forth below.

OPINION OF THE SPECIAL TRIAL JUDGE

PANUTHOS, Chief Special Trial Judge: This matter is before

the Court on respondent’s motion to dismiss for lack of

jurisdiction and to strike. The issues for decision are: (1)

Whether this Court has jurisdiction to review the denial of a

request for innocent spouse relief pursuant to section 6015(f);

and (2) whether certain allegations of fact asserted in the

petition are relevant to petitioner’s request for innocent spouse

relief.
 - 3 -

Background

In March 1999, petitioner submitted to respondent a request

for relief from joint and several liability for taxable year 1988

under section 6015(b), (c), and (f). In a letter dated July 27,

1999, respondent denied the requested relief.1 The determination

letter advised that petitioner was not entitled to relief and

included the following explanation: “Because the taxpayer Diane

Fernandez had actual and constructive knowledge of the Capital

Gains and the tax underpayment. In addition, the petitioning

spouse received a significant financial benefit when she received

sales proceeds of $19,532.13 in tax year 1988.”

On October 28, 1999, petitioner filed a timely petition with

this Court pursuant to section 6015(e) to review respondent’s

denial of relief. Petitioner asserts entitlement to relief under

section 6015(b), (c), and (f). The petition sets forth several

bases of error by respondent and alleges facts in support of such

bases. Two of such allegations of fact are:

1
Petitioner asserts in the petition that the
determination letter was mailed to petitioner and her agent on
Oct. 6, 1999. Respondent, in his answer to the petition, denies
for lack of sufficient information whether a copy of the
determination was mailed on Oct. 6, 1999. Respondent did not
provide any evidence of the mailing date of the July 27, 1999,
letter. While the record is not clear as to the mailing date of
respondent’s determination letter, we note that the petition,
which was postmarked Oct. 25, 1999, and received by the Court on
Oct. 28, 1999, would be timely even assuming the determination
letter was mailed on July 27, 1999. See secs. 6015(e)(1), 7502.
 - 4 -

5. The facts upon which the petitioner relies, as
the basis of the petitioner’s case, are as follows:

* * * * * * *

B. The Petitioner was not in control of the
marital finances, which were one of the governing
factors in the preparation of the 1988 jointly filed
income tax return.

C. The sale of the house in question was owned
exclusively by the Petitioner’s former spouse. The
Petitioner had neither a proprietary nor a financial
interest in the house which was sold which caused the
underpayment of the income tax assessed.

Respondent filed an answer to the petition and subsequently

filed a motion to dismiss for lack of jurisdiction and to strike

as to relief sought under section 6015(f). Respondent further

moved to strike the allegations of fact contained in paragraphs

5.B. and 5.C. of the petition. At the time of filing the

petition, petitioner resided in Elmhurst, New York.

Discussion

1. General

Congress enacted section 6015 in the Internal Revenue

Service Restructuring and Reform Act of 1998, Pub. L. 105-206,

sec. 3201, 112 Stat. 685, 734, as a means of expanding relief to

innocent spouses. See H. Conf. Rept. 105-599, at 53 (1998); S.

Rept. 105-174, at 65, 68 (1998); H. Rept. 105-364 (Part I) at 60-

62 (1998). Section 6015(a) provides that, if an individual has

made a joint return, he or she may elect to seek relief from

joint and several liability under subsection (b). In addition,
 - 5 -

such individual may elect to limit his or her liability under

subsection (c) if eligible.

Section 6015(b) enumerates requirements for seeking innocent

spouse relief. Specifically, section 6015(b) provides:

SEC. 6015(b). Procedures For Relief From Liability
Applicable to All Joint Filers.--

(1) In general.--Under procedures prescribed by
the Secretary, if–-

(A) a joint return has been made for a
taxable year;

(B) on such return there is an understatement
of tax attributable to erroneous items of 1
individual filing the joint return;

(C) the other individual filing the joint
return establishes that in signing the return he
or she did not know, and had no reason to know,
that there was such understatement;

(D) taking into account all the facts and
circumstances, it is inequitable to hold the other
individual liable for the deficiency in tax for
such taxable year attributable to such
understatement; and

(E) the other individual elects (in such form
as the Secretary may prescribe) the benefits of
this subsection not later than the date which is 2
years after the date the Secretary has begun
collection activities with respect to the
individual making the election,

then the other individual shall be relieved of
liability for tax (including interest, penalties, and
other amounts) for such taxable year to the extent such
liability is attributable to such understatement.

Subsection (c) of section 6015 provides an opportunity to

limit liability, as follows:
 - 6 -

SEC. 6015(c). Procedures to Limit Liability for
Taxpayers No Longer Married or Taxpayers Legally Separated
or Not Living Together.--

(1) In general.--Except as provided in this
subsection, if an individual who has made a joint
return for any taxable year elects the application of
this subsection, the individual's liability for any
deficiency which is assessed with respect to the return
shall not exceed the portion of such deficiency
properly allocable to the individual under subsection
(d).

* * * * * * *

(3) Election.--

(A) Individuals eligible to make election.--

(i) In general.--An individual shall
only be eligible to elect the application of
this subsection if–

(I) at the time such election is
filed, such individual is no longer
married to, or is legally separated
from, the individual with whom such
individual filed the joint return to
which the election relates; or

(II) such individual was not a
member of the same household as the
individual with whom such joint return
was filed at any time during the
12-month period ending on the date such
election is filed.

(ii) Certain taxpayers ineligible to
elect.--If the Secretary demonstrates that
assets were transferred between individuals
filing a joint return as part of a fraudulent
scheme by such individuals, an election under
this subsection by either individual shall be
invalid (and section 6013(d)(3) shall apply
to the joint return).
 - 7 -

Section 6015(f) provides an additional opportunity for

relief as follows:

SEC. 6015(f). Equitable Relief.--Under procedures
prescribed by the Secretary, if–-

(1) taking into account all the facts and
circumstances, it is inequitable to hold the individual
liable for any unpaid tax or any deficiency (or any
portion of either); and

(2) relief is not available to such individual
under subsection (b) or (c), the Secretary may relieve
such individual of such liability.

2. Jurisdiction

The first issue to be decided is whether this Court has

jurisdiction to review a denial of a request for innocent spouse

relief pursuant to section 6015(f).

The Tax Court is a court of limited jurisdiction, and we may

exercise our jurisdiction only to the extent authorized by

Congress. See Gati v. Commissioner, 113 T.C. 132, 133 (1999);

Yuen v. Commissioner, 112 T.C. 123, 124 (1999); Bourekis v.

Commissioner, 110 T.C. 20, 24 (1998). The question of the

Court’s jurisdiction is fundamental and must be addressed when

raised by a party or on the Court’s own motion. See Naftel v.

Commissioner, 85 T.C. 527, 530 (1985).

A. Section 6015(e)

The petition herein has been filed pursuant to section

6015(e). Section 6015(e), as pertinent here, provides:

SEC. 6015(e). Petition for review by Tax Court.--
 - 8 -

(1) In general.--In the case of an individual who
elects to have subsection (b) or (c) apply–-

(A) In general.--The individual may petition
the Tax Court (and the Tax Court shall have
jurisdiction) to determine the appropriate relief
available to the individual under this section if
such petition is filed during the 90-day period
beginning on the date on which the Secretary mails
by certified or registered mail a notice to such
individual of the Secretary's determination of
relief available to the individual.
Notwithstanding the preceding sentence, an
individual may file such petition at any time
after the date which is 6 months after the date
such election is filed with the Secretary and
before the close of such 90-day period.

* * * * * * *

(3) Applicable rules.--

(A) Allowance of credit or refund.-–Except as
provided in subparagraph (B), notwithstanding any
other law or rule of law * * *, credit or refund
shall be allowed or made to the extent
attributable to the application of subsection (b)
or (f).

(B) Res judicata.--In the case of any
election under subsection (b) or (c), if a
decision of the Tax Court in any prior proceeding
for the same taxable year has become final, such
decision shall be conclusive except with respect
to the qualification of the individual for relief
which was not an issue in such proceeding. The
exception contained in the preceding sentence
shall not apply if the Tax Court determines that
the individual participated meaningfully in such
prior proceeding.

* * * * * * *

(4) Notice to other spouse.–- The Tax Court shall
establish rules which provide the individual filing a
joint return but not making the election under
subsection (b) or (c) with adequate notice and an
 - 9 -

opportunity to become a party to a proceeding under
either such subsection.

We have been asked, in this “stand alone” petition filed

pursuant to section 6015(e)(1)(A), to decide whether we have

authority to review a denial of relief under section 6015(f).

Since our jurisdiction in this case is dependent upon section

6015(e)(1)(A), we look to the language of section 6015 to

determine whether we have authority to review a denial of relief

under section 6015(f). In Butler v. Commissioner, 114 T.C. ___

(2000), respondent argued that section 6015(e) precluded judicial

review of claims made pursuant to section 6015(f). We opined in

Butler that “We find nothing in section 6015(e) that precludes

our review of respondent’s denial of equitable relief to

petitioner”.

In this case, respondent asserts that, since section

6015(e)(1) provides “in the case of an individual who elects to

have subsection (b) or (c) apply”, the language of the statute

limits our jurisdiction to the review of an election made under

subsection (b) or (c). Therefore, respondent contends, we do not

have jurisdiction to review relief under subsection (f). We do

not agree, as explained more fully below.

When we interpret section 6015(e) to determine the scope of

our jurisdiction, our purpose is to give effect to Congress’

intent. To accomplish this, we must begin with the statutory

language, which is the most persuasive evidence of the statutory
 - 10 -

purpose. See United States v. American Trucking Associations,

Inc., 310 U.S. 534, 542-543 (1940). Usually, the plain meaning

of the statutory language is conclusive. See United States v.

Ron Pair Enters., Inc., 489 U.S. 235, 242 (1989); Woodral v.

Commissioner, 112 T.C. 19, 23 (1999). If a statute is silent or

ambiguous, we may look to the statute’s legislative history in an

attempt to determine congressional intent. See Burlington N.

R.R. v. Oklahoma Tax Commn., 481 U.S. 454, 461 (1987); Griswold

v. United States, 59 F.3d 1571, 1575-1576 (11th Cir. 1995). When

a statute appears to be clear on its face, there must be

unequivocal evidence of legislative purpose before interpreting

the statute so as to override the plain meaning of the words used

therein. See Huntsberry v. Commissioner, 83 T.C. 742, 747-748

(1984); see also Pallottini v. Commissioner, 90 T.C. 498, 503

(1988), and the cases cited therein.

We first look to the prefatory language contained in section

6015(e)(1) which states: “in the case of an individual who elects

to have subsection (b) or (c) apply”. We conclude that this

language does not contain words of limitation that confine our

jurisdiction to review of an election under subsections (b)

and/or (c), as respondent contends. Rather, we understand this

language to encompass the procedural requirement applicable to

all joint filers seeking innocent spouse relief and, therefore,

states the prerequisite to seeking our review of such relief.
 - 11 -

Section 6015(a)(1) provides that, if an individual has made

a joint return, he or she may elect to seek innocent spouse

relief pursuant to the procedures set forth in subsection (b).

If the individual is eligible, he or she may also elect to limit

their liability pursuant to subsection (c). See sec. 6015(a)(2).

Subsections (b) and (c), read together, encompass all joint

filers who have the opportunity to seek innocent spouse relief.

Section 6015(f) provides an additional opportunity for

relief to those taxpayers who do not otherwise meet the

requirements of subsection (b) or (c). Specifically, section

6015(f) provides that if, taking into account all the facts and

circumstances, it is inequitable to hold the individual liable

for any unpaid tax or any deficiency (or any portion of either),

and relief is not available to such individual under subsection

(b) or (c), the Secretary may relieve such individual of such

liability. Section 6015(f) does not require an affirmative

election for relief as do subsections (b) and (c). We interpret

this to mean that section 6015(f) provides an additional

opportunity for relief to those individuals who elect relief

under subsection (b) or (c) but do not meet one or more of the

respective requirements of those subsections. In fact, a

prerequisite for relief under section 6015(f) is that relief is

not available under section 6015(b) or (c). See sec. 6015(f)(2).

Therefore, we conclude, before an individual may petition this
 - 12 -

Court for review of innocent spouse relief, including relief

under subsection (f), such individual must make an election under

subsections (b) and/or (c).

As we pointed out in Butler v. Commissioner, supra, the

statutory language which grants jurisdiction to the Tax Court

over subsection (f) is found in the statutory text: “the

individual may petition the Tax Court (and the Tax Court shall

have jurisdiction) to determine the appropriate relief available

to the individual under this section”. Sec. 6015(e)(1)(A)

(emphasis added). It is our view that Congress intended the term

“under this section” to include all subsections of section 6015

in their entirety.

Our interpretation of the term “under this section” is

consistent with our recent interpretation of identical language

used in section 6404(g)2 which provides in part that the “Tax

Court shall have jurisdiction * * * to determine whether the

Secretary’s failure to abate interest under this section was an

abuse of discretion” (emphasis added). We held in Woodral v.

Commissioner, supra at 22-23, that “Section 6404(g) clearly

grants the Court jurisdiction to review the Commissioner’s

failure to abate interest under all subsections of section 6404

and does not limit the Court’s jurisdiction to review cases

2
Sec. 6404(g) was redesignated sec. 6404(i) by the
Internal Revenue Restructuring and Reform Act of 1998, Pub. L.
105-206, secs. 3305(a), 3309(a), 112 Stat. 743, 745.
 - 13 -

arising only under section 6404(e)” (emphasis added). We also

note that Congress recently amended section 6015(e)(3)(A) in

recognition of the distinction between the terms “section” and

“subsection”. Congress amended section 6015(e)(3)(A) by striking

“of this section” and inserting “of subsection (b) or (f)”.

Omnibus Consolidated and Emergency Supplemental Appropriations

Act of 1999, Pub. L. 105-277, sec. 4002(c), 112 Stat. 2681-906.

B. Legislative History

In Butler v. Commissioner, supra, we opined that the

legislative history of section 6015 supported an interpretation

that section 6015 does not limit our authority to review section

6015(f). For the same reasons as fully discussed in Butler, we

hold that the legislative history of section 6015 makes clear

that Congress did not intend to limit our review of section 6015.

C. Section 6015(f)

Section 6015(f) provides that the Commissioner may relieve

an individual of liability if, taking into account all the facts

and circumstances, it is inequitable to hold the individual

liable for any unpaid tax or deficiency (or portion thereof), and

relief is not available to such individual under subsection (b)

or (c). Respondent asserts that we do not have jurisdiction to

review a denial of a claim for innocent spouse relief under

section 6015(f) because the granting of such relief is

discretionary.
 - 14 -

This argument is identical to that made in Butler v.

Commissioner, supra. We concluded in Butler v. Commissioner,

supra, that the Commissioner’s authority is not committed solely

to agency discretion and is, therefore, susceptible to judicial

review. We further concluded that we are well equipped to decide

whether it was an abuse of discretion for respondent to deny

relief to a taxpayer under section 6015(f). For the same reasons

as more fully discussed in Butler v. Commissioner, supra, we

conclude that we have authority to review respondent’s denial of

petitioner’s claim for equitable relief.

3. Allegations of Fact

In her petition to this Court, petitioner asserted error by

respondent for failing to consider certain facts in his denial of

innocent spouse relief. Petitioner recited the alleged facts in

her petition, see supra p. 4, as bases for such error.

Respondent moved to strike the paragraphs from the petition

as not relevant to the determination of whether petitioner is

entitled to innocent spouse relief. Petitioner is required to

set forth clear and concise statements of the facts on which

petitioner bases the assignments of error. See Rule 34(b)(5);

Jarvis v. Commissioner, 78 T.C. 646, 658 (1982); Gordon v.

Commissioner, 73 T.C. 736, 739 (1980); Risner v. Commissioner,

T.C. Memo. 1996-82. Such facts are relevant to the issue of
 - 15 -

innocent spouse relief. Accordingly, respondent’s motion to

strike is denied.

To reflect the foregoing,

An order will be issued

denying respondent’s motion to

dismiss for lack of

jurisdiction and to strike

with respect to section

6015(f) and to strike with

respect to allegations of fact

asserted in the petition.