T.C. Memo. 2011-87
UNITED STATES TAX COURT
KATHLEEN HAAG, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8915-10. Filed April 19, 2011.
P and H filed joint returns and failed to pay tax
for 8 years (1985-91 and 1993). R served a notice of
proposed levy in September 1999. In 2002 R authorized
a collection suit to be brought against P and H in
District Court; and P raised as an affirmative defense
the claim that she was entitled to relief under I.R.C.
sec. 6015(b) and (f). The parties cross-moved for
summary judgment on the I.R.C. sec. 6015 issue, and the
District Court held in favor of R on the grounds that
P’s assertion of the claim was untimely under I.R.C.
sec. 6015(b)(1)(E) and 26 C.F.R. sec. 1.6015-5(b)(1),
Income Tax Regs. The court entered judgment in favor
of the Government and against P and H. P and H
appealed, not raising the I.R.C. sec. 6015 issue, and
the Court of Appeals for the First Circuit affirmed in
April 2007. In October 2007 P filed suit in District
Court claiming an entitlement to I.R.C. sec. 6015
relief for the same 8 years, but the District Court
dismissed the suit on grounds of res judicata. In
April 2009 this Court held in Lantz v. Commissioner,
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132 T.C. 131 (2009), revd. 607 F.3d 479 (7th Cir.
2010), that the 2-year deadline in sec. 1.6015-5(b)(1),
Income Tax Regs., is invalid when applied to innocent
spouse claims under I.R.C. sec. 6015(f). In July 2009
P filed new requests for relief under I.R.C.
sec. 6015(f), citing Lantz. R did not grant P’s
requests, and P filed a petition in this Court. R
moved for summary judgment on grounds of res judicata.
Held: Res judicata precludes P’s attempted
relitigation of her I.R.C. sec. 6015(f) claim for the
years that were the subject of the prior District Court
collection suit.
Timothy J. Burke, for petitioner.
Patrick F. Gallagher, for respondent.
MEMORANDUM OPINION
GUSTAFSON, Judge: Petitioner Kathleen Haag seeks this
Court’s review, pursuant to section 6015(e),1 of the denial by
the Internal Revenue Service (IRS) of her requests for relief
from her liability for income taxes for eight taxable years, for
which she filed joint returns with her husband. The case is
currently before the Court on respondent’s motion for summary
judgment filed under Rule 121. We will grant that motion and
sustain the IRS’s determination on grounds of res judicata.
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986 (26 U.S.C.), as amended, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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Background
At the time she filed her petition, Mrs. Haag resided in
Massachusetts.
IRS collection of the Haags’ unpaid taxes
For the eight years 1985 through 1991 and 1993, Mrs. Haag
filed joint tax returns with her husband, Robert F. Haag. The
IRS examined their returns and assessed deficiencies, additions
to tax, and interest. The Haags did not fully pay those
liabilities. The IRS filed notices of Federal tax lien against
the Haags: in July 1992 for tax years 1985, 1986, and 1987; in
October 1994 for tax years 1988, 1989, 1990, and 1992; and in May
1995 for tax year 1993. On September 14, 1999, the IRS issued to
each of the Haags a Final Notice, Notice of Intent to Levy and
Notice of Your Right to a Hearing for their joint liabilities for
each of those eight tax years.2
2
In her statement of facts in dispute, submitted in United
States v. Haag (Haag I), 94 AFTR 2d 2004-6665, 2005-1 USTC par.
50,131 (D. Mass. 2004), affd. 485 F.3d 1 (1st Cir. 2007),
discussed below, Mrs. Haag admits that the IRS issued the levy
notices in September 1999. Pursuant to Fed. R. Evid. 201, we
take judicial notice of the record of Haag I and the other
District Court cases discussed herein. Mrs. Haag now appears to
deny the fact, but under Rule 121 she cannot rely on her mere
denial when opposing the IRS’s motion for summary judgment, but
rather she must submit evidence to raise a genuine issue of
material fact. She has not submitted an affidavit or other
evidence to do so, and we take the fact as admitted in Haag I.
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Haag I
In December 2002 the Government filed suit against Mr. and
Mrs. Haag in the U.S. District Court for the District of
Massachusetts (the District Court) in order to reduce their
unpaid assessed taxes, interest, and additions to tax to
judgment. United States v. Haag (Haag I), 94 AFTR 2d 2004-6665,
2005-1 USTC par. 50,131 (D. Mass. 2004), affd. 485 F.3d 1 (1st
Cir. 2007). The years at issue in Haag I were the eight years
that were the subject of the notice of levy (i.e., 1985-1991 and
1993) and the year 2001 (later dismissed as moot),3 and the
Haags’ total unpaid balance for those nine years as of December
23, 2002, was over $1.6 million.
The IRS refiled notices of Federal tax lien against the
Haags in November 2003; and in November 2004, while the Haag I
collection suit remained pending, the Haags filed suit against
the Government in the District Court, Haag v. IRS, No. 04-12344
(D. Mass. filed Nov. 4, 2004), alleging that the IRS deprived
them of their collection due process (CDP) rights by failing to
notify them of their right to a CDP hearing when it refiled the
notices of Federal tax lien in 2003. The Haags sought civil
damages for unauthorized collection actions under section 7433,
3
The District Court found that the issue of the Haags’ tax
liability for 2001 was moot because the liability had been paid.
We will therefore not further discuss the 2001 year, since it has
no bearing on the outcome of this case.
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injunctive relief mandating a CDP hearing, declaratory relief,
attorney’s fees, and costs. The District Court consolidated the
Haags’ suit with the Haag I collection suit.
In the answer she filed in Haag I, Mrs. Haag raised innocent
spouse relief under section 6015(b)(1) and (2) and (f) as an
affirmative defense. For purposes of the IRS’s motion for
summary judgment in this case, we will assume arguendo that
Mrs. Haag’s section 6015(f) defense was meritorious and should
have been upheld. But when Mrs. Haag moved in Haag I for summary
judgment on her claim for innocent spouse relief, the Government
cross-moved for partial summary judgment on that claim, asserting
that Mrs. Haag did not qualify for relief because she failed to
request relief within two years after the IRS began its
collection activities4--as required by statute for an election
under section 6015(b) or (c), see sec. 6015(b)(1)(E), (c)(3)(B),
and as required by regulation for a request for equitable relief
under section 6015(f). 26 C.F.R. section 1.6015-5(b)(1), Income
Tax Regs., provides:
4
With its summary judgment motions, first in the District
Court and later in this Court, the Government submitted
transcripts of account for the Haags for the tax years in
question. Although those account transcripts show notices of
Federal tax lien filed against the Haags in 1992, 1994, and 1995,
the Government’s motions measure the timeliness of Mrs. Haag’s
innocent spouse requests relative to the 1999 levy notice.
Obviously, if Mrs. Haag’s requests were untimely as to the later
levy action, they were even more untimely as to the earlier lien
filings.
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to request equitable relief under § 1.6015-4, a requesting
spouse must file Form 8857 or other similar statement with
the Internal Revenue Service no later than two years from
the date of the first collection activity against the
requesting spouse after July 22, 1998, with respect to the
joint tax liability.
However, in Mrs. Haag’s instance the IRS’s collection activity
began no later than September 1999 (when it issued the notice of
proposed levy), but she did not make any request or election for
innocent spouse relief within two years. Rather, more than three
years elapsed with no election and no request before the IRS
commenced Haag I (and Mrs. Haag raised her affirmative defense).
In September 2004 the District Court denied Mrs. Haag’s
motion for summary judgment because it held, as to the eight
years still at issue (after the dismissal of 2001 as moot), that
she failed to timely seek relief for the remaining years within
the two-year period allowed by the statute and the regulation.
The court granted the Government’s motion for partial summary
judgment on the innocent spouse claim, holding that Mrs. Haag
could not meet the legal requirements for seeking innocent spouse
relief for the remaining years because she had failed to timely
raise the innocent spouse issue.5 See Haag I.
5
The statutory bars of section 6015(b)(1)(E) and (c)(3)(B)
were unassailable in the District Court action, and the record
contains no indication of any direct challenge to the validity of
26 C.F.R. section 1.6015-5(b)(1), Income Tax Regs., in any of
Mrs. Haag’s District Court cases. It is not clear whether
Mrs. Haag sought relief under section 6015(c), and there is
nothing in the record to suggest that she was divorced,
(continued...)
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The Government proved that in November 2003 the IRS had sent
the notice of lien required by section 6320(a) (by producing
reprints of the 2003 lien notices and certified mail records
showing that Mr. Haag signed for the 2003 lien notices), and in
January 2006 the District Court granted the Government’s motion
for summary judgment on the Haags’ notice claim and dismissed the
Haags’ action.
The Haags appealed Haag I, specifically challenging (1) the
dismissal of their claim for damages for the IRS’s alleged
failure to provide them with collection notices and notices of
their right to a CDP hearing; (2) the denial of their motion to
enforce a supposed settlement agreement; and (3) the denial of
their motion to disqualify the Department of Justice from
representing the Government in Haag I. The Haags did not assert
any error in the District Court’s innocent spouse ruling, which
had denied Mrs. Haag summary judgment on that issue and had
granted partial summary judgment to the Government.6 In April
2007 the Court of Appeals for the First Circuit affirmed the
5
(...continued)
separated, or living apart from Mr. Haag, as section
6015(c)(3)(A)(i) would have required.
6
The Haags also did not appeal the District Court’s reducing
to judgment, in favor of the Government, the $1.85 million of
Federal tax assessments against the Haags. Haag v. United
States, 485 F.3d 1, 4 (1st Cir. 2007).
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judgment of the District Court. Haag v. United States, 485 F.3d
1 (1st Cir. 2007).
Haag III7
Mrs. Haag submitted to the IRS a Form 8857, Request for
Innocent Spouse Relief, in April 2005 (i.e., after the District
Court’s September 2004 order denying her innocent spouse claims,
but before the Court of Appeals affirmed the District Court). In
a Decision Letter Concerning Equivalent Hearing Under Section
6320 dated August 31, 2006, the IRS stated that Mrs. Haag was not
entitled to relief under either section 6015(b) or (f) because
7
Between Haag I and Haag III the Haags had filed an
additional suit, which we refer to as Haag II. In August 2006
they sued the Government in the District Court for damages under
section 7433 for the IRS’s alleged failure to send proper
collection notices to the Haags’ attorney in connection with
refiling the liens in 2003. Among other claims, the Haags
alleged that Mrs. Haag satisfied the requirements of section 6015
and therefore qualified for innocent spouse relief. After
Mr. Haag filed a bankruptcy petition in November 2006, the
District Court closed Haag II with the following docket entry:
“In View of Mr. Haag’s Bankruptcy, This Case Is Ordered
Administratively Closed.” Haag v. IRS (Haag II), No. 06-cv-11551
(D. Mass. Nov. 28, 2006) (order closing case), affd. sub nom.
Haag v. United States, 589 F.3d 43 (1st Cir. 2009). In Haag II
the District Court denied several motions to reopen the case, on
the ground that Haag I barred the action on the grounds of res
judicata, and the Court of Appeals affirmed the dismissal and the
conclusion that the question of whether the IRS provided proper
notice of the collection action had been decided in Haag I. Haag
v. United States, 589 F.3d at 45-46. Consequently, the Haag II
suit has no effect on this case, and we do not discuss it
further.
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her April 2005 request was not timely pursuant to 26 C.F.R.
section 1.6015-5(b)(1), Income Tax Regs.8
In October 2007 (after the Court of Appeals for the First
Circuit denied her appeal of Haag I), Mrs. Haag filed suit
against the IRS in the District Court, on the basis of her
April 2005 request. Haag v. IRS (Haag III), No. 07-12007 (D.
Mass. filed Oct. 22, 2007), affd. sub nom. Haag v. United States,
589 F.3d 43 (1st Cir. 2009). She again alleged that she met the
criteria for relief under section 6015; she claimed she had a
right to innocent spouse relief; and she alleged that the IRS had
violated its regulations in failing to hear and grant her claim.
She sought damages under section 7433 and attorney’s fees.
The Government moved to dismiss the suit, arguing that the
claim in Haag III was barred by res judicata. In a memorandum
and order, the District Court held that Haag I was a final
judgment on the merits of Mrs. Haag’s innocent spouse claim; that
the parties in Haag I and Haag III are identical; and that Haag I
and Haag III arose from the same common nucleus of operative
facts, i.e., that the innocent spouse claims in both suits were
the same. In January 2008 the District Court held that
Mrs. Haag’s claim in Haag III was barred by claim preclusion, and
8
The IRS considered Mrs. Haag’s April 15, 2005, innocent
spouse claim as part of an equivalent hearing triggered by a
request for a CDP hearing that the Haags also submitted on April
15, 2005.
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it granted the Government’s motion to dismiss. Haag v. IRS, No.
07-12007, slip op. at 3 (D. Mass. Jan. 15, 2008).
Mrs. Haag appealed the judgment in Haag III, specifically
challenging the holding that res judicata barred her from
relitigating the innocent spouse claim. Mrs. Haag then filed
with the District Court a motion for relief from the judgment in
Haag III; the District Court denied her motion; and Mrs. Haag
appealed that denial. In December 2009 the Court of Appeals for
the First Circuit again affirmed the District Court, concluding
that neither of her appeals had merit and stating that “both
Kathleen Haag’s innocent spouse defense and the contours of her
right, if any, to a hearing were fully adjudicated in Haag I and
resulted in a final judgment on the merits against her.” Haag v.
United States, 589 F.3d at 46. The Court of Appeals concluded
that because her complaint in Haag III concerned the same nucleus
of operative facts as Haag I, her innocent spouse claim in
Haag III is barred by res judicata. Id. The Court of Appeals
also affirmed the dismissal of Haag II as barred by the res
judicata effect of Haag I. Id.
Post-Lantz requests for relief
In April 2009--i.e., eight months before the Court of
Appeals for the First Circuit affirmed Haag III--this Court
decided, in Lantz v. Commissioner, 132 T.C. 131 (2009), revd. 607
F.3d 479 (7th Cir. 2010), that 26 C.F.R. section 1.6015-5(b)(1),
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Income Tax Regs., was invalid in imposing the two-year deadline
for claims for equitable relief under section 6015(f). Mrs. Haag
therefore sought innocent spouse relief under section 6015(f) for
a third time, submitting new Forms 8857 dated July 7, 2009, for
tax years 1985 through 1991 and 1993. In an attachment to her
2009 requests for relief, Mrs. Haag argued that because Lantz v.
Commissioner, supra, had held that regulation invalid, the IRS
must consider her claim and grant her relief.
The IRS issued final determinations dated March 23, 2010,
denying Mrs. Haag’s requests for relief under section 6015(f) for
each of 1986-1991 and 1993 and made no ruling as to 1985. The
workpapers of the IRS’s examiner who considered Mrs. Haag’s 2009
requests indicate that the IRS denied relief because of the res
judicata effect of court proceedings that determined she was not
eligible for innocent spouse relief for the years in issue.
Mrs. Haag petitioned this Court on April 15, 2010, seeking
review of the IRS’s failure to grant innocent spouse relief. The
IRS moved for summary judgment on the basis of res judicata; and
Mrs. Haag opposed the IRS’s motion.
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Discussion
I. Relief from joint liability
Section 6013(d)(3) provides that when married taxpayers file
a joint return, the tax is computed on their aggregate income,
and their liability to pay the tax shown on the return or found
to be owing is joint and several. See also 26 C.F.R. sec.
1.6013-4(b), Income Tax Regs. That is, each spouse is liable for
the entire joint tax liability. However, section 6015 provides
several means for a taxpayer to seek relief from joint liability;
and if the IRS determines not to grant such relief to a taxpayer,
section 6015(e) gives this Court jurisdiction to review that
determination.
II. Res judicata arising from Haag I
Mrs. Haag’s non-entitlement to relief under section 6015 for
the eight years at issue has already been decided, and the
doctrine of res judicata (Latin for “a thing adjudicated”)
requires us to follow that prior decision. Res judicata has the
“purpose of protecting litigants from the burden of relitigating
an identical issue and of promoting judicial economy by
preventing unnecessary or redundant litigation.” Meier v.
Commissioner, 91 T.C. 273, 282 (1988). Res judicata (also called
“claim preclusion”) was developed by the courts to bar
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repetitious suits on the same cause of action and is applicable
to tax litigation.9 As the Supreme Court explained:
[W]hen a court of competent jurisdiction has entered a
final judgment on the merits of a cause of action, the
parties to the suit and their privies are thereafter
bound “not only as to every matter which was offered
and received to sustain or defeat the claim or demand,
but as to any other admissible matter which might have
been offered for that purpose.” * * *
Commissioner v. Sunnen, 333 U.S. 591, 597-598 (1948) (quoting
Cromwell v. County of Sac, 94 U.S. 351, 352 (1877)). Simply
stated,
Under res judicata, a final judgment on the merits of
an action precludes the parties or their privies from
relitigating issues that were or could have been raised
in that action.
Allen v. McCurry, 449 U.S. 90, 94 (1980).
Under the Supreme Court’s explication of res judicata in
Commissioner v. Sunnen, supra, four conditions must be met to
preclude relitigation of a claim: (1) The parties in each action
must be identical (or at least be in privity); (2) a court of
9
The related doctrine of collateral estoppel (or “issue
preclusion”) prevents the relitigation of an identical issue,
even in connection with a different claim or cause of action.
The rule of collateral estoppel provides, “When an issue of fact
or law is actually litigated and determined by a valid and final
judgment, and the determination is essential to the judgment, the
determination is conclusive in a subsequent action between the
parties, whether on the same or a different claim.”
1 Restatement, Judgments 2d, sec. 27 (1982); see also Allen v.
McCurry, 449 U.S. 90, 94 (1980) (“Under collateral estoppel, once
a court has decided an issue of fact or law necessary to its
judgment, that decision may preclude relitigation of the issue in
a suit on a different cause of action”); Montana v. United
States, 440 U.S. 147, 153-154 (1979).
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competent jurisdiction must have rendered the first judgment;
(3) the prior action must result in a final judgment on the
merits; and (4) the same cause of action or claim must be
involved in both suits. See United States v. Shanbaum, 10 F.3d
305, 310 (5th Cir. 1994). Once these conditions are met, each
party is prohibited from raising any claim or defense that was or
could have been raised as part of the litigation over the cause
of action in the prior case. Id. Those four conditions are met
here:
1. In Haag I, Mrs. Haag was the defendant, and the United
States Government was the plaintiff. In this case, Mrs. Haag is
the petitioner, and the respondent is the Commissioner of the
IRS--an agency of the United States Government. A “judgment in a
suit between a party and a representative of the United States is
res judicata in relitigation of the same issue between that party
and another officer of the government” because officers of the
same government are in privity. Sunshine Anthracite Coal Co. v.
Adkins, 310 U.S. 381, 402-403 (1940). Privity exists when the
United States is a party in the District Court and the
Commissioner of Internal Revenue is the respondent here. Gammill
v. Commissioner, 62 T.C. 607, 614 (1974). Thus, the parties are
sufficiently identical.
2. The Government sued Mrs. Haag in Haag I to reduce
unpaid assessments to judgment, and the District Court had
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jurisdiction over that action under sections 7401 and 7402(a) and
28 U.S.C. sections 1340 and 1345. Mrs. Haag pleaded her innocent
spouse claim in her answer, and the District Court entertained
that claim as an affirmative defense to the Government’s
collection claim. The Court of Appeals for the First Circuit
affirmed that judgment in Haag I; and when Mrs. Haag tried to
resist the application of res judicata in Haag III, the same
Court of Appeals (and the court to which an appeal from the
instant case would lie) held against her again. Any challenge to
the competency of the District Court to enter judgment on that
claim has been resolved against Mrs. Haag.10
3. The District Court’s judgment considered Mrs. Haag’s
innocent spouse claim: Mrs. Haag sought summary judgment and the
Government sought partial summary judgment on the innocent spouse
defense, and the District Court granted the Government’s motion
because it held that Mrs. Haag failed to satisfy the statutory
and regulatory requirement that she timely request relief. The
District Court’s judgment was a final judgment on the merits of
this claim.
10
Whether a District Court has jurisdiction to decide an
innocent spouse claim in a collection suit (such as Haag I) can
be disputed. See Pollock v. Commissioner, 132 T.C. 21, 25 n.11
(2009). However, Mrs. Haag’s challenge to the res judicata
effect of Haag I was resolved against her in Haag III, so that
she is collaterally estopped (see note 9 above) from challenging
the res judicata effect of Haag I.
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4. Finally, in this case Mrs. Haag seeks innocent spouse
relief for tax years 1985-1991 and 1993. Identity between claims
raised in an earlier and a later suit depends on whether the
claims derive from a common nucleus of operative facts--the
transactional approach. Gonzales v. Banco Cent. Corp., 27 F.3d
751, 755 (1st Cir. 1994). The District Court entered a judgment
of approximately $1.85 million against Mrs. Haag and her husband
for tax years 1985-1991 and 1993, and the District Court decided
Mrs. Haag was not eligible to seek innocent spouse relief for
those same years. Thus, the innocent spouse claim that she
attempts to raise in this case (for tax years 1985-1991 and 1993)
derives from the same nucleus of operative facts as the innocent
spouse claim that she already litigated (for the same tax years)
in Haag I.
Where the four conditions for claim preclusion are thus
present, relitigation of a claim is barred by res judicata.
III. The non-effect of Lantz v. Commissioner
A legal development important to Mrs. Haag occurred after
Haag I held that her assertion of section 6015 was untimely:
This Court struck down section 1.6015-5(b)(1), Income Tax Regs.,
as an invalid interpretation of section 6015(f) in Lantz v.
Commissioner, 132 T.C. 131 (2009), revd. 607 F.3d. 479 (7th Cir.
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2010).11 Thus, if Mrs. Haag were seeking innocent spouse relief
in this Court in the first instance, then--apart from any effect
of Haag I--her delay in requesting that relief would not
necessarily disqualify her. She implicitly argues that this
Court’s intervening decision in Lantz should forestall the
application of res judicata arising from Haag I. This argument
cannot avail.
The doctrine of res judicata (unlike the doctrine of
collateral estoppel)12 admits no exception for changes in the
law. Res judicata prohibits the relitigating of a claim or cause
of action, absent fraud or some other factor that invalidates the
original judgment. Commissioner v. Sunnen, 333 U.S. at 597.
Thus, even where the law has changed after a first judgment on
11
After the Court of Appeals for the Seventh Circuit
reversed Lantz, we reconsidered the matter but did not change our
position. See Hall v. Commissioner, 135 T.C. 374 (2010), on
appeal (6th Cir., Dec. 7, 2010). The Court of Appeals for the
Third Circuit has recently held the two-year deadline to be
valid. See Mannella v. Commissioner, 631 F.3d 115 (3d Cir.
2011), revg. 132 T.C. 196 (2009).
12
Collateral estoppel may not lie where the controlling
facts or applicable legal rules have changed. See Commissioner
v. Sunnen, 333 U.S. 591, 599-600 (1948). Where the legal or
factual situation in the second case is different, the prior
determination on that issue may no longer be conclusive. For
example, “a judicial declaration intervening between the two
proceedings may so change the legal atmosphere as to render the
rule of collateral estoppel inapplicable.” Id. at 600. However,
even assuming that our decision in Lantz is such a “judicial
declaration”, we note that it was issued in April 2009, eight
months before the Court of Appeals for the First Circuit affirmed
Haag III in December 2009. It is therefore not strictly correct
that Lantz “interven[ed] between” Haag III and this case.
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the merits, a given claim may be relitigated only if the first
judgment is voided in the original court or reversed on appeal.13
Therefore, a change in the law after a matter has been litigated
does not change the claim-preclusive effect of the earlier
decision. Id. at 598-599.
In Haag I Mrs. Haag litigated her innocent spouse claim for
the very years that are at issue here, and under res judicata the
judgment in Haag I precludes her raising in this Court a
repetitive claim for those same years. She is therefore
precluded from “relitigating issues that were or could have been
raised in that action”, Allen v. McCurry, 449 U.S. at 94
(emphasis added), including the issue of the validity of
26 C.F.R. section 1.6015-5(b)(1), Income Tax Regs. Our
invalidating the regulation does not render invalid the District
Court’s judgment (affirmed on appeal) in Haag I and cannot
deprive that judgment of res judicata effect.
IV. The inapplicability of section 6015(g)(2)
Mrs. Haag insists that she has never had the opportunity to
establish that she is entitled to innocent spouse relief, and in
13
Accordingly, any relief for Mrs. Haag would lie not in
this Court, where res judicata bars her relitigating the innocent
spouse claim, but in the Federal courts in Massachusetts, where
the original decisions might be voided or reversed. Of course,
having already lost this issue in those courts at trial and
several times on appeal, Mrs. Haag may have no practical remedy
for her failure to timely request relief, but that does not
confer on this Court any power to undo their decisions.
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a sense that is correct; i.e., the two-year time bar of the
regulation has prevented her attempts to prove that she is
entitled to relief. She invokes section 6015(g)(2), which
provides:
(2) Res judicata.--In the case of any election
under subsection (b) or (c) or of any request for
equitable relief under subsection (f), if a decision of
a court in any prior proceeding for the same taxable
year has become final, such decision shall be
conclusive except with respect to the qualification of
the individual for relief which was not an issue in
such proceeding. The exception contained in the
preceding sentence shall not apply if the court
determines that the individual participated
meaningfully in such prior proceeding. [Emphasis
added.]
That is, to escape the effect of res judicata from prior
litigation, the requesting spouse must show (1) that her innocent
spouse claim “was not an issue” in the prior proceeding and
(2) that she did not “participate[] meaningfully” in the prior
proceeding. Mrs. Haag meets neither of those conditions.
First, her innocent spouse claim was explicitly at issue in
Haag I and was presented to the court by the parties’ cross-
motions for summary judgment on that very issue, and the District
Court explicitly denied her claim for innocent spouse relief.
Second, her allegation that she did not meaningfully
participate in Haag I falls far short. Mrs. Haag was a party in
Haag I; she had a lawyer; and he pressed her innocent spouse
claim. It cannot be said that she did not participate
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meaningfully in Haag I. Section 6015(g)(2) therefore does not
alter the operation of res judicata in this instance.
Because res judicata bars Mrs. Haag’s relitigating the
innocent spouse claims she already litigated in Haag I, we will
grant respondent’s motion for summary judgment and affirm the
IRS’s denial of innocent spouse relief to Mrs. Haag.
To reflect the foregoing,
An appropriate order and
decision will be entered.