Lois E. Ordlock v. Commissioner

126 T.C. No. 4

UNITED STATES TAX COURT

LOIS E. ORDLOCK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 17021-02. Filed January 19, 2006.

P resides in a community property State. P and H
filed joint tax returns for 1982, 1983, and 1984. P
and H paid the reported tax liabilities. Additional
tax liabilities--i.e., understatements--arose that were
attributable to erroneous items of H (H’s understate-
ments). The parties agree that P is entitled to sec.
6015(b), I.R.C., relief for the years in issue and P’s
liability for these years is zero after application of
sec. 6015(b), I.R.C.
After the years at issue until the present, R
applied numerous payments to H’s understatements. One
payment was from P’s “separate property”, as defined by
Cal. Fam. Code sec. 770(a) (West 2004). All other
payments were from P and H’s “community property”, as
defined under Cal. Fam. Code sec. 760 (West 2004). P
seeks a refund pursuant to sec. 6015(g), I.R.C., of the
payments R applied to H’s understatements made with her
separate property and with the community property. R
does not dispute that P may be entitled to a refund for
 - 2 -

the payment made from her separate property unless sec.
6511, I.R.C., applies.

Held: P is not entitled to a refund of amounts
from community property used to pay H’s understate-
ments.

Clayton J. Vreeland, for petitioner.

Patrick W. Lucas, for respondent.

OPINION

GOEKE, Judge: Respondent determined that petitioner is

entitled to relief under section 6015(b).1 The issue for

decision is the amount of refund, if any, petitioner is entitled

to under section 6015(g).

Background

The parties submitted this case fully stipulated under Rule

122. The stipulation of facts and the attached exhibits are

incorporated herein by this reference.

On July 26, 2002, respondent sent petitioner a Notice of

Determination Concerning Your Request for Relief from Joint and

Several Liability Under Section 6015 (notice of determination).

The notice of determination indicates that petitioner is entitled

to relief under section 6015(b) of $160,912 for taxable years

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.
 - 3 -

1982, 1983, and 1984, for which she and her spouse (Mr. Ordlock)

filed joint Federal income tax returns. The following table

provides the specific adjustments for each taxable year in issue

as stated in the notice of determination:

Amount of relief Amount of relief Amount of
Tax Period(s) you requested we could allow tax remaining

12/31/1982 $314 ($621) -0-
12/31/1983 80,081 54,208 -0-
12/31/1984 132,606 132,601 -0-

The notice of determination further specifies that “We’ve granted

your request in full, you don’t have to take any further action.”

On November 1, 2002, the date the petition was filed,

petitioner resided in Anaheim, California.2 In her petition,

petitioner, through her attorney, alleged that

The Commissioner has apparently determined to allow
Petitioner’s request in full, but the Notice [of
determination] does not expressly state that
Petitioner’s request is allowed in full, and the Notice
[of determination] contains various erroneous amounts
and calculations which misstate and miscalculate the
amounts of relief for which Petitioner is eligible
under Code Section 6015(b). The effect of these
misstatements and miscalculations is that the Notice
[of determination] does not allow Petitioner’s request
for relief in full. Therefore, this petition is
necessary in order to verify that the Commissioner
intended to allow Petitioner’s request in full and to
correctly determine and state the full amount of relief
for which Petitioner is eligible under Code Section
6015(b).

2
We note that petitioner’s petition was postmarked Oct. 24,
2002, and was therefore timely.
 - 4 -

Given these allegations, petitioner prayed that

this Court may hear the case and determine (i) that
Petitioner is entitled to relief from all joint and
several liability on the joint returns of Petitioner
and her spouse for each of the 1982, 1983, and 1984 tax
years, in the full amount of such liability that was
unpaid as of July 22, 1998, and (ii) that Petitioner is
further entitled to relief from all joint and several
liability for interest, penalties, and other amounts
attributable to such unpaid (as of July 22, 1998)
liability, and (iii) that the Court grant such other
and further relief to which Petitioner may be entitled.

In short, petitioner’s petition took issue with the scope of the

section 6015(b) relief granted to petitioner in the notice of

determination.3

At trial, on January 5, 2004, the parties made a joint

motion for leave to submit case under Tax Court Rule 122, which

the Court granted.

The parties agree that petitioner is entitled to section

6015(b) relief from joint and several liability for the taxable

years 1982, 1983, and 1984. The parties further agree that the

application of section 6015(b) causes petitioner to have a

Federal income tax liability (including interest, penalties, and

other amounts) of zero for those years.

3
We note that the issue of whether petitioner is entitled
to a refund was not specifically raised in the petition but was
subsequently raised and briefed by the parties.
 - 5 -

Reported Taxes and Payments

Petitioner and Mr. Ordlock (the Ordlocks) filed joint

Federal income tax returns for the taxable years 1982, 1983, and

1984. On their returns they reported Federal income tax owed for

each year. Respondent made numerous assessments for penalties,

additional amounts of tax owed, and interest for the years in

issue. The information most relevant to the refund issue

presented includes the payments and credits applied to the

Ordlocks’ 1982, 1983, and 1984 taxable years, which were made

from “community property” assets as defined in Cal. Fam. Code

sec. 760 (West 2004), unless otherwise indicated. All of the

payments for the years in issue are shown in the appendix hereto.

The Ordlocks remained married at the time the payments on these

tax liabilities were made. Although the parties agree that one

payment was from separate property and the rest from community

property, no effort has been made at this stage of the litigation

to trace the actual sources of the payments listed in the

appendix.

A. 1982

The Form 4340, Certificate of Assessments, Payments, and

Other Specified Matters, for the Ordlocks’ 1982 taxable year does

not list their adjusted gross income or taxable income. However,

the Ordlocks’ 1982 tax return was filed on June 22, 1983, and

reported $23,569 of Federal income tax owed. From April 15,
 - 6 -

1983, through May 7, 2003, the Ordlocks made numerous payments,

and respondent applied an overpayment credit to their 1982 tax

liability. The payments and credits totaled $142,882.67.

B. 1983

The Ordlocks received an extension of time until August 15,

1984, to file their 1983 return. On June 6, 1984, the Ordlocks

filed their 1983 return reporting $105,571 of Federal income tax

owed. The Form 4340 for the Ordlocks’ 1983 taxable year shows

their adjusted gross income was $544,739 and taxable income was

$400,852. From April 15, 1984, through May 5, 1998, the Ordlocks

made numerous payments, and respondent applied overpayment

credits to the Ordlocks’ 1983 tax liability. The payments and

credits totaled $293,626.95.

C. 1984

The Ordlocks received an extension of time to file their

1984 tax return until August 15, 1985. The Ordlocks reported

$92,787 of Federal tax income owed for 1984 on their return,

which was filed May 5, 1985. The Form 4340 for the Ordlocks’

1984 taxable year shows their adjusted gross income was $489,194

and taxable income was $436,822. From April 15, 1985, through

May 9, 2002, the Ordlocks made payments and respondent applied

overpayment credits to their 1984 tax liability. The payments

and credits totaled $95,645.31.
 - 7 -

Discussion

Whether petitioner is entitled to a refund4 under section

6015(g) related to community property assets used to pay Mr.

Ordlock’s understatements presents an issue of first impression

for this Court.5 Relief from joint and several tax liability for

the taxable years in issue is not an issue because respondent has

conceded that petitioner is eligible for relief under section

6015(b).

I. Is Petitioner Entitled to a Refund?

A. The Parties’ Contentions and the Issue Presented

Petitioner contends that section 6015(g) is unambiguous and

its application entitles her to a refund of community property

assets used to pay Mr. Ordlock’s understatements. Respondent

argues that petitioner is not entitled to a refund of community

property assets. Respondent contends that the “relief” provided

to petitioner under section 6015(b) is relief from being held

jointly or severally liable for her and Mr. Ordlock’s 1982, 1983,

and 1984 joint tax liabilities. Respondent further argues that

4
The parties’ filings address neither when the period of
limitations under sec. 6511 expires in this case, nor whether
petitioner has filed a refund claim within that period.
Consequently, we do not discuss these issues.
5
This is not the first instance this issue has arisen in
Federal tax litigation. See United States v. Stolle, 86 AFTR 2d
5180, 2000-1 USTC par. 50,329 (C.D. Cal. 2000).
 - 8 -

section 6321 provides for a lien on the Ordlocks’ community

property to secure Mr. Ordlock’s liability and therefore no

refund of community property can be granted.

The crux of this dispute is the application of the last

sentence of section 6015(a) and the language of section

6015(g)(1). The last sentence of section 6015(a) provides: “Any

determination under this section shall be made without regard to

community property laws.” Section 6015(g)(1) provides as

follows:

SEC. 6015(g). Credits and Refunds.--

(1) In general.--Except as provided in
paragraphs (2) and (3), notwithstanding any
other law or rule of law (other than section
6511, 6512(b), 7121, or 7122), credit or
refund shall be allowed or made to the extent
attributable to the application of this
section.

The dispute turns on the meaning of the phrases “Any

determination under this section” in section 6015(a) and

“notwithstanding any other law or rule of law” in section

6015(g)(1). Petitioner argues that “Any determination” in

section 6015(a) is comprehensive and includes the application of

section 6015(g)(1), and that State community property laws are

disregarded under the “any other law” language in section

6015(g)(1).

Petitioner’s position does not focus on taxable income for

the taxable years at issue, but rather on the ownership of the

payments made on the joint tax liabilities over the subsequent 20
 - 9 -

years. Petitioner asserts that section 6015 requires this Court

to reallocate payments between petitioner and Mr. Ordlock based

on the economic sources, despite the continued existence of the

marital community. This position has far-reaching implications

as it would cause us to read section 6015 as a statutory

exception to the well-established law that State law defines

ownership interests in property for purposes of Federal tax

collections under section 6321. See United States v. Craft, 535

U.S. 274, 292 (2002); Aquilino v. United States, 363 U.S. 509,

513 (1960); United States v. Bess, 357 U.S. 51, 55 (1958); Morgan

v. Commissioner, 309 U.S. 78, 82 (1940).

The question here is whether Congress has given us a “clear

and unequivocal” intent to supplant community property law

regarding payments of the type made on the Ordlocks’ joint tax

liability. Powell v. Commissioner, 101 T.C. 489, 494 (1993).

B. Statutory Interpretation and Construction

Our analysis begins with the language of the statute.

Consumer Prod. Safety Comm. v. GTE Sylvania, Inc., 447 U.S. 102,

108 (1980). Statutes are to be read to give effect to their

plain and ordinary meaning unless that would produce absurd or

futile results. United States v. Am. Trucking Associations,

Inc., 310 U.S. 534, 543 (1940); see Tamarisk Country Club v.

Commissioner, 84 T.C. 756, 761 (1985). Moreover, where the

language of a statute is clear on its face, we require

unequivocal evidence of legislative purpose before construing the
 - 10 -

statute to override the plain meaning. Halpern v. Commissioner,

96 T.C. 895, 899 (1991); Huntsberry v. Commissioner, 83 T.C. 742,

747-748 (1984).

1. Section 6015

Congress enacted section 6015 in the Internal Revenue

Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L.

105-206, sec. 3201, 112 Stat. 734, as a means of expanding relief

to innocent spouses. See H. Conf. Rept. 105-599, at 249-255

(1998), 1998-3 C.B. 747, 1003-1009; S. Rept. 105-174, at 55- 60

(1998), 1998-3 C.B. 537, 591-596; H. Rept. 105-364 (Part 1), at

60-62 (1997), 1998-3 C.B. 373, 432-434. Section 6015 replaced

section 6013(e) for any liability for tax arising after July 22,

1998, and any liability for tax remaining unpaid as of that date.

2. “Any determination”

We first address whether a credit or refund under section

6015(g) is a “determination” for purposes of the last sentence of

section 6015(a). We start with the statutory use of the word

“determination” in the context of community property laws and

relief from joint liability. Former section 6013(e) was added to

the Internal Revenue Code of 1954 by the Act of Jan. 12, 1971,

Pub. L. 91-679, sec. 1, 84 Stat. 2063. It provided limited

relief from joint return liability in paragraph (1) and included

in paragraph (2)(A) the following “Special rules”:
 - 11 -

(2) Special rules.--For purposes of paragraph (1)--

(A) the determination of the spouse to
whom items of gross income (other than gross
income from property) are attributable shall
be made without regard to community property
laws * * *

This “Special rule” remained a part of section 6013(e) until it

was replaced by section 6015 in 1998.

The House version, Internal Revenue Service Restructuring

and Reform Act of 1997, H.R. 2676, 105th Cong., 1st Sess. sec.

321 (1997), of the community property laws exclusion for section

6015(a) included much the same language as former section

6013(e)(2)(A). However, the Senate amendment, RRA 1998, H.R.

2676, 105th Cong., 2d Sess. sec. 3201 (1998), and the adopted

version of H.R. 2676 in RRA 1998, sec. 3201, eliminates the

language modifying the word “determination” and refers to “any

determination”. The accompanying legislative history of the

Senate amendment does not indicate any intent to disturb State

law ownership interests in property for purposes of recalculating

payments in fixing refunds under section 6015. See S. Rept. 105-

174, at 56-57 (1998), 1998-3 C.B. 537, 592-593.

The Joint Committee’s explanation of the Senate’s change is

as follows:

Items are generally allocated between spouses in the
same manner as they would have been allocated had the
spouses filed separate returns. The Secretary may
prescribe other methods of allocation by regulation.
The allocation of items is to be accomplished without
regard to community property laws.
 - 12 -

Staff of Joint Comm. on Taxation, Comparison of Provisions of

H.R. 2676 Relating to IRS Restructuring and Reform as Passed by

the House and the Senate, at III-15 (J. Comm. Print 1998); see

Staff of Joint Comm. on Taxation, General Explanation of Tax

Legislation Enacted in 1998 (the so-called Blue Book), at 68 (J.

Comm. Print 1998). This explanation is consistent with allowing

more flexibility for the Secretary to write regulations regarding

allocations of income items for purposes of fixing the amount of

relief from joint and several liability. This explanation is

also consistent with “any determination” concerning relief from

joint and several tax liability for a specific taxable year, but

not consistent with an analysis of the cash or property which has

been collected on said liability.

It is also noteworthy that the Senate amendments added

equitable relief from joint and several liability. This is

significant because equitable relief is not based on separate

income computations, which were the grist of the community

property waiver under former section 6013(e).

3. Use of the Word “Determination” in Section 6015

After section 6015(a), the word “determine” or

“determination” appears five times in section 6015, four of which

are in subsection (e). The four instances in subsection (e)

refer to determinations of “relief” under section 6015 and

pertain to this Court’s jurisdiction to review the Secretary’s

final determination of that relief. The words “determination”
 - 13 -

and “determine” do not appear in subsection (g)(1), which

provides that a “credit or refund shall be allowed or made to the

extent attributable to the application of this section.” Section

6015(g)(2) provides: “The exception contained in the preceding

sentence shall not apply if the court determines that the

individual participated meaningfully in such prior proceeding.”

4. History of Section 6015(g)

In 1998, paragraph (3)(A) of section 6015(e), as amended by

a technical correction in the Omnibus Consolidated and Emergency

Supplemental Appropriations Act, 1999, Pub. L. 105-277, sec.

4002(c)(2), 112 Stat. 2681-906 (1998), provided as follows:

(3) Applicable rules.--

(A) Allowance of credit or refund.--
Except as provided in subparagraph (B),
notwithstanding any other law or rule of law
(other than section 6512(b), 7121, or 7122),
credit or refund shall be allowed or made to
the extent attributable to the application of
subsection (b) or (f).

The technical corrections in the Community Renewal Tax Relief Act

of 2000, Pub. L. 106-554, sec. 313, 114 Stat. 2763A-640, 2763A-

641, amended subsection (e)(3) by redesignating subsection (g) as

(h) and adding new subsection (g)(1), which provides:

SEC. 6015(g). Credits and Refunds.--

(1) In general.--Except as provided in
paragraphs (2) and (3), notwithstanding any
other law or rule of law (other than section
6511, 6512(b), 7121, or 7122), credit or
refund shall be allowed or made to the extent
attributable to the application of this
section.
 - 14 -

The House conference report indicates that the reason for

the 2000 technical correction was as follows:

Allowance of refunds.--The current placement in
the statute * * * may inappropriately suggest that the
provision applies only to the United States Tax Court,
whereas it was intended to apply administratively and
in all courts. The bill clarifies this by moving the
provision to its own subsection. [H. Conf. Rept. 106-
1033, at 1023 (2000), 2000-3 C.B. 304, 353.]

Accordingly, the original intent of section 6015(e)(3) remains

useful for our purposes. In that regard, the House report’s

initial explanation of the refund provisions in section 6015 is

pertinent: “The Tax Court may order refunds as appropriate where

it determines the spouse qualifies for relief and an overpayment

exists as a result of the innocent spouse qualifying for such

relief.” H. Rept. 105-364 (Part 1), supra at 61, 1998-3 C.B. at

433.

Similar to the language modifying “determination” in the

current version of section 6015(e), this Court’s authority under

section 6015(g)(1) to refund an overpayment flows from our

“determination” of relief from joint and several tax liability.

5. “[N]otwithstanding any other law or rule of law”

Respondent argues that pursuant to section 6321, a lien

attaches to the entire amount of the Ordlocks’ community

property, and thus, no refund of community property can be

granted. The Federal tax lien statute does not create property

rights but merely imposes consequences, Federally defined, to

rights created under State law. United States v. Craft, 535 U.S.
 - 15 -

at 278; United States v. Bess, 357 U.S. at 55. Accordingly,

whether property can be reached by application of the Federal tax

lien statute depends on what rights the taxpayer has in the

property under State law. United States v. Craft, supra at 278.

Petitioner counters that the “notwithstanding” provision of

section 6015(g) takes precedence over all other statutes, laws,

and rules of law that would conflict with or restrict a refund or

credit.

The phrase “notwithstanding any other law or rule of law”

should not always be read literally. Or. Natural Res. Council v.

Thomas, 92 F.3d 792, 796-797 (9th Cir. 1996); E.P. Paup Co. v.

Director, OWCP, 999 F.2d 1341, 1348 (9th Cir. 1993); Kee Leasing

Co. v. McGahan (In re Glacier Bay), 944 F.2d 577, 582 (9th Cir.

1991); Golden Nugget, Inc. v. Am. Stock Exchange, Inc., 828 F.2d

586, 588-589 (9th Cir. 1987). If read literally here, the phrase

could be applied to avoid all State law property ownership

provisions in both common law and community property States, thus

creating an absence of law to define the ownership of the

payments for purposes of the section 6015(g) refund jurisdiction.

Even if limited to community property provisions, petitioner’s

position leaves us with no law or resource to define the

ownership of the payments made from 1985 until 2003 on the tax

liabilities for the years at issue.
 - 16 -

At this point, an excerpt from Powell v. Commissioner, 101

T.C. at 494, is especially apt:

Another significant ingredient is reflected in the
judicial attitude in respect of the interplay between
Federal laws and State community property laws. This
attitude is set forth in the following statement by the
Supreme Court in Mansell v. Mansell, 490 U.S. 581, 587
(1989):

Because domestic relations are preeminently
matters of state law, we have consistently
recognized that Congress, when it passes
general legislation, rarely intends to
displace state authority in this area. See,
e.g., Rose v. Rose, 481 U.S. 619, 628 (1987);
Hisquierdo v. Hisquierdo, 439 U.S. 572, 581
(1979). Thus we have held that we will not
find pre-emption absent evidence that it is
“‘positively required by direct enactment’”.
Hisquierdo, supra, at 581 (quoting Wetmore v.
Markoe, 196 U.S. 68, 77 (1904)). The instant
case, however, presents one of those rare
instances where Congress has directly and
specifically legislated in the area of
domestic relations. [Emphasis supplied.]

In light of the foregoing approach, the Supreme
Court has decreed that Federal law supplants community
property law only where the congressional intent to
accomplish such a result is clear and unequivocal.
Mansell v. Mansell, supra (military retirement pay and
veterans’ disability benefits); McCarty v. McCarty, 453
U.S. 210 (1981) (military retirement pay); Hisquierdo
v. Hisquierdo, 439 U.S. 572 (1979) (railroad retirement
benefits); Wissner v. Wissner, 338 U.S. 655 (1950)
(deceased army officer’s life insurance); In re
Marriage of Hillerman, 167 Cal. Rptr. 240 (Ct. App.
1980) (Social Security benefits). * * *

In addressing the question of whether there is “clear and

unequivocal” congressional intent to supplant established

reference to State law, the legislative history of the

predecessor of section 6015(g) and the wording of the refund
 - 17 -

provision in section 6015(e)(3) following the 1998 technical

correction are helpful.

In 1998, the refund authority in section 6015(e)(3) was tied

specifically “to the extent attributable to the application of

subsection (b) or (f)”, or in the words of the House report, was

exercisable when the Tax Court “determines the spouse qualifies

for relief and an overpayment exists as a result of the innocent

spouse qualifying for such relief.” H. Rept. 105-364 (Part 1),

supra at 61, 1998-3 C.B. at 433.

Given this history, we see an intent to create refund

authority tied specifically to a determination of relief from

joint and several tax liability. However, we see no explicit

intent to supplement that relief by revisiting the nature of

prior payments under State community property laws. Had Congress

intended courts to interpret section 6015 in the manner that

petitioner suggests, it would have provided an alternative to

State law to define property rights. Otherwise, there will be a

void in the collection scheme. We find no congressional intent

to create such a void, nor to have it filled by the judiciary.

II. Other Problems and Inconsistencies That Would Result From
Petitioner’s Position

A. Disregarding Community Property Laws in the Context of
Section 6015(g) Would Discriminate Against Married
People Who File Separately

If spouses file separate returns and only one spouse is

liable for unpaid taxes, the Internal Revenue Service can collect
 - 18 -

out of community assets. See McIntyre v. United States, 222 F.3d

655 (9th Cir. 2000); see also sec. 6321. However, under

petitioner’s section 6015 argument, if married spouses filed

jointly, the Government could not collect out of community assets

without some tracing mechanism when one spouse receives section

6015 relief. Without Congress’s explicit rationale or statement

of such an intent, we find this result to be inconsistent.

B. Disregarding Community Property Laws in the Context of
Section 6015(g) Would Create Potential Abuse

We must avoid an interpretation of section 6015(g) that

would create a potential for abuse by allowing community property

laws to be disregarded during the collection process. Because

section 6015 relief is often granted many years after the taxable

year at issue, the timespan offers an opportunity to change the

source of the payments that are otherwise community property. In

an effort to avoid paying tax liabilities, married taxpayers in

community property States could structure future payments so that

ownership is attributable to the spouse requesting relief under

section 6015, while continuing a jointly financed lifestyle.

C. Did Congress Leave Open the Question of How To Divide
Property Between Spouses for Collection Purposes?

As stated previously, another problem with petitioner’s

position is the lack of legislative direction regarding how to

divide the assets between spouses in community property States

for collection purposes. If we adopt petitioner’s interpretation
 - 19 -

of section 6015 and refrain from looking to State law, a question

arises as to where courts should derive such guidance.

In addition, petitioner’s approach would lead to a very

complex factual analysis to trace the acquisition of the assets

used to make over 20 years of tax payments. It is likely that a

married couple will continue to acquire assets throughout their

relationship. Tracing the acquisition of those assets to

ascertain what assets should be attributed to which spouse is an

administrative nightmare that would severely impede collection

and lead to layers of judicial interpretation and analysis. We

think Congress did not intend to create such a difficult factual

issue in adopting section 6015.

III. Concern With Denial of Effective Relief

Petitioner suggests that our holding today will frustrate

congressional intent by effectively denying section 6015 relief

to persons in community property States. This suggestion appears

to assume that the marital community continues after the year for

which relief is sought, which is obviously not always the case.

Nevertheless, we will examine the consequences of our holding

where the spouse seeking relief remains married in a community

property State after the taxable year in question, as in the

present case.

The Ordlocks remained married in California. They continued

to accumulate assets and make payments on their joint tax

liabilities for 1982, 1983, and 1984 for over two decades. If
 - 20 -

Mr. Ordlock had been personally liable to a nongovernment

creditor, the community assets would have been a potential source

of payment to that creditor.

The question is whether Congress intended to place the

Commissioner at a disadvantage concerning liabilities such as Mr.

Ordlock’s. As we have stated, we see no evidence of such

congressional intent, nor do we see petitioner’s position as

advantageous to tax administration given the problems discussed

previously. The nature of a marital community in California is

to generally allow the individual debts of the spouses to be

collected out of community assets. Cal. Fam. Code sec. 910 (West

2004); McIntyre v. United States, supra; Babb v. Schmidt, 496

F.2d 957 (9th Cir. 1974); Weinberg v. Weinberg, 432 P.2d 709,

713-714 (Cal. 1967); Grolemund v. Cafferata, 111 P.2d 641 (Cal.

1941).6 The policies behind the law can be debated, but a

decision not to disrupt this rule for tax liabilities is sound.

A marital community can involve many sources of income, many

assets, and many expenses. How these expenses are paid, how the

income is handled, and how assets are acquired are all choices of

the spouses.7 Attempts to undo these choices and determine the

6
The California Supreme Court in Grolemund v. Cafferata,
111 P.2d 641 (Cal. 1941), expressly distinguished California’s
community property law from the “community debt” and “separate
debt” positions of Washington and Arizona.
7
Community property rights are equal regardless of which
spouse acquires the property. The following describes the nature
(continued...)
 - 21 -

sources of payments and asset acquisitions are inherently

inconsistent with the concept of a continued marital community

and obviously likely to disrupt that community.

IV. Conclusion

“Any determination” in section 6015(a) refers to

determinations of whether an individual taxpayer is entitled to

7
(...continued)
of the equal ownership:

The equal ownership of the community property assets
and acquisitions has never been dependent upon a
calculus of labor or talent. Both man and woman
equally are partners in the marriage; both equally
share marital property, regardless of whether or not
the actual asset was earned by one or the other. For
example, if the wife is a highly paid attorney and the
husband is a school teacher or works primarily at home,
the differential in actual earnings or earning capacity
is irrelevant to the ownership rights of each. The
notion of marriage as a true legal partnership extends
to all the property earned by either partner during
marriage. In the common law states, if a husband earns
$60,000 a year and the wife's role is that of a
homemaker, whether she has the primary responsibility
of raising the couple's children or not, she will be
entitled only to a statutory fraction of her husband's
estate on his death, one-half to one-third in most
states. During the existence of the marriage she has
no direct interest in his earnings, aside from her
right to support.
In the community property system, on the other
hand, both spouses have a continuing half ownership of
the marital earnings from the beginning of the marriage
and from the time of acquisition of the property. Each
party in the law today is an equal agent of the
partnership, binding it if acting within the scope of
his or her authority and if acting for the joint
benefit of the family. The California community
property system adds to joint ownership the right of
equal management and control.

Bassett, California Community Property Law, sec. 1:18 (2005 ed.).
 - 22 -

relief from joint and several tax liability under section 6015.

This reading is consistent with the legislative history and

statutory construction; a broader reading is not.

The phrase “notwithstanding any other law or rule of law” in

section 6015(g)(1) should not be read to ignore State law for

purposes of defining property interests subject to a Federal tax

lien under section 6321. We do not find that Congress intended

for community property laws to be ignored under section

6015(g)(1) regarding payments made on tax liabilities.

Accordingly, petitioner is not entitled to a refund of an

overpayment attributable to payments made from community

property.

To reflect the foregoing and concessions by respondent,

Decision will be entered

under Rule 155.

Reviewed by the Court.

GERBER, COHEN, HALPERN, CHIECHI, THORNTON, HAINES, WHERRY,
KROUPA, and HOLMES, JJ., agree with this majority opinion.

LARO, J., dissents.
 - 23 -

APPENDIX

Payments applied to the Ordlocks’ 1982 tax liability:

Date Explanation Amount
04/15/1983 Withholding & excess
FICA $55,535.00
08/07/1996 Miscellaneous payment 99.00
09/06/1996 Miscellaneous payment 99.00
10/08/1996 Miscellaneous payment 99.00
11/07/1996 Miscellaneous payment 99.00
12/09/1996 Miscellaneous payment 99.00
01/08/1997 Miscellaneous payment 99.00
02/05/1997 Miscellaneous payment 99.00
03/05/1997 Miscellaneous payment 99.00
04/07/1997 Miscellaneous payment 99.00
04/15/1997 Overpayment credit
applied 7,558.91
05/05/1997 Miscellaneous payment 99.00
06/11/1997 Miscellaneous payment 99.00
07/01/1997 Miscellaneous payment 99.00
08/04/1997 Miscellaneous payment 99.00
09/04/1997 Miscellaneous payment 99.00
10/07/1997 Miscellaneous payment 99.00
10/30/1997 Miscellaneous payment 99.00
12/09/1997 Miscellaneous payment 99.00
01/08/1998 Miscellaneous payment 99.00
02/12/1998 Payment 99.00
02/26/1998 Subsequent payment-
levy 1,500.09
03/03/1998 Subsequent payment-
levy 7,865.46
03/06/1998 Subsequent miscel-
laneous payment 198.00
03/11/1998 Subsequent payment-
levy1 2,485.97
 - 24 -

03/16/1998 Subsequent payment-
levy 3,577.06
03/16/1998 Subsequent payment-
levy 8,695.83
03/16/1998 Subsequent payment-
levy 1,905.46
03/19/1998 Subsequent payment 77.36

03/23/1998 Subsequent payment-
levy 15.00
04/08/1998 Subsequent miscel-
laneous payment 99.00
04/14/1998 Subsequent payment-
levy 44,567.80
05/05/1998 Subsequent miscel-
laneous payment 99.00
06/04/1998 Subsequent miscel-
laneous payment 99.00
07/07/1998 Subsequent miscel-
laneous payment 99.00
08/06/1998 Subsequent miscel-
laneous payment 601.98
08/06/1998 Subsequent miscel-
laneous payment 99.00
09/10/1998 Subsequent miscel-
laneous payment 99.00
10/06/1998 Subsequent miscel-
laneous payment 99.00
11/04/1998 Subsequent miscel-
laneous payment 99.00
12/04/1998 Subsequent miscel-
laneous payment 99.00
01/07/1999 Subsequent miscel-
laneous payment 99.00
02/03/1999 Subsequent miscel-
laneous payment 99.00
03/03/1999 Subsequent miscel-
laneous payment 99.00
05/06/1999 Subsequent miscel-
laneous payment 99.00
06/08/1999 Subsequent miscel-
laneous payment 99.00
 - 25 -

07/08/1999 Subsequent miscel-
laneous payment 99.00
08/06/1999 Subsequent miscel-
laneous payment 99.00
09/08/1999 Subsequent miscel-
laneous payment 99.00
11/04/1999 Subsequent miscel-
laneous payment 99.00
12/06/1999 Subsequent miscel-
laneous payment 99.00
01/05/2000 Subsequent miscel-
laneous payment 99.00
02/09/2000 Subsequent miscel-
laneous payment 99.00
03/03/2000 Subsequent miscel-
laneous payment 99.00
04/04/2000 Subsequent miscel-
laneous payment 99.00
05/04/2000 Subsequent miscel-
laneous payment 99.00
06/06/2000 Subsequent miscel-
laneous payment 99.00
07/07/2000 Subsequent miscel-
laneous payment 99.00
08/08/2000 Subsequent miscel-
laneous payment 273.00
08/08/2000 Subsequent miscel-
laneous payment 99.00
09/06/2000 Subsequent miscel-
laneous payment 99.00
10/06/2000 Subsequent miscel-
laneous payment 99.00
11/08/2000 Subsequent miscel-
laneous payment 99.00
12/04/2000 Subsequent miscel-
laneous payment 99.00
01/04/2001 Subsequent miscel-
laneous payment 99.00
02/02/2001 Subsequent miscel-
laneous payment 99.00
03/05/2001 Subsequent miscel-
laneous payment 99.00
 - 26 -

04/04/2001 Subsequent miscel-
laneous payment 99.00
05/04/2001 Subsequent miscel-
laneous payment 99.00
06/05/2001 Subsequent miscel-
laneous payment 99.00
07/06/2001 Subsequent miscel-
laneous payment 99.00
08/03/2001 Subsequent miscel-
laneous payment 99.00
08/06/2001 Subsequent miscel-
laneous payment 204.75
09/06/2001 Subsequent miscel-
laneous payment 99.00
10/05/2001 Subsequent miscel-
laneous payment 99.00
11/06/2001 Subsequent miscel-
laneous payment 99.00
12/05/2001 Subsequent miscel-
laneous payment 99.00
01/02/2002 Subsequent miscel-
laneous payment 99.00
02/04/2002 Subsequent miscel-
laneous payment 99.00
03/01/2002 Subsequent miscel-
laneous payment 99.00
04/05/2002 Subsequent miscel-
laneous payment 99.00
05/03/2002 Subsequent miscel-
laneous payment 99.00
06/05/2002 Subsequent miscel-
laneous payment 99.00
07/02/2002 Subsequent miscel-
laneous payment 99.00
08/02/2002 Subsequent miscel-
laneous payment 99.00
09/03/2002 Subsequent miscel-
laneous payment 99.00
10/02/2002 Subsequent miscel-
laneous payment 99.00
11/__/20022 Subsequent miscel-
laneous payment 99.00
 - 27 -

12/11/2002 Subsequent miscel-
laneous payment 99.00
01/10/2003 Subsequent miscel-
laneous payment 99.00
02/07/2003 Subsequent miscel-
laneous payment 99.00
03/06/2003 Subsequent miscel-
laneous payment 99.00
04/04/2003 Subsequent miscel-
laneous payment 99.00
05/07/2003 Subsequent miscel-
laneous payment 99.00
Total 142,882.67

1
The parties agree that the Mar. 11, 1998, $2,485.97
payment in the form of levy was made from the petitioner’s
separate property”, as defined in Cal. Family Code sec.
770(a) (West 2004) (separate property).
2
The exact day was illegible.

Payments applied to the Ordlocks’ 1983 tax liability:

Date Explanation Amount
04/15/1991 Overpayment credit
applied $4,228.00
04/15/1984 Withholding and excess
FICA 67,463.00
06/06/1984 Return filed and tax
paid 35,958.45
04/15/1992 Overpayment credit
applied 4,921.00
06/16/1995 Subsequent miscel-
laneous payment 98.00
08/07/1995 Subsequent miscel-
laneous payment 250.00
07/06/1995 Subsequent miscel-
laneous payment 98.00
08/10/1995 Subsequent miscel-
laneous payment 98.00
09/06/1995 Subsequent miscel-
laneous payment 99.00
 - 28 -

10/10/1995 Subsequent miscel-
laneous payment 99.00
11/08/1995 Subsequent miscel-
laneous payment 99.00
12/06/1995 Subsequent miscel-
laneous payment 99.00
01/09/1996 Subsequent miscel-
laneous payment 99.00
02/06/1996 Subsequent miscel-
laneous payment 99.00
03/04/1996 Subsequent miscel-
laneous payment 99.00
04/09/1996 Subsequent miscel-
laneous payment 99.00
05/03/1996 Subsequent miscel-
laneous payment 99.00
06/05/1996 Subsequent miscel-
laneous payment 99.00
06/13/1996 Subsequent payment-
Federal tax lien 78,177.66
07/08/1996 Subsequent miscel-
laneous payment 99.00
03/03/1998 Subsequent miscel-
laneous payment 100,488.28
05/05/1998 Subsequent miscel-
laneous payment 757.56
Total 293,626.95

Payments applied to the Ordlocks’ 1984 tax liability:

Date Explanation Amount
04/15/1985 Withholding & excess
FICA $52,351.00
04/15/1985 Subsequent payment 20,000.00
05/22/1985 Payment with return 22,594.00
10/07/1998 Subsequent miscel-
laneous payment 99.00
 - 29 -

09/03/2001 Overpaid credit applied 600.00
05/09/2002 Overpaid credit applied 1.31
Total 95,645.31
 - 30 -

THORNTON, J., concurring: I agree with the majority opinion

and write to append additional views in support of it.

“[D]omestic relations are preeminently matters of state

law”. Mansell v. Mansell, 490 U.S. 581, 587 (1989).

Accordingly, “the Supreme Court has decreed that Federal law

supplants community property law only where the congressional

intent to accomplish such a result is clear and unequivocal.”

Powell v. Commissioner, 101 T.C. 489, 494 (1993) (citing Supreme

Court precedents). There is no question or dispute that section

6015(a) supplants community property law for purposes of

determining eligibility for relief from joint and several

liability. But as the majority opinion concludes, there is no

“clear and unequivocal” indication that Congress intended to go

further (as urged by petitioner and the dissenters) and supplant

community property law that would otherwise permit a creditor

(here, the Internal Revenue Service) to reach community assets

and apply them to a debt owed by one spouse alone (here, Mr.

Ordlock). Rather, the legislative history strongly suggests that

Congress did not intend to supplant community property law in

this manner.

The predecessor of section 6015 was section 6013(e), enacted

in the Act of Jan. 12, 1971, Pub. L. 91-679, sec. 1, 84 Stat.

2063. Under section 6013(e), in certain circumstances a

requesting spouse could be eligible for relief from tax liability

with respect to erroneously omitted gross income attributable to
 - 31 -

the other spouse. Section 6013(e)(2)(A) provided that for this

purpose, “the determination of the spouse to whom items of gross

income (other than gross income from property) are attributable

shall be made without regard to community property laws”. The

legislative history makes clear that the intended effect of this

provision was to disregard community property for purposes of

determining the requesting spouse’s eligibility for relief.1

In 1997, in expanding the relief available under former

section 6013(e), the House bill retained language substantially

identical to the just-quoted language: “For purposes of this

subsection, the determination of the spouse to whom items of

gross income (other than gross income from property) are

attributable shall be made without regard to community property

laws.” H.R. 2676, 105th Cong., 1st Sess. sec. 321 (1997); H.

Rept. 105-364 (Part 1), at 19 (1997), 1998-3 C.B. 373, 391.

1
The House and Senate reports on the 1971 legislation state
identically:

The bill provides that the determination of the spouse
to whom items of gross income, other than gross income
from property, are attributable is to be made without
regard to community property laws. Thus, the rules of
community property are not followed with respect to
earned income or income from theft or embezzlement.
Income earned by a husband, for example, and omitted
from a joint return, is to be attributed to the
husband, even though it may constitute community
property, in determining whether the wife is entitled
to relief from the tax liability under this provision.
* * * [H. Rept. 91-1734, at 4 (1971); S. Rept. 91-
1537, at 4 (1971), 1971-1 C.B. 606, 608.]
 - 32 -

The first appearance of what is now the flush language of

section 6015(a) (the disputed language) occurred in 1998, in the

Senate amendment to the just-described House bill. Whereas the

House had agreed to liberalize the type of relief available under

former section 6013(e), the Senate agreed to a different type of

relief: in the case of a deficiency arising from a joint return,

the Senate amendment would have permitted the spouse to elect to

be liable only to the extent that items giving rise to the

deficiency were allocable to the spouse.2 For this purpose, under

the Senate amendment, as under current section 6015(c), items

were generally allocated between spouses in the same manner as

they would have been allocated if the spouses had filed separate

returns. The Senate amendment, like the disputed language of

current section 6015(a), states that “Any determination under

this section shall be made without regard to community property

laws.” H.R. 2676, sec. 3201(a), as amended and passed by the

Senate on May 7, 1998. The report of the Senate Finance

Committee explains this provision as follows: “The allocation of

items is to be accomplished without regard to community property

laws.” S. Rept. 105-174, at 56 (1998), 1998-3 C.B. 537, 592.

2
The Senate amendment also provided additional relief in
situations where tax was shown on a return but not paid with the
return. This type of relief was not included in the conference
agreement. See H. Rept. 105-599, at 254 (1998), 1998-3 C.B. 747,
1008. The Senate amendment also contained provision for
“equitable relief”, a version of which is now found in sec.
6015(f).
 - 33 -

Rather than choose between them, the conference agreement

incorporated both the House version of expanded relief from joint

and several liability (currently in section 6015(b)) and, for

certain limited circumstances, the Senate version of allocable

relief (currently in section 6015(c) and (d)). The conference

agreement also included the Senate version of the language

supplanting community property law (what is currently the flush

language of section 6015(a)). Describing this provision of the

Senate amendment, the conference report repeats verbatim the

explanation from the Senate Finance Committee: “The allocation

of items is to be accomplished without regard to community

property laws.” H. Rept. 105-599, at 250 (1998), 1998-3 C.B.

747, 1004.

As previously noted, this stated purpose was consistent

with the longstanding provision of section 6013(e) for

supplanting community property law, which had been adopted

verbatim in the House bill. In fact, the conference report does

not even acknowledge any difference between the House and Senate

bills in this regard, or between the conference agreement and

prior law. Instead, the conference report states that the

conference agreement “follows the Senate amendment” with respect

to deficiencies for taxpayers who are no longer married, or who

are legally separated or not living together; and “also includes

the provision in the House bill expanding the circumstances in

which innocent spouse relief is available.” Id. at 251, 1998-3
 - 34 -

C.B. at 1005. The conference report further states that it

“follows the House bill and the Senate amendment with respect to

procedural rules”. Id. at 255, 1998-3 C.B. at 1009.

In sum, the legislative history lends strong support to the

view that in enacting section 6015, Congress intended to supplant

community property law only for purposes of making the necessary

allocations to determine eligibility for relief from joint and

several liability, just as had been the case for over a quarter

of a century under former section 6013(e). There is not the

slightest indication that Congress intended to expand the

preemption of State law in the manner urged by petitioner and the

dissenters.

The question arises whether section 6015(a) is so clear and

unequivocal as to require preemption of State community property

law in the manner urged by petitioner and the dissenters,

notwithstanding legislative history to the contrary. I agree

with the majority opinion that the statute is ambiguous in this

regard and accordingly fails to provide the “clear and

unequivocal” expression of congressional intent that the Supreme

Court requires for supplanting community property law. Powell v.

Commissioner, 101 T.C. at 494. In the first instance, for

reasons described in the majority opinion, there is considerable

doubt as to whether allowing (or disallowing) a refund or credit

constitutes a “determination” within the meaning of section
 - 35 -

6015(a). But no less fundamentally, in my view, for the reasons

discussed below, even if such an action were considered a

“determination”, it would not be a determination “under” section

6015, within the meaning of section 6015(a).

Before a taxpayer may be allowed a refund or credit, there

must be a determination that the taxpayer has made an

overpayment. See secs. 6401 and 6402. The term “overpayment” is

not statutorily defined but is construed to mean “any payment in

excess of that which is properly due.” Jones v. Liberty Glass

Co., 332 U.S. 524, 531 (1947). Under this definition, an

overpayment has two elements: “(1) the correct tax for the year

and (2) the amounts paid as tax.” Saltzman, IRS Practice and

Procedure, par. 11.02, at 11-10 (rev. 2d ed. 2002). Section 6015

addresses only the first element; i.e., the extent to which the

individual should be relieved of joint and several liability for

the year.3 Before the individual may be entitled to a refund,

however, there must also be a determination of the second

element; i.e., the amount of tax the individual has paid. This

determination implicates a host of factual and legal issues

(including the issue of how to source payments from community

property assets), none of which arise under or can be resolved

3
A determination of relief under sec. 6015 would not
necessarily be dispositive of the individual’s correct tax for
the year, inasmuch as the individual might have income taxes or
other Federal taxes due unrelated to the amounts subject to
relief under sec. 6015.
 - 36 -

under section 6015.4 Moreover, even if it is determined that the

individual has an overpayment, the amount of any refund or credit

to which the individual is entitled may depend upon other issues

arising outside the scope of section 6015, such as whether the

overpayment should be reduced by various offsets that the

Secretary is authorized to make under section 6402.

Accordingly, inasmuch as there can be no determination as to

whether an individual is entitled to a refund or credit unless

there is first a determination whether the individual has an

overpayment, and inasmuch as it cannot be determined “under”

section 6015 whether the individual has an overpayment or to what

4
The following discussion illustrates some of the types of
issues that arise in determining the amount of tax payments for
purposes of determining whether there is an overpayment:

Before an overpayment can exist, a taxpayer must have
“paid” the amount as tax. Not all remittances are
treated as payments of tax when they are received by
the Service. For example, remittances of withholding
tax and estimated tax made by taxpayers before the due
date of the return for the year are not considered
“paid” until the due date of payment; that is, the date
the return for the year is due without regard to any
extension for filing the return. Section 6401(c)
indicates that despite the fact that no return is yet
due or filed nor an assessment of tax made, a taxpayer
may nevertheless be considered to have made an
overpayment. Although the Service treats an amount a
taxpayer remits before the sending of a notice of
deficiency as a deposit in the nature of a cash bond,
not as a payment, the issue of whether a remittance is
considered a payment or cash bond has provoked much
litigation. [Saltzman, IRS Practice and Procedure, par.
11.02[2], at 11-16 and 11-17 (rev. 2d ed. 2002); fn.
ref. omitted.]
 - 37 -

extent the Secretary is authorized to reduce the overpayment in

making any refund or credit, there can be no determination

“under” section 6015 whether the individual is entitled to a

refund or credit.5 Because this is not a determination “under”

section 6015, it follows that section 6015(a) does not supplant

community property law in the making of any such “determination”.

This conclusion is consistent with the proposed regulations,

which had been published when petitioner applied for relief, and

the final regulations.6 The proposed and the final regulations

5
Of course, a determination that an individual qualifies
for relief from joint and several liability under sec. 6015 will
affect the amount of the refund or credit that is “attributable
to the application of this section” and thus authorized to be
made under sec. 6015(g). It is telling that in describing the
allowance of credits or refunds, sec. 6015(g) uses this very
precise language rather than repeating the sec. 6015(a) language,
“determination under this section”. Under well-established
principles of statutory construction, we presume the variation in
statutory phrasing to have been purposeful. Cf. Elec. Arts, Inc.
v. Commissioner, 118 T.C. 226, 258 (2002) (“Ordinarily, in
statutes and other legal documents, it is presumed that if the
drafter * * * varies the terminology, then the drafter intends
that the meaning also vary.”).
6
The final regulations under sec. 6015 apply to elections
or requests for relief filed on or after July 18, 2002. Sec.
1.6015-9, Income Tax Regs. Because petitioner’s request for
relief was filed before July 18, 2002, the final regulations are
inapplicable. Although proposed regulations are given no greater
weight than a position advanced by the Commissioner on brief,
proposed regulations “can be useful as guidelines where they
closely follow the legislative history of the act”, Van Wyk v.
Commissioner, 113 T.C. 440, 444 (1999), as they do here.
Moreover, as pertinent here, the proposed and the final
regulations are identical. In these circumstances, we could
scarcely repudiate the proposed regulations without also casting
doubt on the validity of the final regulations, to which we owe
(continued...)
 - 38 -

state: “In determining whether relief is available” under

section 6015, “items of income, credits, and deductions are

generally allocated to the spouses without regard to the

operation of community property laws.” Sec. 1.6015-1(f),

Proposed Income Tax Regs., 66 Fed. Reg. 3894 (Jan. 17, 2001);

sec. 1.6015-1(f), Income Tax Regs. The proposed and the final

regulations specifically state that “a requesting spouse who is

relieved of joint and several liability under § 1.6015-2,

§ 1.6015-3, or § 1.6015-4 may nevertheless remain liable for the

unpaid tax (including additions to tax, penalties and interest)

to the extent provided by Federal or state transferee liability

or property laws.” Sec. 1.6015-1(h)(1), Proposed Income Tax

Regs., 66 Fed. Reg. 3894 (Jan. 17, 2001); sec. 1.6015-1(j),

Income Tax Regs.

The preamble accompanying the issuance of the final

regulations under section 6015 indicates that in finalizing the

proposed regulations, the Internal Revenue Service received and

rejected a suggestion to alter the just-quoted provision to

achieve the result that petitioner and the dissenters now

advocate.7 T.D. 9003, 2002-2 C.B. 294, 297. As support for

6
(...continued)
considerable deference. See Natl. Muffler Dealers Association,
Inc. v. United States, 440 U.S. 472, 477 (1979).
7
The preamble to the final regulations under sec. 6015
states:
(continued...)
 - 39 -

rejecting this suggestion, the preamble cited, inter alia, United

States v. Stolle, 86 AFTR 2d 5180, 2000-1 USTC par. 50,329 (C.D.

Cal. 2000). In Stolle, the District Court held that under

California community property law, “community property tax is

available to satisfy a debt from either spouse, even if the other

spouse is not responsible for the debt.” Id. at 5186, 2000-1

USTC par. 50,329, at 83,981. Accordingly, the court reasoned,

for purposes of determining the validity of a tax lien against

spouses’ community property, it was “irrelevant” whether the wife

was an innocent spouse under section 6015(b). Id. The court

7
(...continued)

One commentator suggested that the regulations adopt a
rule that the IRS would not look to community property
as a collection source when a requesting spouse with an
interest in such community property is granted relief
under section 6015. A federal tax lien arising under
section 6321 attaches to all property and rights to
property of the taxpayer. Whether a taxpayer has an
interest in property to which the lien can attach is
determined by state law. Aquilino v. United States,
363 U.S. 509 (1960). Once that property interest is
defined, federal law alone determines the consequences
resulting from the attachment of the federal lien on
the property. United States v. Drye, 528 U.S. 49
(1999). If under the law of the community property
state in which the spouses reside, the IRS can look to
community property to collect a liability of one of the
spouses, the determination that the other spouse is
entitled to relief under section 6015 does not affect
the Service’s ability to collect the nonrequesting
spouse’s liability from the community property. See,
e.g., United States v. Stolle, 2000-1 U.S.T.C. ¶ 50,329
(C.D. Cal. 2000); Hegg v. IRS, 28 P.3d 1004 (Idaho
2001). The final regulations do not adopt this
recommendation because it goes beyond the scope of the
statute. [T.D. 9003, 2002-2 C.B. 294, 297.]
 - 40 -

stated: “Nothing in the language or the case law suggests that

the ‘innocent spouse’ provisions of the Internal Revenue Code

prevents the government from collecting against community

property in accordance with state law.” Id.; see also McIntyre

v. United States, 222 F.3d 655 (9th Cir. 2000) (holding that the

Internal Revenue Service may levy upon ERISA-regulated pension

benefits to satisfy a husband’s tax debt notwithstanding the

wife’s claim that she had a vested interest in half of those

benefits under community property laws).

GERBER, COHEN, HALPERN, CHIECHI, HAINES, WHERRY, and KROUPA,
JJ., agree with this concurring opinion.
 - 41 -

VASQUEZ, J., dissenting: I respectfully disagree with the

majority opinion’s holdings primarily because I believe they are

contrary to the controlling statute and legislative intent.

I. Whether Petitioner Entitled to a Refund

A. Statutory Interpretation and Construction

In interpreting section 6015, the Court should give effect

to congressional intent. Ewing v. Commissioner, 118 T.C. 494,

503 (2002); Fernandez v. Commissioner, 114 T.C. 324, 329 (2000).

Congress enacted section 6015 in the Internal Revenue Service

Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206,

sec. 3201, 112 Stat. 734, as a means of expanding relief to

innocent spouses. See Hopkins v. Commissioner, 120 T.C. 451,

458-459 (2003) (“section 6015 was enacted to provide spouses with

broader access to relief from joint and several tax

liabilities”); Washington v. Commissioner, 120 T.C. 137, 159-160

(2003) (“We believe that Congress wanted to grant the broadest

relief, while providing certainty in the settlement of tax refund

claims”); H. Conf. Rept. 105-599, at 249-255 (1998), 1998-3 C.B.

747, 1003-1009; S. Rept. 105-174, at 65, 68 (1998), 1998-3 C.B.

537, 601, 604; H. Rept. 105-364 (Part 1), at 60-62 (1998), 1998-3

C.B. 373, 432-434. “Moreover, we are mindful that section 6015

was designed ‘to correct perceived deficiencies and inequities’,

and it is well settled law that ‘curative legislation should be

liberally construed to effectuate its remedial purpose.’”
 - 42 -

Washington v. Commissioner, supra at 155-156; see also Tcherepnin

v. Knight, 389 U.S. 332, 336 (1967) (remedial legislation should

be construed broadly to effectuate its purposes); Piedmont & N.

Ry. Co. v. ICC, 286 U.S. 299, 311 (1932) (remedial legislation

should be given a liberal interpretation).

B. “Application of this section”

Section 6015(g)(1) provides that “credit or refund shall be

allowed or made to the extent attributable to the application of

this section.” In Fernandez v. Commissioner, supra at 331, in

determining whether the Court has jurisdiction to review a

request for relief under section 6015(f), we stated: “It is our

view that Congress intended the term ‘under this section’ to

include all subsections of 6015 in their entirety.” See Butler

v. Commissioner, 114 T.C. 276, 290 (2000); see also Woodral v.

Commissioner, 112 T.C. 19, 22-23 (1999). Accordingly, the Court

must apply all subsections of section 6015, including subsection

(a), to determine the amount of a taxpayer’s refund pursuant to

subsection (g).

C. Section 6015(a)

1. The Flush Language

The flush language at the end of section 6015(a) provides:

“Any determination under this section shall be made without

regard to community property laws.” The majority invents a
 - 43 -

narrow definition of “determination” despite strong indications

to the contrary in the statute.

A section 6015 “determination” is not merely that a spouse

is entitled to relief from joint and several liability. Contra

majority op. p. 22. The amount that the Commissioner determines

the electing spouse must pay towards the tax liability

attributable to the nonelecting spouse1 and the amount of any

refund are part of the determination. Sec. 6015(e)(1)(A) (“the

individual may petition the Tax Court * * * to determine the

appropriate relief available to the individual under this

section”); Washington v. Commissioner, supra at 145 (holding we

have jurisdiction under section 6015(e)(1) to review all relief

afforded by section 6015); Rooks v. Commissioner, T.C. Memo.

2004-127 (analyzing the Commissioner’s determination and deciding

whether taxpayer was entitled to a refund pursuant to section

6015(g)).

Thus, the flush language of section 6015(a) requires that

community property laws be disregarded in determining the amount

of a taxpayer’s refund pursuant to section 6015(g). See Estate

of Capehart v. Commissioner, 125 T.C. ___ (Nov. 14, 2005)

1
I note that in the notice of determination respondent
determined the amount of relief petitioner was entitled pursuant
to sec. 6015(b), not just that petitioner was entitled to relief,
and that respondent clarified his determination by stipulating
the amount of petitioner’s liability for the years in issue after
application of sec. 6015(b).
 - 44 -

(accepting and applying the parties stipulations which

disregarded Nevada community property law for purposes of

allocating the liability pursuant to section 6015(d)).

2. Section 6013 Compared With Section 6015

Contrary to the view of the majority, the evolution of

former section 6013(e) into section 6015 shows that Congress

intended to disregard community property laws with respect to all

of section 6015 and not to limit disregarding community property

laws to determining whether an electing spouse is entitled to

relief pursuant to section 6015(b), (c), or (f). Former section

6013(e)(5)--before its repeal by RRA 1998, sec. 3201(e), 112

Stat. 740--provided: “For purposes of this subsection, the

determination of the spouse to whom items of gross income (other

than gross income from property) are attributable shall be made

without regard to community property laws.” In contrast, section

6015(a) is broader than former section 6013(e)(5), providing:

“Any determination under this section shall be made without

regard to community property laws.”

The Court should not ignore (1) this statutory change

eliminating the language modifying and limiting the term

“determination” in former section 6013(e)(5); or (2) that this

same limitation was not enacted as part of section 6015 even

though the initial proposals to reform former section 6013

contained this same limitation. Internal Revenue Service
 - 45 -

Restructuring and Reform Act of 1997, H.R. 2676, 105th Cong., 1st

Sess. sec. 321 (1997); see majority op. p. 11. Yet the majority

does just that. The majority recognizes the statutory change,

majority op. p. 10, and the controlling nature of the statutory

language, majority op. p. 9, but then declines to give the

statutory language effect, majority op. pp. 11-12.

D. Section 6015(g)(1)

1. Evolution of Section 6015(g)(1)

Section 6015(g)(1) first was enacted as section

6015(e)(3)(A). RRA 1998 sec. 3201, 112 Stat. 739. Section

6015(e)(3)(A) formerly provided: “Allowance of credit or

refund.--Except as provided in subparagraph (B), notwithstanding

any other law or rule of law (other than section 6512(b), 7121,

or 7122), credit or refund shall be allowed or made to the extent

attributable to the application of subsection (b) or (f).”

On December 21, 2000, Congress moved the provisions of

former 6015(e)(3)(A) to section 6015(g)(1). Community Renewal

Tax Relief Act of 2000, Pub. L. 106-554, sec. 313(a)(2), 114

Stat. 2763A-640. At that time, Congress added section 6511 to

the list of exceptions in the parenthetical following the phrase

“notwithstanding any other law or rule of law”. Id.

2. “Notwithstanding any other law or rule of law”

Section 6015(g)(1) includes the phrase “notwithstanding any

other law or rule of law”. Accordingly, a credit or refund
 - 46 -

pursuant to section 6015(g) takes precedence over all other laws

and rules of law that otherwise would restrict the refund or

credit.

The only exceptions to this phrase are sections 6511,

6512(b), 7121, and 7122. Sec. 6015(g)(1). Congress did not

include section 6321 in the list of exceptions. Sec. 6015(g)(1);

see Washington v. Commissioner, 120 T.C. at 160 (“the only

limitations on the refund are those set forth in sections 6511,

6512(b), 7121, and 7122”). Contrary to the analysis of the

majority, the Court should not add an exception to section

6015(g)(1) for section 6321. Section 6015(a) and (g) clearly

requires State community property laws to be disregarded to

determine what rights the taxpayer has in the property and the

amount of an electing spouse’s refund.

The majority holds that “notwithstanding any other law or

rule of law (other than section 6511, 6512(b), 7121, or 7122)” in

section 6015(g) should not be read literally but never explains

what the phrase means. See Majority op. pp. 15-18. It must mean

something--a fundamental rule of statutory construction is to

give effect to all of the language of the statute. See Hellmich

v. Hellman, 276 U.S. 233 (1928); Stanford v. Commissioner, 297

F.2d 298, 308 (9th Cir. 1961), affg. 34 T.C. 1150 (1960).
 - 47 -

a. Caselaw

Domestic relations are preeminently matters of State law,

and the Supreme Court has consistently recognized that Congress,

rarely intends to displace State authority in this area. Mansell

v. Mansell, 490 U.S. 581, 587 (1989) (addressing the application

of California community property law to military retirement pay).

Accordingly, the Supreme Court stated: “we have held that we

will not find preemption absent evidence that it is positively

required by direct enactment.” Id. (internal quotation marks

omitted).

The plain and precise language of section 6015 evidences its

preemption of State community property laws. Sec. 6015(a), (g);

see Mansell v. Mansell, supra at 587, 590-591, 592. Section

6015(a) and (g) contains clear and unequivocal language

expressing congressional intent to preempt State law. Mansell v.

Mansell, supra at 587; Dunkin v. Commissioner, 124 T.C. 180, 189

(2005).

Although not discussed in detail by the majority, majority

op. pp. 7 n.5, 18, respondent relies on United States v. Stolle,

86 AFTR 2d 5180, 2000-1 USTC par. 50,329 (C.D. Cal. 2000), and

McIntyre v. United States, 222 F.3d 655 (9th Cir. 2000), for the

proposition that a Federal tax lien attaches to community

property and that section 6321 takes precedence over section

6015. I disagree. I believe section 6015 is clear and the
 - 48 -

directives in section 6015(a) and (g)(1) take precedence over

section 6321.

Stolle was a District Court order that dealt with the

relationship between Federal tax liens and community property

held in a revocable trust. United States v. Stolle, supra. The

District Court concluded that a tax lien attached to community

property for the tax debts of an individual and that community

property held on behalf of the individual and his wife by a

revocable trust could be used to satisfy the tax debts of the

individual. Id.

Mrs. Stolle’s entitlement to section 6015 relief was not at

issue in the case. Id. The District Court, however, stated

that, even assuming Mrs. Stolle was entitled to relief pursuant

to section 6015, nothing in section 6015 prevents the Government

from collecting against the community property. Id. I am not

persuaded by the reasoning of Stolle because (1) the issue of

Mrs. Stolle’s entitlement to section 6015 relief and a refund

pursuant to section 6015(g) was not before the District Court and

(2) the District Court did not address the plain and clear

language of section 6015(a) and (g).

Respondent relies on McIntyre v. United States, supra, for

the proposition that a Federal tax lien attaches to the entire

community property and that section 6321 takes precedence over

section 6015. In McIntyre, the U.S. Court of Appeals for the
 - 49 -

Ninth Circuit, to which this case is appealable, considered

whether the Commissioner may levy upon ERISA-regulated pension

benefits to satisfy a husband’s tax debt against the claim that

the wife has a vested interest in half of those benefits pursuant

to California community property laws. Id. at 657. The Court of

Appeals noted:

We have held before that, by granting creditors
recourse against the whole community estate on debts of
only one spouse, California law “implicitly”
establishes that spouse’s “interest” in the whole of
the community property, at least to a degree sufficient
for the IRS to impose tax liens under the Internal
Revenue Code. * * * [Id. at 658.]

Mrs. McIntyre argued that ERISA preempts California community

property law and that ERISA’s antialienation provision prevented

the IRS from levying on the benefits from any ERISA-governed

pension plan.2 Id. at 659, 660. The court stated: “This

argument relies on an over-exuberant interpretation of ERISA’s

anti-alienation provision” and rejected the premise that ERISA’s

antialienation provision would preclude operation of California

community property law to the extent that it would permit

2
The court also rejected Mrs. McIntyre’s argument that
California community property law gave her a vested interest in
half of her husband’s pension benefits and the IRS could not
therefore levy on this half of the pension benefits. McIntyre v.
United States, 222 F.3d 655, 658-659 (9th Cir. 2000). The court
relied on Cal. Fam. Code sec. 910(a) and the reasoning in Babb v.
Schmidt, 496 F.2d 957 (9th Cir. 1974), and held that creditors
have recourse over the whole of the community property. Id. The
issue before us, regarding the preemption of community property
laws by sec. 6015(a) and (g), and the application of sec. 6015,
however, were not at issue in McIntyre.
 - 50 -

creditors to proceed against the pension benefits at issue. Id.

at 659. In rejecting this premise, the court stated: “ERISA’s

anti-alienation provision plainly does not preempt the operation

of California law” because “ERISA itself has a saving clause that

states: ‘Nothing in this subchapter [which includes the anti-

alienation provision] shall be construed to alter, amend, modify,

invalidate, impair, or supersede any law of the United States.’”

Id. at 659, 660 (insertion in original).

McIntyre is distinguishable from this case. First, McIntyre

deals with ERISA and not section 6015. Second, section 6015(a)

and (g), unlike ERISA, expressly preempts community property law.

Sec. 6015(a) (section 6015 determinations are made “without

regard to community property laws”), (g) (refunds are made

“notwithstanding any other law or rule of law (other than section

6511, 6512(b), 7121, or 7122)”). Third, section 6015 has no

saving clause like ERISA.

b. Section 6015 Was Enacted Later

Even if section 6015 and section 6321 are in conflict,

section 6015 controls because section 6015 was enacted later than

section 6321 and supersedes section 6321 insofar as the two

sections are in conflict. See McLean Trucking Co. v. United

States, 321 U.S. 67, 79 (1944); Adkins v. Arnold, 235 U.S. 417,

421 (1914); Specking v. Commissioner, 117 T.C. 95, 116 (2001),
 - 51 -

affd. sub nom. Haessly v. Commissioner, 68 Fed. Appx. 44 (9th

Cir. 2003).

Thus, I believe section 6015(g)(1) takes precedence over

section 6321 where the IRS or the Court determines a taxpayer is

entitled to section 6015 relief.

E. Legislative History of Section 6015

The legislative history regarding refunds pursuant to

section 6015 is scant. The House report states: “The Tax Court

may order refunds as appropriate where it determines the spouse

qualifies for relief and an overpayment exists as a result of the

innocent spouse qualifying for such relief.” H. Rept. 105-364

(Part 1), supra at 61, 1998-3 C.B. at 433. The conference and

Senate reports state: “The separate liability election may not

be used to create a refund, or to direct a refund to a particular

spouse.” H. Conf. Rept. 105-599, supra at 250, 1998-3 C.B. at

1004; S. Rept. 105-174, supra at 59, 1998-3 C.B. at 595.

The legislative history of section 6015 supports calculating

the refund on the basis of the amount paid by the electing spouse

without regard to community property laws towards the

understatement or underpayment attributable to the nonelecting

spouse. Under the heading “Reasons for change”, the Senate

report states:

The Committee believes that a system based on separate
liabilities will provide better protection for innocent
spouses than the current system. The Committee
generally believes that an electing spouse’s liability
 - 52 -

should be satisfied by the payment of the tax
attributable to that spouse’s income and that an
election to limit a spouse’s liability to that amount
is appropriate. [S. Rept. 105-174, supra at 55, 1998-3
C.B. at 591.]

The limited legislative history, however, is immaterial in the

light of the plain and precise language of the statute. Mansell

v. Mansell, 490 U.S. at 592, 594. “Congress is not required to

build a record in the legislative history to defend its policy

choices.” Id.

F. Common Law States and Community Property States

Section 6015 applies to taxpayers in common law

jurisdictions and community property jurisdictions. Denying

petitioner a refund of community assets used to pay Mr. Ordlock’s

understatements creates an inequity between taxpayers in

community property jurisdictions and taxpayers in common law

jurisdictions.

To obtain a refund pursuant to section 6015, taxpayers in

common law jurisdictions, like the electing spouse in Washington,

must prove the amount they paid toward the underpayment or

understatement attributable to the nonelecting spouse (i.e., do

tracing). See Washington v. Commissioner, 120 T.C. at 163; Rooks

v. Commissioner, T.C. Memo. 2004-127. The majority prevents

taxpayers in community property States from obtaining refunds of

community property payments that can be traced to the spouse

entitled to relief. I believe the directive in section 6015(a)
 - 53 -

and (g) to disregard community property laws indicates Congress’s

intent to treat taxpayers in community property jurisdictions and

common law jurisdictions the same.

In Washington v. Commissioner, supra at 159, the Court noted

that “section 6015(g) is very specific with respect to the

limitations placed on a refund”. As in Washington, petitioner’s

relief should not be limited merely to relief from joint and

several liability as respondent contends. Accordingly, I would

conclude that community property laws are disregarded in

determining the amount of petitioner’s refund pursuant to section

6015(g).

II. Amount of Petitioner’s Refund

If, in a community property State, an electing spouse who is

entitled to section 6015(b) or (f) relief has made payments

towards the understatement/underpayment attributable to the

nonelecting spouse, the electing spouse is entitled to a refund

of the amounts applied to the understatement or underpayment

attributable to the nonelecting spouse and paid by the electing

spouse without regard to community property laws.

This is how the refund was calculated in Washington. In

Washington, the taxpayer was employed as a Federal purchasing

agent. Washington v. Commissioner, supra at 139. The taxpayer’s

spouse was a self-employed carpenter who did not pay

self-employment taxes. Id. The taxpayer’s wages were garnished,
 - 54 -

and her overpayments from subsequent years (listed on returns she

filed separately from her spouse) were applied to pay her

spouse’s liability. Id. at 140. The Court held that the

taxpayer was entitled to a refund of the amount she paid toward

the underpayment attributable to her former spouse (i.e., the

amount it was inequitable to hold the taxpayer liable for

pursuant to section 6015(f)). Id. at 163; see also Leissner v.

Commissioner, T.C. Memo. 2003-191 (taxpayer granted relief under

section 6015(f) was entitled to refund of moneys taken from her

individual retirement account to pay tax liabilities attributable

to her former spouse).

The record consists solely of the Forms 4340, Certificate of

Assessments, Payments and Other Specific Matters, for Bayard M.

and Lois Ordlock for 1982, 1983, and 1984, which do not show how

much petitioner paid towards Mr. Ordlock’s understatements

without regard to community property laws. To decide whether

petitioner has made an overpayment, I would hold--as the parties

agree--that the Court needs additional evidence of the amounts

petitioner paid without regard to community property laws toward

Mr. Ordlock’s understatements. See Washington v. Commissioner,

supra; Rooks v. Commissioner, supra; Leissner v. Commissioner,

supra. I would conclude that petitioner is entitled to a refund

of these payments. I would hold that petitioner bears the burden
 - 55 -

of proof on this issue. See Rule 142(a).3 Additionally, I would

note the applicability of the 2-year rule of section 6511, which

is not excepted by section 6015(g)(1). See Washington v.

Commissioner, supra at 160-163. As the Court would require

additional evidence for resolution of this case, and as the

parties agreed to leave the record open, I would hold that this

case could no longer be submitted under Rule 122.

III. Additional Problems With the Majority Opinion

A. This Is a Section 6015 Case; Collection Is Not in Issue

The majority basically holds that disregarding community

property law, for purposes of section 6015, would create a

statutory exception to the rule that “State law defines ownership

interests in property for purposes of Federal tax collections

under section 6321.” Majority op. p. 9; see also majority op.

pp. 15, 17, 19. This is a section 6015 case, not a collection

(section 6330) case. As the majority states: “The issue for

decision is the amount of refund, if any, petitioner is entitled

to under section 6015(g).” Majority op. p. 2.

Collection is independent from the determination of whether

a taxpayer is an “innocent spouse” and the amount of the refund a

taxpayer is entitled to upon a finding that he/she is an innocent

3
Sec. 7491(a) is inapplicable to this case as respondent’s
examination of the 1982, 1983, and 1984 tax years began before
July 22, 1998. See Higbee v. Commissioner, 116 T.C. 438, 440
(2001).
 - 56 -

spouse. Respondent’s collection rights are not at issue in this

case. This leads to my next point.

B. Legal or Statutory Voids? “General” State Property
Laws Define the Source of the Payments

The majority opines that if California community property

laws are disregarded to determine the amount of petitioner’s

refund, the Court will be left “with no law or resource to define

the [source of] ownership of the payments made” on the tax

liabilities for the years in issue. Majority op. pp. 15, 17, 19.

If the Court disregarded community property laws when determining

the amount of section 6015(g) refunds, the Court would not be

left in a void without any guidance any more than State courts in

community property States are in a void when dealing with

nonmarried persons. The Court could apply the “general” property

laws of California (i.e., laws regarding holding property as

joint tenants, tenants in common, etc.) to determine the source

(i.e., ownership) of the payments. As I stated supra, the

parties could present evidence on and brief this point.

C. Potential for Abuse

The majority concludes that if community property laws were

disregarded for purposes of section 6015(g), “married taxpayers

in community property States could structure future payments so

that [the economic source of] ownership is attributable to the

spouse requesting relief under section 6015, while continuing a

jointly financed lifestyle.” Majority op. p. 18.
 - 57 -

The first problem with this conclusion is the implication

that taxpayers who remain married should be denied the benefits

provided by section 6015. Congress did not make divorce a

precondition to section 6015 relief. Taxpayers who remain

married can be innocent spouses under section 6015(b) and (f) and

can obtain refunds under section 6015(g). Notably, divorced or

separated taxpayers who elect and obtain section 6015(c) relief

cannot obtain refunds. Sec. 6015(g)(3).

The second problem is that the same potential abuse is

available to taxpayers in common law States. Taxpayers in common

law States can structure their payments so that the ownership

and/or economic source of ownership is attributable to the spouse

requesting (or who has obtained) relief under section 6015, while

continuing a jointly financed lifestyle. If the electing spouse

in a common law State pays the liability attributable to the

nonelecting spouse with income/assets traceable to the electing

spouse, he or she is entitled to a refund of those amounts.

The third problem is that taxpayers in community property

States can structure their future payments and continue to enjoy

a jointly financed lifestyle (i.e., the majority opinion does not

prevent this abuse). As respondent concedes, petitioner is

entitled to a refund of the amounts paid with her separate

property. Taxpayers in community property States can pay the tax

liability attributable to the nonelecting spouse with separate
 - 58 -

property of the electing spouse and then seek a refund of these

amounts.

D. Complexity/Administrative Difficulty

The majority concludes that “petitioner’s approach would

lead to a very complex factual analysis to trace” the assets used

to make the payments and would lead to “an administrative

nightmare that would severely impede collection”. Majority op.

p. 19.

The fact that tracing may be complex is not a sufficient

reason to disregard the plain language of the statute. Contrary

to the majority’s suggestion that this would burden respondent,

my proposal, supra, is that the burden of proof would be on

petitioner as to this issue (i.e., to prove the economic source

of ownership of the payment).

IV. Conclusion

I believe that the majority gives too little consideration

to the text of section 6015 and instead digresses into policy

matters that are better left to Congress. Additionally, the

majority imposes limitations and distinctions not found in the

statute. Furthermore, the majority narrowly construes the term

“determination”.

We can presume that when Congress enacted section 6015 in

1998 it knew (1) the effects of joint and several liability, (2)

the benefits available to persons who qualify for relief from
 - 59 -

joint and several liability, and (3) the effects that the

majority finds objectionable. See majority op. pp. 18-22. These

policy choices are for Congress, and not the Court, to make. Our

“task is to interpret the statute as best we can, not to second-

guess the wisdom of the congressional policy choice.” Mansell v.

Mansell, 490 U.S. at 592, 594.

I believe that section 6015(a) and (g) is unambiguous and

that community property laws are to be disregarded in determining

the amount of the section 6015(g)(1) refund. The IRS’s ability

to collect the nonelecting spouse’s liability via section 6321 is

distinct from the relief afforded pursuant to section 6015. See

secs. 6015 (which is part of Chapter 61, Information and Returns,

of the Code), 6321 (which is part of Chapter 64, Collection, of

the Code). As in Washington v. Commissioner, 120 T.C. 137

(2003), I believe that Mrs. Ordlock’s relief is not limited

merely to relief from joint and several liability--which is very

little relief indeed as, per the majority, respondent can levy on

her wages, her bank accounts, and her other assets, which are

community property under State law, to satisfy liabilities she

was “relieved” from pursuant to section 6015.

Respectfully, I dissent.

SWIFT, WELLS, COLVIN, and FOLEY, JJ., agree with this
dissenting opinion.
 - 60 -

MARVEL, J., dissenting: I agree with the majority’s

statement that “The crux of this dispute is the application of

the last sentence of section 6015(a) and the language of section

6015(g)(1).” Majority op. p. 8. However, I disagree with the

majority that the wording and structure of section 6015 and its

legislative history support the majority’s conclusion that a

person who resides in a community property State and who

qualifies for relief under section 6015 is not entitled to a

refund of any part of the community property used to satisfy her

spouse’s Federal income tax liability. The principal reasons for

my disagreement are summarized below.

Section 6015(a) Unequivocally Provides That “Any determination
[under section 6015] shall be made without regard to community
property laws.”

As the majority correctly points out, Congress in 1998

enacted section 60151 as a means of expanding relief to innocent

spouses. See H. Conf. Rept. 105-599, at 249-255 (1988), 1998-3

C.B. 747, 1003-1009; S. Rept. 105-174, at 55-60 (1998), 1998-3

C.B. 537, 591-596; H. Rept. 105-364 (Part 1), at 60-62 (1997),

1998-3 C.B. 373, 432-434. Section 6015 replaced section 6013(e),

which was often criticized as too narrowly crafted to provide

broad-based relief from liability to deserving taxpayers.

1
Sec. 6015 was enacted in the Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3201,
112 Stat. 734.
 - 61 -

The last sentence of section 6015(a) unequivocally provides

that “Any determination under this section shall be made without

regard to community property laws.” Section 6015 does not define

the term “determination”, nor does it contain any words limiting

the types of determinations to which the last sentence of

subsection (a) refers. In particular, section 6015 contains no

language limiting the term “determination” to determinations made

under subsection (b), (c), or (f), although Congress could very

easily have inserted such a limitation if it had intended to

enact one.

Under well-recognized principles of statutory

interpretation, if a statute does not define a term, that term is

given its ordinary and commonly accepted meaning. See Keene v.

Commissioner, 121 T.C. 8, 14 (2003); Payless Cashways, Inc. v.

Commissioner, 114 T.C. 72, 77-28 (2000). The term

“determination” is defined in Webster’s Third New International

Dictionary (1971) to mean “the settling and ending of a

controversy” and, alternatively, “the resolving of a question by

argument or reasoning”. It is also defined in Black’s Law

Dictionary (7th ed. 1999) to mean “A final decision by a court or

administrative agency”. Under any of these definitions, a

decision regarding whether a taxpayer qualifies for a refund

under section 6015(g) is a determination.
 - 62 -

The majority nevertheless concludes that a decision as to

whether a taxpayer is entitled to a refund under section 6015(g)

is not a determination within the meaning of section 6015(a).

The majority’s analysis begins with “the statutory use of the

word ‘determination’ in the context of community property laws

and relief from joint liability”, majority op. p. 10, and then

traces the use of the term “determination” in former section

6013(e) and in section 6015, and in the legislative history of

those sections, see majority op. pp. 10-12. Former section

6013(e)(5) contained a special rule that specifically provided

that “the determination of the spouse to whom items of gross

income (other than gross income from property) are attributable

shall be made without regard to community property laws.”

Section 6015(a) does not contain any language modifying or

limiting the word “determination”. The majority attempts to find

a limitation in the structure and wording of the rest of section

6015 and focuses on the fact that the words “determine” and

“determination” do not appear in section 6015(g)(1). See

majority op. p. 13.

Former section 6013(e)(5) specifically described a

determination that had to be made without regard to community

property law. However, the existence of a limitation in former

section 6013(e)(5) is not sufficient to support the majority’s

conclusion that section 6015(a) is also so limited. Although a
 - 63 -

comparable limitation to that contained in former section

6013(e)(5) was included in the House version of the Internal

Revenue Service Restructuring and Reform Act of 1998, Pub. L.

105-206, 112 Stat. 685, see Internal Revenue Service

Restructuring and Reform Act of 1997, H.R. 2676, 105th Cong., 1st

Sess. sec. 321 (1997); H. Rept. 105-364 (Part 1), supra at 19,

1998-3 C.B. at 391, Congress did not include in the enacted

version any limitation upon the types of determinations that,

under section 6015(a), must be made without regard to community

property laws. Clearly, Congress knew how to craft a limitation

had it wanted to do so. See, e.g., former sec. 6013(e)(5).

Because I can discern no limitation from either the language or

structure of section 6015 or from its legislative history, I

conclude that a determination whether a taxpayer is entitled to a

refund under section 6015(g) is a determination within the

meaning of the last sentence of section 6015(a) and must be made

without regard to community property laws.

The Description of “problems and inconsistencies” in the Majority
Opinion Confuses the Service’s Right To Collect With the
Service’s Obligation To Refund.

The majority points out that the Internal Revenue Service

(Service) has the right to collect an unpaid tax liability from

community property even if spouses file separate returns and only

one spouse is liable for unpaid taxes. Majority op. pp. 17-18.

The majority contends that, under petitioner’s section 6015
 - 64 -

argument, if married spouses filed jointly, the Government could

not collect out of community assets without some tracing

mechanism when one spouse received section 6015 relief. Majority

op. p. 18. I disagree.

The issue before us involves petitioner’s claimed right to a

refund of some portion of the tax payments made with community

property. The issue is not whether the Service has a right to

collect an unpaid Federal tax liability out of community

property. Under California law, a creditor is entitled to

collect an unpaid debt out of community property even if the debt

is owed solely by one spouse. See Cal. Fam. Code sec. 910 (West

2004). That right has been exercised by the Service and upheld

by the Federal courts. See, e.g., McIntyre v. United States, 222

F.3d 655 (9th Cir. 2000). A conclusion that a determination

under section 6015(g) must be made without regard to community

property law would not change California community property law

or restrict the Service from continuing to collect from community

property the liability owed by petitioner’s husband. Such a

conclusion, however, might require the Service to refund to

petitioner a part of what it collected from community property.

Determining a Refund Under Section 6015(g)

Although I disagree with the analysis and conclusion of the

majority regarding the proper interpretation of section 6015, I

initially was troubled by the lack of guidance in section 6015(g)
 - 65 -

regarding how we determine whether a refund or credit is

warranted. However, upon further thought, I believe that the

requirement in section 6015(a) to make determinations under

section 6015 without regard to community property law gives us

enough guidance to enable us to make the determination required

by section 6015(g).

Section 6015(g)(1) provides that “Except as provided in

paragraphs (2) and (3), notwithstanding any other law or rule of

law (other than section 6511, 6512(b), 7121, or 7122), credit or

refund shall be allowed or made to the extent attributable to the

application of this section.” Section 6511 contains limitations

on credit or refund including a time limit for filing a claim,

sec. 6511(a), and a limitation on the allowance of credits and

refunds, sec. 6511(b)(1) and (2). Section 6512(b) contains

provisions outlining our overpayment jurisdiction in deficiency

cases, including a limitation on the amount of the credit or

refund. Sec. 6512(b)(3). Section 7121 (closing agreements) and

section 7122 (compromises) authorize the Service to enter into

agreements to resolve a taxpayer’s tax liability. I interpret

section 6015(g) to mean that we must take the provisions of

sections 6511, 6512(b), 7121, and 7122 into account in making our

determination regarding a refund or credit, but not any other law

or rule of law that might operate to restrict the taxpayer’s
 - 66 -

right to a refund or credit. We must make the determination

regarding the taxpayer’s right to a refund or credit without

regard to community property law. Sec. 6015(a).

If community property law is disregarded and if the taxpayer

can establish that he or she has satisfied the refund

requirements set forth in sections 6511 and 6512, it seems

logical to me that we must trace the source of the tax payments

to determine the amount of the refund. If the payments are

traced to income earned by one or both spouses, the income would

be attributed to the person who earned it. If the payments are

traced to the proceeds from the sale of property and the property

is subject to titling, then that property would be allocated in

accordance with title and applicable State law. For example,

under California law, every interest created in favor of several

persons in their own right is an interest in common, unless

acquired by them in partnership for partnership purposes,

declared in its creation to be a joint interest, or acquired as

community property.2 Cal. Civ. Code sec. 686 (West 1982). When

2
A community property interest is one form of joint
ownership that is recognized under California law. See Cal. Fam.
Code sec. 750 (West 2004). The other forms of joint ownership
are joint tenancies, tenancies in common, and community property
with a right of survivorship. Id. Under California law,
property owned jointly by a husband and wife can take any of the
above forms as long as the legal requirements are met. In
addition, a husband and wife, even if they are still married,
can sever the community and convert community property into other
forms of joint property.
 - 67 -

two or more people take title to property as tenants in common

under an instrument silent as to their respective shares, a

presumption arises, which may be overcome by contrary evidence,

that their shares are equal. Caito v. United Cal. Bank, 576 P.2d

466, 472 (Cal. 1978); Anderson v. Broadwell, 6 P.2d 267, 268

(Cal. Ct. App. 1931). When the presumption is overcome, in the

absence of other controlling facts, the respective interests must

be determined by the relative proportion of the purchase price

paid by each. Anderson v. Broadwell, supra at 268.

If we disregard community property law in making our

determination under section 6015(g), it is both logical and

consistent with the directive in section 6015(a) to analyze

petitioner’s interest in property that is owned jointly with her

husband as if she were an unmarried tenant in common under

California law. This form of joint ownership is the closest in

character to a community property interest with no survivorship

right under California law.

The Need for Remedial Legislation

The majority opinion deprives taxpayers in community

property States who are otherwise entitled to relief under

section 6015 of the same relief afforded to taxpayers in common

law States. Under the majority opinion, a taxpayer who is
 - 68 -

granted relief under section 6015(b) or (f)3 will be entitled to a

refund (assuming other refund requirements are met) only if the

taxpayer’s separate property was used to satisfy all or a portion

of the spouse’s tax liability. Unlike a taxpayer’s joint

property interests in a common law State, a taxpayer’s community

property interest will remain a collection source and the

taxpayer will have no right to a refund under section 6015(g)

with respect to community property used to satisfy the spouse’s

tax liability. Given the remedial nature of section 6015 and

Congress’s avowed purpose of broadening a taxpayer’s ability to

obtain relief from joint and several liability, such a result

cannot be consistent with Congress’s intent.

In light of the majority opinion, Congress should revisit

section 6015 and provide us with guidance regarding the proper

application of section 6015 to taxpayers who reside in community

property States. In the meantime, the majority opinion operates

as a strong incentive for taxpayers in community property States

to take advantage of State laws that may permit them to convert

community property into other forms of joint ownership.

COLVIN, FOLEY, and GALE JJ., agree with this dissenting
opinion.

3
Sec. 6015(g)(2) provides that no credit or refund shall be
allowed as a result of an election under subsec. (c).