T.C. Memo. 2009-281
UNITED STATES TAX COURT
JOHN MALUDA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 26429-07. Filed December 7, 2009.
Harvey R. Poe, for petitioner.
Joseph J. Boylan, for respondent.
MEMORANDUM OPINION
FOLEY, Judge: The issue for decision is whether petitioner,
pursuant to section 6015,1 is entitled to innocent spouse relief
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
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with respect to his 1998, 1999, 2000, 2001, and 2002 (years in
issue) Federal income tax liabilities. The parties submitted
this case fully stipulated pursuant to Rule 122.
Background
Petitioner and Cathy Maluda (Ms. Maluda), both high school
graduates, were married on June 11, 1994. During the years in
issue, petitioner operated a Snap-On Tool dealership as a sole
proprietor, Ms. Maluda was an unemployed homemaker, and the
Maludas held joint checking and savings accounts at Valley
National Bank.
The Maludas’ joint Federal income tax returns relating to
the years in issue were prepared by Jay Rodaman. The prepared
returns, however, were not filed with the Internal Revenue
Service. On December 29, 2004, the Maludas untimely filed joint
Federal income tax returns relating to 1999, 2000, 2001, and
2002. On May 31, 2005, the Maludas filed a joint amended Federal
income tax return relating to 2000. On February 12, 2007, the
Maludas untimely filed a joint Federal income tax return relating
to 1998. The Maludas reported, but failed to pay, tax
liabilities on each filed return.
On June 26, 2006, the Maludas began to live in separate
households. On December 22, 2006, Ms. Maluda filed for divorce,
asserting that the marriage was irretrievably broken and that
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petitioner had endangered her life. On May 8, 2007, respondent
received petitioner’s Form 8857, Request for Innocent Spouse
Relief, in which petitioner requested relief pursuant to section
6015(f) and asserted that it would be inequitable to hold him
liable for any unpaid tax because “Cathy removed sums of money
from [his] joint bank account with Cathy which she purportedly
used to pay the Service”. On October 24, 2007, in a final
determination letter relating to 1998, 1999, and 2001 and a final
determination letter relating to 2000 and 2002, respondent
informed petitioner that he was not entitled to section 6015(f)
relief. The stated justification for the denial of relief was
that “relief is not allowed on tax you owe on your own income”.
On November 16, 2007, petitioner, while residing in
Pennsylvania, filed his petition with this Court. Respondent, on
December 28, 2007, notified Ms. Maluda that petitioner was
seeking relief from joint and several liability relating to the
years in issue and that she had a right to intervene. On
September 8, 2008, the date the parties submitted the case fully
stipulated, the Maludas’ divorce was not yet final.
Discussion
Married taxpayers may elect to file a joint Federal income
tax return. Sec. 6013(a). Each spouse filing the return
generally is jointly and severally liable for the accuracy of the
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return and the entire tax due. Sec. 6013(d)(3). Pursuant to
section 6015(a), however, a taxpayer may seek relief from joint
liability.
Petitioner contends that, pursuant to section 6015(f), he is
entitled to relief from liability for the years at issue.
Petitioner further contends that funds designated for payment of
the tax liabilities relating to the years in issue were
misappropriated by Ms. Maluda for her own benefit and that he had
no control over his income after giving it to Ms. Maluda.
Respondent contends that the tax liabilities related to the years
in issue are attributable solely to petitioner’s income, and,
consequently, petitioner is not eligible for equitable relief.
Section 6015(f) provides that the Commissioner is authorized
to grant relief from joint and several liability if the facts and
circumstances indicate that it would be inequitable to hold the
requesting spouse liable for any unpaid tax. Additionally,
relief pursuant to section 6015(b) or (c) must not be available
to the taxpayer. In reviewing respondent’s determination, we
apply a de novo standard of review as well as a de novo scope of
review. See Porter v. Commissioner, 132 T.C. __, __ (2009) (slip
op. at 11-12). Petitioner bears the burden of proving he is
entitled to equitable relief pursuant to section 6015(f). See
Rule 142(a); Porter v. Commissioner, supra.
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Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. 296, 297,2 sets
forth threshold conditions that must be satisfied before the
Commissioner may consider granting section 6015(f) equitable
relief.3 Of those conditions, respondent challenges whether the
liability from which petitioner seeks relief is attributable to
an item of the nonrequesting spouse. This requirement is met if
petitioner can establish that he did not know, and had no reason
to know, that Ms. Maluda misappropriated, for her benefit, funds
intended for the payment of tax (misappropriation exception) or
if petitioner can rebut the presumption that his earnings are
attributable to him (nominal ownership exception). Id. sec.
4.01(7), 2003-2 C.B. at 297.
We agree with petitioner that respondent inappropriately
denied the requested relief solely because the liability was
attributable to petitioner’s income. Indeed, respondent failed
2
We note that Rev. Proc. 2003-61, 2003-2 C.B. 296,
superseded Rev. Proc. 2000-15, 2000-1 C.B. 447. Rev. Proc. 2003-
61, supra, is effective for requests for relief pursuant to sec.
6015(f) which were filed on or after Nov. 1, 2003, and for
requests for such relief which were pending on, and for which no
preliminary determination letter had been issued as of, that
date. Id. sec. 7, 2003-2 C.B. at 299.
3
In Lantz v. Commissioner, 132 T.C. __, __ (2009) (slip op.
at 33), we held that the 2-year requirement of sec. 1.6015-
5(b)(1), Income Tax Regs. is an invalid interpretation of sec.
6015. Accordingly, the 2-year requirement is not applicable to
petitioner’s request for relief.
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to consider the misappropriation exception or the nominal
ownership exception. We engage in a de novo review to determine
whether petitioner qualifies for section 6015 relief.
Petitioner, who has the burden of proof, agreed with respondent,
however, to submit this case fully stipulated despite the fact
that there were critical factual issues in dispute. The parties
have stipulated returns that were filed, petitioner’s request for
relief, respondent’s evaluations prepared by respondent’s
examiners, and the final determination letters. The stipulation
establishes various factual issues, but simply does not establish
that Ms. Maluda misappropriated funds intended for tax payments
or that petitioner’s earnings from his sole proprietorship are
not attributable to him. For example, the parties stipulated
that bank records relating to the Maludas’ joint savings account
were fabricated, yet failed to stipulate who fabricated these
records or whether the fabrication was used to deceive
petitioner. The parties also stipulated that certain payments
were made to credit card companies, yet there is no evidence
illuminating how such payments bolster petitioner’s contention.
Accordingly, petitioner has failed to establish that he is
entitled to equitable relief pursuant to section 6015(f).
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Contentions we have not addressed are irrelevant, moot, or
meritless.
Decision will be entered for
respondent.