T.C. Memo. 2003-166
UNITED STATES TAX COURT
LAURA L. BROOKS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8833-01. Filed June 5, 2003.
Laura L. Brooks, pro se.
Stephen R. Takeuchi and Michael Pesavento, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
FOLEY, Judge: By notice of deficiency dated April 13, 2001,
respondent determined a $3,526 deficiency relating to
petitioner’s 1997 tax year. The issue for decision is whether
petitioner is entitled to relief from joint and several liability
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pursuant to section 6015(b), (c), or (f).1 Petitioner does not
otherwise contest respondent’s deficiency determination.
FINDINGS OF FACT
Petitioner and Ronald Tice were married from 1994 to 1998.
Petitioner was responsible for the household finances. During
their marriage, Mr. Tice was verbally abusive towards petitioner,
and on several occasions, including one in 1997, petitioner
obtained a protective order against Mr. Tice.
During 1997, petitioner was a medical assistant for Dr.
William Fleming, and Mr. Tice performed services for Prestige
Home Centers, Inc. (Prestige), Kelly Services, Inc. (Kelly), and
T.D.I., Inc. (TDI).
In 1996, Mr. Tice began driving rental trucks from Florida
to other States (e.g., New York and Michigan) for TDI and
informed petitioner of his pay rate of 19 cents per mile. Mr.
Tice was away from home 3 weeks each month he worked for TDI and
would inform petitioner of his whereabouts en route or when he
arrived at his destination. Petitioner was aware of the
approximate amount of Mr. Tice’s weekly income from TDI.
Petitioner believed Mr. Tice’s truck driving required him to
spend too much time away from home. In response, Mr. Tice
promised that he would stop working for TDI. Despite Mr. Tice’s
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue.
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driving for TDI for 6 or 7 months in 1997, at the time their 1997
joint Federal income tax return (the joint return) was filed,
petitioner knew only that he worked at least 3 months for TDI
during that year.
In 1997, petitioner and Mr. Tice began experiencing serious
marital difficulties. On January 26, 1998, petitioner prepared
the joint return and attached Forms W-2, Wage and Tax Statement,
from Prestige and Kelly. When petitioner asked Mr. Tice for a
Form W-2 from TDI, Mr. Tice told her that he would “take care of
it”.
A Form 1099 was not sent to petitioner’s residence, and the
joint return did not include compensation TDI paid to Mr. Tice.
In 1999, respondent notified petitioner of proposed changes to
the joint return relating to Mr. Tice’s compensation from TDI
(i.e., $9,133) and a resulting disallowance of the claimed earned
income tax credit (i.e., $961). Petitioner subsequently filed a
Form 8857, Request for Innocent Spouse Relief, in which she
contended that, at the time the return was filed, she was not
aware that Mr. Tice had self-employment income from TDI.
By letter dated February 8, 2000, respondent notified Mr.
Tice of petitioner’s contention that she should be relieved from
joint and several liability pursuant to section 6015 (section
6015 relief). In his response dated February 15, 2000, Mr. Tice
contended that petitioner was not entitled to section 6015
relief.
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On September 18, 2000, respondent determined petitioner was
not entitled to section 6015 relief because she had actual
knowledge of the income that caused the understatement of tax,
and it would not be inequitable to hold petitioner liable for the
tax. By notice dated September 25, 2000, respondent informed
petitioner of his determination.
On July 12, 2001, petitioner, while residing in Silver
Springs, Florida, filed her petition with this Court, in which
she contends that she is entitled to section 6015 relief. On
September 10, 2001, respondent gave notice of petitioner’s
contention to Mr. Tice.
OPINION
Respondent contends that petitioner is not entitled to
section 6015 relief because she knew the nature of Mr. Tice’s
work with TDI, the amount he was paid, and that such compensation
was not reported on their joint return. Respondent contends
that, but for the omission of income relating to TDI, petitioner
and Mr. Tice would not have qualified for a $961 earned income
credit.
Generally, taxpayers filing joint Federal income tax returns
are jointly and severally liable for all taxes due. Sec.
6013(d)(3). In limited situations, however, taxpayers may be
relieved of joint liability. Sec. 6015. Petitioner is not
entitled to relief pursuant to section 6015(b) or (c), if she had
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actual knowledge of the item giving rise to the omitted income.
E.g., Jonson v. Commissioner, 118 T.C. 106, 115 (2002); Cheshire
v. Commissioner, 115 T.C. 183 (2000), affd. 282 F.3d 326 (5th
Cir. 2002); see also Charlton v. Commissioner, 114 T.C. 333
(2000); sec. 1.6015-3(c), (d)(3), Income Tax Regs. Petitioner,
who prepared and filed the joint return, omitted Mr. Tice’s
income relating to TDI. She knew Mr. Tice’s compensation rate
during the period he worked for TDI. Thus, petitioner had actual
knowledge of 50 percent of the item of income giving rise to the
deficiency. See sec. 1.6015-3(c)(4), Example (4)(ii), Income Tax
Regs. Accordingly, pursuant to section 6015(b) and (c),
petitioner is not relieved of liability for the tax deficiency
attributable to 50 percent of the omitted income.
Pursuant to section 6015(f), respondent is granted
discretion to award relief from joint and several liability where
such relief is otherwise unavailable pursuant to section 6015(b)
or (c) if the facts and circumstances indicate that it would be
inequitable to hold the spouse seeking relief liable for the
deficiency. We conclude that it would not be inequitable to hold
petitioner liable for the remaining portion of the deficiency
(i.e., the portion attributable to 50 percent of the omitted
income). She knew of 50 percent of the omitted income and failed
to establish economic hardship or that Mr. Tice had the legal
obligation to pay the additional tax liability. See Rev. Proc.
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2000-15, 2000-1 C.B. 447. In addition, petitioner did not
establish that she had not benefited from the TDI income or the
earned income credit refund. Accordingly, respondent’s denial of
relief pursuant to section 6015(f) was not an abuse of
discretion. See Butler v. Commissioner, 114 T.C. 276 (2000).
To reflect the foregoing,
Decision will be entered
under Rule 155.