T.C. Memo. 2004-184
UNITED STATES TAX COURT
MARGARET A. DURHAM, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10581-02. Filed August 16, 2004.
Margaret A. Durham, pro se.
Edwina L. Jones, for respondent.
MEMORANDUM OPINION
PANUTHOS, Chief Special Trial Judge: Respondent determined
that petitioner is not entitled to relief from joint and several
liability under section 6015 for the 1993 taxable year.1 The
issues for decision are: (1) Whether petitioner is entitled to
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
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relief under section 6015(b) or (c); and (2) whether respondent
abused his discretion in denying petitioner’s request for
equitable relief under section 6015(f).
Background
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioner resided in Hope Mills, North Carolina, at the time she
filed the petition herein.
Petitioner was married to James L. Hyatt (Mr. Hyatt).
During the 1993 taxable year, petitioner was a housewife, and Mr.
Hyatt was a self-employed carpenter and partner of J.D. Trim
Company.
Petitioner and Mr. Hyatt filed a timely Federal income tax
return for the 1993 taxable year (1993 joint return). The 1993
joint return reported “total tax” of $4,175 and tax due of the
same amount. Petitioner and Mr. Hyatt did not remit any payment
with their return. On May 23, 1994, respondent accepted the 1993
joint tax return as filed and assessed the tax reported therein,
along with additions to tax under sections 6651(a)(2) and 6654 of
$39.70 and $166.34, respectively, and interest of $29.03.
Petitioner had overpayments of tax for the taxable years
1995 through 2001. Respondent applied these overpayments to
offset the outstanding tax liability associated with the 1993
joint return in the following manner:
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Taxable Year Amount of Overpayment Week Applied1
1995 $193 5/12/1996
1996 585 5/25/1997
1997 246 5/10/1998
1998 226 2/21/1999
1999 237 4/16/2000
2000 349 5/13/2001
2
2000 300 8/12/2001
2001 253 4/21/2002
1
Respondent testified that Monday is the typical day of the week for
applying the overpayment.
2
Amount of petitioner’s rate reduction credit for 2000.
As of December 8, 2003, the amount outstanding associated with
the 1993 joint return was $1,740.17 of accrued interest.2
In 1995 or sometime thereafter, petitioner and Mr. Hyatt
divorced.
On December 26, 2001, petitioner filed a Form 8857, Request
for Innocent Spouse Relief. Respondent issued petitioner a final
notice dated March 27, 2002, denying petitioner relief from joint
and several liability under section 6015(b), (c), and (f).
Respondent noted:
We received your request more than two years after the
date we began collection activity. IRC Sections
6015(b)(1)(E), 6015(c)(3)(B) and 6015(f) require
Innocent Spouse claims to be filed no later than two
years after the start of collection activity after July
22, 1998. The date of collection activity on your
account, after the enactment if [sic] IRC Section 6015
was 2/22/99.
2
Respondent also applied both Mr. Hyatt’s overpayment of
tax for the 2001 taxable year and Mr. Hyatt’s payments under an
installment agreement to offset the outstanding liability
associated with the 1993 joint return.
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After respondent issued the final notice dated March 27,
2002, denying equitable relief under section 6015(f) based upon
the 2-year time limit, respondent nevertheless requested that his
Appeals Office review petitioner’s request under the
nonexhaustive list of factors of Rev. Proc. 2000-15, sec. 4.03,
2000-1 C.B. 447, 448-449. On November 19, 2003, respondent’s
Appeals Office recommended not granting equitable relief under
section 6015(f) after concluding the following:
The fact that she indicates that she is divorced
and the income was due to the non-requesting spouse
does not out weigh [sic] the factors that she knew
there was a balance due when she signed the return, was
not forced to sign the joint return, had no filing
requirement since she was a housewife and did not have
to sign her name, knew what she was doing when she
signed the joint return (she wanted to get a deduction
for herself), the lack of economic hardship, no abuse,
in good health, has assets that could be sold to pay
the liability and is 45 years old with no dependents
* * *.
Petitioner contends that she is entitled to relief from
joint and several liability under section 6015(b) and (c) and
that respondent abused his discretion in denying her equitable
relief under section 6015(f) for the 1993 taxable year.
Accordingly, petitioner contends that she is entitled to a refund
of the overpayments of her income tax liabilities that respondent
used to offset the liability associated with the 1993 joint
return.
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Discussion
Generally, married taxpayers may elect to file a joint
Federal income tax return. Sec. 6013(a). After making the
election, each spouse is jointly and severally liable for the
entire tax due. Sec. 6013(d)(3). A spouse may seek relief from
joint and several liability under section 6015. A spouse may
qualify for relief from liability under section 6015(b), or if
eligible, may allocate liability under section 6015(c). In
addition, if relief is not available under section 6015(b) or
(c), an individual may seek equitable relief under section
6015(f). Fernandez v. Commissioner, 114 T.C. 324, 329-331
(2000); Butler v. Commissioner, 114 T.C. 276, 287-292 (2000).
Our review is not limited to respondent’s administrative record.
Ewing v. Commissioner, 122 T.C. 32, 44 (2004). Except as
otherwise provided in section 6015, petitioner bears the burden
of proof. Rule 142(a); Alt v. Commissioner, 119 T.C. 306, 311
(2002).
1. Section 6015(b) and (c)
Section 6015(b) provides relief from joint and several
liability for tax (including interest, penalties, and other
amounts) to the extent that such liability is attributable to an
understatement of tax. The term “understatement” means the
excess of (1) the amount of the tax required to be shown on the
return for the taxable year, over (2) the amount of tax imposed
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which is shown on the return, reduced by any rebate (within the
meaning of section 6211(b)(2)). Secs. 6015(b)(3), 6662(d)(2)(A).
Section 6015(c) allows a taxpayer who is eligible and so
elects to limit his or her liability to the portion of a
deficiency that is properly allocable to the taxpayer as provided
in section 6015(d). Sec. 6015(c)(1).
In the present case, there is neither an understatement of
tax, as required under section 6015(b), nor a deficiency, as
required under section 6015(c). Rather, there is an underpayment
of tax. The 1993 return filed by petitioner and Mr. Hyatt
reported tax due of $4,175, but they did not remit any payment
with their return. Accordingly, section 6015(b) and (c) cannot
apply. We sustain respondent’s determination that petitioner is
not entitled to relief from joint and several liability under
either section 6015(b) or (c).
2. Section 6015(f)
Since petitioner is not entitled to relief under section
6015(b) or (c), we consider whether petitioner qualifies for
relief under section 6015(f), after a trial de novo and using an
abuse of discretion standard. See Ewing v. Commissioner, supra
at 43-44; Fernandez v. Commissioner, supra at 328-329; Butler v.
Commissioner, supra at 287-292. Petitioner bears the burden of
proving that respondent’s denial of equitable relief under
section 6015(f) was an abuse of discretion. See Rule 142(a); Alt
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v. Commissioner, supra at 311. Petitioner must demonstrate that
respondent exercised his discretion arbitrarily, capriciously, or
without sound basis in fact or law. See Jonson v. Commissioner,
118 T.C. 106, 125 (2002), affd. 353 F.3d 1181 (10th Cir. 2003);
Woodral v. Commissioner, 112 T.C. 19, 23 (1999).
As directed by section 6015(f), the Commissioner has
prescribed procedures for determining whether a spouse qualifies
for relief under subsection (f). The applicable provision is
found in Rev. Proc. 2000-15, 2000-1 C.B. 447.3 We have upheld
the procedures in reviewing a determination. Washington v.
Commissioner, 120 T.C. 137, 147-152 (2003); Ohrman v.
Commissioner, T.C. Memo. 2003-301.
Rev. Proc. 2000-15, sec. 4.01, 2000-1 C.B. at 448, provides
seven threshold conditions that must be satisfied before the
Commissioner will consider a request for equitable relief under
section 6015(f). According to this revenue procedure, one of
these threshold conditions is that the “requesting spouse applies
for relief no later than two years after the date of the
Service’s first collection activity after July 22, 1998, with
3
This revenue procedure was superseded by Rev. Proc. 2003-
61, which is effective either for requests for relief filed on or
after Nov. 1, 2003, or for requests for relief pending on Nov. 1,
2003, for which no preliminary determination letter has been
issued as of Nov. 1, 2003. Rev. Proc. 2003-61, sec. 7, 2003-32
I.R.B. 296, 299.
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respect to the requesting spouse”.4 See Rev. Proc. 2000-15, sec.
4.01(3), 2000-1 C.B. at 448. Respondent contends that petitioner
failed to satisfy this threshold condition.
We need not address respondent’s contention because, even if
petitioner could satisfy the threshold conditions, Rev. Proc.
2000-15, sec. 4.03, 2000-1 C.B. at 448, has a nonexhaustive list
of factors weighing in favor of relief and factors weighing
against relief, and petitioner has failed to present any evidence
with regard to these factors for determining whether to grant
equitable relief.5 Accordingly, we conclude that respondent did
not abuse his discretion by acting arbitrarily, capriciously, or
without sound basis in fact in denying petitioner’s request for
equitable relief under section 6015(f).
To reflect the foregoing,
Decision will be entered
for respondent.
4
Petitioner does not question the validity of this
threshold condition; therefore, we need not address its validity.
See Hall v. Commissioner, T.C. Memo. 2004-170 n.3.
5
As we indicated earlier, although respondent denied
equitable relief under sec. 6015(f) based upon the 2-year time
limit, respondent subsequently reviewed petitioner’s request
under the nonexhaustive list of factors of Rev. Proc. 2000-15,
sec. 4.03, 2000-1 C.B. 447, 448-449.