T.C. Summary Opinion 2007-36
UNITED STATES TAX COURT
LOIS LIPTON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12588-04S. Filed March 7, 2007.
Lois Lipton, pro se.
Kathleen Raup, for respondent.
GOLDBERG, Special Trial Judge: This is a case arising under
section 6015(f), as amended,1 and 7463 of the Internal Revenue
1
The Tax Relief and Health Care Act of 2006, Pub. L. 109-
432, 120 Stat. 2922, amended sec. 6015(e)(1) to provide that this
Court may review the Commissioner’s denial of relief under sec.
6015(f) in cases where no deficiency has been asserted. The
amendment applies “with respect to liability for taxes arising or
remaining unpaid on or after the date of the enactment” of the
Act, December 20, 2006. See Tax Relief and Health Care Act of
2006, Pub. L. 109-432, div. C. sec. 408, 120 Stat. 3062. As of
the date of enactment, there remained an unpaid liability for tax
(continued...)
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Code as in effect at the time the petition was filed. Unless
otherwise indicated, subsequent section references are to the
Internal Revenue Code of 1986 as amended. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority.
This case arises from petitioner’s election to seek relief
from joint and several liability for Federal income tax for the
taxable year 2001 under section 6015(f). Respondent determined
that petitioner was not entitled to such relief. The sole issue
before this Court is whether petitioner is entitled to relief
under section 6015(f) for 2001 for an underpayment of tax shown
on the return.
Background
Some of the facts are stipulated. The stipulated facts and
the exhibits received into evidence are incorporated herein by
reference. At the time that the petition was filed, petitioner
resided in Wilmington, Delaware.
Petitioner and Ebrehem Khalil Aly (Mr. Khalil Aly), an
Egyptian national, met over the Internet sometime in 1996 and
began a romantic relationship soon thereafter that spanned the
next 5 years. Mr. Khalil Aly was married with children and
living in Egypt at the time that he began an “online”
1
(...continued)
for the year 2001. Therefore, this Court has jurisdiction to
decide this case.
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relationship with petitioner. The relationship culminated in
early 2001 when Mr. Khalil Aly traveled to United States.
Shortly after Mr. Khalil Aly’s arrival, petitioner and Mr. Khalil
Aly were married by a clerk of the court in Florida sometime in
the late spring of 2001.
Petitioner and Mr. Khalil Aly left Florida to reside
permanently in Delaware, where they both worked at Delcare
Management, LLC (Delcare), a physical therapy center. Prior to
his arrival in the United States, Mr. Khalil Aly represented to
petitioner that he was a physician in Egypt. At Delcare, Mr.
Khalil Aly assisted with therapy services by preparing ice and
heat packs and paraffin wax treatments, while petitioner worked
as the center’s office manager. At or about the time Mr. Khalil
Aly started to receive paychecks from Delcare, he and petitioner
went to their local Internal Revenue Service (IRS) office in
Wilmington, Delaware. The couple asked personnel at the IRS
office whether Mr. Khalil Aly would have to pay taxes on his
earnings in the United States, and whether he could claim
dependency exemptions for his children. The IRS personnel
explained that, based on the information the parties provided at
that time, Mr. Khalil Aly would have to pay taxes on his earnings
in the United States, and he might be able to claim his children
as dependents. The IRS personnel provided Mr. Khalil Aly with
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the forms necessary to request Individual Taxpayer Identification
Numbers (ITINs) for his children.
Shortly after the visit to the IRS office, Mr.
Khalil Aly submitted tax forms to Delcare’s payroll department.
These forms indicated that he wished to claim exemptions for six
children.
Mr. Khalil Aly submitted ITIN requests for his six children
in the late spring of 2001. Mr. Khalil Aly received at least two
replies to these requests. The first response occurred
approximately 1 month after his initial submissions and contained
a set of supplemental questions pertaining to his
children’s residency. Mr. Khalil Aly replied to this request. A
second reply followed shortly thereafter, again requesting
additional information with respect to the children’s residency.
Correspondence of this nature continued for 12 months following
Mr. Khalil Aly’s initial request.
Petitioner thereafter enlisted the assistance of her local
Congressman to procure the ITINs for Mr. Khalil Aly’s children.
The Congressman’s staff, in turn, enlisted the assistance of the
Commissioner’s Taxpayer Advocate Service, which informed Mr.
Khalil Aly in May 2002, that ITINs could not be issued for his
children because as of that date, he had not provided
documentation showing that his children satisfied the residency
requirement. Thereafter, Mr. Khalil Aly neither provided the IRS
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with information proving the residency of his children, nor did
he change the number of exemptions he had reported to Delcare for
withholding purposes.
On June 26, 2002, petitioner and Mr. Khalil Aly filed a 2001
Form 1040, U.S. Individual Income Tax Return. On their 2001
return, they elected the filing status of “married filing
jointly.” Petitioner and Mr. Khalil Aly reported tax due and
owing of $10,808 on their 2001 return; however, they failed to
make any payment with respect to this tax due. On December 10,
2002, petitioner and Mr. Khalil Aly submitted an offer-in-
compromise with respect to the unpaid tax for 2001. Respondent
rejected this offer-in-compromise on January 23, 2003, and the
liability stemming from 2001 remains unpaid.
On April 1, 2003, respondent received petitioner’s Form
8857, Request for Innocent Spouse Relief, with respect to taxable
years 2001 and 2002. On the same date, respondent received
petitioner’s Form 12510, Questionnaire for Requesting Spouse.
Both Forms 8857 and 12510 were signed and dated by petitioner on
March 6, 2003, and, with respect to the 2002 taxable year, were
submitted before the 2002 Form 1040 was filed.2
2
Petitioner’s request for innocent spouse relief with
respect to taxable year 2002 was procedurally improper. Sec.
6015(b) permits a request for relief from joint and several
liability only when “a joint return has been made for a taxable
year”, and where that return shows “an understatement of tax”.
Sec. 6015(b)(1)(A) and (B). In this case, petitioner requested
relief for taxable year 2002 1 month before the 2002 return was
(continued...)
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On the Form 8857 submitted by petitioner, she stated that
she separated from Mr. Khalil Aly in January 2003, that she and
her spouse held a joint bank account, that she wrote checks and
balanced the check book, that she reviewed their 2001 return
before signing it, that she knew that there was a balance due
with respect to the 2001 taxable year, that she was in financial
trouble; and that there was no abuse in the marriage. She also
stated that pursuant to a court order in Egypt, Mr. Khalil Aly
was required to send all of his earnings to his ex-wife and
children in Egypt and that the couple directed Mr. Khalil Aly’s
employer to withhold taxes based on six exemptions in reliance on
information provided to them by IRS employees. Periodically, Mr.
Khalil Aly returned to Egypt for extended visits lasting several
months. Petitioner was informed by agents of the Federal Bureau
of Investigations (FBI) in January 2003 that Mr. Khalil Aly was
still married to his wife in Egypt. Petitioner thereafter began
annulment proceedings.
On September 22, 2003, respondent sent petitioner a letter
stating that respondent had made a preliminary determination that
petitioner was not eligible for relief under section 6015(f) for
2
(...continued)
filed. Moreover, the 2002 return indicated that a refund was
owed. As petitioner’s request for relief for the 2002 taxable
year did not comply with the procedural requirements of sec.
6015, respondent addressed only the 2001 taxable year in the
Final Notice of Determination issued to petitioner on July 2,
2004. Accordingly, the taxable year 2002 is not at issue in this
case.
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the 2001 taxable year. On October 8, 2003, petitioner sent
respondent a Statement of Disagreement with respondent’s
preliminary determination as set forth in the letter dated
September 22, 2003. On December 15, 2003, respondent’s Appeals
officer sent petitioner a letter advising her that he had
received her Statement of Disagreement, which would be considered
her appeal. On January 24, 2004, the Appeals officer sent
petitioner a Notice of Determination Concerning Your Request for
Relief from Joint and Several Liability under Section 6015 and
Summary/Recommendation determining that petitioner was not
entitled to relief under section 6015 for the 2001 taxable year.
On May 14, 2004, respondent’s Appeals officer sent
petitioner a letter advising her that the earlier determination
made by its Examination Division would stand. The letter
requested a response from petitioner within 30 days. Petitioner
responded by letter dated May 23, 2004, in which she reiterated
that she should not be held responsible for the liability
stemming from the 2001 taxable year, as that liability resulted
from representations that both the IRS personnel and Mr. Khalil
Aly made to her that ITINs would be issued for Mr. Khalil Aly’s
children for the taxable years at issue.
Discussion
As a general rule, spouses making joint Federal income tax
returns are jointly and severally liable for all taxes shown on
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the return or found to be owing. Sec. 6013(d)(3). In certain
situations, however, a joint return filer can avoid such joint
and several liability by qualifying for relief therefrom under
section 6015.
Relief Available Under Section 6015(f)
Section 6015 provides relief from joint liability by
providing the taxpayer with three avenues for obtaining relief:
(1) Section 6015(b) provides full or apportioned relief with
respect to understatements of tax attributable to certain
erroneous items on the return; (2) section 6015(c) provides
relief for a portion of an understatement of tax for taxpayers
who are separated or divorced; and (3) section 6015(f)
(potentially the broadest of the three avenues and the avenue
pertinent to the issue in this case) confers upon the Secretary
discretion to grant equitable relief for taxpayers who otherwise
do not qualify for relief under section 6015(b) or (c). As there
is no understatement of tax at issue, neither section 6015(b) nor
(c) applies. Therefore, we must consider the equitable relief
provisions of section 6015(f).
Section 6015(f), as amended, provides, in part, that a
taxpayer may be relieved from joint and several liability if it
is determined that, taking into account all the facts and
circumstances, it is inequitable to hold the taxpayer liable for
the unpaid tax, and relief is not available under section 6015(b)
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or (c). To prevail, petitioner must prove both that she is
entitled to relief under section 6015 and that respondent’s
denial of equitable relief from joint liability under section
6015(f) was an abuse of discretion. Jonson v. Commissioner, 118
T.C. 106, 125 (2002), affd. 353 F.3d 1181 (10th Cir. 2003);
Cheshire v. Commissioner, 115 T.C. 183, 198 (2000), affd. 282
F.3d 326 (5th Cir. 2002); Butler v. Commissioner, 114 T.C. 276,
291-292 (2000). For the following reasons, we conclude that
petitioner is not entitled to relief under section 6015 because
she was not eligible to file a joint return for taxable year
2001.
In order to be eligible for relief under section 6015,
petitioner must have made a joint return for the taxable year at
issue. See sec. 6015(a)(1), (b)(1)(A). Section 6013 defines a
joint return as that made by a “husband and wife”. Sec. 6013(a).
In the administration of the Federal income tax laws, the marital
status of individuals is determined under State law where the
taxpayer resides. Von Tersch v. Commissioner, 47 T.C. 415, 419
(1967); Rev. Rul. 58-66, 1958-1 C.B. 60. Accordingly, we now
consider petitioner and Mr. Khalil Aly’s marital status under
Delaware law.
During at least the 5 years prior to his arrival in the
United States in 2001, Mr. Khalil Aly was married with children
in Egypt. During this period, he did not hide his marital status
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from petitioner. When Mr. Khalil Aly arrived in Florida to meet
petitioner in early 2001, he announced to her that although he
was no longer married to his wife in Egypt, “however” an Egyptian
court had issued an order that he remit all of the wages that he
might earn in the United States to his former wife and their six
children. Petitioner testified that shortly after Mr. Khalil Aly
arrived in the United States, she and he were married by a clerk
of a court somewhere in Florida. Petitioner did not testify
about any of the details surrounding the marriage ceremony or
provide any documentation proving that a marriage ceremony took
place.
After their initial meeting and purported marriage ceremony
in Florida, petitioner and Mr. Khalil Aly moved to Delaware.
They lived together there from approximately April 2001 to
January 2003. During the 21 months that they resided in
Delaware, petitioner testified that Mr. Khalil Aly made
approximately three extended trips back to Egypt. He was gone
for approximately 2 months during each trip. Near the time of
each of these trips, Mr. Khalil Aly would offer petitioner an
elaborate reason for his travel. These reasons included a life-
saving operation for one of his daughters and training that he
was required to undergo to become the next “Egyptian Medical
Ambassador to the United States.” According to petitioner, on
each trip made to Egypt Mr. Khalil Aly would take with him large
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sums of cash including all of the wages he earned while working
at Delcare, plus additional money that petitioner gave him.
Petitioner testified that it was during the last of Mr.
Khalil Aly’s extended trips to Egypt that she received a visit
from agents of the FBI. The FBI agents informed petitioner that
Mr. Khalil Aly was perpetrating a ruse: that he was, and had
always been, married to his wife in Egypt, that he came to the
United States for the primary purpose of marrying a citizen here,
and that he was not in line to become the next “Egyptian Medical
Ambassador to the United States.” The FBI strongly advised
petitioner to seek an annulment from the Family Court in Delaware
so that Mr. Khalil Aly (who the FBI perceived as a threat to
national security) could not “use” his “marriage” to a U.S.
citizen to gain reentry into the United States.
On the basis of the foregoing facts, and the suspect
circumstances under which Mr. Khalil Aly came to the United
States (including the brevity of his and petitioner’s engagement
period (apparently days, at most)), we conclude that Mr. Khalil
Aly was, in fact, married at the time that a marriage ceremony
was conducted in Florida, assuming that such a ceremony actually
occurred. Under Florida law, a person who has a living spouse
and marries another person is guilty of a felony of the third
degree. Fla. Stat. Ann. sec. 826.01 (West 2006). Therefore, the
marriage entered into by petitioner and Mr. Khalil Aly in Florida
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was void ab initio. Groover v. Groover, 383 So. 2d 280, 283
(Fla. Dist. Ct. App. 1980). Accordingly, since there was no
valid marriage, under ordinary circumstances, an annulment would
be unnecessary. Id.
We believe that petitioner sought an annulment in the Family
Court in Delaware based equally on the FBI’s revelation to her of
Mr. Khalil Aly’s marital status and motive for remaining
“married” to a U.S. citizen, and her desire to prevent him from
returning to their home. We find that petitioner was very
emotionally distressed and confused by the circumstances that
transpired during and after her visit from the FBI. We believe
that petitioner honestly thought that she had to obtain an
annulment although we are uncertain as to whether there was a
requirement for her to do so under these circumstances. While we
acknowledge that it was improper for her to seek an annulment
after she was told that a valid marriage in Florida never
occurred, we do not consider petitioner’s obtaining the annulment
as having any legal effect with respect to the issue of
petitioner’s correct filing status for taxable year 2001.
Moreover, although we acknowledge that a bigamous marriage
is voidable in Delaware, in this case the marriage was not
entered into in Delaware but Florida, where such marriages
subject the married party to a felony charge and are therefore
void. Del. Code Ann. tit. 13, sec. 101 (1999); Fla. Stat. Ann.
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sec. 826.01 (West 2006). While we believe that the State of
Florida had no reason to suspect that the Florida marriage was
void ab initio, we do not find that the subsequent annulment gave
validity to either the marriage entered into in Florida or the
cohabitation of petitioner and Mr. Khalil Aly in Delaware. A
marriage void ab initio in the State where contracted is also
void ab initio in another jurisdiction. Cf. Loughran v.
Loughran, 292 U.S. 216, 223 (1934) (a general rule of conflict of
laws that a marriage, which is valid under the law of the place
where it is contracted, is recognized as valid everywhere). As a
final point on the inconsequential effect of the annulment, we
conclude that the Delaware annulment did not validate any common
law arrangement that would permit petitioner to file as married,
as neither Florida nor Delaware recognizes common law marriage.
Del. Code Ann. tit. 13, sec. 126 (1999); Fla. Stat. Ann. sec.
741.241 (West 2005).
In Delaware, the presumption of marriage arising from
marital cohabitation is not conclusive but rather subject to
rebuttal, which may be made by proof of facts showing that no
marriage ever existed between the parties, or proof that at its
commencement either party had a prior spouse living and
undivorced. Owens v. Bentley, 14 A.2d 391 (Del. 1940). Here, we
are convinced that the facts presented in this case are
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conclusive that there was never a valid marriage between
petitioner and Mr. Khalil Aly.
Accordingly, we conclude that petitioner is not entitled to
relief under section 6015(f) because Mr. Khalil Aly was still
married at the time that their ceremony in Florida purportedly
occurred, making any union between him and petitioner
meretricious from its inception. Moreover, a joint return could
not be filed by petitioner and Mr. Khalil Aly under these facts
as Mr. Khalil Aly’s previous marriage had not been legally
dissolved. Chap v. Commissioner, T.C. Memo. 1964-26. The fact
that petitioner and Mr. Khalil Aly resided together in Delaware
for 21 months is irrelevant, as there is no State that recognizes
a bigamous common law marriage. Ochs v. Commissioner, T.C. Memo.
1986-595. Since petitioner could not be married to Mr. Khalil
Aly, petitioner is not entitled to joint filing status for the
2001 taxable year.
Petitioner’s Liability for Taxable Year 2001
Petitioner’s correct filing status for the taxable year 2001
should be “single.” Petitioner’s income tax liability for 2001
should be calculated using the filing status “single.”3
3
Exhibit 13 in this case is a copy of petitioner’s amended
tax return with the filing status single for year 2001 that she
submitted to respondent sometime before the trial. We are unsure
as to whether respondent has accepted this return. As a result
of this opinion, respondent should accept the amended return as
(continued...)
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With respect to taxable year 2001, petitioner has only
provided, as an attachment to the joint tax return, a copy of her
Form W-2, Wage and Tax Statement, from Delcare. The Court is not
in possession of sufficient information from which petitioner’s
liability for 2001 may be decided.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.
3
(...continued)
filed. In the alternative, petitioner may be entitled to file a
return for the taxable year at issue with the filing status of
“single.”