Judges: GUSTAFSON
Attorneys: Kathryn J. Sedo , for petitioner. Lisa R. Woods , for respondent.
Filed: May 05, 2011
Latest Update: Nov. 21, 2020
Summary: SUZANNE PULLINS, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT Docket No. 23793–08. Filed May 5, 2011. P filed joint tax returns with her husband—timely for tax year 1999 and untimely (in October 2004) for 2002 and 2003. Each return showed a balance due that was not paid when the return was filed. P signed the returns but did not review or question them. She knew or should have known that the taxes reported on them were not fully paid, but she did not know that her former husband ha
Summary: SUZANNE PULLINS, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT Docket No. 23793–08. Filed May 5, 2011. P filed joint tax returns with her husband—timely for tax year 1999 and untimely (in October 2004) for 2002 and 2003. Each return showed a balance due that was not paid when the return was filed. P signed the returns but did not review or question them. She knew or should have known that the taxes reported on them were not fully paid, but she did not know that her former husband had..
More
SUZANNE PULLINS, PETITIONER v. COMMISSIONER OF
INTERNAL REVENUE, RESPONDENT
Docket No. 23793–08. Filed May 5, 2011.
P filed joint tax returns with her husband—timely for tax
year 1999 and untimely (in October 2004) for 2002 and 2003.
Each return showed a balance due that was not paid when
the return was filed. P signed the returns but did not review
or question them. She knew or should have known that the
taxes reported on them were not fully paid, but she did not
know that her former husband had omitted income from one
of the returns. She received no specific benefit from the non-
payment of the taxes. In 2003 the IRS issued a levy notice to
P for 1999. P and her former husband separated in late 2004.
In 2005 the IRS issued levy notices for 2002 and 2003. There-
after, P divorced her former husband, and the State court
allocated all of the couple’s tax debts to him and awarded him
proceeds from the sale of their jointly owned house, from
which proceeds he could have paid the liabilities. P requested
‘‘innocent spouse’’ relief from the IRS on April 22, 2008 (more
than 2 years after the IRS’s collection activity began), and the
IRS denied the requested relief. P petitioned this Court for
relief, and by the time of trial she was disabled as a result
of complications from surgery. This case would be appealed to
the U.S. Court of Appeals for the Eighth Circuit. Held: We
will follow our holding in Lantz v. Commissioner, 132 T.C. 131
(2009), revd. 607 F.3d 479 (7th Cir. 2010)—i.e., that the 2-
year deadline imposed by 26 C.F.R. sec. 1.6015–5(b)(1),
Income Tax Regs., is invalid—notwithstanding the contrary
decisions by the U.S. Courts of Appeals for the Seventh Cir-
cuit in Lantz and for the Third Circuit in Mannella v.
Commissioner, 631 F.3d 115 (3d Cir. 2011), revg.
132 T.C. 196
(2009). Held, further, P is entitled to relief from joint and sev-
eral liability under I.R.C. sec. 6015(f).
432
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00001 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
(432) PULLINS v. COMMISSIONER 433
Kathryn J. Sedo, for petitioner.
Lisa R. Woods, for respondent.
GUSTAFSON, Judge: Petitioner Suzanne Pullins requested
section 6015 ‘‘innocent spouse’’ relief from joint liability for
income taxes for tax years 1999, 2002, and 2003. 1 The
Internal Revenue Service (IRS) denied Ms. Pullins’s request
because she did not request relief within two years of the
IRS’s first collection activity against her. The IRS then
reevaluated Ms. Pullins’s request on the merits and again
determined that she was not entitled to relief. Ms. Pullins
petitioned this Court, and the issue for decision is whether
she is entitled to relief from joint liability under section 6015.
We hold that she is.
FINDINGS OF FACT
At the time she filed the petition, Ms. Pullins lived in Min-
nesota.
Ms. Pullins’s marriage and finances
Ms. Pullins completed high school. She and Curtis Shirek
married in 1984. Both Mr. Shirek and Ms. Pullins wrote
checks from their joint bank account to pay family bills.
However, Mr. Shirek dominated the relationship, made the
decisions for the family, and determined when any bills
would be paid.
For each year in issue, Mr. Shirek worked in construction.
Ms. Pullins was not involved in Mr. Shirek’s construction
activity. Some or all of Mr. Shirek’s earnings were reported
on Forms 1099–MISC, Miscellaneous Income. Mr. Shirek did
not make quarterly prepayments of income tax.
In 1999 Ms. Pullins did not work outside the home, but in
2002 and 2003 she performed secretarial work because her
family needed the income. Ms. Pullins earned wages of
$19,902 in 2002 and $13,055 in 2003, and her employer with-
held from her wages Federal income tax of $937 in 2002 and
$550 in 2003. Ms. Pullins’s income tax was underwithheld in
1 Unless otherwise indicated, all citations of sections refer to the Internal Revenue Code of
1986 (26 U.S.C.), as amended.
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00002 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
434 136 UNITED STATES TAX COURT REPORTS (432)
2002 by $719, as she acknowledges, 2 and it was overwith-
held in 2003 by $22. 3
The tax returns and assessments at issue
For all three years at issue, Mr. Shirek employed a return
preparer to prepare the couple’s joint Federal income tax
returns. Ms. Pullins’s wage income was reported on the 2002
and 2003 returns.
In general, Mr. Shirek’s construction income was reported
on Schedules C, Profit or Loss From Business, attached to
their returns. Mr. Shirek reported net income from his
construction activity of $58,760 for 1999, $85,333 for 2002,
and $51,624 for 2003. He also earned and reported $961 in
wages in 1999. However, for 1999 he omitted $10,374 in
income that was reported on a Form 1099–MISC.
Ms. Pullins signed each of the returns, but she did not
review the returns or question Mr. Shirek about any items
on the returns or any documents used to prepare the returns.
She did not sign the returns under duress. When Ms. Pullins
signed the 1999 return, she did not know about the omission
of Mr. Shirek’s income.
Ms. Pullins and Mr. Shirek filed joint Federal income tax
returns for the years in issue as follows:
Payment made
Year Date filed Balance due 1 with return
1999 Oct. 18, 2000 $12,823 $150
2002 Oct. 12, 2004 25,811 -0-
2 Ms. Pullins computes her individual liability by using married-filing-separately status and
using the standard deduction. Respondent has not disputed her arithmetic but uses a different
method: Respondent takes the liability for those years as reported (i.e., using married filing
jointly status) and allocates that liability between the spouses according to the amount of the
income attributable to each. On that basis respondent computes that Ms. Pullins’s income tax
was underwithheld in both years—i.e., by $3,395 in 2002 and $940 in 2003. Ms. Pullins has
not disputed respondent’s arithmetic but disagrees with his method. Our use of Ms. Pullins’s
method is explained below in part II.C.1.a.
3 Ms. Pullins’s income tax on her wages was overwithheld by $22 in 2003. On her administra-
tive request for relief submitted in April 2008 she requested a refund for this year, which would
be made (if at all) from the only payment shown on the 2003 transcript in the record—i.e., with-
held tax deemed paid in April 2004. However, even if we otherwise had authority to determine
an overpayment, Ms. Pullins’s request was submitted too late for her to obtain such relief.
Under section 6511(a), a refund claim must be filed ‘‘within 3 years from the time the return
was filed’’ (i.e., within three years after October 2004) or ‘‘within * * * 2 years from the time
the tax was paid’’ (i.e., within two years after April 2004). The April 2008 request for relief was
too late by either of these measures.
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00003 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
(432) PULLINS v. COMMISSIONER 435
Payment made
Year Date filed Balance due 1 with return
2003 Oct. 12, 2004 13,188 -0-
1 The balance due reflects the amount that Ms. Pullins and Mr.
Shirek reported as owed on their returns after accounting for
withholding and estimated tax payments.
The IRS assessed the tax due for 1999 (as reported on the
return) in December 2000 and imposed an addition to tax for
failure to timely pay the tax due. The IRS eventually learned
about the missing income and in August 2002 assessed
$3,430 of additional tax attributable to it.
The IRS’s collection efforts
On November 1, 2000 (before the assessment of the addi-
tional tax), Mr. Shirek and Ms. Pullins entered into an
installment agreement to pay the 1999 tax liability. In 2000
and 2001 Ms. Pullins wrote checks on the joint bank account
as payments toward the 1999 liability. The IRS applied
refunds from tax years 2000 and 2001 toward the 1999
liability. In November 2003 the IRS terminated the install-
ment agreement after Mr. Shirek and Ms. Pullins defaulted
on the agreement. On November 15, 2003, the IRS sent
notices of intent to levy to each of Ms. Pullins and Mr. Shirek
for tax year 1999.
On November 29, 2004, after receiving the untimely
returns for 2002 and 2003, the IRS assessed the amounts
reported as tax due and imposed additions to tax for failure
to timely pay and for late filing. 4 On April 5 and 7, 2005
(after Ms. Pullins filed for divorce, as discussed below), the
IRS sent notices of intent to levy to both Ms. Pullins and Mr.
Shirek for tax years 2002 and 2003.
The dissolution of the marriage
Ms. Pullins and Mr. Shirek separated in late 2004, and
Mr. Shirek moved out of the family home in December
2004—i.e., after they had filed their 2002 and 2003 returns.
Ms. Pullins filed for divorce in February 2005. While the
4 The IRS did not impose a late filing addition to tax for 1999, apparently because it consid-
ered the 1999 return timely filed on extension. The due dates, on extension, for 2002 and 2003
were October 15, 2003, and August 15, 2004, respectively. The October 12, 2004, filing date was
well after those due dates.
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00004 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
436 136 UNITED STATES TAX COURT REPORTS (432)
divorce was pending, Ms. Pullins and Mr. Shirek sold the
family home. The California State court granted Ms. Pullins
the divorce in September 2005 and held that Mr. Shirek was
responsible for paying the 1999, 2002, and 2003 tax debts.
The divorce judgment awarded each spouse $125,227 from
the sale of the marital home and also awarded each spouse
certain items of property.
Finances, remarriage, and tax compliance in subsequent years
Ms. Pullins earned $23,634 in 2004 and $18,216 in 2005.
Her tax returns for those years were due after she filed for
divorce; but she did not timely file tax returns for those
years, and the record does not reflect when or whether she
filed a return for 2006.
For her 2007 return, Ms. Pullins submitted a $25 payment
when she requested an extension of time to file (around the
time that she requested innocent spouse relief for 1999, 2002,
and 2003). She received an extension for her 2007 return
until October 15, 2008. Ms. Pullins filed the 2007 return on
October 22, 2008, reporting total tax of $2,485, withholding
credits of $2,082, and tax due of $403. She paid $25 toward
that liability when she filed the return. The IRS assessed the
tax shown and imposed a failure-to-timely-pay addition to
tax. Ms. Pullins made additional payments in 2009 toward
her 2007 liability.
Ms. Pullins remarried in 2007. She stopped working in
October 2008 and as a result of complications from surgery
is now disabled. At the time of trial she was receiving
monthly long-term disability insurance payments of $1,700.
Shortly before trial she qualified for monthly Social Security
disability benefits of $791. Those benefits will reduce her
insurance payment, and she expects her total monthly dis-
ability income to be $2,091 while the insurance payments
continue. Ms. Pullins expects her disability to be permanent,
and this expectation is reasonable.
Request for relief
On April 22, 2008, Ms. Pullins filed a Form 8857, Request
for Innocent Spouse Relief, with the IRS to request relief
under section 6015. On the Form 8857 she did not indicate
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00005 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
(432) PULLINS v. COMMISSIONER 437
that she had been abused, and she did not allege any mental
or physical health problems.
Ms. Pullins submitted her request roughly four and a half
years after the IRS issued the November 2003 levy notice for
tax year 1999 and slightly more than three years after the
April 2005 levy notices for tax years 2002 and 2003.
OPINION
I. Joint and several liability and section 6015 relief generally
Section 6013(d)(3) provides that when taxpayers file a joint
return, the tax is computed on their aggregate income, and
their liability to pay the tax shown on the return or found
to be owing is joint and several. See also 26 C.F.R. sec.
1.6013–4(b), Income Tax Regs. That is, each spouse is liable
for the entire joint tax liability.
Section 6015 provides three types of relief from joint and
several liability: (1) full or apportioned relief under section
6015(b); (2) proportionate relief for divorced or separated tax-
payers under section 6015(c); and (3) equitable relief under
section 6015(f) when relief is unavailable under either section
6015(b) or (c).
Subsections (b) and (c) both include explicit time limits for
requesting relief. Absent a request’s being submitted within
two years of the first collection action against the requesting
taxpayer, the statute bars relief under either subsection. Sec.
6015(b)(1)(E), (c)(3)(B). Ms. Pullins requested relief under
section 6015 more than two years after the IRS began collec-
tion action against her. Therefore she is not entitled to relief
under subsection (b) or (c). 5
In section 6015(f) Congress did not impose a time limit for
requesting relief. However, by regulation the IRS purported to
impose a two-year time limit. See 26 C.F.R. sec. 1.6015–
5 The tax returns in issue all report tax due, but Ms. Pullins and Mr. Shirek did not pay the
tax with the returns. Thus, they had underpayments for each year in issue. Pursuant to section
6015(b)(1)(B), relief under section 6015(b) is available only for an ‘‘understatement’’, not an un-
derpayment; and pursuant to section 6015(c)(1), relief under section 6015(c) is available only for
a ‘‘deficiency’’, not an underpayment. See Washington v. Commissioner, 120 T.C. 137, 146–147
(2003). Section 6015(f) is broader and permits relief from ‘‘any unpaid tax or any deficiency (or
any portion of either)’’. Thus, even if she had requested relief within two years, Ms. Pullins’s
only possible avenue for relief for the underpayments is under section 6015(f). See Hopkins v.
Commissioner, 121 T.C. 73, 88 (2003). For 1999 Mr. Shirek omitted $10,374 of income, and that
omission results in an understatement of tax. Although section 6015(b) and (c) may provide re-
lief from understatements, due to the late request for relief, only section 6015(f) may provide
relief in this case, even for the liability resulting from this unreported income.
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00006 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
438 136 UNITED STATES TAX COURT REPORTS (432)
5(b)(1). As is discussed briefly below, we have held that regu-
lation to be invalid.
II. Equitable relief under section 6015(f)
A. Statutory text
Section 6015(f) provides:
SEC. 6015(f). EQUITABLE RELIEF.—Under procedures prescribed by the
Secretary, if—
(1) taking into account all the facts and circumstances, it is inequi-
table 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.
Thus, section 6015(f) may offer relief from joint and several
liability, provided that the taxpayer shows that it is inequi-
table to hold her liable upon consideration of all the facts and
circumstances.
B. Procedure and burden of proof
Congress provided this Court express authority to review
the IRS’s denial of equitable relief under section 6015(f),
granting jurisdiction ‘‘to determine the appropriate relief
available to the individual under this section’’. Sec.
6015(e)(1). We conduct a trial de novo when determining
whether a taxpayer is entitled to relief under section 6015(f),
and we may consider evidence outside the administrative
record. Porter v. Commissioner (Porter I), 130 T.C. 115, 117
(2008). We employ a de novo standard of review, rather than
reviewing for abuse of discretion; and the requesting spouse
bears the burden of proving that she is entitled to equitable
relief under section 6015(f). Porter v. Commissioner (Porter
II), 132 T.C. 203, 210 (2009).
C. Factors for evaluating equitable relief: Revenue Proce-
dure 2003–61
In accord with the statutory provision that relief is to be
granted under section 6015(f) following ‘‘procedures pre-
scribed by the Secretary,’’ the IRS has issued revenue proce-
dures to guide its employees in determining whether a tax-
payer is entitled to relief from joint and several liability. See
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00007 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
(432) PULLINS v. COMMISSIONER 439
Rev. Proc. 2003–61, 2003–2 C.B. 296, modifying and super-
seding Rev. Proc. 2000–15, 2000–1 C.B. 447. Revenue Proce-
dure 2003–61, supra, lists the factors that IRS employees
should consider, and the Court consults those same factors
when reviewing the IRS’s denial of relief. See Washington v.
Commissioner, 120 T.C. 137, 147–152 (2003).
Revenue Procedure 2003–61, supra, provides a three-step
analysis for IRS personnel to follow in evaluating requests for
relief: Section 4.01 lists seven threshold conditions that must
be met before the IRS will grant any relief; section 4.02 lists
circumstances in which the IRS will ordinarily grant relief as
to liabilities that were reported on a return (the underpay-
ments at issue in this case); and section 4.03 sets out eight
non-exclusive factors that the IRS will consider in deter-
mining whether equitable relief should be granted. See Rev.
Proc. 2003–61, 2003–2 C.B. at 297–298.
1. Section 4.01: Threshold conditions
The threshold conditions of section 4.01 of Revenue Proce-
dure 2003–61 are:
(1) The requesting spouse filed a joint return for the taxable year for
which he or she seeks relief.
(2) Relief is not available to the requesting spouse under section 6015(b)
or (c).
(3) The requesting spouse applies for relief no later than two years after
the date of the Service’s first collection activity after July 22, 1998, with
respect to the requesting spouse. * * * [6]
(4) No assets were transferred between the spouses as part of a fraudu-
lent scheme by the spouses.
(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 intent.
(7) The income tax liability from which the requesting spouse seeks
relief is attributable to an item of the individual with whom the requesting
spouse filed the joint return * * * [absent certain enumerated exceptions.]
The IRS admits that, in large part, Ms. Pullins satisfies
these requirements: She filed joint returns for the years in
issue; she is not eligible for relief under section 6015(b) or (c);
there is no evidence of fraudulent asset transfers; there is no
evidence of disqualified asset transfers; Ms. Pullins did not
6 See part II.C.1.b below, discussing the two-year requirement.
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00008 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
440 136 UNITED STATES TAX COURT REPORTS (432)
file the returns with any fraudulent intent; and considering
that Ms. Pullins did not work in 1999 and that Mr. Shirek’s
income dwarfed Ms. Pullins’s income in 2002 and 2003, it is
clear that most of the underpayments result from omissions
of Mr. Shirek’s construction income. Thus, Ms. Pullins has
largely satisfied the threshold conditions of section 4.01 of
Revenue Procedure 2003–61. Two exceptions merit discus-
sion:
a. Tax attributable to Ms. Pullins
The exception to her satisfaction of these conditions is her
2002 underwithholding of $719; and to the extent of that
underwithholding, she did not meet the seventh threshold
condition and we do not grant relief. As we stated above, for
purposes of determining the extent of her liability for or over-
payment of tax on her own income, we use Ms. Pullins’s com-
putation on the basis of married-filing-separately status,
rather than the IRS’s computation that made a pro rata
allocation of the reported liability (based on married-filing-
jointly status). To reckon the amount of tax liability that Ms.
Pullins should have to pay because it is fairly attributable to
her, we think that on the facts of this case it is reasonable
to figure Ms. Pullins’s tax liability separately. The IRS’s
method assumes a joint liability and then attributes to her
a pro rata share of the joint liability, but the purpose of sec-
tion 6015 is to grant relief from joint liability. Under the IRS’s
method, if we found Ms. Pullins to be otherwise entitled to
section 6015 relief, we would nonetheless leave her liable for
a portion of the joint liability. 7 Our aim here, however, is to
figure Ms. Pullins’s own liability apart from joint liability
and then ensure that we do not excuse her from paying her
own liability. To accomplish that aim, a determination of her
separate liability, 8 rather than an allocation of the joint
liability, is most reasonable here.
7 For example, the joint liabilities include self-employment tax on Mr. Shirek’s construction
income, which tax accounts for 45 percent of the joint Federal income tax the IRS assessed for
2002. The IRS’s pro rata approach would allocate a proportionate share of that self-employment
tax to Ms. Pullins, even though the self-employment tax is calculated on Mr. Shirek’s income
alone, see 26 C.F.R. sec. 1.6017–1(b)(1), and became Ms. Pullins’s liability only because she filed
jointly with Mr. Shirek, see 26 C.F.R. sec. 1.6017–1(b)(2).
8 As an analogy, see 26 C.F.R. sec. 1.6013–4(d) (to allocate liability where a supposedly joint
return was signed under duress, ‘‘The return is adjusted to reflect only the tax liability of the
individual who voluntarily signed the return, and the liability is determined at the applicable
rates in section 1(d) for married individuals filing separate returns’’ (emphasis added)).
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00009 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
(432) PULLINS v. COMMISSIONER 441
b. Requesting relief more than two years after the IRS’s first
collection activity
The third threshold condition of section 4.01 of Revenue
Procedure 2003–61 states a deadline that the IRS promul-
gated by regulation in 26 C.F.R. section 1.6015–5(b)(1). That
regulation purports to impose a two-year deadline on
requests for relief under section 6015(f), and Ms. Pullins did
not meet that deadline. 9 In Lantz v. Commissioner, 132 T.C.
131 (2009), revd.
607 F.3d 479 (7th Cir. 2010), we held that
the two-year deadline imposed by the regulation is an invalid
interpretation of section 6015(f). After the U.S. Court of
Appeals for the Seventh Circuit reversed Lantz, we reconsid-
ered the matter but did not change our position. See Hall v.
Commissioner, 135 T.C. 374 (2010). The U.S. Court of
Appeals for the Third Circuit has recently held the two-year
deadline to be valid, see Mannella v. Commissioner, 631 F.3d
115 (3d Cir. 2011), revg.
132 T.C. 196 (2009), but for the rea-
sons we have previously expressed, we respectfully disagree.
The court to which an appeal would lie in this case—the
Court of Appeals for the Eighth Circuit—has not addressed
this issue, and we therefore follow our holding in Lantz and
treat the IRS’s two-year deadline as invalid.
In Mayo Found. for Med. Educ. & Research v. United
States, 562 U.S. ll, ll, 131 S. Ct. 704, 713 (2011), the
Supreme Court recently clarified that the standard by which
the validity of regulations will be measured—with regard to
tax matters as well as other matters, and with regard to
‘‘general authority’’ regulations as well as ‘‘specific grant of
authority’’ regulations—is the two-step standard of Chevron
U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837
(1984).
However, Mayo prompts no reconsideration of our holding
in Lantz that the regulation at issue here is invalid. When
9 Ms. Pullins explained that she did not request relief because she thought she did not need
it, since the State court had ordered her husband to pay the taxes. Although given an oppor-
tunity to do so at trial, the IRS made no contention that it suffered any prejudice as a result
of the timing of her request or that Ms. Pullins was culpable for her delay in submitting her
request more than two years after the collection notices. Given our position on the invalidity
of the regulation’s two-year deadline, Ms. Pullins did not contend that, and we therefore do not
address whether, the regulation’s two-year deadline is subject to equitable tolling. Cf. Mannella
v. Commissioner, 631 F.3d 115 (3d Cir. 2011) (remanding to consider whether equitable tolling
applies), revg. 132 T.C. 196 (2009); Hall v. Commissioner,
135 T.C. 374, 387 n.5 (2010) (Wells,
J., concurring) (‘‘such a period of limitations would be subject to the ‘doctrine’ of equitable toll-
ing’’).
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00010 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
442 136 UNITED STATES TAX COURT REPORTS (432)
we decided Lantz, we used the now-mandated Chevron
standard:
Following Golsen v. Commissioner, 54 T.C. 742 (1970), affd.
445 F.2d 985
(10th Cir. 1971), we apply the law of the Court of Appeals to which an
appeal in the case would normally lie. Section 1.6015–5, Income Tax Regs.,
was issued under both a general grant of authority under section 7805 and
a specific grant of authority under section 6015(h). T.D. 9003, 2002–2 C.B.
294. The U.S. Court of Appeals for the Seventh Circuit has held that regu-
lations issued under general or specific authority of the IRS to promulgate
necessary rules are entitled to Chevron deference. * * * Accordingly, we
will follow the Chevron standard in this analysis. [Lantz v. Commissioner,
supra at 137; fn. ref. omitted.]
Thus, in Lantz we held the two-year deadline invalid under
the Chevron standard, and consequently we follow Lantz
(and Mayo and Chevron) today.
2. Section 4.02: Circumstances ordinarily allowing relief
Section 4.02 of Revenue Procedure 2003–61 provides three
conditions that, if satisfied, will ordinarily qualify a
requesting spouse for relief by the IRS from liability for an
underpayment of a properly reported liability. The conditions
are:
(a) On the date of the request for relief, the requesting spouse is no
longer married to, or is legally separated from, the nonrequesting spouse,
or has not been a member of the same household as the nonrequesting
spouse at any time during the 12-month period ending on the date of the
request for relief.
(b) On the date the requesting spouse signed the joint return, the
requesting spouse had no knowledge or reason to know that the non-
requesting 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. * * *
(c) The requesting spouse will suffer economic hardship if the Service
does not grant relief. For purposes of this revenue procedure, the Service
will base its determination of whether the requesting spouse will suffer
economic hardship on rules similar to those provided in Treas. Reg. §
301.6343–1(b)(4). * * *
[Rev. Proc. 2003–61, sec. 4.02(1), 2003–2 C.B. at 298.]
Ms. Pullins meets only one of these three conditions, as we
now show.
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00011 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
(432) PULLINS v. COMMISSIONER 443
a. Married, separated, or divorced
Mr. Shirek moved out in December 2004, and he and Ms.
Pullins were divorced in 2005. She filed her request for relief
in 2008. Ms. Pullins clearly satisfies the first condition.
b. Knowledge or reason to know
Ms. Pullins argues that she did not know of the unpaid
liabilities when the returns were filed in October 2000 and
October 2004—first because she had no knowledge of any
unpaid tax liability on the returns and second because she
reasonably believed that Mr. Shirek would pay any taxes
due. Neither of these arguments is persuasive.
(1) Knowledge of the liabilities
As to her alleged ignorance of the liabilities, Ms. Pullins
testified that she did not notice the amounts of tax shown as
due on the returns (but not paid with the returns) when she
signed them; and she claims that she was unaware that any
amount of tax was due. She explained that she was ignorant
of any tax liability until she filed for divorce in February
2005.
However, Ms. Pullins did not explain why she wrote checks
to the IRS from the couple’s bank account in 2000 and 2001—
with memo lines specifically referring to tax year 1999—to
make partial payments toward the 1999 tax liability if she
did not know that she and her husband had a problem with
unpaid taxes. Her joining Mr. Shirek in entering into an
installment agreement in November 2000 further dem-
onstrates her awareness of their outstanding liabilities. On
these facts, we find her contention that she did not know
about the couple’s tax liabilities until she filed for divorce in
2005 is not credible.
Ms. Pullins asserted that she signed the returns without
reviewing them because she trusted Mr. Shirek. We recog-
nize that many taxpayers trust their spouse to prepare and
file their tax returns and pay their taxes, but we note that
The rate of tax applied against a given amount of income generally is
lower when the income is reported on a joint return than when a husband
and wife file separate returns. The price which the law exacts for this
privilege is that taxpayers who file a joint return are jointly and severally
liable for the amount of tax due, see 26 U.S.C. § 6013(d)(3) (1982), regard-
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00012 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
444 136 UNITED STATES TAX COURT REPORTS (432)
less of the source of income reported and notwithstanding the fact that one
spouse may be less informed about the contents of the return. See
Sonnenborn v. Commissioner, 57 T.C. 373, 381 (1971); 26 U.S.C. §
6013(d)(3) (1982). [Stevens v. Commissioner, 872 F.2d 1499, 1503 (11th Cir.
1989), affg. T.C. Memo. 1988–63.]
A taxpayer may not obtain the benefits of joint filing
status but then obtain relief from joint and several liability
by ignoring or avoiding facts fully disclosed on a return she
signed. Hayman v. Commissioner, 992 F.2d 1256, 1262 (2d
Cir. 1993) (taxpayer who claims to have signed returns with-
out reading them is nevertheless charged with constructive
knowledge of their contents), affg. T.C. Memo. 1992–228. We
impute to a taxpayer knowledge of what she could have
gleaned from the tax returns she signed, if she had taken the
time to review them. Porter v. Commissioner, 132 T.C. at
211–212. Accordingly, Ms. Pullins is chargeable with knowl-
edge of the liabilities that were reported on the returns she
signed. 10
(2) Knowledge that her husband would not pay the liabi-
lities
In evaluating whether a requesting spouse knew or had
reason to know her nonrequesting spouse would not pay the
tax liability, the IRS considers the level of education attained
by the requesting spouse, any evasiveness or deceit by the
nonrequesting spouse, how involved the requesting spouse
was in the activity generating the income tax liability, the
requesting spouse’s involvement in financial matters of the
household, her business or financial expertise, and any lavish
or unusual expenditures compared to past spending levels.
Rev. Proc. 2003–61, sec. 4.03(2)(a)(iii)(C), 2003–2 C.B. at 298.
There is no evidence of lavish or increased spending in
1999, and by 2002 the family finances were sufficiently tight
that Ms. Pullins had started working to help make ends
meet. Ms. Pullins had access to the couple’s joint checking
account, but she explained that Mr. Shirek controlled the
finances and made the decisions for the family. Ms. Pullins
10 The foregoing discussion addresses only the liabilities that were actually reported on the
returns that Ms. Pullins signed—i.e., the great bulk of the liabilities. For purposes of the anal-
ysis under Rev. Proc. 2003–61, sec. 4.02(1)(b), 2003–2 C.B. 296, 298, that discussion is adequate.
As to the $3,430 of tax for 1999 that is attributable to the construction income that Mr. Shirek
omitted from the return, see infra pt. II.C.3.a.(3).
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00013 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
(432) PULLINS v. COMMISSIONER 445
was not involved in Mr. Shirek’s construction activity, which
generated most of the income for the family. There is no evi-
dence of deceit in the record, but Ms. Pullins did allege in a
statement attached to her request for relief that she had filed
for divorce when she learned that Mr. Shirek was keeping
money from her. Ms. Pullins completed high school and does
not claim sophisticated business or financial knowledge or
expertise.
Ms. Pullins testified that she never had reason to question
Mr. Shirek about payment of taxes. However, she made pay-
ments toward the 1999 liabilities and entered into the
installment agreement, and by 2002 they needed more
income and she had to start working to help support the
family; so it is clear that she was aware of their financial
problems. The question is whether the requesting spouse
knew the taxes would be paid on time or reasonably
promptly after the returns were filed. Schepers v. Commis-
sioner, T.C. Memo. 2010–80. The partial payment submitted
with the 1999 return and the subsequent installment agree-
ment demonstrate slow and perhaps reluctant payment—of
which Ms. Pullins was fully aware. The application of
refunds from the couple’s 2000 and 2001 returns toward the
1999 liability provided her further information about Mr.
Shirek’s tax payments. We do not find that when she signed
the returns she reasonably believed that Mr. Shirek would
promptly pay the liabilities shown on the returns.
The California court that granted Ms. Pullins’s divorce
from Mr. Shirek allocated the outstanding tax liabilities to
Mr. Shirek. The court also ordered the couple to split the
$250,454 gain from the sale of their marital home. Thus, Mr.
Shirek had the means to pay the 1999, 2002, and 2003 Fed-
eral income tax liabilities in September 2005 when the court
filed the judgment of dissolution and awarded him $125,227
of the proceeds from the sale of the home. Accordingly, when
the court issued the divorce decree, it was reasonable for Ms.
Pullins to expect Mr. Shirek to obey the court and pay the
tax debts. However, it is her knowledge or reason to know at
the time she signed the tax returns that is critical to this
inquiry; and under the circumstances she had reason to
doubt, when she signed the returns, that Mr. Shirek would
pay the liabilities.
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00014 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
446 136 UNITED STATES TAX COURT REPORTS (432)
c. Economic hardship
The IRS evaluates a requesting spouse’s claim of economic
hardship by considering any information offered by the indi-
vidual that is relevant to the determination, including her
income, assets and liabilities, age, ability to earn, responsi-
bility for dependents, the amounts reasonably necessary for
basic living expenses, the allowable living expenses for her
geographic area, and other factors. See Wiener v. Commis-
sioner, T.C. Memo. 2008–230; 26 C.F.R. sec. 301.6343–
1(b)(4)(ii), Proced. & Admin. Regs. (incorporated into Rev.
Proc. 2003–61 by its sec. 4.02(1)(c)). It is clear that Ms.
Pullins is disabled. At trial Ms. Pullins was manifestly in
pain, short of breath, and uncomfortable sitting or standing
for long periods. Her disability plainly compromises her
ability to earn and is properly taken into account in deter-
mining whether she faces economic hardship. However, her
disability is not the only factor to be considered, and two
other considerations prevent the conclusion that she has
established economic hardship:
(1) Economic facts at the time of trial
Ms. Pullins testified that she receives long-term disability
insurance payments (which may terminate on some unspec-
ified future date), that she expected she would soon begin
receiving Social Security disability benefit payments, that
her monthly disability income would be $2,091, and that she
expects her disability to be permanent. She further testified
that she has commenced divorce proceedings against her
second husband and expected to move out of his house when
her Social Security disability benefit payments commence.
She argues that, when she is on her own, her disability pay-
ments will be insufficient to cover her expenses.
A hypothetical hardship is insufficient to justify relief; a
taxpayer must demonstrate that imposing joint and several
liability is ‘‘inequitable in present terms’’, Von Kalinowski v.
Commissioner, T.C. Memo. 2001–21, and poses a present eco-
nomic hardship. When evaluating economic hardship, the
Office of Appeals necessarily views the requesting spouse’s
financial situation as of the hearing date; but we properly
consider the evidence presented at the de novo trial, see
Porter I, and we consequently evaluate her financial situa-
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00015 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
(432) PULLINS v. COMMISSIONER 447
tion and prospects as of that time, see Nihiser v. Commis-
sioner, T.C. Memo. 2008–135, 95 T.C.M. 1531, 1538
(2008) (‘‘we should * * * look at the evidence presented at
trial, and the state of her finances at that time. * * * But
we must also consider * * * [petitioner’s] future ability to
earn her current salary and pay her basic living expenses’’).
As of the date of trial, Ms. Pullins continued to live with
Mr. Pullins—her second husband—and he apparently paid
her expenses. While her disability payments are admittedly
modest, as long as she and Mr. Pullins continue to live
together—i.e., on the facts at the time of trial—their house-
hold apparently has a monthly budget surplus and some
ability to pay the tax debt. Moreover, Ms. Pullins did not
introduce any evidence of what her expenses might be if she
moves from the home she has shared with Mr. Pullins. Thus,
she presented virtually no detail to substantiate her claim of
economic hardship, whether in her current circumstance with
her husband or in an anticipated future on her own.
(2) Assets on hand
Ms. Pullins did not offer any evidence at trial 11 to show
whether she had any assets. 12 This evidentiary gap is espe-
cially significant because in 2005 she received $125,227 of
the proceeds of the sale of her previous marital home. She
testified that she used part of those proceeds for living
expenses, to purchase a car, and to relocate from California
to Minnesota. However, she did not state whether she still
had any of those funds as of the date of trial.
Ms. Pullins has the burden of proof, and on this record she
has not proved that she will suffer economic hardship if relief
is not granted.
11 Similarly, when Ms. Pullins submitted her request for relief to the IRS in April 2008, she
did not show her assets. The reason for that omission may be that the then-current version of
Form 8857, Request for Innocent Spouse Relief, as revised in June 2007, did not specifically re-
quire disclosure of a requesting spouse’s assets. The subsequent version of Form 8857 as revised
in September 2010 includes an additional section that asks: ‘‘Tell us about your assets. Your
assets are your money and property. Property includes real estate, motor vehicles, stocks, bonds,
and other property that you own. Tell us the amount of cash you have on hand and in your
bank accounts. Also give a description of each item of property, the fair market value of each
item, and the balance of any outstanding loans you used to acquire each item.’’
12 When a taxpayer fails to produce evidence in her possession which, if true, would be favor-
able, we may presume that the evidence, if produced, would favor the opposing party. Wichita
Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1165 (1946), affd.
162 F.2d 513 (10th Cir.
1947).
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00016 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
448 136 UNITED STATES TAX COURT REPORTS (432)
3. Alternative facts-and-circumstances test
Where, as here, the requesting spouse satisfies the
threshold conditions of Revenue Procedure 2003–61, section
4.01, but fails to qualify for relief under section 4.02, she
may nevertheless obtain relief under the facts and cir-
cumstances test of section 4.03. The IRS considers a nonexclu-
sive list of factors to determine whether ‘‘taking into account
all the facts and circumstances, it is inequitable to hold the
requesting spouse liable’’: (1) whether the requesting spouse
is separated or divorced from the nonrequesting spouse; (2)
whether the requesting spouse would suffer economic hard-
ship if not granted relief; (3) whether, in the case of an
underpayment, the requesting spouse knew or had reason to
know that the other spouse would not pay the liability, and,
in the case of a deficiency, whether the requesting spouse did
not know and had no reason to know of the item giving rise
to the deficiency; (4) whether the nonrequesting spouse had
a legal obligation to pay the outstanding tax liability pursu-
ant to a divorce decree or agreement; (5) whether the
requesting spouse received a significant benefit from the
unpaid income tax liability or the item giving rise to the defi-
ciency; and (6) whether the requesting spouse has made a
good faith effort to comply with the tax laws for the taxable
years following the years for which she requests relief. Id.
sec. 4.03(2), 2003–2 C.B. at 298–299.
Other factors that may indicate relief is appropriate when
present but that will not weigh against granting relief when
absent are: (i) whether the nonrequesting spouse abused the
requesting spouse and (ii) whether the requesting spouse was
in poor mental or physical health at the time she signed the
tax return or when she requested relief. Id. sec. 4.03(2)(b),
2003–2 C.B. at 299.
We analyze all relevant facts and circumstances, with all
factors considered and appropriately weighted and no single
factor determinative, in determining whether it is inequi-
table to hold a taxpayer liable for a joint tax liability. See
Porter II, 132 T.C. at 214.
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00017 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
(432) PULLINS v. COMMISSIONER 449
a. Applying the facts and circumstances factors
(1) Marital status
Ms. Pullins had divorced Mr. Shirek when she requested
innocent spouse relief. This factor weighs in favor of relief.
(2) Economic hardship
Generally, economic hardship exists when collection of the
tax liability will render the taxpayer unable to meet basic
living expenses. 26 C.F.R. sec. 301.6343–1(b)(4)(i). As dis-
cussed above in part II.C.2.c., Ms. Pullins failed to make a
convincing showing of economic hardship. She failed to make
an accounting of her assets, and it appears that as long as
she lives with her second husband, she has some income
available to pay toward her tax liability; consequently, she
has not proved economic hardship. However, Ms. Pullins is
disabled, and the marriage on which her support currently
depends was, at the time of the trial, evidently at risk of dis-
solution. Balancing her inability to work and the modest dis-
ability income she will receive against the lack of evidence on
assets and expenses, we find this factor to weigh only mod-
erately against granting relief.
(3) Knowledge or reason to know
Ms. Pullins actually knew about (or is imputed with knowl-
edge about) the liabilities reported on the returns she signed,
and she did not have a reasonable belief that Mr. Shirek
would reasonably promptly pay those liabilities. See supra
pt. II.C.2.b.
However, in the case of a deficiency, the question is
whether the requesting spouse did not know and had no rea-
son to know of the item giving rise to the deficiency—in this
case, the $10,374 of construction income that Mr. Shirek
omitted in 1999 (which generated an additional tax liability
of $3,430). Ms. Pullins did not know of that omission and,
given her non-involvement in his construction business, she
could not reasonably be expected to have known. This was
not an instance in which a husband failed altogether to
report income from a business that his wife knew about;
rather, here the husband reported about 85 percent of the
income. As to the unreported portion of the liability (i.e., the
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00018 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
450 136 UNITED STATES TAX COURT REPORTS (432)
deficiency), Ms. Pullins lacked knowledge, and to the extent
of $3,430 of the joint liability this factor weighs in favor of
granting relief.
As to the underpayments, however, as noted Ms. Pullins
has not proved that she did not know and had no reason to
know, when she signed the returns at issue, that Mr. Shirek
would not pay the tax liabilities reflected there. For most of
the liability, therefore, this factor weighs against granting
relief.
(4) Nonrequesting spouse’s legal obligation
The California court’s August 2005 judgment ordered Mr.
Shirek to pay the 1999, 2002, and 2003 Federal income tax
and California Franchise Tax Board liabilities, and it also
ordered him to appear on behalf of Ms. Pullins, defend her,
and hold her harmless from those debts. Moreover, Mr.
Shirek had the means to pay the Federal income taxes after
the divorce, given that the property distribution awarded
$125,227 to each spouse from the sale of the marital resi-
dence. We are not bound (by collateral estoppel or otherwise)
to the determination of a State family court, and that court
does not have the power to adjust a spouse’s Federal tax
liabilities. However, when evaluating what is equitable in
this instance under section 6015(f), we will assign consider-
able weight to the determination of the State court which
placed the responsibility for satisfying the tax debts on Mr.
Shirek.
Revenue Procedure 2003–61, sec. 4.03(2)(a)(iv), 2003–2
C.B. at 298, provides that the nonrequesting spouse’s legal
obligation ‘‘will not weigh in favor of relief if the requesting
spouse knew or had reason to know, when entering into the
divorce decree or agreement, that the nonrequesting spouse
would not pay the income tax liability.’’ Considering the cir-
cumstances that existed at the time of the divorce (as
opposed to the time she signed the returns, see supra part
II.C.2.b.), the record does not contain any evidence indicating
that Ms. Pullins had any reason to expect that Mr. Shirek
would ignore the family court order and fail to pay the tax
debts. Accordingly, this factor clearly weighs in favor of
granting Ms. Pullins relief.
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00019 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
(432) PULLINS v. COMMISSIONER 451
(5) Significant benefit
The significant benefit factor examines whether the
requesting spouse directly or indirectly received ‘‘significant
benefit (beyond normal support) from the unpaid income tax
liability’’. Rev. Proc. 2003–61, sec. 4.03(2)(a)(v), 2003–2 C.B.
at 299 (referencing 26 C.F.R. section 1.6015–2(d)). Ms.
Pullins did share in the benefit of Mr. Shirek’s income for the
years in issue; but there is nothing in the record to indicate
that, during her marriage to Mr. Shirek, Ms. Pullins received
any specific or extraordinary benefit from their nonpayment
of their tax liabilities. The IRS points to their acquisition of
‘‘waverunners, a golf cart and a camper/trailer’’; but while it
is certainly true that a family should not buy such items
rather than pay their taxes, we think these items do not rise
to a level that implicates significant benefit to Ms. Pullins.
More difficult to evaluate is the IRS’s contention that Ms.
Pullins benefited from the nonpayment of taxes by her
receipt of increased proceeds from the equity in the marital
home. The IRS observes:
Upon her divorce from Mr. Shirek, Petitioner received $125,000.00 from
the sale of the marital home. * * * Had Petitioner and Mr. Shirek used
the equity of $250,000 in their home to pay their tax liabilities at the time
they were due, the money Petitioner would have received from the sale of
the marital home would have been significantly less. See George v.
Commissioner, T.C. Memo. 2004–261. In George, the Court found that the
requesting spouse received a significant benefit when she received pension
and life insurance funds after the death of the nonrequesting spouse. The
Court noted these funds could have been used during the nonrequesting
spouse’s lifetime to pay the tax liabilities and the requesting spouse would
have received a reduced amount of money. Consequently, the requesting
spouse received a significant benefit from the nonpayment of the taxes. Id.
Likewise, Petitioner would have received far less money during her divorce
had the tax liabilities been paid when due.
It is true that the proceeds to be distributed to the spouses
in the divorce proceedings would have been reduced if the
couple had used the equity in the marital home to pay their
tax debts. However, two considerations defeat the contention
that this resulted in significant benefit to Ms. Pullins:
First, George v. Commissioner, T.C. Memo. 2004–261,
involved not proceeds from the sale of a marital home but
pension and life insurance funds. Unlike the funds in George,
here the equity interest in the home was created by the fam-
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00020 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
452 136 UNITED STATES TAX COURT REPORTS (432)
ily’s mortgage payments—i.e., one of its routine living
expenditures. By definition, significant benefit is ‘‘beyond
normal support’’. Rev. Proc. 2003–61, sec. 4.03(2)(a)(v). Mort-
gage payments on a middle-class home constitute normal
support that is not considered to generate ‘‘significant ben-
efit’’. It is therefore difficult to explain how, before the prop-
erty distribution in the divorce, any significant benefit could
arise from the equity interest that is simply the result of
those mortgage payments.
Second, Ms. Pullins’s first opportunity to drawn down
equity from the home to pay the taxes was when the house
was sold and the proceeds were distributed in the divorce
proceedings. It does not appear—and we cannot assume—
that nonpayment of the taxes at that time actually benefited
her or (to put it differently) that payment of the taxes at the
time of the distribution would have reduced her share of the
distribution. The divorce court awarded Mr. Shirek half (i.e.,
$125,227) of the proceeds and ordered him to pay the taxes
unilaterally; thus, the court evidently intended that Ms.
Pullins receive $125,227 not reduced by tax payments. If
instead Ms. Pullins and Mr. Shirek had agreed that the
taxes would be paid directly from the proceeds, then on the
basis of everything we know, it is altogether likely that the
court would have awarded Ms. Pullins $125,227 and given
Mr. Shirek only the remainder. If that is true, then Ms.
Pullins did not benefit from the nonpayment of the taxes at
that time but rather suffered the detriment, not intended by
the divorce court, of having her share of the proceeds remain
at risk of IRS collection.
Under the circumstances of this case, we find that Ms.
Pullins did not realize significant benefit from the non-
payment of the taxes. Accordingly, this factor weighs in favor
of granting relief.
(6) Compliance with Federal tax laws
Where the requesting spouse has made a good-faith effort
to comply with Federal tax laws in years following the years
for which she requests relief, this compliance can weigh in
favor of relief. Ms. Pullins testified that she mailed tax
returns for tax years 2004 and 2005 with filing status of
married filing separate and single, respectively. She asserted
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00021 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
(432) PULLINS v. COMMISSIONER 453
that she mailed those returns the Saturday before trial in
September 2009. As of the date of trial, the IRS had no record
of receiving the returns, and Ms. Pullins offered no evidence
of their filing. The record does not clearly reflect whether or
when Ms. Pullins filed a Federal income tax return for
2006—or whether she had an obligation to file for 2006. She
requested an extension of time to file her 2007 return, and
it was due on October 15, 2008. She filed the return one
week late, with a balance due, and she paid that balance,
plus interest and additions to tax, by February 24, 2009.
Ms. Pullins asserts that her mailing her 2004 and 2005
Federal income tax returns the weekend before trial in Sep-
tember 2009 shows that she was in compliance with her tax
filing obligations at the time of trial. Those returns both
claim an overpayment and request a refund. However, she
filed each of those returns several years after they were due
and on the eve of trial. We cannot say that she has proved
that she made a good-faith effort to comply with Federal
income tax laws in the years following the years in issue.
Accordingly, this factor weighs against granting relief.
(7) Abuse
At trial Ms. Pullins testified that Mr. Shirek became an
abusive alcoholic at the end of their marriage. She still
trusted him when they signed the 2002 and 2003 returns in
October 2004, but he moved out of the family home in
December 2004, and she filed for divorce in February 2005.
Ms. Pullins did not inform the IRS before trial that she suf-
fered abuse at Mr. Shirek’s hands. On the contrary, in her
April 2008 request for relief on Form 8857, she explicitly
answered ‘‘No’’ to question 10: ‘‘Were you a victim of spousal
abuse or domestic violence during any of the tax years you
want relief?’’
At trial, however, Ms. Pullins alleged that Mr. Shirek
emotionally abused her during the marriage. When ques-
tioned about her ‘‘No’’ answer on Form 8857, she explained
that she made a simple mistake and checked the wrong box.
However, the following additional instructions accompany
the ‘‘Yes’’ box:
Attach a statement to explain the situation and when it started. Provide
photocopies of any documentation, such as police reports, a restraining
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00022 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
454 136 UNITED STATES TAX COURT REPORTS (432)
order, a doctor’s report or letter, or a notarized statement from someone
who was aware of the situation.
Ms. Pullins did not describe or document any alleged abuse
in an attachment to her Form 8857; and she did not explain
why, if she mistakenly checked ‘‘No’’, she did not follow the
‘‘Yes’’ instructions and do so. 13
Ms. Pullins has not introduced any evidence to corroborate
her testimony—contradicted by her Form 8857—that she suf-
fered abuse from Mr. Shirek. Accordingly, we do not find that
she proved abuse. This factor does not weigh in favor of
relief—and it also does not weigh against granting relief. See
Rev. Proc. 2003–61, sec. 4.03(2)(b), 2003–2 C.B. at 299.
(8) Mental or physical health
There is no evidence that Ms. Pullins was ill when she
signed the returns in issue or when she requested relief in
April of 2008. See id. sec. 4.03(2)(b)(ii). This factor ordinarily
would not weigh in favor of or against granting relief in the
IRS’s analysis. See id. sec. 4.03(2)(b). However, having
observed Ms. Pullins at trial in September 2009, we conclude
that she is now disabled and unable to work and earn income
and that she may be permanently so. We find that her obvi-
ously impaired health at the time of the trial de novo is rel-
evant, and we conclude that this factor weighs in favor of
granting relief.
b. Weighing the facts and circumstances
This is a close case. Three factors favor retained liability:
Ms. Pullins’s failure to prove economic hardship, her lack of
a reasonable expectation that Mr. Shirek would pay the
liabilities when she signed the returns, and her failure to
timely file her returns and pay her taxes since the years in
issue. However, four factors favor relief—Ms. Pullins’s
divorce from Mr. Shirek, Mr. Shirek’s legal obligation to pay
the tax liabilities, Ms. Pullins lack of significant benefit from
the nonpayment, and Ms. Pullins’s poor health—and a fifth
13 Ms. Pullins explained that she did not allege abuse during her divorce proceedings because
she wanted the divorce to proceed quickly so that she could get out of the marriage. This ration-
ale may be perfectly logical for the divorce proceedings and may explain why the California fam-
ily court judgment does not discuss abuse. Thus, we do not rely on that judgment to prove or
disprove abuse. However, she completed Form 8857 in April 2008, long after the divorce pro-
ceedings had concluded.
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00023 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
(432) PULLINS v. COMMISSIONER 455
favors relief as to the 1999 deficiency, i.e., her lack of knowl-
edge of Mr. Shirek’s unreported income. Especially weighty
here is the fact that the divorce court—with the family’s cir-
cumstances set out before it in greater detail than was pos-
sible in our tax case—determined that Mr. Shirek should pay
the taxes, placed proceeds in his hands sufficient to do so,
and allocated resources to Ms. Pullins on the assumption
that he would do so and she would not have to.
Accordingly, after considering and weighing all the factors,
we find that with the exception of her underwithholding of
$719 of her own liability in 2002, it would be inequitable to
hold Ms. Pullins liable for the 1999, 2002, and 2003 tax
liabilities.
To reflect the foregoing,
An appropriate decision will be entered.
f
VerDate 0ct 09 2002 14:55 May 30, 2013 Jkt 372897 PO 20009 Frm 00024 Fmt 2847 Sfmt 2847 V:\FILES\PULLINS.136 SHEILA
