T.C. Memo. 2007-129



                UNITED STATES TAX COURT



          DEBRA ANNE BANDERAS, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 7733-05.                Filed May 22, 2007.



     P filed joint Federal income tax returns with her
husband H for the 1997 and 1999 taxable years. The
returns were signed subsequent to H’s filing for
bankruptcy protection and reported balances due that
were not paid upon submission. Following H’s death, P
sought relief from joint and several liability under
sec. 6015(f), I.R.C., with respect to the 1997 and 1999
liabilities.

     Held: P is not entitled to relief from joint and
several liability, pursuant to sec. 6015(f), I.R.C.,
with respect to her 1997 and 1999 taxable years.


James R. Monroe, for petitioner.

Miriam C. Dillard, for respondent.
                                - 2 -

               MEMORANDUM FINDINGS OF FACT AND OPINION


     WHERRY, Judge:    This case arises from a petition for

judicial review filed in response to a determination concerning

relief from joint and several liability under section 6015.1    The

issue for decision is whether denial by respondent of

petitioner’s request for relief from joint and several liability

for the taxable years 1997 and 1999 constitutes an abuse of

discretion.

                          FINDINGS OF FACT

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

The stipulations of the parties, with accompanying exhibits, are

incorporated herein by this reference.

     Petitioner married Julio C. Banderas (Dr. Banderas) in March

of 1972.    For most of their married life, the couple resided in

Georgia, where Dr. Banderas practiced medicine, specializing in

orthopedic surgery, and petitioner stayed at home caring for

their children and children from a previous marriage of Dr.

Banderas.   Petitioner later returned to school and in 1993

completed a registered nursing degree.   Throughout the relevant

period and at the time of trial, petitioner was employed in the

nursing field, often working multiple jobs.   During their


     1
       Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, and Rule references
are to the Tax Court Rules of Practice and Procedure.
                                 - 3 -

marriage, petitioner and Dr. Banderas maintained and had equal

access to a joint checking account, and both wrote checks on the

account.   Both also opened household mail.    Dr. Banderas,

however, assumed primary responsibility in handling the family’s

financial affairs.

     In the mid-1990s, Dr. Banderas became involved in a contract

dispute with a business associate, Alexander Doman (Dr. Doman),

who was to purchase Dr. Banderas’s medical practice in

preparation for Dr. Banderas’s retirement.     The matter proceeded

to litigation and resulted in a $832,447 civil judgment against

Dr. Banderas on June 25, 1997.    To collect on the judgment, the

Banderases’ joint checking account was levied in 1997.

Petitioner then, in August of 1997, opened a separate checking

account into which Dr. Banderas’s Social Security checks and

petitioner’s income were deposited and out of which living

expenses were paid.

     During the pendency of the foregoing controversy,

Dr. Banderas retired, and he and petitioner moved to Florida in

early 1996.   Thereafter, on October 3, 1997, Dr. Banderas filed a

voluntary chapter 7 bankruptcy petition in the U.S. Bankruptcy

Court for the Middle District of Florida.     The bankruptcy case

was closed by order of that court on July 21, 2005, after
                                - 4 -

disbursement by the trustee of more than $2.37 million.2

Meanwhile, on October 15, 1998, petitioner and Dr. Banderas

signed and timely filed a joint Form 1040, U.S. Individual Income

Tax Return, for 1997.    The return reflected total adjusted gross

income of $304,673, consisting primarily of pension, annuity, and

Social Security income of Dr. Banderas but also including $5,025

of wage income earned by petitioner.3   A reported $10,250 was

shown as Federal income tax withheld, $250 of which represented

withholding from petitioner’s wages.    The stated balance due was

$64,767.   Petitioner was aware of the balance due at the time she

signed the return.   No payment was submitted with the return.

The Banderases’ joint Form 1040 for 1998 was filed in late 1999

reporting a loss and is not at issue here.

     By 1999, financial pressures had apparently led Dr. Banderas

to return to work.   Then, on September 16, 1999, Dr. Banderas was

diagnosed with cancer.   The cancer was terminal, and Dr. Banderas

died of complications from the disease on November 16, 1999.     On

October 15, 2000, petitioner signed and timely filed a joint Form

1040 for 1999 as a surviving spouse.    The return reflected total

adjusted gross income of $121,326, which amount incorporated wage


     2
       This Court takes judicial notice of the July 21, 2005,
order. See Fed. R. Evid. 201; Estate of Reis v. Commissioner, 

, 1027 (1986).
     3
       The Banderases rounded the amounts reported on their tax
returns.
                                 - 5 -

and Social Security income of Dr. Banderas totaling $84,089 and

petitioner’s wages of $37,068.    After subtraction of $10,063 in

Federal income tax withheld, $853 of which was attributed to

petitioner’s wages, the return reported a balance due of $10,262.

No payment was submitted with the return.

     On or about June 12, 2003, the Internal Revenue Service

(IRS) received from petitioner a signed Form 8857, Request for

Innocent Spouse Relief.   Petitioner indicated on the Form 8857

that she was requesting equitable relief under section 6015(f)

for underpayments of tax for 1997 and 1999,4 and she attached the

following explanatory statement:

          Most of my married life - which was my entire
     adult life until my husband passed away - I was a
     “stay-at-home” wife and mother, with my husband working
     hard to support us and to build what we thought was our
     retirement plan.
          In 1997, as a result of an unjust judgement
     against my husband, an illegal hold was placed on our
     joint checking account, which caused our check to the
     IRS for the balance of our 1996 taxes to bounce due to
     “unavailable funds”. Shortly afterwards, my husband
     was advised to file for bankruptcy.
          Before filing, we were reassured that the IRS
     would be the #1 creditor, and that all taxes would be
     paid before any other creditors. Had we not been
     assured of this, my husband would have gotten a
     distribution from the pension plan to pay any taxes
     before filing.
          During the bankruptcy proceedings, we realized
     that our retirement plan was, in reality, his
     retirement plan - and it was taken away. When my


     4
       Petitioner also listed 1996 as a year for which she was
requesting relief, but that year was not further considered after
the IRS explained that no balance was due.
                                 - 6 -

     husband passed away, the proceeds of his life insurance
     policy also went to the bankruptcy court.
          So I found myself, at almost 50 years of age, not
     only without my beloved husband, but also with the
     urgent need to prepare financially for my future.
          In an attempt to pay off our debts, to support
     myself since he passed away, and to try to prepare for
     my future/retirement, I have been working 2-3 jobs at a
     time, 70-100+ hours/week, something that I cannot
     continue much longer.
          Finding myself now responsible for an additional
     bill of over $100,000 to the IRS, I am overwhelmed even
     by the idea of how to pay it off. Because almost all
     the taxes were based on my husband’s income, etc., and
     the ensuing financial problems were a result of his
     petition of bankruptcy and the court’s actions, I
     respectfully request that I be relieved of the
     responsibility of these debts as they present an
     unfathomable hardship to me.

     Petitioner also submitted to the IRS a Form 12510,

Questionnaire for Requesting Spouse, dated July 22, 2003.    In

response to a question asking her to explain when and how she

thought reported balances due would be paid, petitioner wrote:

“By proceeds from my husband’s pension plan - never dreaming that

the court would take it away”.    A further question asking what

efforts were made to pay reported taxes after relevant returns

were filed elicited the following answer:

     Everything (pension plan) was frozen by the court - we
     were waiting for the discharge to have the funds freed
     up - in 99 we found that was never going to happen -
     accountant said with such a loss we would not owe
     anything “ever again”. Then my husband passed away;
     with $400,000 left in bankruptcy court they are telling
     me there will be none left for me or our kids.

Petitioner also on the Form 12510 completed a statement of her

average income and expenses.   She listed wage income of
                               - 7 -

approximately $80,000 and monthly expenses totaling approximately

$3,700.

     Petitioner’s request for relief was initially denied by the

IRS Examination Division on April 29, 2004.   Petitioner responded

with a statement of disagreement requesting that the IRS

reconsider the denial.   Her reasons for the continued dispute

paralleled those alluded to in her Forms 8857 and 12510, to wit:

     Contrary to your conclusion, when my husband and I
     signed the tax returns for 1997, we had every reason to
     believe that we would be able to pay those taxes.
     First of all, my husband’s attorney had assured us that
     the IRS was always the first creditor in bankruptcy
     proceedings. Therefore, we had no doubt that the taxes
     would be paid through the court. As stated in my
     original request for relief, had we even suspected that
     this would not be the case, the amount for the taxes
     could have - and would have - been withdrawn from the
     pension plan monies before the bankruptcy was ever
     filed. Also, had that suspicion existed, we still
     would have had the security of knowing that the taxes
     could be paid with pension plan funds after the
     bankruptcy was discharged. Never in our wildest dreams
     - or worst nightmares - did it ever occur to us that
     the pension plan could be lost to the court. I believe
     that it was two years later when we found that this
     travesty of justice could actually take place.

     While I knew when I filed and signed the 1999 return
     that we had lost our pension plan, I believed, again
     without a doubt, that those taxes would be paid.
     Shortly after my husband’s death, before the return was
     filed, I was told by several sources, including the
     bankruptcy trustee, that remaining monies would go to
     me as his beneficiary. When my husband passed away,
     the bankruptcy court received an additional $750,000.00
     - ¾ of a million dollars - from the proceeds of my
     husband’s life insurance policy (monies which I still
     contend rightfully belong to our children and me).
     Therefore, although I no longer had faith or trust in
     our “judicial” system, logic alone told me that there
     would be more than enough monies to pay all taxes and
                               - 8 -

     debts owed. It was not until last year, 2003, that the
     trustee intimated that, although there was over
     $400,000 remaining with the court, with all creditors
     having been paid, that there “may not” be anything left
     for me and/or the family. Over a year later, I am
     still unable to fathom either the ludicrousness or
     horrific injustice of this outcome.

     Petitioner received the requested reconsideration of her

claim by the IRS Office of Appeals.    Appeals Officer Mark Pearce

(Mr. Pearce) was assigned petitioner’s case in July of 2004.    His

case activity records show that Mr. Pearce communicated with

petitioner or her representative, James R. Monroe (Mr. Monroe),

on a number of occasions and logged at least 8.75 hours

specifically on her case.   After his review of the case,

Mr. Pearce concluded in an Appeals Case Memo prepared on February

22, 2005, that a weighing of the factors prescribed in Rev. Proc.

2003-61, 2003-2 C.B. 296, for evaluating claims under section

6015(f) did not support petitioner’s request for equitable

relief.

     On March 3, 2005, the IRS issued to petitioner a notice of

determination denying her request for section 6015(f) relief.

The grounds listed in the notice for the denial were that

petitioner had established neither a reasonable belief that the

tax would be paid nor economic hardship.   Petitioner filed a

timely petition with this Court contesting the adverse

determination and reflecting an address in Cape Coral, Florida.

A trial was held in November of 2005.   At the time of trial,
                               - 9 -

petitioner had, within the last month, moved to Las Vegas,

Nevada, and had just begun a new job.

     After posttrial briefs were filed, two Courts of Appeals,

those for the Eighth and Ninth Circuits, ruled that the Tax Court

lacked jurisdiction to consider denials of relief under section

6015(f) in proceedings where no deficiency had been asserted.

See Bartman v. Commissioner, 

, 787 (8th Cir. 2006),

affg. in part and vacating in part T.C. Memo. 2004-93;

Commissioner v. Ewing, 

, 1013-1014 (9th Cir. 2006),

revg. 

(2002), vacating 

(2004).   This

Court subsequently reached the same conclusion in Billings v.

Commissioner, 

, 17 (2006).

     Given these developments, the Court on August 30, 2006,

issued an order directing the parties to show cause why this case

should not be dismissed for lack of jurisdiction.   Following

responses from both parties, the Court on October 24, 2006,

issued T.C. Memo. 2006-228, holding that we were constrained to

dismiss this case.   An order of dismissal for lack of

jurisdiction was entered on the same date.

     Thereafter, the Tax Relief and Health Care Act of 2006, Pub.

L. 109-432, div. C, sec. 408, 120 Stat. 3061, amended section

6015(e)(1) to provide that this Court may review the

Commissioner’s denial of relief under section 6015(f) in cases

where no deficiency has been asserted.   The amendment applies
                               - 10 -

with respect to liability for taxes arising or remaining unpaid

on or after the December 20, 2006, date of enactment.

light of the change in the law, the Court on

December 26, 2006, issued an order directing the parties to show

cause why the earlier dismissal for lack of jurisdiction should

not be vacated.    Respondent filed a response confirming that

petitioner’s liabilities for the relevant years remain unpaid and

that the Court now has jurisdiction to review the underlying

determination.    The Court issued an order vacating the

October 24, 2006, dismissal on January 11, 2007.    This matter is

now in a posture to be addressed on the merits.

                               OPINION

     As a general rule, section 6013(d)(3) provides that “if a

joint return is made, the tax shall be computed on the aggregate

income and the liability with respect to the tax shall be joint

and several.”    An exception to such joint and several liability

exists, however, for spouses able to satisfy the statutory

requirements for relief set forth in section 6015.

     Section 6015 authorizes three types of relief.    Subsection

(b) provides a form of full or partial relief available to all

joint filers and similar to, but less restrictive than, that

previously afforded by former section 6013(e), which was repealed

for taxes remaining unpaid as of July 22, 1998, or arising after

that date.   Subsection (c) permits a taxpayer who has divorced or
                               - 11 -

separated to elect to have his or her tax liability calculated

proportionately as if separate returns had been filed.

Subsection (f) confers discretion upon the Commissioner to grant

equitable relief, based on all facts and circumstances, as

follows:

     SEC. 6015.   RELIEF FROM JOINT AND SEVERAL LIABILITY ON
                  JOINT RETURN.

          (f) Equitable Relief.--Under procedures prescribed
     by the Secretary, if--

                (1) taking into account all the facts and
           circumstances, it is inequitable to hold the
           individual liable for any unpaid tax or any
           deficiency (or any portion of either); and

                (2) relief is not available to such
           individual under subsection (b) or (c),

     the Secretary may relieve such individual of such
     liability.

     The Court reviews a denial of relief under section 6015(f)

for abuse of discretion; i.e., whether respondent’s determination

was arbitrary, capricious, or without sound basis in law or fact.

Jonson v. Commissioner, 

, 125 (2002), affd. 

(10th Cir. 2003); Butler v. Commissioner, 

, 292

(2000).    Except as otherwise provided in section 6015, the

taxpayer generally bears the burden of proving such an abuse of

discretion.   Rule 142(a); Alt v. Commissioner, 

, 311

(2002), affd. 

(6th Cir. 2004); Jonson v.

Commissioner, supra at 113.
                             - 12 -

     Relief under section 6015(b) or (c) is premised on the

existence of an understatement or deficiency.   Because the

liabilities at issue in this case derive from unpaid taxes

reported on the 1997 and 1999 returns, petitioner is not eligible

for relief under subsection (b) or (c).   Accordingly, there is no

dispute that petitioner satisfies the criterion for equitable

relief codified in section 6015(f)(2).    The instant dispute thus

centers on the facts and circumstances inquiry of section

6015(f)(1).

     As directed by section 6015(f), the Secretary has

promulgated guidance to structure the relevant facts and

circumstances analysis, the applicable version of which is set

forth in Rev. Proc. 2003-61, 2003-2 C.B. 296.    Rev. Proc. 2003-

61, sec. 4.01, 2003-2 C.B. at 297, first lists seven threshold

conditions that must be met before the IRS will consider a

request for relief under section 6015(f):   (1) The requesting

spouse filed a joint return for the year for which relief is

sought; (2) relief is not available under section 6015(b) or (c);

(3) the application for relief is made no later than 2 years

after the date of the IRS’s first collection activity; (4) no

assets were transferred between the spouses as part of a

fraudulent scheme; (5) the nonrequesting spouse did not transfer

disqualified assets to the requesting spouse; (6) the requesting

spouse did not file or fail to file the return with fraudulent
                                - 13 -

intent; and (7) absent enumerated exceptions, the liability from

which relief is sought is attributable to an item of the

nonrequesting spouse.    Respondent here concedes that petitioner

meets these seven conditions.

     Rev. Proc. 2003-61, sec. 4.02, 2003-2 C.B. at 298, then

gives three circumstances under which, if all are satisfied, the

IRS “ordinarily will grant relief” with respect to underpayments

on joint returns.   The first of these elements requires that, on

the date of the request for relief, the requesting spouse be no

longer married to, be legally separated from, or not have been a

member of the same household as the nonrequesting spouse at any

time during the preceding 12-month period.

C.B. at 298.     The death of Dr. Banderas in November of

1999 preceded petitioner’s request by more than 12 months, and

this element therefore raises no barrier.     The remaining two

elements, however, which address knowledge and economic hardship,

are at the crux of the instant controversy.

     The second, or knowledge, element requires that:

     On the date the requesting spouse signed the joint
     return, the requesting spouse had no knowledge or
     reason to know that the nonrequesting spouse would not
     pay the income tax liability. The requesting spouse
     must establish that it was reasonable for the
     requesting spouse to believe that the nonrequesting
     spouse would pay the reported income tax liability. If
     a requesting spouse would otherwise qualify for relief
     under this section, except for the fact that the
     requesting spouse’s lack of knowledge or reason to know
     relates only to a portion of the unpaid income tax
     liability, then the requesting spouse may receive
                               - 14 -

     relief to the extent that the income tax liability is
     attributable to that portion. [Id. sec. 4.02(1)(b),
     2003-C.B. at 298.]

     Petitioner argues that respondent erred in concluding that

she possessed knowledge or reason to know that the taxes would

not be paid.   As to 1997, petitioner contends that she had a

reasonable belief that the taxes would be paid either out of the

bankruptcy proceeding, from Dr. Banderas’s pension plan, or from

future earnings obtained through Dr. Banderas’s returning to

work.   As to 1999, petitioner alleges that she reasonably

believed that the taxes would be paid from funds remaining after

the close of the bankruptcy proceeding, particularly in light of

the additional $750,000 received by the bankruptcy estate from a

life insurance policy on Dr. Banderas.

     Petitioner testified regarding payment of the balances due

on the 1997 and 1999 returns, of which she was concededly aware.

The following colloquy on direct examination dealt with 1997:

          Q     Did your husband attempt to pay the 1997
     taxes?

          A    We didn’t--we had no access to the money at
     that time. It was in the Bankruptcy Court, and we--

           Q    So the bankruptcy was filed in 1997?

           A    Right.   Before we filed the return.

           Q    And the return was filed in 1998?

           A    Right.

           Q    And all the funds were tied up in bankruptcy?
                              - 15 -

          A    Right.

          Q    What source did your husband attempt to use
     to pay the 1997 taxes that were due?

          A    Well, we were told that the IRS was the
     number one creditor. And we expected the Court, the
     Bankruptcy Court to pay the taxes.

          Q    Any other source?

          A    If we--well, the pension plan. Because we
     thought the pension plan was protected, and we never
     thought that was going to be taken away from us.

          Q    How much was in the pension plan?

               *      *   *    *    *     *   *

          A    Over a million dollars. Plus my husband’s
     life insurance ended up being in there too. So over $2
     million in the end.

          Q    Did somebody tell you that the pension funds
     were exempt?

          A    We have always been told that the pension
     plan was exempt. Yes.

               *      *   *    *    *     *   *

          Q    What would have happened if the pension plan
     didn’t pay for the taxes and the bankruptcy hadn’t paid
     for the taxes? Was there any other source of--

          A    My husband would have had to go back to work,
     which he ended up having to do anyway.

With respect to 1999, counsel inquired:   “what was your intent

regarding the balance due that was shown on the 1999 tax return”?

Petitioner replied:   “I anticipated money coming from the

Bankruptcy Court to pay it off”, and she went on to cite the

pension plan and life insurance.
                                - 16 -

     The overarching general question raised by petitioner’s

contentions is one of timing.    The standard suggested by

petitioner on brief highlights this issue:      “The test should be

whether the requesting spouse had a reasonable belief that the

taxes would eventually be paid by the non-requesting spouse.”

(Emphasis added.)   Petitioner was clearly aware on the dates she

signed the Forms 1040 that no liquid funds were available and on

hand to be submitted with the returns.      She knew that the bulk of

Dr. Banderas’s assets were tied up in the bankruptcy; there is no

suggestion that any concrete steps had been taken, or were ever

taken, to try to obtain a distribution from the pension plan; and

Dr. Banderas had not yet returned to gainful employment at the

time of filing the return for 1997 and was deceased at the time

of filing the return for 1999.

     It would thus appear that petitioner had not so much a

reasonable belief that the taxes would be paid as an inchoate

hope for a favorable change in circumstances that would, at some

undefined future point in time, place moneys at Dr. Banderas’s or

her own disposal to pay the taxes.       Petitioner has at no juncture

made any attempt to identify when, in terms of a particular time

period, she thought the taxes would be paid.      Furthermore,

although petitioner has generally alluded to being “told” that

the IRS would be the number one creditor in the bankruptcy and

that the pension plan was exempt, she did not call any witnesses
                               - 17 -

to establish the specific information she was given.   As much as

we sympathize with the unfortunate, even tragic, string of events

that befell the Banderas household, we cannot accept a test so

nebulous as that proposed by petitioner.   To do so would

essentially eviscerate the reasonable belief standard.

“Eventually” is simply too open-ended to place any meaningful or

administratively workable limits on qualification for relief.

     The Court concludes that a reasonable belief that taxes

would be paid must at minimum incorporate a belief that funds

would be on hand within a reasonably prompt period of time.5    As

just indicated, petitioner has failed to make such a showing

here.    Furthermore, because petitioner has never identified any

timeframe, the Court need not probe the contours of the how soon

question, or even whether the standard should be limited to




     5
       Taxpayers are required to pay their taxes when due. A
delay in payment not authorized by statute renders the Government
an involuntary creditor without security or other assurance that
the tax and interest thereon will be paid. When tax or interest
due is not paid, the burdens of Government are transferred to
other taxpayers, including those of future generations. Where
all funds needed to pay the taxes for a year of bankruptcy will
be trapped in the bankruptcy estate or for any other reason, the
bankrupt taxpayer and spouse may, at the taxpayer’s or spouse’s
option, elect to close their taxable years effective on the day
before the bankruptcy case was commenced. Sec. 1398(d)(2). This
election creates 2 short taxable years, the tax liability for the
first of which is included as a claim against the debtor’s estate
and is payable from the estate. Id.; see also sec. 6161(c)
(regarding authorized extensions of time to pay).
                              - 18 -

situations where moneys were thought to be available at the time

the relevant return was signed and filed.6

     The foregoing conclusion is consistent with the result

reached by this Court in other contexts involving factual

contingencies regarding source of payment.   In Vuxta v.

Commissioner, T.C. Memo. 2004-84, the Court addressed a

taxpayer’s request for relief under section 6015(f) for 1989,

1990, and 1991.   The underlying returns showing balances due had

been filed on September 17, 1990, September 23, 1991, and May 30,

1996, respectively.   The taxpayer and her husband had filed for


     6
       Placement of the modifying prepositional phrase (“On the
date the requesting spouse signed the joint return”) in the text
of Rev. Proc. 2003-61, sec. 4.02(1)(b), 2003-2 C.B. 296, 298,
would not appear to be conclusive on this issue. While the
Court’s placement of the phrase has varied, certain paraphrases
of the standard are amenable to a reading that could require a
belief that actual payment of the taxes would occur with the
filing of the return. E.g., Merendino v. Commissioner, T.C.
Memo. 2006-2 (“The relevant knowledge in the case of a reported
but unpaid liability is that the tax would not be paid when the
return was signed.”). The legislative history of the provision
might be open to a similar reading, in that the example supplied
indicates Congress intended for equitable relief to be granted
where a requesting spouse “does not know, and had no reason to
know, that funds intended for the payment of tax were instead
taken by the other spouse for such other spouse’s benefit.” H.
Conf. Rept. 105-599, at 254 (1998), 1998-3 C.B. 1008. Again,
however, the Court need not decide here whether such usages or
examples operate as limitations.

     Additionally, guidelines set forth in the Internal Revenue
Manual (IRM) could suggest a more liberal reading, stating: “A
belief the tax would be paid is not reasonable if the RS
[requesting spouse] knew or had reason to know the NRS
[nonrequesting spouse] was not in an economic position, and was
not expected to be in an economic position within the foreseeable
future, to pay those taxes.” IRM sec. 25.15.3.8.3.2(2).
                                - 19 -

bankruptcy on May 1, 1992, and received a discharge on May 23,

1997.     This Court concluded that, while the taxpayer lacked

knowledge or reason to know that the taxes for 1989 would not be

paid, she knew or had reason to know that the 1990 and 1991

liabilities would be unpaid because the return for 1990 preceded

the bankruptcy petition by only a little over 7 months and the

return for 1991 was filed during pendency of the bankruptcy case.

     In Morello v. Commissioner, T.C. Memo. 2004-181, the

taxpayer’s husband lost his job in 1992, and she returned to work

after more than 20 years as a homemaker, in order to help relieve

resultant financial difficulties.     By the time tax returns for

1992 through 1995 were signed and filed in 1996, financial

pressures, including mortgage foreclosure proceedings and the

fact that her husband was contemplating and then did file for

bankruptcy, had continued to plague the family for a number of

years.     Because the taxpayer was aware of these circumstances, we

held that she had not established that it was reasonable for her

to believe that the balances shown as due on the returns would be

paid.

        Given the foregoing, the Court cannot conclude that the

facts of this case are consistent with a reasonable belief that

the taxes would be paid.     Accordingly, petitioner has not shown

that, at the times she signed the 1997 and 1999 returns, she had

no knowledge or reason to know that the taxes would not be paid.
                              - 20 -

Her sincere hope for payment through eventual receipt of funds

from various contingencies is not sufficiently concrete to fall

within the ambit of a meaningful reasonableness standard.

     The third and final element of section 4.02 of Rev. Proc.

2003-61 places a requirement that the requesting spouse will

suffer economic hardship if relief is not granted.

C.B. at 298.   For purposes of making the

hardship determination, Rev. Proc. 

, references the

rules in section 301.6343-1(b)(4), Proced. & Admin. Regs.    The

cited provision defines economic hardship as an inability to pay

“reasonable basic living expenses” and directs the Commissioner

to consider factors such as, among other things, the taxpayer’s

age, employment status and history, ability to earn, number of

dependents, and amount reasonably necessary for food, clothing,

housing, utilities, medical expenses, insurance (including home-

owner & health), transportation, current tax payments, etc.     Sec.

301.6343-1(b)(4), Proced. & Admin. Regs.

     The parties dispute what information the Court should

consider in its analysis of this element.   Respondent’s position

is that consideration should take into account only those

materials provided to the Appeals Office during the underlying

administrative process.   Petitioner disagrees and has sought to

supplement the administrative record in several respects.

Petitioner suggests that a purportedly insufficient quantity of
                              - 21 -

time spent by the Appeals officer in reviewing her case and the

officer’s failure to request updated financial information

justify augmentation of the record.

     The Court stated its position on this issue in Ewing v.

Commissioner, 

(in exercising our jurisdiction

under section 6015(e)(1)(A) “to determine” whether a taxpayer is

entitled to relief under section 6015(f), it is appropriate for

this Court de novo to consider evidence beyond the administrative

record), vacated on other grounds 

(9th Cir. 2006).

However, because here the outcome flowing from a limited review

of the administrative record alone and that obtaining after

taking into account all information proffered by petitioner are

identical, the Court finds it unnecessary to comment further on

the merits of the parties’ differing views of the proper record

for review.

     During the administrative phase, petitioner submitted a Form

12510 dated July 22, 2003, showing an excess of income over

expenses of approximately $2,980 per month.    This portrayal

clearly fails to reflect economic hardship, and we do not read

petitioner’s arguments to contend otherwise.    Nor does petitioner

suggest that she provided updated financial information to the

Appeals officer at any time prior to his final recommendations on

her case in early 2005.   To the extent that petitioner intimates

that the burden rested entirely on the Appeals officer to request
                                - 22 -

new data, her point, in this particular context, is not well

taken.

     As a general matter, taxpayers are usually responsible for

establishing their positions before the IRS.    Second, on a more

specific and practical level, petitioner, despite being

represented by counsel, apparently never alerted the Appeals

officer of any relevant change in circumstances.    Furthermore,

the types of items reported on the Form 12510 were not inherently

of a nature to raise a suspicion of dramatic change over the

course of the ensuing period.    The only likely difference hinted

at on the face of the Form 12510 would have been a reduction in

income, as petitioner appended a comment that she might be unable

to continue to sustain multiple jobs.    However, third-party

payers reported to the IRS even higher wages of $87,925 for the

completed taxable year of 2003 (the most recent year for which

records would have been available during at least the majority of

the time petitioner’s case was before Mr. Pearce).    This fact was

noted by the Appeals officer in his recommendations.    Third-party

payers similarly reported still higher wages to petitioner of

$90,974 for 2004.   In this scenario, the Court, despite its

admiration for petitioner’s efforts to help herself, is

unconvinced that petitioner may abdicate all responsibility for

raising some issue of pertinent change or, conversely, that the
                              - 23 -

Appeals officer acted arbitrarily or capriciously in relying on

the information previously provided.

     Additionally, the Court is not persuaded that petitioner’s

remarks concerning the quantum of time devoted to her case should

have any bearing on our analysis.   The recorded time is in no way

patently insufficient, and the Court is not in a position to

divine any type of arbitrary standard as to the time it might

take an individual to properly evaluate a given set of facts.

     At trial, petitioner sought to introduce three 1-page sheets

of financial information, all dated November 14, 2005 (the date

of the calendar call):   (1) A listing of assets and liabilities;

(2) a listing of purported actual current income and expenses;

and (3) a listing of current income and expenses incorporating

national, regional, and local IRS standards.   The listings were

not accompanied by any supporting documentation.   Counsel for

respondent objected on grounds, in part, that she was not

provided with the exhibits until the morning of trial.    The

Court, in light of the Standing Pretrial Order and citing the

prejudice to respondent’s ability to prepare for cross-

examination, sustained the objection, and the documents were not

admitted.   Instead, petitioner testified regarding her estimates

of various assets, liabilities, income amounts, and expenses.

     Petitioner then filed a posttrial brief and attached thereto

three tables, purportedly summarizing petitioner’s testimony and
                              - 24 -

bearing striking similarity to the exhibits not admitted at trial

(with the income and expense listings now bearing two columns,

one labeled November 14, 2005, and the other labeled February

2005).   However, the tables incorporate noticeably more detail

and precision than can reasonably be gleaned from petitioner’s

often generalized approximations from the stand.

     It is the status of the record as just described that

precipitated the Court’s comment that the outcome of the case is

unaffected regardless of any proffered information considered in

augmentation of the administrative record.   The complete dearth

of any documentation to corroborate or substantiate the figures

renders petitioner’s various estimates unpersuasive in any event.

Moreover, the Court would observe that only the computations

purporting to detail income and expenses as of February 2005 show

an excess of expenses over income, and it is decidedly

questionable whether all of those expenses shown are properly

taken into account for purposes of section 301.6343-1(b)(4),

Proced. & Admin. Regs. (for example, charitable contributions and

payments on various liabilities).

     The Court is therefore constrained to conclude that

petitioner has failed to establish economic hardship within the

meaning of Rev. Proc. 2003-61, sec. 4.02, 2003-2 C.B. at 298.

Accordingly, on account of failure to satisfy two of the three

elements enumerated as delineating those circumstances in which
                              - 25 -

the Commissioner will ordinarily grant relief, petitioner does

not qualify for equitable relief under Rev. Proc. 2003-61, sec.

4.02, 2003-2 C.B. at 298.

     Where relief is not available under section 4.02 of Rev.

Proc. 2003-61, section 4.03 of the revenue procedure sets forth a

list of nonexclusive factors that the Commissioner will consider

in determining whether it would be inequitable to hold the

requesting spouse liable for all or part of the unpaid income tax

liability.   As emphasized in Rev. Proc. 2003-61, sec. 4.03(2),

2003-2 C.B. at 298, no single factor is to be determinative;

rather, all factors are to be considered and weighed

appropriately.

     Eight factors are listed, the latter two of which will weigh

in favor of granting relief if present but will not weigh against

relief if absent.   The factors are directed toward whether:    (1)

The requesting spouse is separated or divorced from the

nonrequesting spouse; (2) the requesting spouse will suffer

economic hardship without relief; (3) the requesting spouse did

not know or have reason to know that the nonrequesting spouse

would not pay the liability; (4) the nonrequesting spouse had a

legal obligation to pay the outstanding liability; (5) the

requesting spouse received significant benefit (beyond normal

support) from the enhanced assets or income resulting from the

unpaid liability; (6) the requesting spouse has made a good faith
                                - 26 -

effort to comply with income tax laws in subsequent years; (7)

the requesting spouse was abused by the nonrequesting spouse; and

(8) the requesting spouse was in poor mental or physical health

when signing the return or requesting relief.      Rev. Proc. 2003-

61, sec. 4.03(2)(a) and (b), 2003-2 C.B. at 298-299.

     As just described in connection with analysis of section

4.02 of Rev. Proc. 2003-61, the marital status factor weighs in

favor of granting relief, while the economic hardship and

knowledge elements weigh against granting relief.      The remaining

factors are considered below.

     The legal obligation factor asks whether the nonrequesting

spouse has an obligation to pay the outstanding liability

pursuant to a divorce decree or separation agreement.

C.B. at 298.      Because petitioner and

Dr. Banderas were never divorced or separated, this factor is

neutral.

     The significant benefit factor probes whether the requesting

spouse received, directly or indirectly, from the assets or

income resulting from the unpaid liability any benefit in excess

of normal support.   Sec. 1.6015-2(d), Income Tax Regs.; Rev.

Proc. 2003-61, sec. 4.03(2)(a)(v), 2003-2 C.B. at 299

(referencing sec. 1.6015-2(d), Income Tax Regs.).      Evidence of

such benefit “may consist of transfers of property or rights to

property, including transfers that may be received several years
                               - 27 -

after the year of the * * * [relevant return]”.    Sec. 1.6015-

2(d), Income Tax Regs.   Normal support is measured by the

circumstances of the particular parties.    Estate of Krock v.

Commissioner, 

, 678-679 (1989); Levy v. Commissioner,

T.C. Memo. 2005-92.

     Respondent notes that from 1999 to 2005, the Banderases or

petitioner sold several parcels of real property and received

approximately $8,000 to $10,000 on each of the three

transactions.   Petitioner testified that the proceeds were used

primarily to pay living and moving expenses, to make a

downpayment on a new residence, and to contribute to the cost of

a daughter’s wedding.    In 2004, petitioner received a $60,000

distribution from her individual retirement account.    Petitioner

also acknowledged making a loan of conservatively at least

$18,000 during 2004 to a friend whose whereabouts were unknown at

the time of trial.

     In the unique circumstances of this case, particularly the

fact that the majority of the Banderases’ assets were tied up in

the bankruptcy litigation, the described uses of the relatively

modest proceeds from the property transactions would not

generally appear to rise to the level of excess benefit.     The

wedding costs, however, give us pause.    Likewise, the $18,000

loan and the failure to apply any of the retirement account

distribution to outstanding taxes could signal a more telling
                                - 28 -

selective avoidance of tax liabilities.    Nonetheless, the Court

is also cognizant that, while the bankruptcy establishes reason

to know that the taxes would not be paid at the time of filing,

its pendency could have engendered a degree of confusion in

petitioner’s mind as to responsibility for the taxes and the

eventual source of funds for their payment.    The Court therefore

is unconvinced that the substantial benefit prong weighs strongly

either for or against relief.

     The compliance with income tax laws factor addresses the

good faith efforts of the requesting spouse in subsequent years.

Rev. Proc. 2003-61, sec. 4.03(2)(a)(vi), 2003-2 C.B. at 299.    The

record indicates that petitioner’s 2000 return was not timely

filed and that amounts due remained outstanding until at least

February of 2004.   The 2001 and 2002 returns were timely filed,

but the balance due for 2001 was not paid until January of 2003.

The 2002 taxes were timely paid.    As of the time of trial, IRS

records did not reflect that petitioner had filed her 2003 or

2004 returns.   Petitioner testified that she believed she timely

filed the 2003 return but refiled it, in response to IRS

inquiries, shortly before the trial in November of 2005, at which

time she also filed her initial return for 2004.    Petitioner also

explicitly conceded at trial and on brief that various of her

returns and related payments were delinquent on account of

financial difficulties, moves, misplaced documents, etc.
                              - 29 -

     Hence, petitioner’s compliance with tax laws subsequent to

the filing of the 1999 return reveals shortcomings.

Additionally, petitioner’s generalized allusions to financial

pressures and information misplaced during moves are insufficient

to establish good faith efforts with respect to the series of

delinquencies occurring over a period of years.    This factor

weighs against relief.

     The presence of abuse is a factor weighing in favor of

relief, but its absence carries no contrary weight.    Rev. Proc.

2003-61, sec. 4.03(2)(b)(i), 2003-2 C.B. at 299.    Because

petitioner has at no point alleged any abuse by Dr. Banderas,

this factor is neutral.

     The final factor enumerated in the revenue procedure, and

again weighing only in favor of and not against relief, is

directed toward whether the requesting spouse was in poor mental

or physical health when signing the return or seeking relief.

C.B. at 299.   The nature, extent,

and duration of illness are to be taken into account.

trial and on brief incorporate general

assertions of high blood pressure, depression, and bad knees.

Nonetheless, the record is bereft of any corroborating medical

documentation or any specific contentions regarding how such

ailments might have impacted petitioner’s ability to meet her

Federal tax obligations.   In fact, petitioner acknowledged that,
                               - 30 -

except for her weight, she was in good health during the 1997 and

1999 years at issue and until 2000 when her blood pressure began

rising.    The Court observes that petitioner was able to work

multiple jobs throughout much of the relevant period.     Thus,

while the Court does not doubt that petitioner bore substantial

stress on account of the difficult circumstances besetting her

family, the record does not enable us to find particular health

issues of a nature that would affect the balancing of her claim

for relief.    This factor, too, is neutral.

     Accordingly, of those factors identified in the pertinent

revenue procedure, only one weighs clearly in favor of granting

relief.    The remainder are either negative or essentially

neutral.    The Court is therefore unable to conclude that

respondent’s denial of equitable relief under section 6015(f) was

an abuse of discretion.

     The Court has considered all other arguments made by the

parties and, to the extent not specifically addressed herein, has

concluded that they are without merit or are moot.     To reflect

the foregoing,


                                          Decision will be entered

                                     for respondent.