THORPE v. COMMISSIONER

T.C. Summary Opinion 2004-98

UNITED STATES TAX COURT

GARNETT E. THORPE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 6209-03S. Filed July 26, 2004.

Garnett E. Thorpe, pro se.

Jason W. Anderson, for respondent.

WOLFE, Special Trial Judge: This case was heard pursuant to

the provisions of sections 6330(d) and 7463 of the Internal

Revenue Code in effect when the petition was filed. Unless

otherwise indicated, all subsequent section references are to the

Internal Revenue Code in effect at relevant times. The decision

to be entered is not reviewable by any other court, and this

opinion should not be cited as authority.
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The issue for decision is whether respondent’s Appeals

officer abused his discretion in sustaining a proposed levy to

collect petitioner’s unpaid income tax liability for 1997

following a collection due process hearing (CDP hearing) under

section 6330.

Background

Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference. When he filed his

petition, petitioner resided in Rockford, Illinois.

Petitioner and his former wife, Jacynth R. Thorpe (Mrs.

Thorpe), filed a joint income tax return for 1997. Following an

examination of their 1997 return, petitioner and Mrs. Thorpe

agreed to a tax deficiency plus additions to tax. The total

liability for taxes and additions to tax for 1997 is

approximately $7,000.

In March 1999, petitioner filed a chapter 7 bankruptcy

petition, and he was granted a discharge in his bankruptcy case

on April 25, 2001. Petitioner’s Federal income tax liabilities

were not discharged.

On August 6, 2001, respondent issued a Final Notice--Notice

of Intent to Levy and Notice of Your Right to a Hearing (final

notice) to petitioner and Mrs. Thorpe in connection with their

income tax assessments for 1997. On August 20, 2001, petitioner
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responded to the final notice by timely filing a Form 12153,

Request for a Collection Due Process Hearing. In pertinent part,

petitioner’s Form 12153 stated: “The amount owed should be

shared between both spouses. We are presently separated

(legally) and have filed for a divorce with the State of Georgia

where Mrs. Thorpe now resides permanently”.

The Form 12153 purportedly was filed jointly by petitioner

and Mrs. Thorpe, but actually petitioner filed the request for a

CDP hearing without Mrs. Thorpe’s knowledge and consent and

printed her signature on the form. Petitioner provided Mrs.

Thorpe’s Social Security number and current home address on the

Form 12153, and respondent’s Appeals Office attempted to contact

her to determine whether she wanted to join the CDP hearing.

Mrs. Thorpe did not respond to respondent’s notification attempt

and was not a party to the CDP hearing.

The Form 12153 includes the following instruction: “If you

believe that your spouse or former spouse should be responsible

for all or a portion of the tax liability from your tax return,

check here [__] and attach Form 8857, Request for Innocent Spouse

Relief, to this request.” Petitioner placed a check mark in the

box, but did not attached a Form 8857 to the Form 12153. On

November 28, 2001, the Appeals Office sent petitioner an

additional copy of a Form 8857 to complete and return if he still

wanted to allocate the tax liability between himself and Mrs.
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Thorpe. Once again, petitioner did not return the Form 8857 to

the Appeals Office, and at the time of trial he had not filed a

Form 8857 with the Internal Revenue Service.

Petitioner’s divorce from Mrs. Thorpe was finalized on March

12, 2002, by the Illinois Circuit Court in Winnebago County,

Illinois. The divorce decree ordered that the income tax debt be

split evenly between petitioner and Mrs. Thorpe. Mrs. Thorpe was

awarded custody of the couple’s only child, subject to

petitioner’s “reasonable and seasonable visitation”, and

petitioner was ordered to pay child support of $116 weekly.

Petitioner’s case was assigned to an Appeals officer from

respondent’s Appeals Office in Peoria, Illinois. On February 20,

2003, petitioner discussed his case with the Appeals officer

during a telephone conference. The record is silent as to the

substance of this telephone conference, except as quoted below in

an excerpt from the notice of determination.

On April 14, 2003, the Appeals officer issued to petitioner

a Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330 (notice of determination), in which he

sustained the proposed levy to collect petitioner’s 1997 tax

liability. The notice of determination set forth the following

explanation regarding the Appeals officer’s consideration of

petitioner’s request that liability on his 1997 joint return be

shared equally with his former wife:
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Per form 12153, the only issue raised by the taxpayer
was that the amount owed should be shared between both
spouses. At that time, 8-16-2001, the taxpayer was not
yet divorced. The taxpayer’s divorce decree is dated
3-12-2002. Per that decree, “the income tax debt shall
be split equally between the parties.”

As previously mentioned, the taxpayer’s ex-wife,
Jacynth Thorpe, did not respond to the Appeals Office’s
correspondence relative to her participation in the CDP
proceedings. Therefore, regular collection enforcement
procedures remain in effect relative to her 1997 joint
tax liability. The IRS is authorized to satisfy the
joint liability from the income and/or assets of either
or both spouses, depending on where the funds can be
obtained the quickest and easiest. If Jacynth Thorpe
does not comply with the court order and voluntarily
pay her equal share of the balance due, the taxpayer
has recourse in civil court, but not through the IRS.

On the form 12153, the taxpayer checked the box which
indicated that a form 8857, Request for Innocent Spouse
Relief, was attached. That form was not attached to
the form 12153 and there is no record that one was ever
submitted to the IRS. A blank form 8857 was sent to
the taxpayer by Appeals on 11-28-2001 to complete and
return if he wanted to request Innocent Spouse Relief.
That form was never returned either. Therefore, the
taxpayer has no formal request for Innocent Spouse
relief in the system. Consequently, that issue will
not be addressed further.

The notice of determination includes the following

explanation of the Appeals officer’s consideration of collection

alternatives proposed by petitioner:

Concerning any alternative means of collection, on 2-
20-2003, the taxpayer stated that his wages were
presently being garnished for student loans and that he
is currently paying child support. He also indicated
that if he did not qualify for a hardship (currently
not collectible) status, that he would try to make
monthly payments, if the payment amount was not
prohibitive.
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However, the taxpayer does not currently qualify for a
hardship status or even an installment agreement.
Transcripts reflect that he has not filed a return for
2000 and that he earned more than the $7,200 of gross
income required for having to file a return for that
year. During his CDP hearing on 2-20-2003, the
taxpayer also indicated that he would have both his
2000 and 2002 returns filed by the end of February and
would send copies to the Appeals Office. As of 4-7-
2003, a transcript of his account reflects that neither
of those returns have been filed. The Appeals Office
has not received copies of any returns as of that date
either.

Upon receiving the notice of determination, petitioner

timely filed a petition with this Court under section 6330(d).

The underlying tax liability is not in dispute in this case.

Discussion

A. General Rules

Section 6330 entitles a taxpayer to notice and an

opportunity for a hearing before certain lien and levy actions

are taken by the Commissioner in the process of collecting unpaid

Federal taxes. Upon request, a taxpayer is entitled to a “fair

hearing” conducted by an impartial officer from the Office of

Appeals. Sec. 6330(b)(1), (3). At the hearing, the Appeals

officer is required to: (1) Obtain verification from the

Secretary that the requirements of applicable law and

administrative procedure have been met; (2) consider any relevant

issue raised by the taxpayer related to the unpaid tax or

proposed levy, including appropriate spousal defenses, challenges

to the appropriateness of collection actions, and offers of
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collection alternatives; and (3) consider whether any proposed

collection action balances the need for the efficient collection

of taxes with the legitimate concern of the taxpayer that any

collection action be no more intrusive than necessary. Sec.

6330(c). A hearing may be conducted face to face, by telephone,

or through written correspondence. Sec. 301.6330-1(d)(2), Q&A-

D7, Proced. & Admin. Regs.

This Court has jurisdiction to review the Commissioner’s

administrative determination under section 6330(d). Where, as

here, the validity of the underlying tax liability is not at

issue, we review the determination for abuse of discretion. Sego

v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner,

114 T.C. 176, 181-182 (2000). An abuse of discretion occurs when

an Appeals officer takes action that is arbitrary, capricious, or

without sound basis in fact or law. See Woodral v. Commissioner,

112 T.C. 19, 23 (1999).

B. Separation of Joint and Several Liability

In general, spouses are jointly and severally liable for any

tax liability arising from a joint return. Sec. 6013(d)(3). At

a collection due process hearing, a taxpayer is entitled to raise

relevant spousal defenses, including a request for relief

from joint and several liability on a joint return under section

6015. Sec. 6330(c)(2)(A)(i). When a section 6015 claim is

raised at a CDP hearing, the claim is governed in all respects by
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the provisions of section 6015 and the regulations and procedures

thereunder, and the taxpayer must submit the claim “in writing

according to rules prescribed by the Commissioner or the

Secretary.” Sec. 301.6330-1(e)(2), Proced. & Admin. Regs.

Section 6015 provides three types of relief from joint and

several liability: (1) Full or apportioned relief under section

6015(b) if, among other requirements, the requesting spouse

“establishes that in signing the return he or she did not know,

and had no reason to know” of an understatement of tax; (2)

proportionate tax relief under section 6015(c) for a requesting

spouse who is divorced or legally separated or has not been a

member of the same household as the nonrequesting spouse for the

preceding 12 months; and (3) equitable relief under section

6015(f) for a requesting spouse not eligible for relief under

either section 6015(b) or (c).

On his Form 12153, petitioner stated that he was entitled to

the benefits of a spousal defense of the type provided for in

section 6015(c) for a spouse who is divorced, legally separated,

or no longer a member of the same household as the other spouse

for at least 12 months. The requesting spouse is required to

elect the application of section 6015(c) not later than 2 years

after the date on which collection activities have begun with

respect to the requesting spouse. Sec. 6015(c)(1), (3)(B). Once

a valid section 6015(c) election is in effect, the spouses’ joint
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and several liability is separated under the allocation rules of

section 6015(d). Sec. 6015(c)(1). In general, section 6015(d)

provides that the requesting spouse’s share of the tax liability

is determined by allocating the items giving rise to the

deficiency to each spouse as if the former spouses had originally

filed separate returns. Sec. 6015(d)(3)(A).

The Appeals officer rejected petitioner’s claim for section

6015(c) relief on the basis that petitioner did not have a

“formal request for Innocent Spouse relief in the system” because

he failed to file a Form 8857. In reviewing the Appeals

officer’s determination for an abuse of discretion under section

6330(d), we must consider whether petitioner’s other written

communications with respondent’s Appeals Office constituted an

election for relief under section 6015(c).

Section 6015(c) does not specify the manner in which a

taxpayer may file an election for relief. The regulations issued

under section 6015 provide as follows:

To elect the application of § 1.6015-2 [section 6015(b)
relief] or 1.6015-3 [section 6015(c) relief] * * * a
requesting spouse must file Form 8857, “Request for
Innocent Spouse Relief” (or other specified form);
submit a written statement containing the same
information required on Form 8857, which is signed under
penalties of perjury; or submit information in the
manner prescribed by the Treasury and IRS in forms,
relevant revenue rulings, revenue procedures, or other
published guidance * * *.

Sec. 1.6015-5(a), Income Tax Regs. Under the section 6015

regulations, a requesting spouse is not required to file a Form
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8857 but can make a valid election by submitting an equivalent

written statement. These regulations were issued as proposed

regulations on January 17, 2001, and section 1.6015-5(a) remained

unchanged when the regulations were issued in final form on July

17, 2002. T.D. 9003, 2002-2 C.B. 294. Section 1.6015-5, Income

Tax Regs., applies to elections made on or after July 18, 2002.

Sec. 1.6015-9, Income Tax Regs.1

The only written communication in this record that could be

considered an election for separate liability under section

6015(c) is the statement on petitioner’s Form 12153.2 The Form

1
In addition to issuing regulations in proposed and final
form under sec. 6015, the IRS also provided guidance on the
procedure for electing equitable relief for purposes of sec.
6015(f) in Rev. Proc. 2000-15, 2000-1 C.B. 447, effective on Jan.
18, 2000. Rev. Proc. 2000-15, sec. 5, 2000-1 C.B. at 449,
provides:

A requesting spouse seeking equitable relief under
§ 6015(f) or 66(c) must file Form 8857, Request for Innocent
Spouse Relief (and Separation of Liability, and Equitable
Relief), or other similar statement signed under penalties
of perjury, within 2 years of the first collection activity
against the requesting spouse. If a requesting spouse has
already filed an application for relief under § 6015(b) or
§ 6015(c), the Service will consider whether equitable
relief under § 6015(f) is appropriate for the portion of the
liability for which relief under § 6015(b) or § 6015(c) is
not available. A subsequent filing of a request for
equitable relief under § 6015(f) is not necessary.
2
As noted in the text above, petitioner stated on the Form
12153 that “The amount owed should be shared between both
spouses. We are presently separated (legally) and have filed for
a divorce with the State of Georgia where Mrs. Thorpe now resides
permanently”. The statement subsequently was supplemented by a
copy of petitioner’s divorce decree from Mrs. Thorpe, dated Mar.
(continued...)
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12153 was signed by petitioner under penalties of perjury but was

submitted while the section 6015 regulations still were in

proposed form. While proposed regulations may not be “competent

authority”, see Houston Oil & Minerals Corp. v. Commissioner, 92

T.C. 1331, 1388 (1989), affd. 922 F.2d 283 (5th Cir. 1991); F.W.

Woolworth Co. v. Commissioner, 54 T.C. 1233, 1265-1266 (1970),

here they may be useful as a guide in view of their adoption

approximately a year after petitioner completed his Form 12153.

Under these circumstances, we do not believe it is necessary or

appropriate for us to ignore the proposed regulations.

In the absence of contrary authority defining an election

for section 6015(c) purposes, under the circumstances here, we

may consider petitioner’s statement on the Form 12153 as a valid

election if it sufficiently communicates the elements required

for relief under section 6015(c).

On the Form 12153, petitioner clearly stated that he was

seeking to separate joint and several liability on his 1997 joint

return. The statement informed the Appeals officer that the

Thorpes were legally separated and provided Mrs. Thorpe’s Social

Security number and new address to allow the Appeals officer to

notify Mrs. Thorpe of her right to join the CDP hearing and

intervene in petitioner’s section 6015(c) claim. Petitioner did

2
(...continued)
12, 2002, requiring that “the income tax debt shall be split
equally between the parties”.
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not provide information specifying how each item giving rise to

the Thorpes’ 1997 tax liability should be allocated for purposes

of section 6015(d), but he stated that the tax liability should

be evenly divided between the spouses and furnished a divorce

decree to that effect.

Petitioner’s statement on the Form 12153 sufficiently

communicated the elements required under section 6015(c) and

should be considered a valid separate liability election. The

Appeals officer’s refusal to consider petitioner’s request for

relief under section 6015(c) was based upon his absolute

requirement that petitioner file a Form 8857 without regard to

whether petitioner filed an equivalent written request for

relief. Although petitioner plainly had requested relief from

joint and several liability on his Form 12153 and provided a copy

of his divorce decree requiring an even split of the tax

liability, the Appeals officer declined to investigate the issue

further and instead suggested that petitioner take “recourse in

civil court” regardless of the cost and inconvenience of further

action in State courts.

While the Appeals officer was not bound by the allocation

set forth in the divorce decree, the statement on petitioner’s

Form 12153, supplemented by the relevant portion of the divorce

decree, qualifies as a section 6015(c) election. If petitioner

was not entitled to section 6015(c) relief according to the
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allocation rules of section 6015(d), the Appeals officer could

have considered, without the necessity for a separate section

6015(f) election, whether equitable relief under section 6015(f)

was appropriate for the portion of the liability for which

section 6015(c) relief was not available. Rev. Proc. 2000-15,

sec. 5, 2000-1 C.B. 447, 449; see supra note 1. The

nonrequesting spouse’s legal liability is a factor that usually

weighs in favor of the requesting spouse’s claim for equitable

relief. Rev. Proc. 2000-15, sec. 3.03(e), 2000-1 C.B. at 449.

The Appeals officer’s refusal to discuss or consider the issue of

petitioner’s request for relief under section 6015(c) raised in

the Form 12153 or to consider relief under section 6015(f) was

arbitrary, capricious and without sound basis in law.

Under the circumstances of this case, we hold that the

Appeals officer abused his discretion in declining to consider

petitioner’s section 6015(c) claim at his CDP hearing.

C. Collection Alternatives

Petitioner proposed collection alternatives at his CDP

hearing by urging that he qualified for currently not collectible

status on account of hardship and suggesting, alternatively, an

installment agreement. The Appeals officer determined that

petitioner was not eligible for a collection alternative because

petitioner had failed to file an income tax return for 2000. We

have consistently upheld an Appeals officer’s determination not
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to consider a collection alternative when a taxpayer is not

current with his income tax filings. Rodriguez v. Commissioner,

T.C. Memo. 2003-153; Ashley v. Commissioner, T.C. Memo. 2002-286.

At the CDP hearing, the Appeals officer granted petitioner a

reasonable amount of time to become current with his income tax

filings, but petitioner did not do so. The Appeals officer did

not abuse his discretion in rejecting petitioner’s collection

alternative proposals.

D. Remand of Petitioner’s Case to Appeals Office

Where a taxpayer is not afforded a proper opportunity for a

hearing under section 6330, the Court may remand the case to the

Appeals Office to hold a hearing if we “believe that it is either

necessary or productive”. Lunsford v. Commissioner, 117 T.C.

183, 189 (2001); Day v. Commissioner, T.C. Memo. 2004-30.

Since we hold that petitioner filed a valid election for

relief under section 6015(c), the Appeals officer was obligated

to consider this spousal defense at the CDP hearing under section

6330(c)(2)(A)(i). Petitioner and Mrs. Thorpe were legally

separated at the time the election was filed and divorced at the

time of the CDP hearing, and we believe it is necessary and

likely to be productive for us to remand this case to the Appeals

Office to determine the correct allocation of the tax liability

between petitioner and Mrs. Thorpe under section 6015(c) and (d).
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Reviewed and adopted as the report of the Small Tax Case

Division.

To reflect the foregoing,

An appropriate order

will be issued.