Judges: MARVEL
Attorneys: Sherri K. Anderson , for petitioner. William F. Castor and Dessa J. Baker-Inman , for respondent.
Filed: Sep. 10, 2012
Latest Update: Nov. 21, 2020
Summary: T.C. Memo. 2012-260 UNITED STATES TAX COURT SHARON K. HUDGINS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 21782-10. Filed September 10, 2012. Sherri K. Anderson, for petitioner. William F. Castor and Dessa J. Baker-Inman, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION MARVEL, Judge: Petitioner seeks review of respondent’s determination to deny relief from joint and several liability for unpaid Federal income taxes for -2- [*2] 2006 under section 6015(b), (c)
Summary: T.C. Memo. 2012-260 UNITED STATES TAX COURT SHARON K. HUDGINS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 21782-10. Filed September 10, 2012. Sherri K. Anderson, for petitioner. William F. Castor and Dessa J. Baker-Inman, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION MARVEL, Judge: Petitioner seeks review of respondent’s determination to deny relief from joint and several liability for unpaid Federal income taxes for -2- [*2] 2006 under section 6015(b), (c),..
More
T.C. Memo. 2012-260
UNITED STATES TAX COURT
SHARON K. HUDGINS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 21782-10. Filed September 10, 2012.
Sherri K. Anderson, for petitioner.
William F. Castor and Dessa J. Baker-Inman, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
MARVEL, Judge: Petitioner seeks review of respondent’s determination to
deny relief from joint and several liability for unpaid Federal income taxes for
-2-
[*2] 2006 under section 6015(b), (c), and (f) and for 2007 under section 6015(f).1
Petitioner timely petitioned this Court. After concessions,2 the sole issue for
decision is whether petitioner is entitled to relief under section 6015(f) for 2007.
FINDINGS OF FACT
Some of the facts have been stipulated. The stipulation of facts is
incorporated herein by this reference. Petitioner resided in Oklahoma when she
petitioned this Court.
Background
Petitioner and Mr. Rozell married in December 2005. Mr. Rozell died from a
mixture of pills and alcohol on February 14, 2009.
1
Unless otherwise indicated, all section references are to the Internal Revenue
Code for the relevant periods, and all Rule references are to the Tax Court Rules of
Practice and Procedure. Some monetary amounts have been rounded to the nearest
dollar.
2
After an audit in 2008 respondent issued to petitioner and Donald R. Rozell
a notice of deficiency determining a deficiency of $4,280, plus interest, with respect
to their joint income tax return for 2006. The liability was satisfied on April 15,
2009, when respondent collected the amount due by a refund offset of a $5,509
overpayment of petitioner and Mr. Rozell’s joint income tax account for 2008. Of
the overpayment, $4,909 was attributable to Mr. Rozell’s income tax withholding,
and $600 was attributable to a refundable recovery rebate credit. Accordingly, the
parties now agree that petitioner’s request for relief for 2006 is moot.
-3-
[*3] During 2007 Mr. Rozell and three of his brothers each owned a 25% share of
Hubs Vending Corp. (Hubs), an S corporation. From 2007 through at least 2010
petitioner owned and operated two businesses: (1) Hudgins Realty (real estate
business), a sole proprietorship, and (2) Seahorse Publishing (publishing business),
also a sole proprietorship.
At the time of Mr. Rozell’s death, petitioner and/or Mr. Rozell owned the
following real properties: (1) their marital home at 1321 East Sixth Street, Cushing,
Oklahoma (Sixth Street property); (2) a rental property at 417 North Linwood,
Cushing, Oklahoma (Linwood property); (3) a rental property at 824 East Second
Street, Cushing, Oklahoma (Second Street property); and (4) an undeveloped
investment property in Lincoln County, Oklahoma (Lincoln County property).
Petitioner and Mr. Rozell timely filed a joint Form 1040, U.S. Individual
Income Tax Return, for 2007 reporting the following income items: (1) wages of
$13,004 that Mr. Rozell received from Hubs; (2) Schedule C, Profit or Loss From
Business, income of $22,534 from petitioner’s real estate business; (3) Schedule C
income of $3,221 from petitioner’s publishing business; and (4) net passthrough
income from Hubs of $163,714 on Schedule E, Supplemental Income and Loss.
-4-
[*4] The joint return reported a total tax liability of $29,982, income tax withheld of
$9,285, and tax due of $20,697.
Petitioner’s Request for Relief
On or about July 8, 2009, petitioner submitted to respondent a Form 8857,
Request for Innocent Spouse Relief (request for relief), seeking relief from joint
and several liability for her and Mr. Rozell’s outstanding 2007 income tax liability.
In a letter dated July 28, 2009, respondent’s Cincinnati Centralized Innocent
Spouse Operation (CCISO) notified Mr. Rozell’s estate of petitioner’s request for
relief and requested that the estate complete a Form 12508, Questionnaire for
Non-Requesting Spouse. Petitioner, through her representative, partially
completed and returned the Form 12508 on behalf of Mr. Rozell’s estate.
In considering petitioner’s request for relief CCISO determined that (1) of
the outstanding 2007 tax liability, $3,639 was attributable to petitioner and
$17,058 was attributable to Mr. Rozell; (2) petitioner did not have a reasonable
belief that Mr. Rozell would pay the tax because she did not review the return in
the first instance and because the tax liabilities shown on Mr. Rozell’s individual
-5-
[*5] returns from 2001 and 2002 were also not timely paid;3 (3) petitioner was not
making a good-faith effort to comply with the tax laws because she did not file her
2008 return, which had an extended due date of October 15, 2009, until October
20, 2009;4 and (4) petitioner’s minimum monthly payment was $215 because her
monthly income and expenses were $2,485 and $2,270, respectively.
In a letter dated January 25, 2010, CCISO proposed to deny petitioner relief
under section 6015. In a letter dated February 4, 2010, petitioner’s attorney
requested reconsideration of the proposed denial.
Appeals Office Proceedings
Respondent then transferred petitioner’s request for relief to respondent’s
Appeals Office. On June 23, 2010, Appeals Officer William Jarvi held a
conference with petitioner and her attorney. Subsequently, the Appeals Office
determined that (1) petitioner would not suffer economic hardship if denied relief,
(2) petitioner had reason to know the liability would not be paid, (3) Mr. Rozell
3
Petitioner was not married to Mr. Rozell during 2001-02, and it is unclear
why CCISO concluded that she had knowledge of Mr. Rozell’s prior
noncompliance. In deciding this case, we do not rely on CCISO’s conclusion.
4
Respondent concedes that petitioner timely filed her 2008 return.
-6-
[*6] did not have a legal obligation to pay the liability,5 (4) petitioner appeared not
to be in compliance with the tax laws, and (5) petitioner’s marital status was the
only factor favoring relief. Accordingly, the Appeals Office denied petitioner’s
request for relief.
The Probate Case
On March 27, 2009, Sherre Rozell-Brandenburg, Mr. Rozell’s previous wife,
filed a petition for letters of administration of Mr. Rozell’s estate in the District
Court of Payne County, Oklahoma. On June 2, 2009, petitioner filed a cross-
petition for letters of administration, and on June 10, 2009, the court appointed her
personal representative of the estate.
On October 16, 2009, petitioner filed an application for an order
determining that Mr. Rozell’s estate had an interest in the Betty Rozell Revocable
Trust (Betty Rozell trust), requiring an account of the trust to be provided, and
determining whether the estate should file an action in the District Court of
Lincoln County, Oklahoma, to enforce or construe the terms of the trust. In her
application, petitioner alleged that the estate had a one-seventh interest in the trust
5
The Appeals officer seems to have misunderstood this factor, asking,
according to the case record, whether petitioner agreed to pay Mr. Rozell’s debts.
-7-
[*7] as a beneficiary and that Mr. Rozell had understood before his death that he
would be receiving a distribution from the trust of approximately $60,000.
On August 25, 2010, petitioner filed an inventory of Mr. Rozell’s estate in the
probate case. In the inventory, petitioner listed as nonprobate assets of the estate
three parcels of real property that she and Mr. Rozell had owned as joint tenants
with the right of survivorship. The three parcels listed in the inventory were: (1) the
Sixth Street property, (2) the Second Street property, and (3) the Lincoln County
property. Petitioner listed as personal property of the estate (1) the estate’s interest
in Hubs, which was valued at approximately $90,000 and listed as having been
transferred by the court to Ms. Rozell-Brandenburg to satisfy Ms. Rozell-
Brandenburg’s lien on the estate; (2) tools worth approximately $1,500, and (3) the
estate’s one-seventh interest in the Betty Rozell trust, the value of which was to be
determined. Finally, petitioner listed $9,989 as money the estate received after Mr.
Rozell’s death.
The Trust Case
On March 31, 2010, petitioner filed a petition on behalf of Mr. Rozell’s estate
in the District Court of Lincoln County, Oklahoma, to enjoin the trustee of the Betty
Rozell trust from distributing the estate’s one-seventh share of the trust to other
persons or entities. On December 16, 2010, the court entered judgment in
-8-
[*8] favor of the Betty Rozell trust, and on April 6, 2011, petitioner appealed the
district court’s judgment.6
Conveyances of the Rental Properties
By quitclaim deeds dated September 1, 2010, petitioner conveyed the
Linwood property and the Second Street property to her sister, Brenda Sue Hudgins,
and her brother, Jackie Lee Hudgins. The quitclaim deeds regarding the Linwood
and Second Street properties bore no documentary tax stamps and stated that the
conveyances were “family transfer[s]”.
The Foreclosure Case
On March 31, 2011, a foreclosure suit was filed in the District Court of Payne
County, Oklahoma, against petitioner and Mr. Rozell regarding the Sixth Street
property. On August 16, 2011, the court entered judgment for the plaintiff and
ordered that the Sixth Street property be sold at a sheriff’s sale. On October 4,
2011, the Sixth Street property was offered for sale.
6
As of the time of trial, the appeal was still pending in the Court of Civil
Appeals of the State of Oklahoma. See OCIS Case Summary for No. DF-109331,
Oklahoma State Courts Network, http://www.oscn.net/applications/oscn/getcase
information.asp?submitted=true&number=109331&db=Appellate&viewtype=
oscn (last visited July 24, 2012).
-9-
[*9] Petitioner’s Business Income: 2006-10
Petitioner reported business income for tax years 2006-10 as follows:
Real estate business Publishing business
Gross Net Gross Net
Year receipts Expenses income receipts Expenses income
2006 $76,415 $53,155 $23,260 -0- -0- -0-
2007 47,990 25,456 22,534 $25,115 $21,894 $3,221
2008 26,770 16,797 9,973 51,804 43,202 8,602
2009 14,570 17,970 (3,400) 42,773 35,280 7,493
2010 20,633 17,419 3,214 28,280 29,652 (1,372)
Petitioner’s Rental Income: 2006-10
Petitioner reported rental income for tax years 2006-10 as follows:
Linwood property Second Street property
Gross Net Gross Net
Year receipts Expenses income receipts Expenses income
2006 $1,950 $3,046 ($1,096) -0- -0- -0-
2007 2,050 1,705 345 -0- -0- -0-
2008 2,475 2,376 99 -0- -0- -0-
2009 4,225 305 3,920 $2,900 $3,792 ($892)
2010 9,958 675 9,283 -0- 753 (753)
Petitioner’s Form 433-A
On September 20, 2011, petitioner submitted to respondent a Form 433-A,
Collection Information Statement for Wage Earners and Self-Employed
Individuals. On the Form 433-A petitioner reported that she was a beneficiary of
the Betty Rozell Trust and that she anticipated receiving $50,000. Petitioner did
- 10 -
[*10] not list the Linwood, Second Street, or Lincoln County properties as real
property she owned, and she did not disclose that she had transferred her interest in
the Linwood or Second Street property for less than full value within the last 10
years.
Petitioner indicated on her Form 433-A that (1) she had ceased operating her
publishing business; (2) she had $29 in total cash; (3) she had an IRA account worth
$4,271; (4) she owned two vehicles: a 2002 Lexus ES-300 with 238,800 miles on it
and estimated equity of $7,500 and a 1991 Chrysler “TCM” with 60,000-80,000
miles on it and estimated equity of $4,500; and (5) from January 1 through
September 14, 2011, she had total income of $14,653 and total expenses of
$14,815. Petitioner calculated her income and expenses as follows:
- 11 -
[*11] Income and expense report
1/1/11 - 9/14/11
Income
Sales/commission $8,575
Property management/com. 1,830
Property management/res. 1,048
Family transfer/sale ($400/month) 3,200
1
Total 14,653
Expenses
Advertising $1,163
Auto (travel) 40
Auto (service) 141
Auto (other) 33
Business 1,799
Charity 5
Dining 290
Dues (Chamber of Commerce) 150
Filing fee 4
Food 83
Promotional 195
Insurance 457
Legal fees 609
Lions Club dues 100
Materials 91
Medical (out of pocket) 1,020
Postage 43
Supplies 159
Office (other) 1,536
Telephone 3,715
Utilities 3,182
Total 14,815
1
Petitioner erroneously calculated her total income to be $13,753.
- 12 -
[*12] OPINION
I. Section 6015
Generally, married taxpayers who file a joint Federal income tax return are
jointly and severally liable for the tax reported or reportable on the return. Sec.
6013(d)(3); Butler v. Commissioner, 114 T.C. 276, 282 (2000). Section 6015
allows a spouse to obtain relief from joint and several liability in certain
circumstances. Section 6015(a)(1) provides that a spouse who has made a joint
return may elect to seek relief from joint and several liability under section
6015(b) (dealing with relief from liability for an understatement of tax with
respect to a joint return). Section 6015(a)(2) provides that an eligible spouse may
elect to limit that spouse’s liability for any deficiency with respect to a joint return
under section 6015(c) (dealing with relief from joint and several liability for
taxpayers who are no longer married or who are legally separated or no longer
living together). If a taxpayer does not qualify for relief under either section
6015(b) or (c), the taxpayer may seek equitable relief under section 6015(f).
Under section 6015(f), the Secretary7 has discretion to grant equitable relief to
7
The term “Secretary” means the Secretary of the Treasury or his delegate.
Sec. 7701(a)(11)(B).
- 13 -
[*13] a spouse who filed a joint return with an understatement or underpayment of
tax. See also sec. 1.6015-4(a), Income Tax Regs.
The parties agree that petitioner is not entitled to relief under section 6015(b)
or (c) because she is seeking relief from an underpayment of tax, not an
understatement of tax or a deficiency in tax. See Hopkins v. Commissioner, 121
T.C. 73, 88 (2003). Petitioner contends, however, that she is entitled to relief from
joint and several liability under section 6015(f). Respondent disagrees.
We have jurisdiction to determine whether petitioner qualifies for section
6015(f) relief. See sec. 6015(e); see also Kollar v. Commissioner, 131 T.C. 191,
196 (2008).
II. The Standard and Scope of Review
In Porter v. Commissioner, 132 T.C. 203, 210 (2009), we held that, in
determining whether a taxpayer is entitled to equitable relief under section 6015(f),
we apply a de novo standard and scope of review.8 Petitioner bears the burden of
proving that she is entitled to relief under section 6015(f). See id.; see also Rule
142(a)(1).
8
Respondent disagrees with our holding in Porter v. Commissioner, 132 T.C.
203 (2009). Respondent argues that the appropriate standard of review in sec.
6015(f) cases is abuse of discretion and the scope of review should be limited to the
administrative record. We decline to revisit our holding in Porter.
- 14 -
[*14] Pursuant to section 6015(f), the Commissioner has prescribed guidelines in
Rev. Proc. 2003-61, 2003-2 C.B. 296,9 for determining whether a requesting spouse
qualifies for relief under that section. This Court considers those guidelines, but is
not bound by them, in evaluating the facts and circumstances of a case. See Pullins
v. Commissioner, 136 T.C. 432, 438-439 (2011); Porter v. Commissioner, 132 T.C.
at 210.
On January 5, 2012, the Internal Revenue Service (IRS) released Notice
2012-8, 2012-4 I.R.B. 309, which proposed a revenue procedure that, if finalized,
would revise the factors the IRS will use to evaluate a requesting spouse’s claim
for equitable relief under section 6015(f) and would supersede Rev. Proc. 2003-
61, supra. Notice 2012-8, supra, states that, “until the revenue procedure is
finalized, the Service will apply the provisions in the proposed revenue procedure
instead of Rev. Proc. 2003-61 in evaluating claims for equitable relief under
section 6015(f).” However, in Sriram v. Commissioner, T.C. Memo. 2012-91, slip
op. at 9 n.7, we took the position that we would “continue to apply the factors in
Rev. Proc. 2003-61, 2003-2 C.B. 296, in view of the fact that the proposed
revenue procedure is not final and because the comment period under the notice
9
Rev. Proc. 2003-61, 2003-2 C.B. 296, supersedes Rev. Proc. 2000-15,
2000-1 C.B. 447, and is effective for requests for sec. 6015(f) relief filed on or after
November 1, 2003. Rev. Proc. 2003-61, secs. 6 and 7, 2003-2 C.B. at 299.
- 15 -
[*15] only recently closed.” See also Yosinski v. Commissioner, T.C. Memo.
2012-195, slip op. at 13 n.9; Deihl v. Commissioner, T.C. Memo. 2012-176, slip
op. at 29.
The parties contend that this Court should apply the provisions of the
proposed revenue procedure set forth in Notice 2012-8, supra, in determining
whether petitioner is entitled to equitable relief under section 6015(f). We decline
to do so. We adopt here an approach similar to the approach used in Sriram. We
shall decide whether petitioner is entitled to relief under section 6015(f) by
considering all of the relevant facts and circumstances, evaluating them through the
prism of Rev. Proc. 2003-61, supra, and noting where appropriate how the analysis
used in Rev. Proc. 2003-61, supra, would change if the proposed revenue procedure
in Notice 2012-8, supra, had actually been finalized.
III. Rev. Proc. 2003-61
A. Section 4.01: Threshold Conditions
Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. at 297-298, sets forth seven
threshold conditions that a requesting spouse must satisfy to be eligible to submit a
request for relief under section 6015(f): (1) the requesting spouse filed a joint
Federal income tax return for the tax year or years for which relief is sought; (2) the
requesting spouse does not qualify for relief under section 6015(b) or (c); (3)
- 16 -
[*16] the requesting spouse applies for relief no later than two years after the date of
the Commissioner’s first collection activity after July 22, 1998, with respect to the
requesting spouse;10 (4) no assets were transferred between the spouses as part of a
fraudulent scheme by such spouses; (5) the nonrequesting spouse did not transfer
disqualified assets to the requesting spouse; (6) the requesting spouse did not file the
returns with fraudulent intent; and (7) the liability from which relief is sought is
attributable to an item of the nonrequesting spouse, unless an exception applies.
An exception to the seventh threshold condition applies where the requesting
spouse shows that he or she was subject to abuse before the time that the return was
filed and that, as a result of that abuse, the requesting spouse did not challenge the
treatment of any item on the return. See Rev. Proc. 2003-61, sec. 4.01(7)(d), 2003-
2 C.B. at 298.
The parties agree that petitioner satisfies the first six threshold conditions.
The parties also agree that, to the extent that petitioner’s joint liability for 2007 is
10
In Lantz v. Commissioner, 132 T.C. 131 (2009), rev’d,
607 F.3d 479 (7th
Cir. 2010), we held that the two-year deadline imposed by Rev. Proc. 2003-61, sec.
4.01, 2003-2 C.B. at 297, pursuant to sec. 1.6015-5(b)(1), Income Tax Regs., is
invalid. Notice 2012-8, 2012-4 I.R.B. 309, 312, proposes to eliminate the two-year
deadline and replace it with a requirement that the request for relief be filed within
the applicable period of limitations provided by sec. 6502 (relating to collections) or
sec. 6511 (relating to claims for credit or refund).
- 17 -
[*17] attributable to Mr. Rozell, she has satisfied the seventh condition. Petitioner
contends, however, that she also qualifies for relief, under the abuse exception to
the seventh condition, from the part of the liability attributable to her because Mr.
Rozell’s alcohol addiction constituted abuse.
Petitioner has failed to introduce evidence showing that Mr. Rozell’s
alcohol addiction, if any, prevented her from challenging any item on their
return.11 Accordingly, petitioner cannot qualify for the abuse exception to the
seventh threshold condition even if Mr. Rozell’s alcohol addiction constituted
abuse.12 We must decide, however, whether petitioner qualifies for relief with
respect to the amount of the tax liability attributable to Mr. Rozell.
B. Section 4.02: The Safe Harbor Requirements
If a requesting spouse fulfills the threshold requirements of Rev. Proc.
2003-61, sec. 4.01, the Commissioner ordinarily will grant relief from joint and
several liability with respect to underpayments on a joint Federal income tax
11
Petitioner did not introduce any evidence, other than her own testimony, that
Mr. Rozell suffered from an alcohol addiction. We shall assume that Mr. Rozell
suffered from an alcohol addiction that ultimately led to his death; but we note that
the record contains no objective evidence, such as a death certificate or medical
records, to confirm petitioner’s testimony.
12
As discussed infra pp. 38-39, petitioner’s argument that Mr. Rozell’s
alcohol addiction constituted abuse also lacks merit.
- 18 -
[*18] return, provided that all of the following additional safe harbor requirements
are satisfied: (1) on the date of the request for relief, the requesting spouse is no
longer married to, or is legally separated from, the nonrequesting spouse; (2) on the
date the requesting spouse signed the joint return, the requesting spouse did not
know, and had no reason to know, that the nonrequesting spouse would not pay the
tax liability; and (3) the requesting spouse will suffer economic hardship if the
Commissioner does not grant relief. Id. sec. 4.02, 2003-2 C.B. at 298.
The parties agree that petitioner was the widow of Mr. Rozell when she
requested relief under section 6015(f). However, the parties disagree (1) whether
petitioner has shown that she did not know, or have reason to know, that the liability
reported on the 2007 return would not be paid and (2) whether petitioner has shown
that she would face economic hardship if her request for relief were denied.
Accordingly, we address these two issues.
1. Knowledge or Reason To Know
Petitioner contends that she reasonably believed that the tax liability would be
paid. Respondent contends that petitioner failed to satisfy her duty of inquiry when
signing the 2007 return.
In determining whether a taxpayer knew or should have known that a tax
liability would not be paid, we impute to a taxpayer knowledge of what she could
- 19 -
[*19] have gleaned from tax returns she signed, had she taken the time to review
them. See Porter v. Commissioner, 132 T.C. at 211-212 (citing Hayman v.
Commissioner, 992 F.2d 1256, 1262 (2d Cir. 1993), aff’g T.C. Memo. 1992-228).
Petitioner testified that (1) she did not know that the 2007 return showed that
there was tax due when she signed the return, (2) she and Mr. Rozell did not receive
any distributions of money or property corresponding to the pass-through income
from Hubs, (3) there were no large purchases consistent with the receipt of such a
distribution, and (4) she had assumed that Hubs would advance funds to satisfy the
tax liability generated by the pass-through income Mr. Rozell received from Hubs.
We find credible petitioner’s testimony that when she learned of the
outstanding tax liability, she believed that Hubs would advance funds to satisfy that
liability. We are also prepared to find that belief reasonable under the
circumstances. But the question is not whether petitioner reasonably believed that
the tax would be paid when she learned of the outstanding liability. Rather, the
question is whether petitioner reasonably believed when she signed the return that
the amount shown on the return as tax due would be paid. See Rev. Proc. 2003-61,
sec. 4.02(1)(b). Petitioner could not have had a reasonable belief that the tax
liability would be paid when she signed the return because she did not examine the
- 20 -
[*20] return before signing it and she has conceded that she was unaware there was
tax due when she signed the return.13
Petitioner also cannot claim that her failure to review the return before signing
it constitutes reasonable belief that the liability would be paid. As we said in Pullins
v. Commissioner, 136 T.C. at 444: “[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.” Accordingly, petitioner is
charged with knowledge of the liability that was reported on the return she signed.
2. Economic Hardship
Petitioner contends that she will suffer economic hardship if she is not
granted relief from joint and several liability because (1) she lost her husband’s
income with his death and the passing of his interest in Hubs to Ms. Rozell-
Brandenburg, (2) she lost her home to foreclosure, (3) she had to close her
13
We have previously indicated that a requesting spouse who failed to review
the return could satisfy this requirement where reviewing the return would not have
caused the requesting spouse to know or have reason to know that the liability
shown on the return would not be paid. See Kosola v. Commissioner, T.C. Memo.
2010-34, 99 T.C.M. 1141, 1144 (2010). Here, by contrast, had petitioner
reviewed the return, she would have had reason to know that the liability shown on
the return would go unpaid unless and until she was reassured that Hubs would
advance funds to satisfy the liability.
- 21 -
[*21] publishing business, and (4) her real estate business has suffered because of
the downturn in the real estate markets. Respondent contends that (1) petitioner has
not proved that her monthly expenses exceed her monthly income; (2) petitioner was
entitled to a portion of the proceeds from Mr. Rozell’s estate; (3) through Mr.
Rozell’s estate, petitioner may be entitled to a part of the distribution from the Betty
Rozell trust; (4) petitioner currently owns the Lincoln County property; and (5)
petitioner’s siblings hold the Linwood and Second Street properties as mere
nominees for her because she transferred the Linwood and Second Street properties
to her siblings for inadequate consideration and maintains full control over the
properties.
In determining whether a requesting spouse will suffer economic hardship if
the Commissioner denies his or her request for relief under section 6015(f), Rev.
Proc. 2003-61, sec. 4.02, directs the Commissioner to base his decision on rules
similar to those found in section 301.6343-1(b)(4), Proced. & Admin. Regs.
Section 301.6343-1(b)(4), Proced. & Admin. Regs., provides that an individual
suffers economic hardship when the individual is unable to pay reasonable basic
living expenses. In determining a reasonable amount for basic living expenses, the
Commissioner must consider information provided by the taxpayer, including:
- 22 -
[*22] (A) The taxpayer’s age, employment status and history, ability to
earn, number of dependents, and status as a dependent of someone
else;
(B) The amount reasonably necessary for food, clothing, housing
* * *, medical expenses * * *, transportation, current tax payments
* * *, alimony, child support, or other court-ordered payments, and
expenses necessary to the taxpayer’s production of income * * *;
(C) The cost of living in the geographic area in which the
taxpayer resides;
(D) The amount of property exempt from levy which is available
to pay the taxpayer’s expenses;
(E) Any extraordinary circumstances such as special education
expenses, a medical catastrophe, or natural disaster; and
(F) Any other factor that the taxpayer claims bears on economic
hardship and brings to the attention of the * * * [Commissioner].
Id.
In evaluating a requesting spouse’s claim of economic hardship, we are under
no obligation to accept self-serving, uncorroborated testimony. See Tokarski v.
Commissioner, 87 T.C. 74, 77 (1986); Kosola v. Commissioner, T.C. Memo.
2010-34,
99 T.C.M. 1141, 1145 (2010). However, we may accept a
requesting spouse’s testimony if we find it credible. See, e.g., Washington v.
Commissioner,
120 T.C. 137, 150 (2003); Kosola v. Commissioner, 99 T.C.M.
(CCH) at 1145.
- 23 -
[*23] The parties have two principal disputes with respect to whether petitioner will
suffer economic hardship if denied relief from joint and several liability under
section 6015(f): (1) whether petitioner’s siblings hold the Linwood and Second
Street properties as mere nominees for her, and (2) whether petitioner has
adequately proved the amounts of her income and expenses and the value of her
equity in her assets. We address each of these disputes in turn.
a. The Linwood and Second Street Properties
We have previously considered the issue of whether a third party holds
property as a nominee of a taxpayer by examining whether the Commissioner can
collect against such property. See Dalton v. Commissioner, 135 T.C. 393, 404
(2010), rev’d on other grounds,
682 F.3d 149 (1st Cir. 2012). Under sections 6321
and 6331, a lien is imposed, and the Secretary can levy, upon any “property” or
“rights to property” belonging to a taxpayer. See Drye v. United States,
528 U.S.
49, 55 (1999); Holman v. United States,
505 F.3d 1060, 1065 (10th Cir. 2007).
This includes “‘property held by a third party if it is determined that the third party
is holding the property as a nominee * * * of the delinquent taxpayer.’” Holman,
505 F.3d at 1065 (quoting Spotts v. United States,
429 F.3d 248, 251 (6th Cir.
2005)) (alteration in original); see also Dalton v. Commissioner, 135 T.C. at 404.
Application of nominee principles to support a lien or levy turns on a two-part
- 24 -
[*24] inquiry. The first part of the inquiry looks “to state law to determine what
rights the taxpayer has in the property the Government seeks to reach.” Drye, 528
U.S. at 58; see also Holman, 505 F.3d at 1067-1068; Dalton v. Commissioner, 135
T.C. at 405. The second part of the inquiry looks “to [F]ederal law to determine
whether the taxpayer’s state-delineated rights qualify as ‘property’ or ‘rights to
property’ within the compass of * * * [sections 6321 and 6331].” Drye, 528 U.S. at
58; see also Holman, 505 F.3d at 1067-1068; Dalton v. Commissioner, 135 T.C. at
405.
In deciding whether a third party holds property as a nominee for a taxpayer
in Oklahoma, courts have turned to Oklahoma fraudulent conveyance principles.
See Dalton v. Commissioner, 135 T.C. at 408 (citing United States v. Stinson, 386
F. Supp. 2d 1207, 1218 (W.D. Okla. 2005)). Under Oklahoma’s Uniform
Fraudulent Transfer Act,
A. A transfer made or obligation incurred by a debtor is fraudulent as
to a creditor, whether the creditor’s claim arose before or after the
transfer was made or the obligation was incurred, if the debtor made
the transfer or incurred the obligation:
1. with actual intent to hinder, delay, or defraud any creditor of the
debtor; or * * *.
- 25 -
[*25] Okla. Stat. Ann. tit. 24, sec. 116(A) (West 2008). In determining a debtor’s
intent,
consideration may be given, among other factors, to whether:
1. the transfer or obligation was to an insider;
2. the debtor retained possession or control of the property transferred
after the transfer;
3. the transfer or obligation was disclosed or concealed;
4. before the transfer was made or obligation was incurred, the debtor
had been sued or threatened with suit;
5. the transfer was of substantially all the debtor’s assets;
6. the debtor absconded;
7. the debtor removed or concealed assets;
8. the value of the consideration received by the debtor was
reasonably equivalent to the value of the asset transferred or the
amount of the obligation incurred;
9. the debtor was insolvent or became insolvent shortly after the
transfer was made or the obligation was incurred;
10. the transfer occurred shortly before or shortly after a substantial
debt was incurred; and
11. the debtor transferred the essential assets of the business to a
lienor who transferred the assets to an insider of the debtor.
Okla. Stat. Ann. tit. 24, sec. 116(B); see also Stinson, 386 F. Supp. 2d at 1218
(“Under Oklahoma law, the indicia of a fraudulent conveyance include inadequate
- 26 -
[*26] consideration, insolvency of the transferor, a familial relationship between the
transferor and transferee, the pendency or threat of litigation, and the transfer of the
debtor’s entire estate.” (citing Ebey-McCauley Co. v. Smith, 353 P.2d 23, 28 (Okla.
1960))).
Petitioner testified that she sold the Linwood and Second Street properties to
her sister, Ms. Hudgins, and her brother, Mr. Hudgins, in installment sales.
Petitioner further testified that, under these installment sales, she continued to
collect the rents and pay all expenses on the properties and that she never turned
over any of the rents to her siblings. When asked to explain why she set up such an
arrangement, petitioner testified that she entered into this arrangement because she
could no longer afford to maintain the properties in the event that they required
significant repairs.
We do not find petitioner’s testimony regarding the transfer of the Linwood
and Second Street properties to be credible, for two reasons. First, the quitclaim
deeds regarding the Linwood and Second Street properties bore no documentary tax
stamps and stated that the conveyances were “family transfer[s]”. Oklahoma
imposes a documentary stamp tax on each deed conveying land when the
consideration or value of the property conveyed, exclusive of the value of any
encumbrance on the property, exceeds $100. Okla. Stat. Ann. tit. 68, sec. 3201(A)
- 27 -
[*27] (West 2001). The documentary stamp tax is prorated at the rate of 75 cents
per $500 of consideration, including future consideration. Id. sec. 3201(A), (C)(3).
Deeds between persons related within the second degree of consanguinity without
consideration are exempt from the tax. Id. sec. 3202(4) (West 2001 & Supp. 2012).
Accordingly, by recording the quitclaim deeds as family transfers, petitioner
represented to the State of Oklahoma that she did not, and will not, receive
consideration for the properties.
Second, petitioner failed to introduce (1) copies of the installment sale
agreements, (2) any corroboration that she obtained, or will require, any assistance
from her siblings in maintaining the Linwood and Second Street properties, or (3)
any evidence, other than her own unsupported testimony, regarding her remaining
equity in the properties. Lacking such corroboration, we decline to accept
petitioner’s self-serving testimony. See Broz v. Commissioner, 137 T.C. 46, 59
(2011) (“We need not accept the taxpayer’s self-serving testimony when the
taxpayer fails to present corroborative evidence.”); Tokarski v. Commissioner, 87
T.C. at 77.
We observe that (1) petitioner transferred the properties to her relatives, see
Okla. Stat. Ann. tit. 24, sec. 113(7)(a)(1) (defining “[i]nsider” to include “a
relative of the debtor”); (2) petitioner continued to exercise full control over the
- 28 -
[*28] properties, such as by collecting rent on and paying expenses for the
properties, after the transfers; (3) petitioner did not disclose the transfer of the
properties for less than full consideration on her Form 433-A; (4) the transfers were
made during the pendency of petitioner’s efforts to secure relief under section
6015(f); and (5) petitioner received inadequate consideration for the properties.
Accordingly, on the evidence before us, we conclude that petitioner fraudulently
conveyed the Linwood and Second Street properties under Oklahoma’s Uniform
Fraudulent Transfer Act.
We now turn to the second part of the inquiry to decide, under Federal law,
whether petitioner’s interests in the Linwood and Second Street properties
constitute “property” or a “right[] to property” under sections 6321 and 6331.
Under Oklahoma’s Uniform Fraudulent Transfer Act, “a creditor * * * may obtain
* * * an attachment or other provisional remedy against the asset transferred”.
Okla. Stat. Ann. tit. 24, sec. 119(A) (West 2008). Because creditors can attach
transferred properties under Oklahoma law, we find that petitioner’s interests in
the transferred properties are “property” or a “right[] to property” under sections
6321 and 6331. See Drye, 528 U.S. at 58 (holding that a disclaimed inheritance is
“property” or a “right[] to property” under sections 6321 and 6331, even though
creditors could not reach the disclaimed inheritance under state law); see also
- 29 -
[*29] United States v. Krause (In re Krause), 637 F.3d 1160, 1166 (10th Cir. 2011)
(“[T]he terms ‘property’ and ‘rights to property’ * * * embrace not only rights or
interest[s] with exchangeable value that the taxpayer holds formal legal title to, but
also those that the taxpayer * * * is found under state law to have fraudulently
conveyed to a nominee.”); Dalton v. Commissioner, 135 T.C. at 407.
Accordingly, for the purposes of deciding whether petitioner will suffer
economic hardship if denied relief from joint and several liability under section
6015(f), we conclude that her siblings hold the Linwood and Second Street
properties as mere nominees for her.
b. Petitioner’s Income, Expenses, and Assets
The administrative record shows that in January 2010 petitioner was 57
years old and had no dependents. Petitioner’s 2006-10 tax returns show that she
reported items of income, for at least some of those years, from her real estate
business, her publishing business, and from renting out the Linwood property. At
trial petitioner conceded that the Second Street rental was currently profitable.
Petitioner also concedes that she currently owns the Lincoln County property.
Petitioner testified that she closed her publishing business in November
2010 because it was starting to lose money and because her mother could no
longer write for her on account of her mother’s deteriorating health. However,
- 30 -
[*30] petitioner failed to introduce any books, records, or other evidence showing
that the publishing business was no longer viable or that the publishing business was
too burdensome to continue on account of her mother’s deteriorating health.
Lacking corroboration, we decline to accept petitioner’s self-serving testimony. See
Tokarski v. Commissioner, 87 T.C. at 77.
Petitioner testified that she now pays her father rent of $550 per month and
that she is paying for her own utilities. Petitioner, however, also testified that her
father would not accept any rent payments from her and that she is now living with
her mother. Petitioner introduced no evidence to corroborate her testimony.
Lacking corroboration, we decline to accept petitioner’s self-serving testimony. See
id. Accordingly, on the evidence before us, we cannot determine whether petitioner
is currently incurring housing and utility expenses.
Other than her 2006-10 tax returns, an unsupported and incomplete Form
433-A, and some limited testimony, petitioner has failed to produce any books,
records, or other credible evidence to support her claimed income and expenses.
Without such evidence, we are unable to determine petitioner’s income or
expenses.
Petitioner also failed to introduce any evidence that would enable us
to determine her equity in the Linwood, Second Street, and Lincoln County
- 31 -
[*31] properties or her monthly rental income from the Linwood and Second Street
properties. Petitioner testified that she thought that she had equity in the Linwood
and Second Street properties of $6,000 and $1,000, respectively and that she listed
the Lincoln County property for sale for $30,000. Petitioner also testified that the
Linwood and Second Street properties produced a combined $750 in gross income
and $400 in net income per month. Petitioner introduced no evidence to corroborate
her testimony. Lacking corroboration, we decline to accept petitioner’s self-serving
testimony. See id.
Accordingly, we find that petitioner has failed to show that she will suffer
economic hardship if denied relief under section 6015(f).14 See Rule 142(a)(1).
In summary, we conclude that petitioner has not satisfied the safe harbor
requirements of Rev. Proc. 2003-61, sec. 4.02, because she has failed to satisfy her
burden of showing that she reasonably believed that the tax due on the 2007 return
would be paid and that she will suffer economic hardship if denied relief.
14
Because we conclude on other grounds that petitioner has not shown that
she would suffer economic hardship if denied relief, we need not decide whether
petitioner’s interest in Mr. Rozell’s estate and potential interest in the Betty Rozell
trust also preclude her from showing that she will suffer economic hardship if denied
relief.
- 32 -
[*32] C. Section 4.03: Factors for Determining Whether To Grant
Equitable Relief
If a requesting spouse satisfies the threshold conditions of Rev. Proc. 2003-
61, sec. 4.01, but fails to satisfy one or more of the safe harbor requirements of Rev.
Proc. 2003-61, sec. 4.02, the Commissioner may still grant relief under section
6015(f) on the basis of several additional factors. See Rev. Proc. 2003-61, sec.
4.03, 2003-2 C.B. at 298-299. The following list is not exclusive, and no single
factor is determinative:
(a) Factors that may be relevant to whether the Service will grant
equitable relief include, but are not limited to, the following:
(i) Marital status. Whether the requesting spouse is separated
(whether legally separated or living apart) or divorced from the
nonrequesting spouse. * * *
(ii) Economic hardship. Whether the requesting spouse would
suffer economic hardship (within the meaning of section 4.02(1)(c) of
this revenue procedure) if the Service does not grant relief from the
income tax liability.
(iii) Knowledge or reason to know.
(A) Underpayment cases. In the case of an income tax liability
that was properly reported but not paid, whether the requesting
spouse did not know and had no reason to know that the
nonrequesting spouse would not pay the income tax liability.
- 33 -
[*33] * * * * * * *
(C) Reason to know. For purposes of (A) and (B) above, in
determining whether the requesting spouse had reason to know, the
Service will consider the requesting spouse’s level of education, any
deceit or evasiveness of the nonrequesting spouse, the requesting
spouse’s degree of involvement in the activity generating the income
tax liability, the requesting spouse’s involvement in business and
household financial matters, the requesting spouse’s business or
financial expertise, and any lavish or unusual expenditures compared
with past spending levels.
(iv) Nonrequesting spouse’s legal obligation. Whether the
nonrequesting spouse has a legal obligation to pay the outstanding
income tax liability pursuant to a divorce decree or agreement. * * *
(v) Significant benefit. Whether the requesting spouse received
significant benefit (beyond normal support) from the unpaid income tax
liability or item giving rise to the deficiency. * * *
(vi) Compliance with income tax laws. Whether the requesting
spouse has made a good faith effort to comply with income tax laws in
the taxable years following the taxable year or years to which the
request for relief relates.
(b) Factors that, if present in a case, will weigh in favor of
equitable relief, but will not weigh against equitable relief if not present
in a case, include, but are not limited to, the following:
(i) Abuse. Whether the nonrequesting spouse abused the
requesting spouse. The presence of abuse is a factor favoring relief.
A history of abuse by the nonrequesting spouse may mitigate a
requesting spouse’s knowledge or reason to know.
(ii) Mental or physical health. Whether the requesting spouse
was in poor mental or physical health on the date the requesting
spouse signed the return or at the time the requesting spouse
- 34 -
[*34] requested relief. The Service will consider the nature, extent,
and duration of illness when weighing this factor.
Id. sec. 4.03(2). We now consider each of these factors.
1. Marital Status
Petitioner was widowed from Mr. Rozell when she requested relief.
Accordingly, this factor favors relief.
2. Economic Hardship
For the reasons discussed supra pp. 20-31, we find that petitioner would not
suffer economic hardship if her request for relief under section 6015(f) were
denied. Accordingly, this factor weighs against relief.15 See Sriram v.
Commissioner, slip op. at 18.
3. Knowledge or Reason To Know
For the reasons discussed supra pp. 18-20, petitioner should have known
that there was tax due on the return when she signed it and she could not have
15
The Commissioner proposes in Notice 2012-8, sec. 4.03(2)(b), 2012-4
I.R.B. at 313, that the economic hardship factor should be considered neutral where
denying relief from joint and several liability will not result in economic hardship to
the requesting spouse.
- 35 -
[*35] reasonably believed that the tax due on the return would be paid when she
signed the return.16 Accordingly, this factor weighs against relief.
4. Nonrequesting Spouse’s Legal Obligation
Petitioner and Mr. Rozell were not divorced. Accordingly, this factor is
neutral. See Bland v. Commissioner, T.C. Memo. 2011-8, 101 T.C.M. 1023,
1025 (2011).
5. Significant Benefit
Petitioner contends that she received no significant benefit from the
underpayment of tax due to income items attributable to Mr. Rozell because she and
Mr. Rozell neither received nor spent distributions corresponding to the pass-through
income from Hubs. Respondent concedes that there is no evidence that petitioner
received significant benefit from the underpayment of tax but contends that this
factor should be considered neutral because Mr. Rozell also did not receive
significant benefit from the underpayment of tax.
Respondent cites no cases holding that the nonrequesting spouse must
receive significant benefit from an understatement or underpayment of tax for this
16
Petitioner failed to introduce any evidence suggesting that Mr. Rozell was
deceitful or evasive with respect to the 2007 return. Additionally, as discussed infra
pp. 38-39, petitioner’s contention that Mr. Rozell’s alcohol addiction constituted
abuse is meritless.
- 36 -
[*36] factor to favor relief. The plain language of Rev. Proc. 2003-61, sec.
4.03(2)(a)(v), does not so require. However, the revenue procedure proposed by
Notice 2012-8, supra, provides as follows:
If only the nonrequesting spouse significantly benefitted from the unpaid
tax or item giving rise to an understatement or deficiency, and the
requesting spouse had little or no benefit, or the nonrequesting spouse
enjoyed the benefit to the requesting spouse’s detriment, this factor will
weigh in favor of relief. If the amount of unpaid tax or understated tax
was small such that neither spouse received a significant benefit, then
this factor is neutral.
Notice 2012-8, 2012-4 I.R.B. at 314.
As discussed supra pp. 14-15, we have not yet adopted the mode of analysis
proposed by Notice 2012-8, supra. We are also not convinced that the analysis
proposed by Notice 2012-8, supra, would require the nonrequesting spouse to
significantly benefit from the underpayment or understatement of tax for this factor to
favor relief where the underpayment or understatement of tax is large.
Moreover, we disagree with respondent’s assertion that Mr. Rozell received
no significant benefit from the pass-through income from Hubs. Mr. Rozell owned a
25% share of Hubs. When a shareholder of an S corporation is required to report
income of the S corporation, the shareholder’s basis in the S corporation stock is
increased accordingly. Sec. 1367(a)(1)(A). Because Hubs never made a
corresponding distribution of any money or property to Mr. Rozell, see sec.
- 37 -
[*37] 1368(b)(1) and (c)(1), Mr. Rozell’s basis in Hubs was thus greater than it
would have been without the pass-through income. This was a significant benefit
to Mr. Rozell but not to petitioner. Accordingly, even under respondent’s view,
this factor favors relief.
6. Compliance With Income Tax Laws
Petitioner contends that she has complied with the income tax laws for the
years following 2007. Respondent contends that petitioner filed her 2009 Federal
income tax return, which was due on April 15, 2010, on October 4, 2010, and that
respondent has no record of receiving a request for an extension of time to file her
return for that year.
Petitioner’s 2009 return showed no tax due. Petitioner’s 2009 return that
was submitted into evidence includes a Form 4868, Application for Automatic
Extension of Time To File U.S. Individual Income Tax Return. The Form 4868 is
stamped as received by respondent on October 4, 2010, the same date that
respondent received petitioner’s 2009 return. Petitioner has submitted no evidence
suggesting that she timely requested an extension of time to file her 2009 return.
Critically, petitioner never testified as to whether she requested an extension of
time to file her 2009 return. Lacking evidence that petitioner timely requested an
extension of time to file her 2009 return, we must assume that she did not. See
- 38 -
[*38] Rule 142(a)(1). However, because (1) the 2009 return showed no tax due, (2)
petitioner has timely filed in all other years since 2007, and (3) petitioner contends
that she timely requested an extension of time to file for 2009, we conclude that this
factor is neutral.
7. Abuse
Abuse can be both physical and psychological. See Nihiser v. Commissioner,
T.C. Memo. 2008-135, 95 T.C.M. 1531, 1536-1537 (2008). Generally,
“nonphysical abuse will weigh in favor of relief only where it is severe enough to
incapacitate a requesting spouse in the same manner he or she would be
incapacitated by physical abuse.” Pugsley v. Commissioner, T.C. Memo. 2010-255,
100 T.C.M. 454, 458 (2010).
Petitioner failed to introduce evidence showing that Mr. Rozell physically or
psychologically abused her. Instead, petitioner contends that Mr. Rozell’s alcohol
addiction constituted a form of abuse. Petitioner has not cited any cases holding
that a nonrequesting spouse’s alcohol addiction, by itself, constitutes a form of
abuse favoring equitable relief under section 6015(f).17 Moreover, petitioner failed
17
Petitioner cites Notice 2012-8, supra, which proposes to supersede Rev.
Proc. 2003-61, supra, with a provision that “[t]he impact of a nonrequesting
spouse’s alcohol or drug abuse is also considered in determining whether a
requesting spouse was abused.” See Notice 2012-8, 2012-4 I.R.B. at 314. We
(continued...)
- 39 -
[*39] to introduce expert testimony supporting her contention that Mr. Rozell’s
alcohol addiction constituted psychological abuse. Our cases require more than
alcohol addiction by the nonrequesting spouse for a finding of abuse under section
6015(f). See Nihiser v. Commissioner, 95 T.C.M. (CCH) at 1536-1537.
Accordingly, this factor is neutral. See Rev. Proc. 2003-61, sec. 4.03(2)(b)(i).
8. Mental or Physical Health
Petitioner has introduced no evidence showing that her mental or physical
health was impaired either when she signed the return or when she requested relief.
Lacking such evidence, we find that petitioner did not have a physical or mental
impairment at the relevant times. See Rule 142(a)(1). Accordingly, this factor is
neutral. See Rev. Proc. 2003-61, sec. 4.03(2)(b)(ii).
In summary, two of the eight factors set out in Rev. Proc. 2003-61, sec. 4.03,
favor granting relief, four factors are neutral, and two factors weigh against
granting relief. Petitioner had the burden of proof as to persuasion, and if this were
a matter of simply counting factors for and against relief, she would lose. In
17
(...continued)
agree that alcohol and drug addiction can be a factor in determining that a requesting
spouse was abused, see Nihiser v. Commissioner, T.C. Memo. 2008-135, 95
T.C.M. 1531, 1537 (2008), but we do not agree, and we do not read Notice
2012-8, supra, as proposing, that a nonrequesting spouse’s alcohol or drug
addiction, by itself, constitutes abuse under sec. 6015(f).
- 40 -
[*40] section 6015(f) cases, however, we do not simply count factors. We evaluate
all of the relevant facts and circumstances to reach a conclusion. See Pullins v.
Commissioner, 136 T.C. at 448; Rev. Proc. 2003-61, sec. 4.03(2). Some of the most
compelling facts in our analysis are the findings that petitioner fraudulently conveyed
the Linwood and Second Street properties and failed to disclose her interest in the
Lincoln County property. These weigh heavily against relief in our view because a
spouse requesting equitable relief under section 6015(f) should come to the table
with clean hands. Petitioner took affirmative steps to minimize her asset ownership
in order to distort the economic analysis conducted with respect to her section
6015(f) request for relief. Accordingly, we conclude that petitioner is not entitled to
relief from joint and several liability under Rev. Proc. 2003-61, sec. 4.03.18
IV. Conclusion
On the basis of the foregoing, we conclude that petitioner has failed to
satisfy the safe harbor requirements of Rev. Proc. 2003-61, sec. 4.02, and the
equitable factors set forth in Rev. Proc. 2003-61, sec. 4.03. Accordingly, we hold
18
For the reason discussed above, we would reach the same conclusion even
if we were to evaluate petitioner’s request for relief under the procedure proposed
by Notice 2012-8, supra.
- 41 -
[*41] that petitioner is not entitled to relief from joint and several liability under
section 6015(f).
We have considered all other arguments made by the parties, and to the extent
not discussed above, find those arguments to be irrelevant, moot, or without merit.
To reflect the foregoing,
Decision will be entered for
respondent.
