T.C. Summary Opinion 2007-193
UNITED STATES TAX COURT
FRANCINE EDWARDS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10467-05S. Filed November 15, 2007.
Francine Edwards, pro se.
Jamie J. Song, for respondent.
DEAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect when the petition was filed. Pursuant to section 7463(b),
the decision to be entered is not reviewable by any other court,
and this opinion shall not be treated as precedent for any other
case. Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the year in issue, - 2 -
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
The issues for decision are whether: (1) The Court has
jurisdiction in this proceeding to review the grant by the
Internal Revenue Service (IRS) of innocent spouse relief to
petitioner’s former spouse; and (2) petitioner’s liability should
be limited to 50 percent of the deficiency.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits received into evidence
are incorporated herein by reference. At the time the petition
was filed, petitioner resided in Fall River, Massachusetts.
Petitioner and Jacob Edwards (former spouse) filed a joint
Federal income tax return for 2001. Petitioner and her former
spouse reported $115,297 on line 22, total income. Respondent’s
third party payer reports, however, showed that petitioner
received and failed to report the following items of income:
(1) $440 as compensation for services reported on a Form W-2,
Wage and Tax Statement; (2) $3,339 in unemployment compensation
reported on a Form 1099-G, Certain Government Payments; (3) $12
in interest reported on a Form 1099-INT, Interest Income; and
(4) $6,522 in gross distributions from an individual retirement
account reported on a Form 1099-R, Distributions From Pensions,
Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance - 3 -
Contracts, etc. Respondent initiated an examination based on the
third party payer reports.
During the examination, petitioner’s former spouse filed a
Form 8857, Request for Innocent Spouse Relief, and respondent
granted his request pursuant to section 6015(c). The former
spouse was relieved from joint and several liability with respect
to the deficiency. Thereafter, respondent issued a notice of
deficiency to petitioner, determining a $3,784 deficiency.
Petitioner has since conceded that she received and failed to
report the items of income.
Discussion
Generally, the Commissioner’s determinations in a notice of
deficiency are presumed correct, and the taxpayer has the burden
to prove that the determinations are in error. See Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). But the burden of
proof on factual issues that affect a taxpayer’s tax liability
may be shifted to the Commissioner where the “taxpayer introduces
credible evidence with respect to * * * such issue.” See sec.
7491(a)(1). The burden will shift only if the taxpayer has
complied with the substantiation requirements and has cooperated
with the Commissioner’s reasonable requests for witnesses,
information, documents, meetings, and interviews. See sec.
7491(a)(2). Petitioner has not alleged or proven that section
7491(a) applies; accordingly, the burden remains on her. - 4 -
1. Review of the IRS’s Decision to Grant Innocent Spouse Relief
Petitioner contends that the IRS erred in granting innocent
spouse relief to her former spouse because he knew about the
unreported items of income and shared in the proceeds of their
tax refund.
The Tax Court is a court of limited jurisdiction and can
exercise its jurisdiction only to the extent provided by
Congress. Sec. 7442; Judge v. Commissioner, 88 T.C. 1175,
1180-1181 (1987); Naftel v. Commissioner, 85 T.C. 527, 529
(1985); see also Rules 13(a), 320(b). With respect to innocent
spouse relief claims, the Court has three jurisdictional bases
for reviewing a claim: (1) As an affirmative defense in a
deficiency redetermination proceeding pursuant to section
6213(a); (2) as a stand-alone petition pursuant to section
6015(e) where the Commissioner has issued a final determination
denying the electing spouse’s claim for relief or the
Commissioner has failed to rule on the claim within 6 months of
its filing; and (3) in the context of a petition for review of a
lien or levy action pursuant to section 6320(c) or 6330(d). See
secs. 6015(e), 6213, 6214, 6320(c), 6330(c)(2)(A)(i), (d); Maier
v. Commissioner, 119 T.C. 267, 270 (2002), affd. 360 F.3d 361 (2d
Cir. 2004); see also Corson v. Commissioner, 114 T.C. 354, 363
(2000); Baumann v. Commissioner, T.C. Memo. 2005-31; Hale
Exemption Trust v. Commissioner, T.C. Memo. 2001-89. - 5 -
With respect to a nonelecting spouse, section 6015 does not
provide an independent basis for this Court to exercise its
jurisdiction and to review the IRS’s decision to grant relief
unless there is a deficiency proceeding where the claim is raised
as an affirmative defense by the electing spouse pursuant to
section 6213(a), the electing spouse has filed a petition with
the Court under section 6015(e)(1)(A), or there is a petition for
review of a lien or levy action pursuant to section 6320(c) or
6330(d) and the claim for innocent spouse relief is raised as a
defense pursuant to section 6330(c)(2)(A)(i). See Maier v.
Commissioner, 360 F.3d at 365; cf. Hale Exemption Trust v.
Commissioner, supra; King v. Commissioner, 115 T.C. 118, 125
(2000); Corson v. Commissioner, supra; Baumann v. Commissioner,
supra. This results because section 6015(e)(1) contemplates that
the Court have jurisdiction only when the electing spouse has
timely filed a petition (and has satisfied certain other
requirements). The nonelecting spouse is only afforded a right
to notice and an opportunity to intervene once the electing
spouse has initiated a proceeding in this Court. See sec.
6015(e)(4); see also Rules 13(a), 320(b), 325(a) and (b), 330(b).
Here, the electing spouse did not petition the Court for
review under section 6015(e)(1)(A), the petition for review did
not arise within the context of a lien or levy action pursuant to
section 6320(c) or 6330(d), and the issue was not raised as an - 6 -
affirmative defense within our traditional deficiency
jurisdiction pursuant to section 6213(a). Therefore, the Court
lacks jurisdiction to review the IRS’s decision to grant innocent
spouse relief to petitioner’s former spouse.
2. Joint and Several Liability
Petitioner contends that she should not be liable for the
full amount of the deficiency. Rather, she argues, her liability
should be limited to 50 percent since it was a joint return, her
former spouse knew about the unreported items, and he received
the benefits of the erroneous joint return (i.e., she alleges
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T.C. Summary Opinion 2007-193
UNITED STATES TAX COURT
FRANCINE EDWARDS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10467-05S. Filed November 15, 2007.
Francine Edwards, pro se.
Jamie J. Song, for respondent.
DEAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect when the petition was filed. Pursuant to section 7463(b),
the decision to be entered is not reviewable by any other court,
and this opinion shall not be treated as precedent for any other
case. Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the year in issue, - 2 -
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
The issues for decision are whether: (1) The Court has
jurisdiction in this proceeding to review the grant by the
Internal Revenue Service (IRS) of innocent spouse relief to
petitioner’s former spouse; and (2) petitioner’s liability should
be limited to 50 percent of the deficiency.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits received into evidence
are incorporated herein by reference. At the time the petition
was filed, petitioner resided in Fall River, Massachusetts.
Petitioner and Jacob Edwards (former spouse) filed a joint
Federal income tax return for 2001. Petitioner and her former
spouse reported $115,297 on line 22, total income. Respondent’s
third party payer reports, however, showed that petitioner
received and failed to report the following items of income:
(1) $440 as compensation for services reported on a Form W-2,
Wage and Tax Statement; (2) $3,339 in unemployment compensation
reported on a Form 1099-G, Certain Government Payments; (3) $12
in interest reported on a Form 1099-INT, Interest Income; and
(4) $6,522 in gross distributions from an individual retirement
account reported on a Form 1099-R, Distributions From Pensions,
Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance - 3 -
Contracts, etc. Respondent initiated an examination based on the
third party payer reports.
During the examination, petitioner’s former spouse filed a
Form 8857, Request for Innocent Spouse Relief, and respondent
granted his request pursuant to section 6015(c). The former
spouse was relieved from joint and several liability with respect
to the deficiency. Thereafter, respondent issued a notice of
deficiency to petitioner, determining a $3,784 deficiency.
Petitioner has since conceded that she received and failed to
report the items of income.
Discussion
Generally, the Commissioner’s determinations in a notice of
deficiency are presumed correct, and the taxpayer has the burden
to prove that the determinations are in error. See Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). But the burden of
proof on factual issues that affect a taxpayer’s tax liability
may be shifted to the Commissioner where the “taxpayer introduces
credible evidence with respect to * * * such issue.” See sec.
7491(a)(1). The burden will shift only if the taxpayer has
complied with the substantiation requirements and has cooperated
with the Commissioner’s reasonable requests for witnesses,
information, documents, meetings, and interviews. See sec.
7491(a)(2). Petitioner has not alleged or proven that section
7491(a) applies; accordingly, the burden remains on her. - 4 -
1. Review of the IRS’s Decision to Grant Innocent Spouse Relief
Petitioner contends that the IRS erred in granting innocent
spouse relief to her former spouse because he knew about the
unreported items of income and shared in the proceeds of their
tax refund.
The Tax Court is a court of limited jurisdiction and can
exercise its jurisdiction only to the extent provided by
Congress. Sec. 7442; Judge v. Commissioner, 88 T.C. 1175,
1180-1181 (1987); Naftel v. Commissioner, 85 T.C. 527, 529
(1985); see also Rules 13(a), 320(b). With respect to innocent
spouse relief claims, the Court has three jurisdictional bases
for reviewing a claim: (1) As an affirmative defense in a
deficiency redetermination proceeding pursuant to section
6213(a); (2) as a stand-alone petition pursuant to section
6015(e) where the Commissioner has issued a final determination
denying the electing spouse’s claim for relief or the
Commissioner has failed to rule on the claim within 6 months of
its filing; and (3) in the context of a petition for review of a
lien or levy action pursuant to section 6320(c) or 6330(d). See
secs. 6015(e), 6213, 6214, 6320(c), 6330(c)(2)(A)(i), (d); Maier
v. Commissioner, 119 T.C. 267, 270 (2002), affd. 360 F.3d 361 (2d
Cir. 2004); see also Corson v. Commissioner, 114 T.C. 354, 363
(2000); Baumann v. Commissioner, T.C. Memo. 2005-31; Hale
Exemption Trust v. Commissioner, T.C. Memo. 2001-89. - 5 -
With respect to a nonelecting spouse, section 6015 does not
provide an independent basis for this Court to exercise its
jurisdiction and to review the IRS’s decision to grant relief
unless there is a deficiency proceeding where the claim is raised
as an affirmative defense by the electing spouse pursuant to
section 6213(a), the electing spouse has filed a petition with
the Court under section 6015(e)(1)(A), or there is a petition for
review of a lien or levy action pursuant to section 6320(c) or
6330(d) and the claim for innocent spouse relief is raised as a
defense pursuant to section 6330(c)(2)(A)(i). See Maier v.
Commissioner, 360 F.3d at 365; cf. Hale Exemption Trust v.
Commissioner, supra; King v. Commissioner, 115 T.C. 118, 125
(2000); Corson v. Commissioner, supra; Baumann v. Commissioner,
supra. This results because section 6015(e)(1) contemplates that
the Court have jurisdiction only when the electing spouse has
timely filed a petition (and has satisfied certain other
requirements). The nonelecting spouse is only afforded a right
to notice and an opportunity to intervene once the electing
spouse has initiated a proceeding in this Court. See sec.
6015(e)(4); see also Rules 13(a), 320(b), 325(a) and (b), 330(b).
Here, the electing spouse did not petition the Court for
review under section 6015(e)(1)(A), the petition for review did
not arise within the context of a lien or levy action pursuant to
section 6320(c) or 6330(d), and the issue was not raised as an - 6 -
affirmative defense within our traditional deficiency
jurisdiction pursuant to section 6213(a). Therefore, the Court
lacks jurisdiction to review the IRS’s decision to grant innocent
spouse relief to petitioner’s former spouse.
2. Joint and Several Liability
Petitioner contends that she should not be liable for the
full amount of the deficiency. Rather, she argues, her liability
should be limited to 50 percent since it was a joint return, her
former spouse knew about the unreported items, and he received
the benefits of the erroneous joint return (i.e., she alleges
that he received half of the $4,114 refund, and had the items
been reported correctly, the refund would have been about $330).
In general, section 6013(d)(3) provides that if a joint
return is filed, the tax is computed on the individuals’
aggregate income, and liability for the resulting tax is joint
and several. See also sec. 1.6013-4(b), Income Tax Regs. A
fundamental characteristic of joint and several liability is that
the IRS, at its option, may proceed against the taxpayers
separately and may obtain a separate judgment against each. See
Dolan v. Commissioner, 44 T.C. 420 (1965). The decision to
assess or not assess tax against one of the spouses who filed a
joint return does not prevent the IRS from proceeding against the
other. See id.; see also Kroh v. Commissioner, 98 T.C. 383
(1992). - 7 -
Therefore, the Court has no basis for limiting petitioner’s
liability to “50 percent” as she requests. This is especially
true in the light of the fact that petitioner does not qualify
for innocent spouse relief in her own right since she admits to
receiving and failing to report the items of income. Petitioner
does not qualify for relief under section 6015(b) because she
cannot establish that she did not know or had no reason to know
that there was an understatement of tax when she signed the
return. See sec. 6015(b)(1) and (2). Because the items giving
rise to the deficiency were directly allocable to petitioner,
section 6015(c) does not provide any avenue for relief. See also
sec. 1.6015-3(d)(2)(iii), Income Tax Regs. (stating that
erroneous items of income are allocated to the spouse who was the
source of the income). Finally, it is not inequitable to hold
petitioner liable for the deficiency since she fails one of the
threshold conditions for relief; i.e., “The income tax liability
from which the requesting spouse seeks relief is attributable to
an item of the * * * [other spouse]”. Rev. Proc. 2003-61, sec.
4.01(7), 2003-2 C.B. 296, 297; see also id. sec.
4.03(2)(a)(iii)(B), 2003-2 C.B. at 298 (stating that actual
knowledge of the item giving rise to the deficiency weighs - 8 -
strongly against relief). Accordingly, respondent’s
determination is sustained.
To reflect the foregoing,
Decision will be entered for
respondent.