T.C. Summary Opinion 2003-116
UNITED STATES TAX COURT
SHIRLEY WESTERHUIS, Petitioner, AND
WILLIAM R. TIPPING, Intervenor v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9568-02S. Filed August 20, 2003.
Shirley Westerhuis, pro se.
William R. Tipping, pro se.
J. Michael Melvin, for respondent.
POWELL, Special Trial Judge: This case was heard pursuant
to the provisions of section 74631 of the Internal Revenue Code
in effect at the time the petition was filed. The decision to be
1
Unless otherwise indicated, subsequent section references are
to the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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entered is not reviewable by any other court, and this opinion
should not be cited as authority.
This is a so-called stand alone innocent spouse case arising
under section 6015(f). Petitioner applied for relief from joint
tax liability for the 1997 taxable year. Respondent determined
that petitioner was not entitled to such relief. Petitioner
filed a timely petition under section 6015(e). Intervenor,
petitioner’s former husband, filed a Notice of Intervention under
Rule 325(b) and opposes such relief. The issue is whether
respondent’s denial of relief under section 6015(f) was an abuse
of discretion. Petitioner resided in Cocoa, Florida, at the time
the petition was filed.
Background
The facts may be summarized as follows. During 1997,
petitioner and intervenor were married. Petitioner was employed
by Ameripath Florida, Inc., and had wage income of $41,823.25
during 1997. Intervenor lost his job in early 1997, and in
August 1997 he decided to return to school for further education.
He also took a part-time job at Sea World of Florida, Inc.,
earning approximately $7 per hour. In order to help pay their
living expenses and accumulated debts, intervenor withdrew
$14,363 from an individual retirement account (IRA).
Petitioner and intervenor were divorced in January 1998.
For the taxable year 1997, petitioner and intervenor filed a
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joint Federal income tax return. They reported on that return
the IRA disbursement of $14,363. In computing the tax due they
included the early distribution additional tax under section
72(t). The return showed that they owed $2,979. That amount was
not paid when the return was filed.
At the time of the divorce petitioner and intervenor owned a
residence. Originally the residence was to be sold, and each was
to receive half of the proceeds. Subsequently, the residence was
ordered deeded to petitioner, and petitioner was ordered to
“continue to pay the joint debts”. Petitioner was represented by
an attorney during these proceedings. The house was eventually
sold in 2000, and petitioner received approximately $20,000.
Petitioner filed individual 1998 and 1999 Federal income tax
returns. Each return showed that she was due a refund.
Respondent applied these overpayments to the amount not paid on
the 1997 tax liability.
Discussion
A requesting spouse may elect relief from joint and several
liability under section 6015. There are three types of relief
available: (1) Section 6015(b)(1) provides full relief from
joint and several liability; (2) section 6015(c) provides
separate tax liability available to divorced or separated
taxpayers; and (3) section 6015(f) provides equitable relief from
joint and several liability in certain circumstances if section
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6015(b) and (c) are unavailable. Petitioner is not eligible for
relief under either section 6015(b) or (c).
Section 6015(f) provides:
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.
To prevail, petitioner must show that respondent’s denial of
equitable relief under section 6015(f) was an abuse of
discretion. Jonson v. Commissioner, 118 T.C. 106, 125 (2002);
Cheshire v. Commissioner, 115 T.C. 183, 198 (2000), affd. 282
F.3d 326 (5th Cir. 2002); Butler v. Commissioner, 114 T.C. 276,
292 (2000). As directed by section 6015(f), the Commissioner
prescribed procedures to use in determining whether the
requesting spouse qualifies for relief under section 6015(f).
Those procedures are found in Rev. Proc. 2000-15, 2000-1 C.B.
447.2 The revenue procedure includes a partial list of the
positive and negative factors to be considered, including whether
the requesting spouse is divorced, whether the requesting spouse
2
Rev. Proc. 2000-15, sec. 3, 2000-1 C.B. 447, 448, is
applicable for any liability for tax arising on or before July
22, 1998, that was unpaid on that date.
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would suffer undue economic hardship, whether the requesting
spouse “had no reason to know that the liability would not be
paid”, and whether the requesting spouse significantly benefited
beyond normal support from the unpaid liability. See Rev. Proc.
2000-15, sec. 4.03(1) and (2), 2000-1 C.B. at 448-449. “No
single factor will be determinative of whether equitable relief
will or will not be granted in any particular case. Rather all
factors will be considered and weighed appropriately.” Rev.
Proc. 2000-15, sec. 4.03, 2000-1 C.B. at 448.
Petitioner executed the 1997 return voluntarily. The unpaid
amount was clearly shown on the return that she executed. She
must have known that there was an amount owing, or at the very
least had reason to know that there was an unpaid tax liability.
It may be, as petitioner testified, that she thought that the
unpaid tax liability would be paid by intervenor. But, under the
ultimate property decree entered on July 28, 1999, 18 months
after the original decree, the house was transferred to
petitioner with the understanding that she would continue to pay
the joint debts. We note that petitioner’s 1998 overpayment was
credited against the 1997 tax liability on April 15, 1999, 3
months before the final decree was entered. It would seem that
at least by then she was aware that the 1997 tax liability had
not been paid. Nonetheless, she agreed that she would continue
to pay the joint debts.
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Furthermore, we find no basis for concluding that petitioner
would suffer undue financial hardship in being liable for the
1997 tax liability. She maintained her employment, and during
1998 and 1999 had gross income of $49,469 and $51,179,
respectively. Moreover, she received $20,000 from the sale of
the residence in 2000.
Finally, it should be noted that, while petitioner may not
have significantly benefited from the funds withdrawn from the
IRA, the funds were used in great part for living expenses of
both petitioner and intervenor.
In sum, we find that no factors considered support the
conclusion that petitioner is entitled to relief under section
6015(f) and that respondent’s denial of relief was an abuse of
discretion.3
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.
3
Because of our disposition on the ground that petitioner is
not entitled to relief, we need not discuss whether this Court
has jurisdiction to order a refund to petitioner for 1998 and
1999.