Annette Faye Neitzer, and Richard J. Arnoldussen, Intervenor v. Commissioner

2018 T.C. Memo. 156
United States Tax Court·Decided September 19, 2018·No. 5366-16·Unpublished

Opinion

T.C. Memo. 2018-156

UNITED STATES TAX COURT

ANNETTE FAYE NEITZER, Petitioner, AND RICHARD J. ARNOLDUSSEN, Intervenor v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 5366-16. Filed September 19, 2018.

Patricia A. Hintz, for petitioner.

Richard J. Arnoldussen, pro se.

Richard C. Grosenick and Karla Nettleton (student), for respondent. -2-

[*2] MEMORANDUM FINDINGS OF FACT AND OPINION

PARIS, Judge: Pursuant to section 6015(e)(1),1 petitioner seeks review of

respondent’s determination that she is not entitled to relief from joint and several

liability under section 6015(f) for 2012 with respect to the Federal income tax

return (2012 return) that she filed jointly with intervenor, her former spouse. If the

Court determines that petitioner is entitled to relief under section 6015(f), then

petitioner seeks a refund of money levied to satisfy the joint income tax liability.

FINDINGS OF FACT

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

facts, the first supplemental stipulation of facts, and the attached exhibits are

incorporated herein by this reference. Petitioner resided in Wisconsin when she

timely filed her petition. Intervenor also resided in Wisconsin when he filed his

notice of intervention.

I. Background

Petitioner holds a bachelor’s degree in nursing and previously worked in the

fields of surgical intensive care, emergency room nursing, and triage nursing. In

1 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure. -3-

[*3] 2006 she became totally disabled. Petitioner has undergone numerous spine

and hip surgeries. She expects her condition to deteriorate over time and expects

to require further medical treatment in the future.2 Her condition has limited her

ability to work.

Petitioner and intervenor married in 2007. They separated in August 2010

and filed for divorce in September 2010. The divorce became final on July 14,

2014. Intervenor owned interests in two businesses, which were the primary

sources of his income. During the pendency of the divorce petitioner maintained

her own finances and paid her own expenses. Her income consisted of payments

from Social Security disability, veteran’s disability, long-term disability, and

temporary spousal maintenance payments from intervenor. Petitioner did not have

access to the couple’s joint checking account at Johnson Bank (Johnson Bank

account) during the pendency of the divorce. Instead, she maintained her own

account at Associated Bank (Associated Bank account) from which she paid her

expenses.3

2 Petitioner was 55 years old at the time of trial. 3 Immediately before the separation the funds in the Associated Bank account consisted of $100,000 from a personal injury settlement paid to petitioner on April 5, 2010, and $38,000 petitioner transferred on May 3, 2010, from the Johnson Bank account. The Johnson Bank account held the proceeds from the (continued...) -4-

[*4] For 2010, 2011, 2012, and 2013 petitioner and intervenor filed joint Federal

income tax returns. During those years intervenor employed his business

accountant to prepare the joint returns. Petitioner agreed to file joint returns with

intervenor during the divorce proceeding because she believed she was required to

do so under the terms of the temporary divorce order in place before the issuance

of the final divorce decree. Petitioner and intervenor owed a liability on their

2011 tax and were assessed an addition to tax under section 6651(a) for failure to

pay timely. On December 27, 2012, they both signed Form 843, Claim for Refund

and Request for Abatement, asking for abatement of the addition to tax. On that

date intervenor also sent a check from the Johnson Bank account to the Internal

Revenue Service (IRS) for the 2011 tax liability, which was later returned for

insufficient funds.4

II. 2012 Return

Intervenor’s business accountant prepared the 2012 return on the basis of

information from intervenor and information petitioner provided to him through

3 (...continued) sales of petitioner’s home that she owned before her marriage to intervenor and a home petitioner and intervenor purchased together before their marriage. 4 At that time petitioner did not have access to the Johnson Bank account. See supra p. 3. -5-

[*5] her divorce attorney. The 2012 return reported income of $276,192.

Petitioner’s income totaled $16,620 and included wages, Social Security disability,

interest income, and gambling winnings. The remainder of the income came from

intervenor’s wages and shares of two businesses. The 2012 return showed tax due

of $53,382. Intervenor timely paid $29,208 through withholding from his wages

and $5,000 through a check from the Johnson Bank account. The remaining

$19,174 tax liability for 2012 (2012 tax liability) was attributable solely to

intervenor.

On June 3, 2013, intervenor told petitioner to go to his business

accountant’s office to sign the 2012 return for filing later that day. Petitioner had

approximately two hours to travel to the accountant’s office and sign the 2012

return before the close of business. Upon petitioner’s arrival, intervenor was in

the parking lot. They argued in the parking lot before petitioner entered the

accountant’s office. Petitioner signed an authorization permitting the accountant

to file the 2012 return but did not review or ask for additional time to review the

2012 return. Petitioner did not request or receive a copy of the 2012 return at the

time she signed the authorization. Even if petitioner had requested a copy, it is not

certain that she would have been given one because intervenor instructed his -6-

[*6] business accountant not to disclose to petitioner any information about his

businesses or personal finances.

III. Collection

On or about August 9, 2013, petitioner received a letter from respondent

regarding the 2012 tax liability. She contacted intervenor, who agreed to pay it.

On September 25, 2013, intervenor requested but was denied an installment

agreement for the 2012 tax liability. On October 28, 2013, intervenor tendered a

check to pay the balance of the 2012 tax liability, but the payment was returned for

insufficient funds. Petitioner was unaware of intervenor’s failed attempts to pay

the 2012 tax liability.

On or about January 1, 2014, intervenor changed the mailing address on file

with respondent so that future correspondence would be mailed to his business

address. Intervenor also instructed his office staff to mark “return to sender” on

any notices or other correspondence that was addressed to petitioner at his

business address. On January 23, 2014, respondent issued petitioner Letter 1058,

Final Notice of Intent to Levy and Notice of Your Right to a Hearing. The letter

was addressed to petitioner but mailed to intervenor’s business address. On

February 13, 2014, the letter was returned to respondent as refused or unclaimed. -7-

[*7] On March 12 and 24, 2014, respondent issued petitioner Form 668-A(ICS),

Notice of Levy, addressed to intervenor’s business address, notifying petitioner of

a levy on her Associated Bank account.5 Sometime in March 2014 intervenor

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