T.C. Memo. 2007-156
UNITED STATES TAX COURT
VICTORIA RAE MOORE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7878-06. Filed June 19, 2007.
Victoria Rae Moore, pro se.
Nhi T. Luu, for respondent.
MEMORANDUM OPINION
GERBER, Judge: In a petition filed April 27, 2006,
petitioner alleged that respondent abused his discretion in
denying her relief under section 60151 from joint income tax
1
All section references are to the Internal Revenue Code
in effect for the period under consideration, and all Rule
references are to the Tax Court’s Rules of Practice and
Procedure, unless otherwise indicated.
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liabilities for 1992, 1993, 1994, and 1997. On October 4, 2006,
respondent’s Motion for Summary Judgment was filed. The issues
remaining for our consideration are (1) whether this case is ripe
for summary judgment; and (2) whether petitioner is barred by the
doctrine of res judicata from seeking section 6015 relief, or
more particularly, whether she “meaningfully participated” in two
prior Tax Court proceedings which resolved her tax liabilities
for the 1992, 1993, 1994, and 1997 tax years.
Background
Petitioner and her former husband (the Moores) filed joint
Federal income tax returns for their taxable years 1992, 1993,
1994, and 1997. On each of those joint returns, the Moores
claimed partnership losses from cattle breeding. The
partnerships were formed, promoted, and operated by Walter J.
Hoyt, III.2
2
From about 1971 through 1998, Hoyt organized, promoted,
and operated more than 100 cattle breeding partnerships.
Hoyt also organized, promoted, and operated sheep breeding
partnerships. From 1983 to his subsequent removal * * *
[around 2000], Hoyt was the tax matters partner of each Hoyt
partnership. From approximately 1980 through 1997, Hoyt was
a licensed enrolled agent, and as such, he represented many
of the Hoyt partners before the Internal Revenue Service
(IRS). In 1998, Hoyt’s enrolled agent status was revoked.
Hoyt was convicted of various criminal charges in 2000.
Johnson v. Commissioner, T.C. Memo. 2007-29.
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By means of an October 2, 1996, determination, respondent
disallowed the Moores’ claimed partnership losses and determined
income tax deficiencies, additions to tax, and penalties for the
taxable years 1992, 1993, and 1994. By means of an October 30,
2002, determination, respondent disallowed the Moores’ claimed
partnership losses for 1997 and determined an income tax
deficiency and penalties for that year. The Moores carried back
some of those losses to their 1987 through 1991 tax years.
On December 23, 1996, the Moores petitioned the Tax Court
seeking review of respondent’s October 2, 1996, determination.
That case was assigned docket No. 27274-96. Among other
allegations, the Moores contended in docket No. 27274-96 that the
3-year period for assessment had expired, but no claim for relief
was alleged under section 6013(e).3 Initially, the Moores were
pro se in docket No. 27274-96 and on July 27, 1998, entries of
appearance were filed on behalf of the Moores by Attorneys Wendy
S. Pearson and Terri A. Merriam. Attorney Merriam filed an
amendment to the petition on August 24, 1998, alleging an
alternative legal theory, but no mention of section 6013(e) or
innocent spouse relief was contained in the amended pleading.
3
Sec. 6013(e) was the predecessor to sec. 6015 allowing,
under certain circumstances, relief from joint and several tax
liability. At times, these provisions were referred to as
“innocent spouse” provisions.
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On July 30, 2002, Jennifer A. Gellner filed an entry of
appearance on behalf of the Moores in docket No. 27274-96, and on
that same date she filed a status report with the Court. On
January 27, 2003, Attorneys Pearson, Merriam, and Gellner, filed
a petition regarding the Moores’ 1997 tax year in response to the
October 30, 2002, notice issued by respondent. That case was
assigned docket No. 1460-03. In that petition it was alleged
that the Moores were entitled to a theft loss for 1997, but no
section 6015 relief from joint and several liability was alleged.
On August 7, 2003, respondent’s counsel in docket No. 1460-
03 sent a letter to the Moores’ attorneys listing the issues in
that case and asking whether the list was accurate and complete.
Relief from joint and several tax liability was not listed as an
issue in the case. It was also requested that the letter be
forwarded to petitioner and her husband if their attorneys
withdrew from the case. On August 14, 2003, Attorneys Pearson,
Merriam and Gellner moved to withdraw as counsel of record, and
their motions were granted August 18, 2003.
Thereafter, respondent sent petitioner two letters (August
25 and September 5, 2003) requesting that respondent be notified
of petitioner’s position in the case. In a letter dated
September 4, 2003, petitioner stated: “I feel I should get the
same settlement that the other Hoyt partners get” and “I was an
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innocent spouse and didn’t find out until years later it was a
scam.”
On September 8, 2003, respondent’s counsel mailed petitioner
a letter, with respect to both docketed cases, advising that if
she believed she was entitled to section 6015 relief, she should
amend her pleadings. In addition, respondent’s counsel sent
petitioner a copy of the text of section 6015 along with that
letter. On September 18, 2003, respondent’s counsel spoke with
petitioner by telephone to arrange a meeting, and in that
conversation, petitioner acknowledged that she had read section
6015 provided with the September 8, 2003, letter. A pretrial
meeting was held on September 30, 2003, and at that meeting
petitioner informed respondent’s counsel that she would notify
respondent if she intended to concede the two Tax Court cases.
On October 9, 2003, petitioner engaged in a telephone
conversation with Mr. Moore, respondent’s counsel, and the Court.
During that conversation, respondent’s counsel advised the Court
that she believed that the assessments of the tax for the taxable
years 1987 through 1991 might have been barred by the running of
the period for assessment. Thereafter, both of petitioner’s
cases were set for trial on July 26, 2004, at Portland, Oregon.
On April 29, 2004, respondent’s counsel spoke with petitioner,
who advised that she intended to settle the pending cases. On
May 18, 2004, respondent conceded, by means of an amended answer,
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the period for assessment had expired with respect to the Moores’
tax years 1987 through 1991.
Petitioner and Mr. Moore executed settlement documents
resolving all of the issues in the cases pending before the
Court. On August 6 and August 11, 2004, the Court entered
decisions in the cases bearing docket Nos. 27274-96 and 1460-03,
respectively, setting forth income tax deficiencies and penalties
for tax years 1992, 1993, 1994, and 1997. On December 28, 2004,
the income tax deficiencies and penalties were assessed against
petitioner for her 1992, 1993, 1994, and 1997 tax years.
On or about August 9, 2005, petitioner, by means of a Form
8857, Request for Innocent Spouse Relief, sought relief from
joint and several liability for her 1992, 1993, 1994, and 1997
tax years.4 Following respondent’s denial, petitioner filed a
petition with this Court instituting this proceeding.
Discussion
Petitioner was a participant in two prior Tax Court
proceedings in which she and Mr. Moore ultimately agreed to
income tax deficiencies and penalties. Based on the Moores’
agreement with respondent, the Court entered decisions for the
income tax deficiencies and penalties. Respondent assessed the
tax and penalties, and petitioner subsequently sought relief from
4
Petitioner did not seek relief for years prior to 1992 due
to respondent’s concession that the period for assessment had
expired with respect to those years.
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joint and several liability under section 6015 in this stand-
alone proceeding. Respondent moved for summary judgment,
contending that petitioner is barred under the principles of res
judicata from relitigating these same tax years.
Summary Judgment
Summary judgment is appropriate if there is no genuine issue
of material fact and a decision may be rendered as a matter of
law. Rule 121(b); Fla. Peach Corp. v. Commissioner, 90 T.C. 678,
681 (1988). In this case there is no apparent disagreement about
the material facts and circumstances in the controversy.
Although petitioner contends that she did not fully understand
the legal nuances and some of the procedural aspects of the
deficiency suits, there is no disagreement about what occurred.
Petitioner was informed about section 6015 and the need to amend
her pleadings prior to the time that she agreed to settle the
joint income tax liabilities for the years under consideration.
Respondent’s counsel had referenced the potential for section
6015 relief, and petitioner was sent a copy of the statute.
Petitioner does not deny those facts, but instead she contends
that she did not fully understand the legal or procedural
nuances.
Her lack of understanding did not keep her from raising a
claim for relief in the prior Tax Court cases. She understood
that relief was available when she settled the income tax cases.
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She resolved the cases at the urging of Mr. Moore, but was
informed about the possibility of relief as an “innocent spouse”.
With that factual background, this case is ripe for resolution by
means of summary judgment. Petitioner has made no allegations or
showing that the facts are materially different from those
presented by respondent in his summary judgment motion. See Reid
v. Sears, Roebuck & Co., 790 F.2d 453, 459-460 (6th Cir. 1986);
see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-250
(1986).
Res Judicata
Respondent contends that petitioner is barred under the
principles of res judicata from seeking relief from joint and
several liability under section 6015. There is no question that
petitioner’s claim for relief in this case involves the same
taxable years and liabilities as the deficiency suits. There is
also no question that the parties are the same in this proceeding
as in the prior two and that the decisions in the prior
proceedings are final.
The only question concerns whether the exception to the
principle of res judicata contained in section 6015(g)(2)
applies. Section 6015(g)(2) provides that res judicata does not
apply if qualification of the individual for relief was not an
issue in the prior proceeding and if the individual did not
participate meaningfully. It is petitioner’s burden to show by a
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preponderance of the evidence that she did not meaningfully
participate in the prior proceedings. Huynh v. Commissioner,
T.C. Memo. 2006-180; Monsour v. Commissioner, T.C. Memo. 2004-
190.
A taxpayer who has filed a joint return may seek relief
from joint and several liability by following procedures
established in section 6015. Section 6015 may apply to a tax
liability that arose after July 22, 1998, and also to a tax
liability that arose on or before such date and remained unpaid
as of July 22, 1998. See Internal Revenue Service Restructuring
and Reform Act of 1998, Pub. L. 105-206, sec. 3201(g)(1), 112
Stat. 740; Vetrano v. Commissioner, 116 T.C. 272, 277 (2001).
The doctrine of res judicata provides that, when a court of
competent jurisdiction enters a final judgment in a cause of
action, the parties are bound “‘not only as to every matter which
was offered and received * * * but as to any other admissible
matter which might have been offered for that purpose.’”
Commissioner v. Sunnen, 333 U.S. 591, 597 (1948) (quoting
Cromwell v. County of Sac, 94 U.S. 351, 352 (1877)). The
doctrine also applies where the Court’s final decision was based
on an agreement between the parties. See United States v.
Bryant, 15 F.3d 756, 758 (8th Cir. 1994).
Section 6015(g)(2) provides that, in the case of an election
under section 6015(b) or (c) for any taxable year that is the
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subject of a final court decision, such decision shall be
conclusive unless the individual’s qualification for relief was
not an issue in the prior court proceeding and the individual did
not “participate meaningfully” in the prior proceeding. In
Vetrano v. Commissioner, supra at 278, we explained that
an individual who participated meaningfully in a court
proceeding is precluded from electing relief under
section 6015(b) or (c) for the same taxable year after
the decision of the court becomes final, whether or not
the individual's qualification for relief under section
6015(b) or (c) was an issue in the prior proceeding.
* * *
Petitioner argues that her level of involvement in the prior
case was not “meaningful” for purposes of section 6015(g)(2)
because she: (1) Was not well informed about section 6015
relief, (2) was, at times, represented by counsel who were
representing a large group of taxpayers; and (3) she followed Mr.
Moore’s advice to settle. In effect, petitioner contends that
she was not involved in discussions about and/or that she was not
knowledgeable about law or procedure.
Section 1.6015-1(e), Income Tax Regs., provides:
(e) Res judicata and collateral estoppel.--A
requesting spouse is barred from relief from joint and
several liability under section 6015 by res judicata
for any tax year for which a court of competent
jurisdiction has rendered a final decision on the
requesting spouse's tax liability if relief under
section 6015 was at issue in the prior proceeding, or
if the requesting spouse meaningfully participated in
that proceeding and could have raised relief under
section 6015. A requesting spouse has not meaningfully
participated in a prior proceeding if, due to the
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effective date of section 6015, relief under section
6015 was not available in that proceeding. * * *
In this case, petitioner and Mr. Moore were embroiled in a
protracted controversy with respondent involving their “tax
shelter” partnership losses. The controversy covered the tax
decade including the years 1987 through 1997. Respondent’s
counsel, in October 2003, advised the Court that the period for
assessment had expired for the 1987 through 1991 tax years, and,
ultimately, respondent conceded the disputed deficiencies
attributable to those years. Petitioner and her husband filed
their petition pro se in the first of their deficiency suits and
then, after approximately 2 years, became represented therein by
attorneys.
Petitioner and her husband remained represented through the
filing of the petition in their second deficiency suit until
August 2003 when their attorneys were permitted to withdraw as
counsel of record. It was after the withdrawal of their
attorneys that settlement with the Government was discussed with
petitioner and Mr. Moore and the cases were resolved by agreement
of the parties. Prior to executing the settlement, petitioner,
who was divorced from Mr. Moore, was sent letters from
respondent’s counsel alerting her to the need to amend her
pleadings if she wished to allege that she was entitled to relief
from the joint and several liability under section 6015. In
addition, petitioner was sent a copy of the text of section 6015.
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Petitioner engaged in a conversation about section 6015 with
respondent’s counsel, but respondent’s counsel declined to
provide petitioner with further advice about how and/or whether
to proceed to amend her pleading to allege section 6015 relief.
Petitioner also was being urged by Mr. Moore to resolve the case,
and she took his advice.
Petitioner contends that throughout the period that these
cases were in controversy, she was not knowledgeable about law or
procedure and that she may have been poorly represented by
counsel5 and/or wrongly followed her husband’s advice. Under
these circumstances we must decide whether petitioner’s
participation was meaningful in the prior two cases so as to
preclude her from seeking section 6015 relief in this stand-alone
proceeding.
Generally, with respect to the application of res judicata,
the quality of advocacy and the actual knowledge of the litigants
are not special circumstances in determining whether a prior
judgment is a bar in subsequent litigation. See Jones v. United
5
The implication raised by petitioner was that the
attorneys represented the interest of numerous partnership
investors and that little attention was paid to petitioner’s
individual issues. Although petitioner alludes to these
conditions, the Court was not made privy to the actual
discussions or relationship that petitioner had with her legal
representatives, and these matters remain a matter of conjecture.
For purposes of this motion for summary judgment, we assume,
arguendo, that she was not adequately advised by her attorneys
about sec. 6013(e) or sec. 6015.
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States, 466 F.2d 131, 136 (10th Cir. 1972); Cory v. Commissioner,
159 F.2d 391, 392 (3d Cir. 1947), affg. a Memorandum Opinion of
this Court. In this case, petitioner represented herself when
she agreed to settle without formally raising the question of
section 6015 relief.
As was stated in Huynh v. Commissioner, T.C. Memo. 2006-180:
Court cases have not yet clearly defined
"meaningful participation" in all respects, although we
have indicated that "merely [complying]" with a
spouse's instructions to sign various pleadings and
other documents filed in prior litigation is not
conclusive of meaningful participation, Thurner v.
Commissioner, supra at 53, but signing court documents
and participating in settlement negotiations are
indicators of meaningful participation. Id.; Monsour
v. Commissioner, supra.
In Trent v. Commissioner, T.C. Memo. 2002-285, we
suggested that a taxpayer who participated in meetings
with an Appeals officer and who voluntarily signed a
decision document generally would be regarded as having
participated meaningfully, regardless of whether the
taxpayer was represented by counsel. [Fn. ref.
omitted.]
Here, petitioner was represented by counsel for an extended
period of time. Significantly, however, after the representation
ended, petitioner was advised by respondent of the existence of
section 6015 and the need to amend her pleading if she wished to
seek relief under that Code provision. That advice was provided
prior to the time that petitioner voluntarily agreed to settle
the outstanding issues in the two cases, which did not include
the question of relief under section 6015. The fact that Mr.
Moore urged that she agree to resolve the controversy does not
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take away from the fact that she was informed of section 6015
prior to settlement. The fact that petitioner was informed about
section 6015, participated in meetings with respondent’s counsel
and the Court, and voluntarily entered into a settlement makes
her participation “meaningful”.
Whether petitioner received good or bad advice from Mr.
Moore and/or her representatives does not obviate her knowledge
of the relief provisions or her opportunity to be well informed.
The exception to res judicata contained in section 6015(g)(2)
addresses the opportunity to raise and/or pursue the relief
afforded by section 6015. Petitioner participated and had that
opportunity. Her reasons for pursuing or not pursuing relief are
not dispositive under the statute, regulation, and case
precedent.
Because petitioner materially participated in the prior two
cases involving the same tax years, same tax liabilities, and
same parties, she is barred from relitigating the question of
relief from those liabilities in this proceeding.
To reflect the foregoing,
An appropriate order and decision
will be entered granting respondent’s
Motion for Summary Judgment.