T.C. Summary Opinion 2005-128
UNITED STATES TAX COURT
TAMMY DEBRA MARTIN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 15635-04S, 15636-04S. Filed August 22, 2005.
Tammy Debra Martin, pro se.
Lorianne D. Masano, for respondent.
DEAN, Special Trial Judge: These consolidated cases were
heard pursuant to the provisions of section 7463 of the Internal
Revenue Code as in effect at the time the petitions were filed.
Unless otherwise indicated, subsequent section references are to
the Internal Revenue Code of 1986 as amended, and Rule references
are to the Tax Court Rules of Practice and Procedure. The
decisions to be entered are not reviewable by any other court,
and this opinion should not be cited as authority.
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The cases arise from petitioner’s election to seek relief
from joint and several liability under section 6015 for Federal
income taxes for 1996 and 1997. Respondent issued to petitioner
notices of determination that she is not entitled to relief under
section 6015(f).
The issue for decision is whether respondent’s determination
for each year that petitioner is not entitled to relief under
section 6015(f) is an abuse of discretion.
Background
The stipulated facts and the exhibits received into evidence
are incorporated herein by reference. At the time the petitions
in these cases were filed, petitioner resided in Anthony,
Florida.
Petitioner filed her 1996 Federal income tax return jointly
with her then husband, Mark J. Martin (husband), on February 12,
1998. Her joint Federal income tax return for 1997 was filed
shortly thereafter, on April 15, 1998. Both returns were filed
without remittance. It does not appear that petitioner
significantly benefited from the failure to pay tax beyond normal
support.
Petitioner and her husband received a judgment of
dissolution of marriage in Illinois on April 27, 2002.
Petitioner sent to respondent a Form 8857, Request for Innocent
Spouse Relief, dated October 6, 2003.
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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, however, may seek
relief from joint and several liability under section 6015. To
obtain relief from liability, a spouse must qualify 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),1 a spouse 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).
The Court’s review of determinations under section 6015(f) is not
limited to the Commissioner’s administrative record. Ewing v.
Commissioner, 122 T.C. 32, 44 (2004).
Except as otherwise provided in section 6015, the taxpayer
bears the burden of proof. Rule 142(a); Alt v. Commissioner, 119
T.C. 306, 311 (2002), affd. 101 Fed. Appx. 34 (6th Cir. 2004).
Section 6015(f) grants the Commissioner discretion to
relieve from joint and several liability an individual who files
a joint return. Because relief from the 1996 and 1997
1
Because petitioner seeks relief from an underpayment of tax
for each year rather than an understatement, relief under
subsecs. (b) and (c) of sec. 6015 is not available. See
Washington v. Commissioner, 120 T.C. 137, 145-147 (2003).
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underpayments is not available to petitioner under section
6015(b) or (c), she has satisfied one of the two prerequisites
for relief under section 6015(f).
The other prerequisite is that it is inequitable to hold the
individual liable for the unpaid tax, taking into consideration
all of the facts and circumstances. As contemplated by section
6015(f), the Commissioner has prescribed guidelines in Rev. Proc.
2000-15, sec. 4.02, 2000-1 C.B. 447, 448, to be used in
determining whether an individual qualifies for relief under that
section.2 Rev. Proc. 2000-15, sec. 4.01, 2001-1 C.B. at 448,
sets forth the threshold conditions that must be satisfied before
the Commissioner will consider a request for equitable relief
under section 6015(f). Respondent does not dispute that
petitioner has satisfied the threshold conditions.
Where the requesting spouse satisfies the threshold
conditions set forth in Rev. Proc. 2000-15, sec. 4.01, Rev. Proc.
2000-15, sec. 4.02 sets forth the circumstances under which the
Commissioner will ordinarily grant relief to that spouse under
section 6015(f).
2
The guidelines applicable herein are set forth in Rev.
Proc. 2000-15, 2000-1 C.B. 447, which was in effect at the time
petitioner’s request for relief was made, Oct. 15, 2003. Rev.
Proc. 2000-15, supra, has been superseded by Rev. Proc. 2003-61,
2003-2 C.B. 296, effective for requests for relief filed on or
after Nov. 1, 2003.
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Respondent determined that petitioner has not shown that, at
the time each return was signed, she had no knowledge or reason
to know that the tax would not be paid. Respondent also
determined that she has failed to show that she would suffer
economic hardship if relief were not granted. Respondent
therefore concluded that petitioner has failed to satisfy all of
the elements of Rev. Proc. 2000-15, sec. 4.02, and does not
qualify for relief under section 6015(f).
Petitioner’s Form 12510, Questionnaire for Requesting
Spouse, indicates that her only checking account was a joint
checking account with her husband. Petitioner did not work
outside of the home, and her husband’s paycheck was deposited by
petitioner into the account. Petitioner wrote checks for all of
the family bills from the account. She reviewed bank statements
and picked up all household mail. The returns for both years,
marked “self-prepared”, reflect no withholding or estimated tax
payments. Almost all of petitioner’s testimony at trial
consisted of her alleging that she did not know that in signing
the returns she would be jointly and severally liable for the
income tax liabilities.
The Court concludes from the evidence that if petitioner did
not choose to write a check for the tax liability for either
year, the liabilities would not be paid. Petitioner offered no
explanation as to why she might have reason to think that the
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taxes would be paid if she did not pay them. The Court finds
that petitioner has not shown that at the time she signed the
returns she had no reason to know that the taxes would not be
paid.
In determining whether a requesting spouse will suffer
economic hardship if relief is not granted, Rev. Proc. 2000-15,
supra, looks to section 301.6343-1(b)(4), Proced. & Admin. Regs.,
for guidance. Rev. Proc. 2000-15, sec. 4.02(1)(c), 2000-1 C.B.
at 448. Economic hardship is present if satisfaction of the tax
liability in whole or in part will cause the taxpayer to be
unable to pay reasonable basic living expenses. Sec.
301.6343-1(b)(4), Proced. & Admin. Regs. Petitioner offered no
evidence that payment of part or all of the taxes due would cause
her financial hardship.
Where, as here, the requesting spouse fails to qualify for
relief under Rev. Proc. 2000-15, sec. 4.02, the Commissioner may
nonetheless grant the requesting spouse relief under Rev. Proc.
2000-15, sec. 4.03. Rev. Proc. 2000-15, sec. 4.03(1) and (2),
2000-1 C.B. at 448, sets forth six positive and six negative
factors that are to be considered in determining whether to grant
relief. The revenue procedure makes clear that no single factor
is to be determinative in any particular case, that all factors
are to be considered and weighed appropriately, and that the list
of factors is not intended to be exhaustive.
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The knowledge or reason to know factor, the economic
hardship factor, and the legal obligation to pay factor in Rev.
Proc. 2000-15, sec. 4.03(2)(b), (d), and (f), respectively, are
the opposites of the knowledge or reason to know factor, the
economic hardship factor, and the legal obligation to pay factor
in Rev. Proc. 2000-15, sec. 4.03(1)(d), (b), and (e),
respectively. The attribution factor in Rev. Proc. 2000-15, sec.
4.03(2)(a) is substantially the opposite of the attribution
factor in Rev. Proc. 2000-15, sec. 4.03(1)(f). Consequently, in
the Court’s review of the Commissioner’s determination denying
relief under section 6015(f), the Court has held that a finding
with respect to the reason to know, economic hardship, legal
obligation, and attribution factors ordinarily will weigh either
in favor of or against granting equitable relief under section
6015(f). Ewing v. Commissioner, 122 T.C. at 45. The Court has
also held that a finding that a requesting spouse did not receive
a significant benefit from the item giving rise to the deficiency
weighs in favor of granting relief under section 6015(f). Id.
Finally, the Court treats evidence that the remaining positive
and negative factors are not applicable as evidence weighing
neither in favor of nor against granting equitable relief (i.e.,
as neutral). Id.
In favor of petitioner here are the factors of marital
status, attribution, and failure to significantly benefit beyond
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normal support. Petitioner’s failure to show that she had no
reason to know that the taxes would not be paid, and that payment
of part or all of the taxes would cause her economic hardship are
negative factors. Under Rev. Proc. 2000-15, sec. 4.03(2)(b),
reason to know that the tax would not be paid “is an extremely
strong factor weighing against relief.” The revenue procedure
provides that “when the factors in favor of equitable relief are
unusually strong, it may be appropriate to grant relief under
section 6015(f) in limited situations” where the spouse
requesting relief had reason to know of the understatement. Id.
The Court finds no “unusually strong” factors in favor of
equitable relief here.
Petitioner has alleged that she suffered abuse at the hands
of her husband. If true, it would be another factor in her
favor. Rev. Proc. 2000-15, sec. 4.03(1)(c), 2000-1 C.B. at 444.
The record includes copies of several “Miscellaneous Incident”
reports prepared by officers of the Glen Ellyn police department.
The reports, most of which postdate the years at issue, do show
that petitioner and her husband often did not get along: They
argued loudly and, on one occasion, engaged in a “mutual shoving
match”. The reports do not, however, show that petitioner was
“abused” by her husband.
Petitioner has three factors in her favor and two that weigh
against her. In view of the language of Rev. Proc. 2000-15, sec.
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4.03(2)(b), that knowledge that the tax would not be paid is an
“extremely strong factor”, the Court finds, considering all the
facts and circumstances, that respondent did not abuse his
discretion in denying petitioner equitable relief from joint and
severable liability under section 6015(f).
Reviewed and adopted as the report of the Small Tax Case
Division.
Decisions will be entered
for respondent.