T.C. Memo. 2007-112



                      UNITED STATES TAX COURT



                  BEA-JAYE WARE, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 21809-04.            Filed May 1, 2007.



     William J. Day and Austin B. Barnes III, for petitioner.

     Alisha M. Harper, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     HAINES, Judge:   Respondent determined that petitioner is not

entitled to relief under section 6015(f) for joint income tax

liabilities for 1997 through 1999 (the years in issue).1   The



     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended. Amounts are rounded to
the nearest dollar.
                                - 2 -

issue for decision is whether respondent abused his discretion in

denying petitioner’s request for equitable relief under section

6015(f).

                          FINDINGS OF FACT

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.2      At the time she filed

her petition, petitioner resided in Brunswick, Ohio.

     Petitioner and David C. Crouch (Mr. Crouch) were married on

December 31, 1992.    At the time of trial, petitioner and Mr.

Crouch remained married and continued to reside in the same

residence.

     Petitioner and Mr. Crouch are graphic design artists.

During the years at issue, Mr. Crouch owned and operated Dave

Crouch Graphics.    Mr. Crouch made no estimated tax payments on

income he received from Dave Crouch Graphics.      During the years

at issue, petitioner was employed by Advanstar Communications,

Inc. (Advanstar).    Advanstar withheld Federal income tax from

petitioner’s wages, and had she filed her returns as married



     2
        Respondent reserved relevancy objections to three
exhibits attached to the stipulation of facts and to all trial
testimony on the basis that such information was not available to
the Appeals officer when she made her determination in this case.
While the relevance of some of the disputed exhibits and
testimony is limited, the Court will give the evidence only such
consideration as is warranted by its pertinence to the Court’s
analysis of the instant case.
                                - 3 -

filing separately, petitioner would have been entitled to a

refund.

     Petitioner and Mr. Crouch filed their 1994 through 1996 tax

returns as married filing separately.   Petitioner and Mr. Crouch

filed a joint 1997 Federal income tax return on May 7, 1999,

reflecting an amount owed of $33,423.   The amount owed was

attributable solely to Mr. Crouch’s business activities.

Petitioner and Mr. Crouch included a $6,500 payment with their

1997 return and made an additional payment of $4,000 in August

1999.    In October 2000, petitioner received notice that her wages

were to be garnished in order to pay her and Mr. Crouch’s 1997

outstanding tax liability.   For pay periods ending November 3 and

17, and December 1 and 15, 2000, Advanstar withheld $557 from

petitioner’s pay as garnishment.3

     On November 9, 2000, petitioner and Mr. Crouch filed joint

Federal income tax returns for 1998 and 1999, reflecting amounts

owed of $19,671 and $27,321, respectively.   The amounts owed were

attributable solely to Mr. Crouch’s business activities.   No

payments accompanied the 1998 and 1999 returns.   Petitioner

voluntarily signed the returns on November 9, 2000.   At the time

she signed the returns, she knew there was an outstanding tax


     3
        On Feb. 7, 2002, petitioner and Mr. Crouch’s 1997 joint
tax liability was discharged under 11 U.S.C. sec. 727, by the
U.S. Bankruptcy Court for the Northern District of Ohio.
Respondent has conceded that he will no longer attempt to collect
the discharged liability.
                               - 4 -

liability for 1997, that her wages were being garnished to pay

the 1997 tax liability, and that petitioner and Mr. Crouch could

not pay the amounts due for 1998 and 1999.

     On or about March 20, 2001, petitioner filed a Form 8857,

Request for Innocent Spouse Relief, requesting equitable relief

under section 6015(f).   Along with the Form 8857, petitioner

submitted a letter explaining why she thought she was entitled to

equitable relief.   The letter stated in part:

     Our tax matters have always been handled by David. * *
     * I had no knowledge that our Joint tax returns for tax
     years 1997, 1998 and 1999 were not timely filed. I
     became aware of this situation, last summer when * * *
     [a revenue officer] placed her business card in the
     door of our residence. I had no knowledge until this
     happened; and then I only knew Dave was behind for
     1997. When the Service levied my wages in December
     2000; I became aware of the unfiled 1998 & 1999 tax
     returns.

     The underpaid taxes * * * are attributable solely to
     David’s business * * * I have never been involved in my
     husband’s business * * *. David maintained the books
     and records of his business.

     David & I retained the law firm of Roni Lynn Deutch, to
     negotiate a payment plan on the delinquent tax returns.
     I was not offered nor received counsel with respect to
     my option of filing separately; from David, for the
     unfiled years. * * *

     If I had received knowledge of the tax situation by my
     husband, our tax preparer, or Roni Lynn Deutch I would
     have elected to file separate federal & state of Ohio
     tax returns for 1997, 1998 & 1999.

On August 17, 2001, respondent notified petitioner that the Form

8857 had been received and requested additional information.
                                - 5 -

     On September 19, 2001, petitioner submitted to respondent a

Form 886-A, Innocent Spouse Questionnaire.   Petitioner reported

monthly gross income of $3,715 and monthly expenses of $5,685.

Petitioner’s monthly expenses included, among other things, $300

for clothing, $700 for vehicle expenses, $240 for “pet care”, and

$400 in miscellaneous expenses.

     On December 20, 2001, respondent issued petitioner an

initial determination letter.   Respondent determined that

petitioner was not entitled to equitable relief under section

6015(f) for the years at issue, stating:

     To qualify for relief under IRC Section 6015(f), you
     must establish that you believed the tax would be paid
     at the time of filing the return. Information in your
     case file does not establish that you had belief that
     the tax would be paid at the time of filing.
     Therefore, your request for relief for the tax years *
     * * [at issue] has been disallowed.

On March 4, 2002, respondent received from petitioner a Form

12509, Statement of Disagreement, in which petitioner repeated

her arguments set forth in her request for innocent spouse

relief.

     On July 22, 2002, respondent advised petitioner that her

case had been received for consideration and identified Appeals

Officer Denise Neidermeyer (Ms. Neidermeyer) as the person

handling her case.   Ms. Neidermeyer determined that “The taxpayer

knew or had reason to know that the tax would not be paid when

she signed the [1998 and 1999] returns.    This is evidenced by the
                                - 6 -

fact that her wages were garnished for prior-year joint

liabilities before she signed the 1998 and 1999 returns.”   Ms.

Neidermeyer recommended that petitioner be denied equitable

relief under section 6015(f).   On August 12, 2004, respondent

issued petitioner a notice of determination denying her request

for equitable relief under section 6015(f).

     On November 15, 2004, petitioner filed her petition with

this Court.   Petitioner contended that respondent abused his

discretion in denying her equitable relief under section 6015(f).

This case was called for trial on March 27, 2006.

     On July 25, 2006, this Court issued Billings v.

Commissioner, 

(2006), holding that the Court does not

have jurisdiction to review the Commissioner’s denial of relief

under section 6015(f) in a case where no deficiency has been

asserted.   Our holding in Billings was in accord with the Courts

of Appeal opinions in Bartman v. Commissioner, 

(8th

Cir. 2006), affg. in part and vacating T.C. Memo. 2004-93, and

Commissioner v. Ewing, 

(9th Cir. 2006), revg. 

(2002).   On September 1, 2006, respondent filed a motion

to dismiss for lack of jurisdiction contending that, in light of

Billings v. 

, the Court lacked jurisdiction

over this case.

     In the Tax Relief and Health Care Act of 2006, Pub. L. 109-

432, div. C, sec. 408, 120 Stat. 3061, Congress reinstated our
                                  - 7 -

jurisdiction to review the Commissioner’s determinations under

section 6015(f) with respect to tax liability remaining unpaid on

or after December 20, 2006.     Upon order of the Court, the parties

certified that petitioner’s liability for tax years 1998 and 1999

remained unpaid as of December 20, 2006.4     Accordingly, the Court

determined that it has jurisdiction over this case and denied

respondent’s motion to dismiss for lack of jurisdiction.

                                 OPINION

     If a husband and wife file a joint Federal income tax

return, they generally are jointly and severally liable for the

tax due.    Sec. 6013(d)(3); Butler v. Commissioner, 

,

282 (2000).    However, a spouse may qualify for relief from joint

and several liability under section 6015(b) or (c) if various

requirements are met.      The parties agree that petitioner does not

qualify for relief under section 6015(b) or (c).

     If relief is not available under section 6015(b) or (c), the

Commissioner may relieve an individual of liability for any

unpaid tax if, taking into account all the facts and

circumstances, it would be inequitable to hold the individual

liable.    Sec. 6015(f).   This Court has jurisdiction to review a

denial of equitable relief under section 6015(f).     Sec. 6015(e);




     4
        Petitioner’s 1997 tax year is no longer at issue.     See
supra note 3.
                                - 8 -

see also Farmer v. Commissioner, T.C. Memo. 2007-74; Van Arsdalen

v. Commissioner, T.C. Memo. 2007-48.

     We review the Commissioner’s denial of relief for abuse of

discretion.   Jonson v. Commissioner, 

, 125 (2002),

affd. 

(10th Cir. 2003); Farmer v. 

; Van Arsdalen v. 

.    The taxpayer seeking

relief has the burden of proof.    Alt v. Commissioner, 

, 311 (2002), affd. 

(6th Cir. 2004).     To

prevail, the taxpayer must show that the Commissioner’s

determination was arbitrary, capricious, or without sound basis

in fact or law.     Butler v. 

at 291-292; Farmer

v. 

; Van Arsdalen v. 

.

     The Commissioner promulgated a list of factors in Rev. Proc.

2000-15, sec. 4, 2000-1 C.B. 447, 448-449, that the Commissioner

considers in determining whether to grant equitable relief under

section 6015(f).5    First, the Commissioner will not grant relief

unless seven threshold conditions have been met:    (1) The

taxpayer must have filed joint returns for the taxable years for

which relief is sought; (2) the taxpayer does not qualify for



     5
        Respondent’s determination was subject to Rev. Proc.
2000-15, 2000-1 C.B. 447. Rev. Proc. 

, was
superseded by Rev. Proc. 2003-61, 2003-2 C.B. 296, for requests
for relief under sec. 6015(f) that were filed on or after Nov. 1,
2003, or if pending on Nov. 1, 2003, for which no preliminary
determination letter had been issued as of Nov. 1, 2003. While
petitioner’s request was pending on Nov. 1, 2003, a preliminary
determination letter was issued before Nov. 1, 2003.
                                 - 9 -

relief under section 6015(b) or (c); (3) the taxpayer must apply

for relief no later than 2 years after the date of the

Commissioner’s first collection activity after July 22, 1998,

with respect to the taxpayer; (4) the liability must remain

unpaid; (5) no assets were transferred between the spouses filing

the joint returns as part of a fraudulent scheme by such spouses;

(6) there were no disqualified assets transferred to the taxpayer

by the nonrequesting spouse; and (7) the taxpayer did not file

the returns with fraudulent intent.      Rev. Proc. 2000-15, sec.

4.01, 2000-1 C.B. at 448.    Respondent concedes that petitioner

meets these conditions.

     Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B. at 448-449, lists

two factors which, if true, the Commissioner treats as favoring

relief:   (1) The taxpayer is separated or divorced from the

nonrequesting spouse; and (2) the taxpayer was abused by the

nonrequesting spouse.    Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B.

at 449, also lists two factors which, if true, the Commissioner,

treats as not favoring relief:    (3) The taxpayer received

significant benefit (beyond normal support) from the unpaid

liability or the item giving rise to the deficiency; and (4) the

taxpayer has not made a good faith effort to comply with Federal

income tax laws in the tax years following the tax year to which

the request for relief relates.    See Ferrarese v. Commissioner,

T.C. Memo. 2002-249.    The Commissioner generally does not
                                - 10 -

consider the absence of any of the factors (1), (2), (3), or (4)

as weighing in favor of, or against, whether to grant relief

under section 6015(f).    Rev. Proc. 2000-15, sec. 4.03, 2000-1

C.B. at 448-449.

     Rev. Proc. 2000-15, sec. 4.03, lists the following four

factors which, if true, the Commissioner treats as favoring

relief, and which, if not true, the Commissioner treats as not

favoring relief:    (5) The taxpayer would suffer economic hardship

if relief were denied; (6) in the case of a liability that was

properly reported but not paid, the taxpayer did not know and had

no reason to know that the liability would not be paid; (7) the

liability for which relief is sought is attributable to the

nonrequesting spouse; and (8) the nonrequesting spouse has a

legal obligation pursuant to a divorce decree or agreement to pay

the outstanding tax liability (weighs against relief only if the

requesting spouse has the obligation).       Rev. Proc. 2000-15, sec.

4.03, also states that no single factor is controlling, all

factors will be considered and weighed appropriately, and the

list of factors in Rev. Proc. 2000-15, sec. 4, is not exhaustive.

     1.   Petitioner’s Marital Status

     Petitioner and Mr. Crouch were still married when petitioner

sought relief.     This factor is neutral.
                                  - 11 -

     2.    Spousal Abuse

     Petitioner did not allege that she suffered from spousal

abuse.    This factor is neutral.

     3.     Significant Benefit

     Respondent determined that petitioner received significant

benefit beyond normal support from the unpaid tax liability.

During the years at issue, petitioner and Mr. Crouch failed to

pay self-assessed taxes of nearly $70,000, excluding any

penalties or interest.     While the outstanding tax liability arose

solely from Mr. Crouch’s business activities, petitioner does not

allege that Mr. Crouch secreted his earnings that would otherwise

have been used to pay the taxes due.        The record establishes that

petitioner’s and Mr. Crouch’s failure to pay the taxes due

increased their expendable income.         Further, petitioner testified

that her husband’s income allowed her to meet the monthly

expenses in excess of her own income.        Petitioner’s monthly

expenses included $300 for clothing, $700 for vehicle expenses,

$240 for pet care, and $400 in miscellaneous expenses.        While

neither petitioner nor respondent has elaborated on what “normal

support” is in this case, the above-described expenses certainly

go beyond normal support.    Because the underpayment of tax

allowed petitioner to meet these expenses, we find that

petitioner received significant benefit beyond normal support

from the unpaid liability.    This factor weighs against relief.
                              - 12 -

     4.   Compliance With Tax Laws

     Petitioner complied with Federal income tax laws after 1999,

the last year in issue.   This factor is neutral.

     5.   Economic Hardship

     A factor treated by the Commissioner as weighing in favor of

relief under section 6015(f) is that paying the taxes owed would

cause the requesting spouse to suffer economic hardship.     Rev.

Proc. 2000-15, sec. 4.03(1)(b), 2000-1 C.B. at 448.    The

Commissioner considers the taxpayer to suffer economic hardship

if paying the tax would prevent the taxpayer from paying

reasonable basic living expenses.    Sec. 301.6343-1(b)(4)(i),

Proced. & Admin. Regs.; Rev. Proc. 2000-15, secs. 4.02(1)(c) and

4.03(1)(b), 2000-1 C.B. at 448-449.

     Respondent determined that petitioner failed to allege that

economic hardship would arise if she were denied relief.

Petitioner did not allege in her request for innocent spouse

relief, at trial, or in her opening brief that she would suffer

economic hardship if denied relief.    Petitioner’s first and only

mention of economic hardship is in her reply brief, where she

states:   “It is simply baffling that respondent cannot determine

for itself that petitioner would suffer economic hardship if

relief from joint and several liability is not granted when it

was garnishing $557.45 from her paychecks leaving her a paltry

$356.55 for two (2) weeks take home pay.”    While the garnishment
                               - 13 -

certainly reduced petitioner’s expendable income in November and

December of 2000, it does not establish that payment of the

outstanding tax liability would prevent petitioner from paying

reasonable basic living expenses.   Petitioner has presented no

evidence, either to respondent or to the Court, that she would

suffer economic hardship if denied relief.    Common sense suggests

that payment of the outstanding tax liability would put

petitioner in a less-than-desirable financial situation.

However, based on petitioner’s complete lack of proof, we have no

choice but to conclude petitioner would not suffer economic

hardship if she were denied relief.     This factor weighs against

relief.

     6.   Knowledge or Reason To Know

     In determining whether a taxpayer qualifies for equitable

relief under section 6015(f), the Commissioner considers whether

the requesting spouse knew or had reason to know that the

reported liability would be unpaid at the time the return was

signed.   Rev. Proc. 2000-15, sec. 4.03(2)(b), 2000-1 C.B. at 449.

     Respondent determined that petitioner knew or had reason to

know that the reported liability would be unpaid when the 1998

and 1999 returns were filed.   Petitioner argues that she was

unaware of the tax problems surrounding Mr. Crouch’s business
                               - 14 -

activities and that she had no reason to know their 1998 and 1999

reported tax liabilities would be unpaid.6

     Prior to signing and filing the 1998 and 1999 tax returns,

petitioner’s wages were garnished by respondent to pay

petitioner’s and Mr. Crouch’s joint 1997 tax liability.     At the

least, this put petitioner on notice of the tax problems she and

Mr. Crouch were facing.   Even more detrimental to her argument,

petitioner testified that she knew they could not pay the amount

due when she signed the returns.    We find petitioner knew or had

reason to know that the reported liability would be unpaid at the

time she signed the returns.   This factor weighs against relief.

     7.   Whether the Underpayment of Tax Is Attributable to the
          Non-Requesting Spouse

     Respondent concedes that the underpayment of tax was solely

attributable to Mr. Crouch’s business activities.     This factor

favors relief.

     8.   Legal Obligation To Pay

     Because there is no decree or agreement imposing such

obligation, this factor is neutral.

     The only factor favoring relief is that the underpayment of

tax was attributable to Mr. Crouch.     This factor is strongly



     6
        In support of her argument, petitioner cites Browda v.
Commissioner, T.C. Summary Opinion 2004-16. Under sec. 7463(b),
summary opinions are not treated as precedent for any other case,
and we do not consider further petitioner’s argument as it
relates to Browda.
                             - 15 -

outweighed by the significant benefit petitioner received from

the underpayment, her knowledge or reason to know that the

reported liability would be unpaid, and her failure to

demonstrate economic hardship.   Based on the above, we find that

petitioner has failed to carry her burden of showing respondent

abused his discretion in denying her equitable relief under

section 6015(f).

     In reaching our holding herein, we have considered all

arguments made, and, to the extent not mentioned above, we

conclude that they are moot, irrelevant, or without merit.

     To reflect the foregoing and respondent’s concession

regarding petitioner’s 1997 tax year,



                                              An appropriate

                                         decision will be entered.