Francine Edwards v. Commissioner

T.C. Summary Opinion 2007-193

UNITED STATES TAX COURT

FRANCINE EDWARDS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 10467-05S. Filed November 15, 2007.

Francine Edwards, pro se.

Jamie J. Song, for respondent.

DEAN, Special Trial Judge: This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed. Pursuant to section 7463(b),

the decision to be entered is not reviewable by any other court,

and this opinion shall not be treated as precedent for any other

case. Unless otherwise indicated, subsequent section references

are to the Internal Revenue Code in effect for the year in issue,
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and all Rule references are to the Tax Court Rules of Practice

and Procedure.

The issues for decision are whether: (1) The Court has

jurisdiction in this proceeding to review the grant by the

Internal Revenue Service (IRS) of innocent spouse relief to

petitioner’s former spouse; and (2) petitioner’s liability should

be limited to 50 percent of the deficiency.

Background

Some of the facts have been stipulated and are so found.

The stipulation of facts and the exhibits received into evidence

are incorporated herein by reference. At the time the petition

was filed, petitioner resided in Fall River, Massachusetts.

Petitioner and Jacob Edwards (former spouse) filed a joint

Federal income tax return for 2001. Petitioner and her former

spouse reported $115,297 on line 22, total income. Respondent’s

third party payer reports, however, showed that petitioner

received and failed to report the following items of income:

(1) $440 as compensation for services reported on a Form W-2,

Wage and Tax Statement; (2) $3,339 in unemployment compensation

reported on a Form 1099-G, Certain Government Payments; (3) $12

in interest reported on a Form 1099-INT, Interest Income; and

(4) $6,522 in gross distributions from an individual retirement

account reported on a Form 1099-R, Distributions From Pensions,

Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance
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Contracts, etc. Respondent initiated an examination based on the

third party payer reports.

During the examination, petitioner’s former spouse filed a

Form 8857, Request for Innocent Spouse Relief, and respondent

granted his request pursuant to section 6015(c). The former

spouse was relieved from joint and several liability with respect

to the deficiency. Thereafter, respondent issued a notice of

deficiency to petitioner, determining a $3,784 deficiency.

Petitioner has since conceded that she received and failed to

report the items of income.

Discussion

Generally, the Commissioner’s determinations in a notice of

deficiency are presumed correct, and the taxpayer has the burden

to prove that the determinations are in error. See Rule 142(a);

Welch v. Helvering, 290 U.S. 111, 115 (1933). But the burden of

proof on factual issues that affect a taxpayer’s tax liability

may be shifted to the Commissioner where the “taxpayer introduces

credible evidence with respect to * * * such issue.” See sec.

7491(a)(1). The burden will shift only if the taxpayer has

complied with the substantiation requirements and has cooperated

with the Commissioner’s reasonable requests for witnesses,

information, documents, meetings, and interviews. See sec.

7491(a)(2). Petitioner has not alleged or proven that section

7491(a) applies; accordingly, the burden remains on her.
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1. Review of the IRS’s Decision to Grant Innocent Spouse Relief

Petitioner contends that the IRS erred in granting innocent

spouse relief to her former spouse because he knew about the

unreported items of income and shared in the proceeds of their

tax refund.

The Tax Court is a court of limited jurisdiction and can

exercise its jurisdiction only to the extent provided by

Congress. Sec. 7442; Judge v. Commissioner, 88 T.C. 1175,

1180-1181 (1987); Naftel v. Commissioner, 85 T.C. 527, 529

(1985); see also Rules 13(a), 320(b). With respect to innocent

spouse relief claims, the Court has three jurisdictional bases

for reviewing a claim: (1) As an affirmative defense in a

deficiency redetermination proceeding pursuant to section

6213(a); (2) as a stand-alone petition pursuant to section

6015(e) where the Commissioner has issued a final determination

denying the electing spouse’s claim for relief or the

Commissioner has failed to rule on the claim within 6 months of

its filing; and (3) in the context of a petition for review of a

lien or levy action pursuant to section 6320(c) or 6330(d). See

secs. 6015(e), 6213, 6214, 6320(c), 6330(c)(2)(A)(i), (d); Maier

v. Commissioner, 119 T.C. 267, 270 (2002), affd. 360 F.3d 361 (2d

Cir. 2004); see also Corson v. Commissioner, 114 T.C. 354, 363

(2000); Baumann v. Commissioner, T.C. Memo. 2005-31; Hale

Exemption Trust v. Commissioner, T.C. Memo. 2001-89.
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With respect to a nonelecting spouse, section 6015 does not

provide an independent basis for this Court to exercise its

jurisdiction and to review the IRS’s decision to grant relief

unless there is a deficiency proceeding where the claim is raised

as an affirmative defense by the electing spouse pursuant to

section 6213(a), the electing spouse has filed a petition with

the Court under section 6015(e)(1)(A), or there is a petition for

review of a lien or levy action pursuant to section 6320(c) or

6330(d) and the claim for innocent spouse relief is raised as a

defense pursuant to section 6330(c)(2)(A)(i). See Maier v.

Commissioner, 360 F.3d at 365; cf. Hale Exemption Trust v.

Commissioner, supra; King v. Commissioner, 115 T.C. 118, 125

(2000); Corson v. Commissioner, supra; Baumann v. Commissioner,

supra. This results because section 6015(e)(1) contemplates that

the Court have jurisdiction only when the electing spouse has

timely filed a petition (and has satisfied certain other

requirements). The nonelecting spouse is only afforded a right

to notice and an opportunity to intervene once the electing

spouse has initiated a proceeding in this Court. See sec.

6015(e)(4); see also Rules 13(a), 320(b), 325(a) and (b), 330(b).

Here, the electing spouse did not petition the Court for

review under section 6015(e)(1)(A), the petition for review did

not arise within the context of a lien or levy action pursuant to

section 6320(c) or 6330(d), and the issue was not raised as an
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affirmative defense within our traditional deficiency

jurisdiction pursuant to section 6213(a). Therefore, the Court

lacks jurisdiction to review the IRS’s decision to grant innocent

spouse relief to petitioner’s former spouse.

2. Joint and Several Liability

Petitioner contends that she should not be liable for the

full amount of the deficiency. Rather, she argues, her liability

should be limited to 50 percent since it was a joint return, her

former spouse knew about the unreported items, and he received

the benefits of the erroneous joint return (i.e., she alleges

that he received half of the $4,114 refund, and had the items

been reported correctly, the refund would have been about $330).

In general, section 6013(d)(3) provides that if a joint

return is filed, the tax is computed on the individuals’

aggregate income, and liability for the resulting tax is joint

and several. See also sec. 1.6013-4(b), Income Tax Regs. A

fundamental characteristic of joint and several liability is that

the IRS, at its option, may proceed against the taxpayers

separately and may obtain a separate judgment against each. See

Dolan v. Commissioner, 44 T.C. 420 (1965). The decision to

assess or not assess tax against one of the spouses who filed a

joint return does not prevent the IRS from proceeding against the

other. See id.; see also Kroh v. Commissioner, 98 T.C. 383

(1992).
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Therefore, the Court has no basis for limiting petitioner’s

liability to “50 percent” as she requests. This is especially

true in the light of the fact that petitioner does not qualify

for innocent spouse relief in her own right since she admits to

receiving and failing to report the items of income. Petitioner

does not qualify for relief under section 6015(b) because she

cannot establish that she did not know or had no reason to know

that there was an understatement of tax when she signed the

return. See sec. 6015(b)(1) and (2). Because the items giving

rise to the deficiency were directly allocable to petitioner,

section 6015(c) does not provide any avenue for relief. See also

sec. 1.6015-3(d)(2)(iii), Income Tax Regs. (stating that

erroneous items of income are allocated to the spouse who was the

source of the income). Finally, it is not inequitable to hold

petitioner liable for the deficiency since she fails one of the

threshold conditions for relief; i.e., “The income tax liability

from which the requesting spouse seeks relief is attributable to

an item of the * * * [other spouse]”. Rev. Proc. 2003-61, sec.

4.01(7), 2003-2 C.B. 296, 297; see also id. sec.

4.03(2)(a)(iii)(B), 2003-2 C.B. at 298 (stating that actual

knowledge of the item giving rise to the deficiency weighs
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strongly against relief). Accordingly, respondent’s

determination is sustained.

To reflect the foregoing,

Decision will be entered for

respondent.