135 T.C. 374">*374 GOEKE, Judge: This case is before the Court on petitioner's request for relief under section 6015(f). ^{12010 U.S. Tax Ct. LEXIS 35">*36} We have jurisdiction under section 6015(e).

The specific issue is whether petitioner is entitled to equitable relief under section 6015(f), notwithstanding her failure to request such relief before the 2-year deadline imposed by section 1.6015-5(b)(1), Income Tax Regs.

The facts have been stipulated and are so found.

At the time of filing the petition, petitioner resided in Cincinnati, Ohio. Petitioner and Etheridge Hall (Mr. Hall) were married on October 9, 1965. Petitioner and Mr. Hall filed joint Federal income tax returns for the tax years 1998 and 2001 (the years in issue). For the year 1998 petitioner and Mr. Hall included a payment with their return but did not pay the full amount due. For the year 2001 petitioner 135 T.C. 374">*375 and Mr. Hall filed a return but did not pay any of the amount due. However, since the filing of their 2001 return, petitioner and Mr. Hall made several payments for the tax year 2001, and the Internal Revenue Service (IRS) applied several credits to their account.

On April 17, 2003, petitioner and Mr. Hall divorced. Pursuant to their divorce decree, Mr. Hall had a legal obligation to pay his and petitioner's 2010 U.S. Tax Ct. LEXIS 35">*37 joint income tax liabilities. However, petitioner did not know at the time she filed her joint returns for the years at issue whether Mr. Hall would pay the tax due for said years.

On July 6, 2004, respondent initiated collection activity against petitioner and Mr. Hall's outstanding tax liabilities for the years 1998 and 2001 by issuing an intent to levy notice.

On August 1, 2008, petitioner signed and submitted to respondent Form 8857, Request for Innocent Spouse Relief, for her 1998 and 2001 tax years. On August 14, 2008, the IRS issued a preliminary determination denying petitioner relief under section 6015(f) for the years in issue because petitioner's claim was not filed within the 2-year period. On or about August 22, 2008, petitioner filed a Form 12509, Statement of Disagreement, protesting the IRS' denial of innocent spouse relief and stating that she was not aware that collection activity had been initiated against her. In addition, petitioner stated in her Form 12509 that the "statements" she had received "always had on the statement * * * [that] I had two years to call. * * * If your [sic] telling me I [was] suppose to do this last year, I'm still receiving statements saying 2010 U.S. Tax Ct. LEXIS 35">*38 I still have two years. Could you explain this please."

By letter dated September 10, 2008, respondent's Appeals Office acknowledged receipt of petitioner's case for consideration and informed petitioner of the Appeals officer assigned to it.

On November 17, 2008, the Appeals officer held a conference with petitioner at which she was informed that the IRS could not grant her relief because she had not timely filed her request. The Appeals officer explained that the IRS had issued a collection notice to her on July 6, 2004, and petitioner was required to file a Form 8857 by July 6, 2006; the Form 8857 was received on July 31, 2008, making the request untimely. On November 20, 2008, respondent issued a final Appeals determination denying petitioner relief from 135 T.C. 374">*376 joint and several liability under section 6015(f) for the years at issue.

On December 22, 2008, petitioner timely petitioned this Court, contesting respondent's denial of relief.

On November 5, 2009, respondent sent petitioner's case to the Cincinnati Centralized Innocent Spouse Operations Unit to reconsider the merits of her request. The result was again denial of relief. However, in a stipulation of settled issues, dated June 1, 2010 U.S. Tax Ct. LEXIS 35">*39 2010, respondent agreed that "petitioner would be entitled to equitable relief on the merits" if her request had been timely. Petitioner agreed in the same stipulation of settled issues that she had submitted her request more than 2 years after collection activities had commenced.

This case presents the same issue as this Court's Opinion in Lantz v. Commissioner, 132 T.C. 131">132 T.C. 131 (2009), revd. 607 F.3d 479">607 F.3d 479 (7th Cir. 2010). In that case this Court held that the 2-year limitation imposed by section 1.6015-5(b)(1), Income Tax Regs., is an invalid interpretation of section 6015(f). The Court of Appeals for the Seventh Circuit reversed this holding, finding that the regulation was within the Secretary's discretion to prescribe procedures for the application of section 6015(f). Appeal of this case would normally lie to the Court of Appeals for the Sixth Circuit, so the rule of deference is not applicable. See Golsen v. Commissioner, 54 T.C. 742">54 T.C. 742, 54 T.C. 742">757 (1970), affd. 445 F.2d 985">445 F.2d 985 (10th Cir. 1971). However, given the reversal of Lantz, it is appropriate that this Court revisit the issue.

The Court of Appeals for the Seventh Circuit in Lantz held that "audible silence" 2010 U.S. Tax Ct. LEXIS 35">*40 was not a guide to congressional meaning because there was nothing unusual in the fact that Congress chose not to include a statute of limitations in section 6015(f). The Court of Appeals noted that courts often borrow statutes of limitations from other laws and that Congress was aware that agencies often make up their own deadlines through regulations.

The Court of Appeals also held that while the doctrine of laches might substitute for the lack of a statute of limitations 135 T.C. 374">*377 in a situation applying equitable principles, it cannot do so for section 6015(f). The Court of Appeals reasoned that if section 6015(f) has no strict deadline, "the two-year deadlines in subsections (b) and (c) will be set largely at naught because the substantive criteria of those sections are virtually the same as those of (f)." Lantz v. Commissioner, 607 F.3d 479">607 F.3d at 484.

Finally, the Court of Appeals noted that section 6015(f) is a safety valve by which the IRS may grant relief to a taxpayer under regulations prescribed by the Secretary. Because Congress authorized the Secretary to grant discretionary relief under procedures that the Secretary was to devise, the court held that judicial deference to the regulation 2010 U.S. Tax Ct. LEXIS 35">*41 was required and the Secretary was empowered to set a deadline for applying for section 6015(f) relief. 607 F.3d 479">Id. at 486.

The analysis by the Court of Appeals concluded with the recognition that the result was "harsh" but suggested Mrs. Lantz might be provided relief under section 6343(a)(1)(D). Id.

In Lantz v. Commissioner, 607 F.3d 479">607 F.3d at 483, the Court of Appeals recognized that equity traditionally did not include a strict "statute of limitations" but as stated previously, the Court of Appeals rejected "laches" as a means to apply section 6015(f). Traditionally, in cases of equity there was no statute of limitations, but delay in filing a claim was considered as a factor in deciding whether equity would be served by granting relief. Id. By adopting a statute of limitations, the Court of Appeals accepted that cases invoking inequitable circumstances will be denied relief without considering the facts and circumstances. The cause of the delay in filing and the circumstances, no matter how extreme, are irrelevant. The Court of Appeals rejected the traditional method to address delay in the equity context because of subsections (b) and (c) of section 6015 and the 2-year limitations 2010 U.S. Tax Ct. LEXIS 35">*42 provision in those subsections, which it found supports the use of the 2-year standard for subsection (f). ^{22010 U.S. Tax Ct. LEXIS 35">*43 2010 U.S. Tax Ct. LEXIS 35">*44 2010 U.S. Tax Ct. LEXIS 35">*45 2010 U.S. Tax Ct. LEXIS 35">*46 2010 U.S. Tax Ct. LEXIS 35">*47}

135 T.C. 374">*379 The Court of Appeals' application of the 2-year limits in subsections (b) and (c) makes subsection (f) ineffective in situations where an innocent spouse is unaware of the need to or unable to contact the IRS for some of the very reasons that Congress considered in enacting section 6015. For example, a spouse is sometimes subject to abuse by a partner. The abuse can take many forms. Where a spouse is prevented from acting by fear, intimidation, or fraud, an administrative procedural hurdle would eliminate consideration of relief by the IRS. The Secretary did not allow any exception even for extreme cases, but rather adopted a strict time bar that requires the IRS to deny relief without any consideration of the facts and circumstances. See sec. 1.6015-5(b)(1), Income Tax Regs. In our 2010 U.S. Tax Ct. LEXIS 35">*48 view, a regulation which rejects claims for relief without considering the facts and circumstances is contrary to the specific statutory requirement that all the facts and circumstances be taken into account. Lantz v. Commissioner, 132 T.C. 131">132 T.C. 147. We concluded that the regulation, which bars relief from inequity solely upon the ground that it was requested beyond a specified period, failed to consider all the facts and circumstances. 132 T.C. 131">Id. at 150.

Respondent contends that this is a procedural rule clearly within the Secretary's discretion. However, a time bar is not simply a procedural rule. In the case of equity, it has the 135 T.C. 374">*380 substantive effect of making one circumstance, the time of the claim, the only relevant factor. The statute requires consideration of all facts and circumstances to decide whether there is inequity. Sec. 6015(f). Specifying a period not provided in the statute overrides all the other potential causes of inequity and is fundamentally inconsistent with the language and purpose of the statute.

The relationship of subsections (b) and (c) to subsection (f) is fundamental to the issue before us. The Court of Appeals 2010 U.S. Tax Ct. LEXIS 35">*49 found that without a 2-year statute of limitations for subsection (f), the limitations for subsections (b) and (c) are made ineffective. Lantz v. Commissioner, 607 F.3d 479">607 F.3d at 484. Therefore, the Court of Appeals held that silence in subsection (f) did not support a different rule but rather that the context of subsection (f) after subsections (b) and (c) required the same rule. 607 F.3d 479">Id. at 484-485. We believe the Court of Appeals' opinion overlooks the very specific and different purpose of subsection (f). ³

As applied by the IRS in Rev. Proc. 2003-61, 2003-2 C.B. 296, subsection (f) requires a decision about whether collecting a joint liability yields an inequitable result. The revenue procedure and this Court have consistently looked beyond the taxable year at issue to apply subsection (f). The facts relevant to subsections (b) and (c)2010 U.S. Tax Ct. LEXIS 35">*50 are primarily those of the taxable year in issue and whether the party claiming relief is liable for a joint deficiency. In the case of subsection (f), relief from the deficiency under subsections (b) and (c) is not available and underpaid taxes already assessed on the basis of the joint return as filed are possibly subject to relief. Rev. Proc. 2003-61, secs. 4.01(2), 4.02, 4.03, 2003-2 C.B. at 297-298. While facts from the year the return was filed may be relevant in applying subsection (f), those facts are not exclusive. The application of subsection (f) also depends on current economic hardship and marital circumstances after the year of the joint liability. Id. sec. 4.03(2)(a)(i) and (ii), 2003-2 C.B. at 298. Such circumstances are to be weighed 135 T.C. 374">*381 together with the events during the year in question, and no one factor is determinative. Id. The consideration of contemporaneous circumstances distinguishes subsection (f) analysis from the taxable year factual analysis required under subsections (b) and (c).

The IRS, faced with serious budget constraints, must handle many claims for relief, and we appreciate that some recognition of the timeliness of claims is necessary. 2010 U.S. Tax Ct. LEXIS 35">*51 But a refusal to consider or outline exceptional circumstances runs squarely contrary to the statutory mandate to prevent inequity. The need for expediency and the concern with drafting a rule that reconciles subsections (b), (c), and (f) of section 6015 effectively are not valid reasons for the Secretary to ignore the statutory mandate to prevent inequity. The Secretary has wide latitude to implement section 6015(f) but does not have carte blanche to ignore the purpose and defeat the application of the section for a substantial number of otherwise deserving taxpayers.

The Court of Appeals in Lantz v. Commissioner, 607 F.3d 479">607 F.3d at 485, cites Lopez v. Davis, 531 U.S. 230">531 U.S. 230, 531 U.S. 230">238, 121 S. Ct. 714">121 S. Ct. 714, 148 L. Ed. 2d 635">148 L. Ed. 2d 635 (2001), and asks the rhetorical question:

Since the government can refuse to grant equitable relief to someone who meets the statutory criteria and applies within two years of the first collection action, why can't it decide to deny relief to a class of applicants defined as those who waited too long? * * *

WELLS, J., concurring: I agree with the majority that the period of limitations provided in section 1.6015-5(b)(1), Income Tax Regs., is invalid. I write separately to advance an additional reason I think the regulation is invalid.

By regulation, the Commissioner is attempting to place an absolute, ironclad 2-year limitations period on making a request for equitable relief under section 6015(f), even though section 6015(f)2010 U.S. Tax Ct. LEXIS 35">*55 contains no limitations period. The majority opinion properly characterizes respondent's position in this case and the opinion of the Court of Appeals for the Seventh Circuit in Lantz v. Commissioner, 607 F.3d 479">607 F.3d 479 (7th Cir. 2010), revg. 132 T.C. 131">132 T.C. 131 (2009), as follows:

By adopting a statute of limitations, the Court of Appeals accepted that cases invoking inequitable circumstances will be denied relief * * * [regardless of] the facts and circumstances. The cause of the delay in filing and the circumstances, no matter how extreme, are irrelevant. The Court of Appeals rejected the traditional method to address delay in the equity context because of subsections (b) and (c) of section 6015 and the 2-year limitations provision in those subsections which it found supports the use of the 2-year standard for subsection (f). [Majority op. p. 7; emphasis added; fn. ref. omitted.]

135 T.C. 374">*388 GUSTAFSON, J., concurring: I concur with the result reached by the majority--i.e., that the two-year deadline imposed in 26 C.F.R. section 1.6015-5(b)(1), Income Tax Regs., is invalid. I part company with the majority only in aspects of its rationale that do not affect the outcome (discussed in parts I-III below); and I still conclude--for the reasons that we stated in Lantz v. Commissioner, 132 T.C. 131">132 T.C. 131, 132 T.C. 131">138-144 (2009), revd. 607 F.3d 479">607 F.3d 479 (7th Cir. 2010), and that I summarize below in part IV--that the IRS's two-year deadline is invalid because it is at odds with the congressional intent evident in the statute.

The majority states today: "the regulation, which bars relief from inequity solely 2010 U.S. Tax Ct. LEXIS 35">*66 upon the ground that it was requested beyond a specified period, failed to consider all the facts and circumstances", for purposes of section 6015(f)(1). Majority op. p. 12. ¹ This reasoning would apparently disallow the Internal Revenue Service (IRS) from imposing by regulation any set deadline for filing requests for equitable relief from joint liability under section 6015(f), because any set deadline, when applied, would "mak[e] one circumstance, the time of the claim, the only relevant factor", majority op. p. 13, rather than having "all the facts and circumstances" govern the outcome.

However, the Internal Revenue Code is replete with "facts and circumstances" provisions that are subject to procedural deadlines. Nearby section 6015(b)(1)(D) has identical language ("taking into account all the facts and circumstances, it is inequitable" (emphasis added)), but the relief provided in section 6015(b) depends on an election's being made before a two-year deadline. Sec. 6015(b)(1)(E). 2010 U.S. Tax Ct. LEXIS 35">*67 That is, under section 6015(b)Congress both required that "all the facts and circumstances" be taken into account and provided in effect that, if an election was not made within two years, the single fact of timing would govern the outcome. The "all the facts and circumstances" provision in section 6015(f) thus does not, in and of itself, preclude a deadline for an equitable claim.

135 T.C. 374">*389 Consequently, I conclude that a statute may provide a substantive standard for equitable relief that takes into account "all the facts and circumstances" while, at the same time, providing or permitting a procedural deadline for the submission of a request for that relief.

The majority observes critically that the Court of Appeals for the Seventh Circuit "rejected 'laches'", majority op. p. 7, citing Lantz v. Commissioner, 607 F.3d 479">607 F.3d at 483; and the majority thereby seems to edge toward the position (not taken by this Court in Lantz) that the "Equitable Relief" of section 6015(f) embodies concepts of equity, as opposed to law. At law, time limits are expressed in statutes of limitation; but equity jurisprudence developed instead the more flexible defense of laches (prejudicial delay) and 2010 U.S. Tax Ct. LEXIS 35">*68 the doctrine of "equitable tolling" of statutes of limitation, ^{22010 U.S. Tax Ct. LEXIS 35">*69} concepts that would arguably be more congruent with the congressional purpose behind section 6015(f) than the IRS's blunt application of the two-year rule of its regulation.

However, the title "Equitable Relief" does not warrant the conclusion that laches or equitable tolling inhere in section 6015(f) to the exclusion of a regulation that provides an explicit limitations period. The word "equitable" may sometimes implicate the law-equity distinction; ³ but usually the word "equity" means simply justice or fairness, "equitable" means just or fair, ^{42010 U.S. Tax Ct. LEXIS 35">*70} and "inequitable" means unjust or 135 T.C. 374">*390 unfair. ⁵ Those common meanings are appropriate here, for reasons stated by dissenting Judges Thornton and Holmes. See dissenting op. pp. 33-35. The "equitable" vocabulary of section 6015(f) does not implicitly or explicitly prohibit a regulatory deadline.

Section 6015(f) provides that equitable relief is to be administered "[u]nder procedures prescribed by the Secretary", and the IRS promulgated the regulatory deadline under this authority; but the majority states that "a time bar is not simply a procedural rule." Majority op. pp. 12-13. In this context, however, a deadline is a "procedure": Congress placed the two-year deadline of section 6015(b)(1)(E) under the "Procedures For Relief From Liability Applicable to All Joint Filers"; and it placed the two-year deadline of section 6015(c)(3)(B) under the "Procedures2010 U.S. Tax Ct. LEXIS 35">*71 To Limit Liability for Taxpayers No Longer Married". (Emphasis added.) Congress thus suggested that a time limit might be one of the "procedures" for granting relief, and it authorized the IRS to promulgate "procedures" for the "Equitable Relief" provision of section 6015(f). See also Lantz v. Commissioner, 132 T.C. 131">132 T.C. 155-156 (Thornton and Holmes, JJ., dissenting). I think it cannot be said that Congress prohibited the IRS from promulgating any deadline for applying for equitable relief.

If, as I conclude, section 6015(f) permits and authorizes the IRS to promulgate by regulation a deadline for taxpayers who request equitable relief, then the remaining issue is whether the deadline that the IRS did promulgate is a permissible deadline under the statute. I conclude it is not. Congress created two forms of so-called "traditional relief" and imposed a two-year deadline on both. Sec. 6015(b)(1)(E), (c)(3)(B). Congress next provided for "Equitable Relief"--the whole purpose of which was to grant "relief * * * not available * * * under subsection (b) or (c)". Sec. 6015(f)(2) (emphasis added). For this broader equitable relief 2010 U.S. Tax Ct. LEXIS 35">*72 Congress did not 135 T.C. 374">*391 impose a two-year deadline--nor any deadline--and it authorized the IRS to establish "procedures". Sec. 6015(f). For the agency then to slap onto the equitable provision the same two-year deadline that Congress had manifestly chosen not to impose shows a failure to discern the Congressional purpose in enacting this broader equitable relief. The two-year deadline is not valid.

THORNTON and HOLMES, JJ., dissenting: We continue respectfully to dissent from the majority and to think that the regulation requiring taxpayers to apply for relief under section 6015(f) within 2 years is valid under Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837">467 U.S. 837, 104 S. Ct. 2778">104 S. Ct. 2778, 81 L. Ed. 2d 694">81 L. Ed. 2d 694 (1984). We explained our reasons in our dissent in Lantz v. Commissioner, 132 T.C. 131">132 T.C. 131, 132 T.C. 131">152-161 (2009). The Court of Appeals for the Seventh Circuit reversed the majority in that case, 607 F.3d 479">607 F.3d 479 (7th Cir. 2010), and the issue is already pending in at least two other circuits, see Mannella v. Commissioner, No. 10-1308 (3d Cir.) (argument set for November 17, 2010), appealing 132 T.C. 196">132 T.C. 196 (2009); Coulter v. Commissioner, No. 10-680 (2d Cir.) (briefing completed September 8, 2010), appealing a stipulated 2010 U.S. Tax Ct. LEXIS 35">*73 decision of this Court.

The majority mostly repeats its original reasons for invalidating the regulation. We write again to respond to its new argument hinted at in its observation that "equity traditionally did not include a strict 'statute of limitations'". Majority op. p. 7. The majority seems to suggest that by using the term "inequitable" in section 6015(f), Congress meant to invoke traditional notions of equity jurisprudence that would preclude the IRS from imposing any fixed deadline, notwithstanding the statute's expansive delegation of discretionary authority for the IRS to provide relief "Under procedures prescribed by the Secretary".

We think this argument reads too much into the word "inequitable" which, to an ordinary speaker of English, usually just means "unfair". See Merriam Webster's Collegiate Dictionary 638 (11th ed. 2008), http://mw1.merriam-webster.com/dictionary/inequitable. And that seems to be the way Congress thought it was using "inequitable". 135 T.C. 374">*392 Section 6015(f) provides that the Secretary may provide relief if "taking into account all the facts and circumstances, it is inequitable to hold the individual liable for any unpaid tax or any deficiency". This language 2010 U.S. Tax Ct. LEXIS 35">*74 derives from former section 6013 (e), which, as enacted in 1971, authorized the Secretary to provide innocent spouse relief if various requirements were met, including that "taking into account all other facts and circumstances, it is inequitable to hold the other spouse liable for the deficiency". Act of Jan. 12, 1971, Pub. L. 91-679, sec. 1, 84 Stat. 2063. The contemporaneous reports of the congressional tax-writing committees indicate identically that the purpose of this legislation was to "correct the unfairness in the situations brought to the attention of this committee and to bring government tax collection practices into accord with basic principles of equity and fairness." H. Rept. 91-1734, at 2 (1970) (emphasis added); S. Rept. 91-1537, at 2 (1970), 1971-1 C.B. 606, 607 (emphasis added).

Although the words "equity" or "equitable" might trigger echoes of old chancery practice, "inequitable" should not--the opposites of "equity" and "equitable" in the chancery sense are not "inequity" or "inequitable", but "common law" and "legal". We think it exceptionally improbable that the word "inequitable" in section 6015(f) means, as the majority might seem to suggest, "contrary to principles 2010 U.S. Tax Ct. LEXIS 35">*75 of equity jurisprudence, including its traditional aversion to strict statutes of limitation." A request for relief under section 6015(f) is called a request for "equitable relief" not because it is a request for reformation, rescission, specific performance, or accounting, but because to a reasonable decisionmaker at the IRS it would be unfair to hold one spouse jointly liable with another for a particular tax debt.

The majority believes that a fixed deadline is unfair because in some cases it may result in denial of relief that otherwise would be available. But, as Judge Posner observes, this circumstance "does not bear on the validity of the deadline; any statute of limitations will cut off some, and often a great many, meritorious claims." Lantz v. Commissioner, 607 F.3d 479">607 F.3d at 481.

Similarly, we respectfully disagree with those concurring who believe that the concept of equitable tolling has any bearing on the validity of the regulation. If, as they suggest, equitable tolling might be available to provide relief from the 135 T.C. 374">*393 regulatory deadline--a theory, incidentally, that neither party has raised or addressed--this circumstance would negate the assumption, central to the majority's reasoning, 2010 U.S. Tax Ct. LEXIS 35">*76 that the deadline is an absolute temporal bar to relief.

HALPERN, GALE, and MORRISON, JJ., agree with this dissent.