T.C. Memo. 2019-139
UNITED STATES TAX COURT
LINDSEY JONES, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 32168-15. Filed October 16, 2019.
Jonathan T. Amitrano and Alvah Lavar Taylor, for petitioner.
Mindy Meigs and Sherri G. Morris, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
ASHFORD, Judge: Petitioner filed the petition in this case in response to a
so-called final appeals determination (notice of determination) denying her request
for relief from joint and several liability under section 6015(f) for the 2009 and -2-
[*2] 2010 taxable years (years at issue).1 We must decide whether petitioner is
entitled to relief under that section from underpayments of tax for those years. We
hold that she is not.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.2
1 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect at all relevant times. 2 We note that at trial, in addition to receiving into evidence the stipulation of facts (which did not delineate what constituted the administrative record at the time of the notice of determination), the Court received (1) the testimonies of petitioner, her ex-husband Noah Pike, and three additional witnesses for petitioner without objection from respondent’s counsel and (2) four additional exhibits proffered by petitioner. The trial took place and the record was closed before the President signed into law the Taxpayer First Act (TFA), Pub. L. No. 116-25, 133 Stat. 981 (2019), on July 1, 2019. TFA sec. 1203, 133 Stat. at 988, amended sec. 6015(e) by adding paragraph (7), which provides for the standard and scope of Tax Court review. Specifically, paragraph (7) provides that “[a]ny review of a determination made under this section [sec. 6015] shall be reviewed de novo by the Tax Court and shall be based upon--(A) the administrative record established at the time of the determination, and (B) any additional newly discovered or previously unavailable evidence.” According to TFA sec. 1203(b), this provision applies “to petitions or requests filed or pending on or after the date of the enactment of this Act.” It would thus seem that the effective date provision calls on us to apply sec. 6015(e)(7) to cases tried before that section was enacted, which would include this case. Suffice it to say, however, sec. 6015(e)(7) would not change our ultimate finding set forth below as to whether petitioner is entitled to relief under sec. 6015(f) from the underpayments of tax for the years at issue. In other words, even allowing petitioner to present her case to the fullest extent and considering all of the evidence presented, we find that she is not entitled to sec. 6015(f) relief for the (continued...) -3-
[*3] The stipulation of facts and the attached exhibits are incorporated herein by
reference. Petitioner resided in California when her petition was filed.
I. Petitioner’s Background
On October 13, 2002, petitioner married Noah Pike, and they were still
married during the years at issue. They have one child. During 2009 petitioner
primarily took care of their child but was also employed as a “W-2 wage earner”
for Ebanista, Inc. (2009 W-2 employer), and claimed to be a student and have an
interior design business. During 2010 petitioner continued to primarily take care
of their child but was also employed as a “W-2 wage earner” for Restoration
Hardware, Inc., and Gardenology, Inc. (2010 W-2 employers), and claimed to be a
student. During the years at issue Mr. Pike worked as a manager in his family’s
restaurants.
On August 15, 2008, petitioner and Mr. Pike separated. When they
separated, however, money was tight, and thus they remained in the marital home
together, sleeping in separate bedrooms. They also knew that they would need to
sell this home, which they did in October 2008 for a net gain of $70,000, and
ultimately, they would need to use $30,000 of the net proceeds to satisfy their tax
2 (...continued) years at issue. -4-
[*4] liability for 2008. Upon their separation Mr. Pike began paying petitioner
spousal support of $2,825 monthly.
In connection with their separation in August 2008 petitioner and Mr. Pike
met with a mediator to discuss a marital settlement agreement (MSA) but did not
sign an MSA at that meeting. They met with the mediator again in 2010, and on
February 2, 2011, they executed an MSA.
The MSA did not make any reference to petitioner and Mr. Pike’s not-yet-
filed 2009 and 2010 joint returns or their then-future tax liabilities for the years at
issue. However, the MSA did make reference to their tax liability for 2008; viz, in
addressing the division of community property, the MSA indicated that petitioner
and Mr. Pike had equally received the remaining net proceeds from the sale of
their marital home after payment of $30,000 to the Internal Revenue Service (IRS)
from these proceeds to satisfy their 2008 tax liability.
The MSA memorialized the fact that Mr. Pike had been paying petitioner
spousal support of $2,825 monthly and provided that this spousal support
obligation would continue until his or petitioner’s death, petitioner’s remarriage,
further court order, or through September 30, 2011, whichever occurs first.
The MSA also included in pertinent part the following provisions: -5-
[*5] DIVISION OF DEBTS
The parties agree that they have provided for the payment of all joint debts of which they are aware, and if any joint debts are discovered hereafter which are not provided for in this agreement, each party will pay one-half of such debt.
* * * * * * *
TAX REFUNDS OR DEFICIENCIES
If at any time after the effective date of this agreement the parties shall be entitled to any tax refund on any federal or state income tax returns filed by the parties jointly, such refund shall be divided between them equally. Any deficiency assessed for any prior year in which the parties filed joint returns shall be payable in proportion to their income in the year assessed by each party as an individual obligation.
On March 16, 2011, petitioner commenced a proceeding in the Superior
Court of California in Orange County, California (Orange County court), in which
she sought a decree dissolving her marriage to Mr. Pike on the basis of
irreconcilable differences. In connection with this proceeding petitioner and Mr.
Pike completed and signed under penalties of perjury income and expense
declarations. On their respective declarations, dated April 1, 2011, they indicated
in the section titled “Tax Information” that they “last filed taxes” for 2008 and
their filing status was married filing jointly. -6-
[*6] On May 6, 2011, the Orange County court issued a decree of dissolution of
petitioner and Mr. Pike’s marriage, effective September 27, 2011. This decree
incorporated the MSA.
II. Petitioner’s Tax Returns
For the years at issue and each year before that during their marriage, Mr.
Pike had a tax return preparer prepare and file joint Federal income tax returns for
himself and petitioner. Petitioner was never involved in their preparation or filing.
Petitioner would provide her tax-related information to Mr. Pike, and he would
mail his tax-related information, together with hers, to the tax return preparer each
year. With respect to at least 2010, Mr. Pike signed petitioner’s name on the
return without her having reviewed it. Indeed, during their marriage Mr. Pike
handled all of their family financial matters.
Petitioner’s total reliance on Mr. Pike to handle family financial matters is
consistent with her actions in this regard before and after their marriage. Before
their marriage she was never involved in the preparation and filing of her Federal
income tax returns; instead, she gave her tax-related information to her mother,
and her mother prepared and filed her returns. Once she remarried in September
2012, petitioner relied on her second husband, Jeremiah Johnson, to handle the
preparation and filing of their joint Federal income tax returns. -7-
[*7] The IRS received petitioner and Mr. Pike’s joint Federal income tax return
for 2009 (2009 joint return) and joint Federal income tax return for 2010 (2010
joint return) after the dissolution of their marriage; the IRS received the 2009 joint
return on October 25, 2012, and the 2010 joint return on November 23, 2012.
The 2009 joint return reported total income of $178,374, consisting of
“[w]ages, salaries, tips, etc.” of $60,309 (attributable in part to petitioner’s wages
from her 2009 W-2 employer), taxable interest of $12, business income of
$121,053 (attributable to both petitioner’s reported interior design business and
Mr. Pike’s reported “restaurant management” business), and a capital loss of
$3,000. The 2009 joint return also reported three exemptions (one each for
petitioner, Mr. Pike, and their child) and certain payments totaling $1,281 and
claimed nonrefundable education credits of $512 and the standard deduction for
married filing jointly status. Finally, the 2009 joint return reported a resulting
Federal income tax liability of $39,848 (exclusive of penalties and interest).
The 2010 joint return reported total income of $184,642, consisting of
“[w]ages, salaries, tips, etc.” of $15,246 (i.e., petitioner’s total wages from her
2010 W-2 employers), business income of $170,109 (solely attributable to Mr.
Pike’s reported “restaurant management” business), and a capital loss of $713.
Like the 2009 joint return, the 2010 joint return reported three exemptions and -8-
[*8] certain payments, and claimed the standard deduction for married filing
jointly status. Finally, the 2010 joint return reported a resulting Federal income
tax liability of $49,003 (exclusive of penalties and interest).
The IRS received petitioner’s Federal income tax return for 2011, reflecting
her filing status as single and a tax refund of $651, and petitioner and Mr.
Johnson’s joint Federal income tax return for 2012 (2012 joint return), reflecting a
Federal income tax liability of $819 (exclusive of penalties and interest), on June
19, 2014. Petitioner gave Mr. Johnson permission to sign the 2012 joint return on
her behalf without having reviewed it.
The IRS received petitioner and Mr. Johnson’s joint Federal income tax
returns for 2013 and 2014, reflecting Federal income tax liabilities of $1,018 and
$310, respectively (exclusive of penalties and interest), on June 8, 2015. The IRS
received petitioner and Mr. Johnson’s joint Federal income tax return for 2015,
reflecting a tax refund of $4,159, on May 23, 2016.
III. Petitioner’s Request for Relief From Joint and Several Liability
On August 4, 2014, petitioner submitted Form 8857, Request for Innocent
Spouse Relief, in which she requested relief from joint and several liability under
section 6015(f) with respect to the years at issue. On that form petitioner did not
check the boxes that would have indicated that (1) she or other members of her -9-
[*9] family were a victim of spousal abuse or domestic violence (or suffering the
effects of such abuse) during the years at issue or when the 2009 and 2010 joint
returns were filed or (2) she had a mental or physical health problem either when
those returns were filed or the form was filed.
On September 23, 2015, the IRS Office of Appeals in Covington, Kentucky,
issued a notice of determination to petitioner denying her relief under section
6015(f) for the years at issue. According to the notice of determination, she was
denied relief because “[t]he information we have available does not show you
meet the requirements for relief” and “[y]ou did not show it would be unfair to
hold you responsible.”
Petitioner timely filed a petition with this Court seeking review of
respondent’s determination.
OPINION
I. Introduction
Generally, married taxpayers may elect to file a joint Federal income tax
return. Sec. 6013(a). If a joint return is made, the tax is computed on the spouses’
aggregate income, and each spouse is fully responsible for the accuracy of the
return and is jointly and severally liable for the entire amount of tax shown on the
return or found to be owing. Sec. 6013(d)(3); Butler v. Commissioner, 114 T.C. -10-
[*10] 276, 282 (2000). Nevertheless, under certain circumstances a spouse who
has made a joint return may seek relief from joint and several liability under
procedures set forth in section 6015. Sec. 6015(a). Section 6015 provides a
spouse with three alternatives: (1) full or partial relief under subsection (b),
(2) proportionate relief under subsection (c), and (3) if relief is not available under
subsection (b) or (c), equitable relief under subsection (f). Respondent considered
petitioner’s entitlement to relief from joint and several liability only under
subsection (f), and we have jurisdiction to do the same.3 See sec. 6015(e)(1).
II. Valid 2010 Joint Return
We first address whether petitioner and Mr. Pike made a valid joint Federal
income tax return for 2010.4 Petitioner asserts that not only did she not sign the
2010 joint return but she did not expressly consent to having Mr. Pike sign her
name on and file that return. If the 2010 joint return is not a valid joint return,
then she is not liable for the underpayment reflected thereon and the issue of
whether she is entitled to relief under section 6015(f) for 2010 becomes moot. See
3 Sec. 6015(b) and (c) do not apply in this case because there are neither understatements of tax nor deficiencies at issue, as required by sec. 6015(b) and (c), respectively; rather, only underpayments are at issue. See Durham v. Commissioner, T.C. Memo. 2004-184, slip op. at 6. 4 Petitioner does not dispute that the 2009 joint return was a valid joint return. -11-
[*11] Raymond v. Commissioner, 119 T.C. 191, 194-197 (2002); Acquaviva v.
Commissioner, T.C. Memo. 1996-542, slip op. at 13.
Whether an income tax return is a joint return or a separate return of the
other spouse is a question of fact. Hunter v. Commissioner, T.C. Memo. 2016-
164, at *7 (and cases cited thereat). The determinative factor in deciding whether
a filed return qualifies as a joint return is whether the spouses intended to file a
joint return. Id. The absence of one spouse’s signature on a joint return does not
necessarily preclude a finding of a valid joint return where the facts indicate
otherwise. Okorogu v. Commissioner, T.C. Memo. 2017-53, at *19 (citing
Hennen v. Commissioner, 35 T.C. 747, 748 (1961)); Acquaviva v. Commissioner,
slip op. at 13 (and cases cited thereat).
In Okorogu v. Commissioner, at *19, we stated:
The “tacit consent rule” holds that the intent to file a joint return may be inferred from facts demonstrating that a nonsigning spouse tacitly approved or acquiesced in the other spouse’s filing of the joint return. This Court has considered a variety of factors in evaluating the issue of tacit consent, especially whether the nonsigning spouse filed a separate return, whether the nonsigning spouse objected to the other spouse’s joint filing, and whether the couple’s prior filing history indicates the intent to file jointly. Thus, a history of reliance by the nonsigning spouse on the other spouse with respect to family financial matters, including the preparation of tax returns, suggests that the nonsigning spouse consented to the other spouse’s filing of the return in question. Furthermore, the inclusion of income and deductions attributable to the nonsigning spouse on the -12-
[*12] return generally will be taken as proof of the intent to file a joint return, even where the nonsigning spouse failed to give his or her express consent to the filing. [Citations omitted.]
The tacit consent rule is not separable from the presumption of correctness
that attaches to the Commissioner’s determination of a joint return in cases where
one spouse fails to sign. Hennen v. Commissioner, 35 T.C. at 749.
On the record before us, we find that petitioner tacitly consented to the
filing of the 2010 joint return. Petitioner did not file a separate Federal income tax
return for 2010 despite her income’s having exceeded the filing threshold.5
Petitioner also acknowledged that she provided Mr. Pike her tax-related
information for 2010 (as well as for 2009) despite having separated from him in
2008. Mr. Pike credibly testified that petitioner gave him her tax-related
information for the years at issue so that the 2009 and 2010 joint returns could be
prepared. Furthermore, petitioner and Mr. Pike filed joint Federal income tax
returns during all the years they were married, and petitioner relied on Mr. Pike to
prepare (or have prepared) those returns, as well as to handle all other family
financial matters.
5 Sec. 6012(a)(1) requires every individual whose gross income equals or exceeds the exemption amount to file a return. For 2010 the exemption amount was $3,650. During 2010 petitioner received wages totaling $15,246 from her 2010 W-2 employers. Petitioner’s gross income exceeded the $3,650 exemption amount, and therefore she was required to file a return for 2010. -13-
[*13] Similarly, petitioner testified that she allowed Mr. Johnson to sign her name
on the 2012 joint return. Petitioner acknowledged that (as with the 2010 joint
return with Mr. Pike) she had no involvement in the preparation of the 2012 joint
return and did not review that return whatsoever before allowing Mr. Johnson to
sign her name thereon. The absence of her signature on Federal income tax
returns is, therefore, not decisive. Accordingly, these facts support a finding that
petitioner and Mr. Pike made a valid joint Federal income tax return for 2010.
III. Relief Under Section 6015(f)
Where relief is not available under section 6015(b) or (c), such as in this
case, section 6015(f) grants the Commissioner the discretion to relieve a
requesting spouse of joint liability if, taking into account all the facts and
circumstances, it would be inequitable to hold the requesting spouse liable for the
unpaid tax or deficiency or any portion thereof. Additionally, section 6015(f)
authorizes granting such equitable relief “[u]nder procedures prescribed by the
Secretary”. For requests filed on or after September 16, 2013, and for requests
pending in any Federal court on or after September 16, 2013, Rev. Proc. 2013-34,
2013-43 I.R.B. 397, prescribes the guidelines that the IRS will consider in
determining whether equitable relief is appropriate. Although we are not bound
by them, since they are applicable in this case we will analyze petitioner’s request -14-
[*14] under these guidelines to ascertain whether she satisfies the requirements for
relief under section 6015(f). See Yancey v. Commissioner, T.C. Memo. 2017-59,
at *17 (and cases cited thereat).
Rev. Proc. 2013-34, sec. 4.01, 2013-43 I.R.B. at 399, sets forth seven so-
called threshold conditions (threshold conditions) that must be satisfied in order
for the requesting spouse to be eligible for equitable relief under section 6015(f).
The threshold conditions are: (1) the requesting spouse filed a joint return for the
taxable year for which relief is sought; (2) relief is not available to the requesting
spouse under section 6015(b) or (c); (3) the claim for relief is timely filed; (4) no
assets were transferred between the spouses as part of a fraudulent scheme; (5) the
nonrequesting spouse did not transfer disqualified assets to the requesting spouse;
(6) the requesting spouse did not knowingly participate in the filing of a fraudulent
tax return; and (7) absent certain enumerated exceptions, the tax liability from
which the requesting spouse seeks relief is attributable to an item of the
nonrequesting spouse. Rev. Proc. 2013-34, sec. 4.01. These conditions are stated
in the conjunctive; thus, a requesting spouse must satisfy all seven of them before
relief may be granted. Hunter v. Commissioner, at *13 (citing Agudelo v.
Commissioner, T.C. Memo. 2015-124, at *18). -15-
[*15] Petitioner meets the first six threshold conditions but does not fully satisfy
the seventh condition. Generally, the income tax liability from which the
requesting spouse seeks relief must be attributable, either in full or in part, to an
item of the nonrequesting spouse or an underpayment resulting from the
nonrequesting spouse’s income unless a specified exception applies.6 Rev. Proc.
2013-34, sec. 4.01(7), 2013-43 I.R.B. at 399. If the liability is partially
attributable to the requesting spouse, then relief can be considered only for the
portion of the liability attributable to the nonrequesting spouse. Id. The liabilities
for the years at issue were partially attributable to petitioner. Consequently, she is
eligible for relief under section 6015(f) only for the portions of the liabilities
attributable to Mr. Pike.
For the portions of the liabilities for which petitioner is eligible for relief
under section 6015(f), Rev. Proc. 2013-34, sec. 4.02, 2013-43 I.R.B. at 400, sets
forth circumstances under which the IRS will make a streamlined determination
6 The exceptions are: (1) attribution due solely to the operation of community property law, (2) nominal ownership, (3) misappropriation of funds, (4) abuse, and (5) fraud committed by the nonrequesting spouse. Rev. Proc. 2013- 34, sec. 4.01(7), 2013-43 I.R.B. 397, 399. Except for the abuse exception, petitioner does not make any specific allegations that she meets any of the exceptions. On the basis of the record before us (and as further discussed infra pp. 23-24 with respect to addressing abuse as a factor altering any of the factors set forth in Rev. Proc. 2013-34, sec. 4.03(2), 2013-43 I.R.B. at 400), we find that none of the exceptions apply here in any event. -16-
[*16] granting equitable relief to the requesting spouse under section 6015(f). The
requesting spouse is eligible for a streamlined determination by the IRS granting
equitable relief under Rev. Proc. 2013-34, sec. 4.02, only in cases in which the
requesting spouse establishes that she (1) is no longer married to the
nonrequesting spouse (marital status requirement), (2) would suffer economic
hardship if not granted relief (economic hardship requirement), and (3) did not
know or have reason to know that the nonrequesting spouse would not or could
not pay the underpayment of tax reported on the joint income tax return (or did not
know or have reason to know that there was an understatement or deficiency on
the joint income tax return) (knowledge requirement). It is undisputed in this case
that the marital status requirement has been met. However, petitioner does not
dispute that she would not suffer economic hardship if not granted relief;
therefore, the economic hardship requirement has not been met, making her
ineligible for a streamlined determination.7
7 In the light of petitioner’s conceding the economic hardship requirement, we need not address whether the knowledge requirement has been met. See Rev. Proc. 2013-34, sec. 4.02, 2013-43 I.R.B. at 400. However, in considering below the factors set forth in Rev. Proc. 2013-34, sec. 4.03(2), we address whether petitioner knew or had reason to know that Mr. Pike would not or could not pay the liabilities for the years at issue. -17-
[*17] Where, as here, the requesting spouse fails to satisfy all of the requirements
for a streamlined determination, Rev. Proc. 2013-34, sec. 4.03(2), 2013-43 I.R.B.
at 400, sets forth seven nonexclusive factors to be considered in determining
whether a requesting spouse is entitled to equitable relief under section 6015(f):
(1) marital status; (2) economic hardship; (3) in the case of an underpayment,
knowledge or reason to know that the nonrequesting spouse would not or could
not pay the tax liability; (4) legal obligation; (5) significant benefit;
(6) compliance with the income tax laws; and (7) mental or physical health of the
requesting spouse. These factors are to be weighted appropriately, and no one
factor is determinative. See Yancey v. Commissioner, at *19 (and cases cited
thereat). Accordingly, we will consider each in turn.
With respect to the marital status factor, the parties agree that when the IRS
made the determination set forth in the notice of determination, petitioner was no
longer married to Mr. Pike. The marital status factor weighs in favor of relief.
See Rev. Proc. 2013-34, sec. 4.03(2)(a).
With respect to the economic hardship factor, petitioner does not dispute
that she would not suffer economic hardship if relief were not granted. See supra
p. 16. The economic hardship factor is neutral. See Rev. Proc. 2013-34, sec.
4.03(2)(b), 2013-43 I.R.B. at 401. -18-
[*18] With respect to the knowledge factor, in the case of a tax liability that was
properly reported but not paid, we look at whether, as of the date the return was
filed (or the date the requesting spouse reasonably believed the return was filed),
the requesting spouse knew or had reason to know that the nonrequesting spouse
would not or could not pay the tax liability at that time or within a reasonable
period of time after the filing of the return. Id. sec. 4.03(2)(c)(ii), 2013-43 I.R.B.
at 401. This factor will weigh against relief if, on the basis of the facts and
circumstances of the case, it was not reasonable for the requesting spouse to
believe that the nonrequesting spouse would or could pay the tax liability shown
on the return. Id.
By April 1, 2011, when she and Mr. Pike completed and signed under
penalties of perjury income and expense declarations, petitioner was aware that
their last joint Federal income tax return filing was for 2008 and thus that the 2009
joint return was late and the 2010 joint return was imminently due. She also knew
that they needed to use $30,000 of the net proceeds from the sale of their marital
home to satisfy their 2008 tax liability. Indeed, she acknowledged at trial that
when she and Mr. Pike separated money was tight. “[W]e have consistently found
that a requesting spouse’s knowledge of the couple’s financial difficulties deprives
the requesting spouse of reason to believe that his or her ex-spouse will pay the -19-
[*19] tax liability.” Stolkin v. Commissioner, T.C. Memo. 2008-211, slip op. at 8
(citing Gonce v. Commissioner, T.C. Memo. 2007-328, and Butner v.
Commissioner, T.C. Memo. 2007-136).
Furthermore, with respect to the 2009 joint return, petitioner conceded that
she signed this return; her signature appears approximately 1-1/2 inches below the
line for “amount you owe”, which she and Mr. Pike reported was $39,848.
Petitioner’s testimony that she is “not a numbers person” and therefore completely
entrusted Mr. Pike with all of their family financial matters is disingenuous. We
have consistently found that a requesting spouse cannot “play the ‘ostrich, hiding
[his or] her head in the proverbial sand’” or turn a blind eye to the couple’s tax
filings. See Wang v. Commissioner, T.C. Memo. 2014-206, at *24 (quoting Doyle
v. Commissioner, 94 F. App’x 949, 952 (3d Cir. 2004), aff’g T.C. Memo. 2003-
96). Given the circumstances, petitioner should have been concerned about her
tax obligations and taken some steps to assure herself (i.e., inquire of Mr. Pike)
that the tax liabilities for the years at issue would be paid. Thus, we find that
petitioner knew or had reason to know that Mr. Pike would not or could not pay -20-
[*20] the tax liabilities for the years at issue. The knowledge factor weighs
against relief.8 See Rev. Proc. 2013-34, sec. 4.03(2)(c).
With respect to the legal obligation factor, we look at whether the
requesting spouse or the nonrequesting spouse has a legal obligation arising from
a divorce decree or other legally binding agreement to pay the outstanding Federal
income tax liability. Id. sec. 4.03(2)(d), 2013-43 I.R.B. at 402. This factor will be
neutral if, on the basis of an agreement or consent order, both spouses have a legal
obligation to pay the outstanding income tax liability, the spouses are not
separated or divorced, or the divorce decree or agreement is silent as to any
obligation to pay the outstanding income tax liability. Id.
Petitioner and Mr. Pike executed an MSA in February 2011, approximately
a month before she petitioned for dissolution of her marriage to Mr. Pike. The
MSA does not explicitly address the tax liabilities for the years at issue. It does
provide in the section therein titled “Tax Refunds or Deficiencies” that “[a]ny
deficiency assessed for any prior year in which the parties filed joint returns shall
be payable in proportion to their income in the year assessed by each party as an
individual obligation.” This provision plainly speaks to tax deficiencies and
8 Assuming arguendo that we had found that the knowledge factor favored relief, that finding would not change our ultimate finding set forth below as to whether petitioner is entitled to equitable relief under sec. 6015(f). -21-
[*21] Federal income tax returns filed before the MSA was executed. However,
neither of these conditions is applicable here since this is not a deficiency case but
rather an underpayment case; and when the MSA was executed, the 2009 and
2010 joint returns had not yet been filed. Thus, this text is not particularly
enlightening as to each spouse’s legal obligation regarding underpayments of tax.
We also note that the mediator credibly testified that the “Tax Refunds or
Deficiencies” section was “boilerplate” and that he would not have used it had he
known that petitioner and Mr. Pike possibly would have tax liabilities arising from
not-yet-filed Federal income tax returns.
The MSA provides in an earlier section titled “Division of Debts” that for
any joint debts “discovered hereafter which are not provided for in this agreement,
each party will pay one-half of such debt.” The mediator credibly testified that
this section similarly was “boilerplate” and thus did not specifically address future
tax debts. However, he also credibly testified that this section was intended to
apply to undisclosed liabilities. Given his testimony, it is apparent that the MSA
does not provide that an undisclosed liability would be the sole responsibility of
Mr. Pike (or the party who incurred the liability), but rather it would be the equal
responsibility of petitioner and Mr. Pike. Accordingly, although the mediator’s
testimony raises questions as to how he would have handled the issue of tax -22-
[*22] liabilities arising from not-yet-filed Federal income tax returns, the MSA
either imposes a legal obligation on both petitioner and Mr. Pike for the tax
liabilities for the years at issue or is silent as to such obligation. The legal
obligation factor is neutral. See Rev. Proc. 2013-34, sec. 4.03(2)(d).
With respect to the significant benefit factor, there is no evidence that
petitioner or Mr. Pike realized any significant benefit, as that term is defined by
Rev. Proc. 2013-34, sec. 4.03(2)(e), 2013-43 I.R.B. at 402, from the unpaid tax
liabilities for the years at issue; respondent’s argument that this factor weighs
against relief (or is neutral) because less money would have been available for
support for petitioner had these liabilities been paid in full and on time is
meritless. The significant benefit factor favors relief or at worst is neutral. See
Wang v. Commissioner, at *40; Rev. Proc. 2013-34, sec. 4.03(2)(e).
With respect to the compliance factor, petitioner’s Federal income tax
returns for 2011 through 2014 were all filed late and the tax liabilities reflected
thereon were also all paid late.9 The compliance factor weighs against relief. See
9 Additionally, we note that on her Federal income tax return for 2011, petitioner did not report as income the spousal support she received from Mr. Pike during 2011 pursuant to the MSA they entered into in February 2011. See Wang v. Commissioner, T.C. Memo. 2014-206, at *42 (citing Pugsley v. Commissioner, T.C. Memo. 2010-255). -23-
[*23] Yancey v. Commissioner, at *23-*24; Canty v. Commissioner, T.C. Memo.
2016-169, at *19; Rev. Proc. 2013-34, sec. 4.03(2)(f), 2013-43 I.R.B. at 403.
With respect to the health factor, there is no evidence that petitioner was in
poor physical or mental health when the 2009 and 2010 joint returns were filed or
when she requested relief under section 6015. Indeed, petitioner did not check the
box on Form 8857 that would have indicated that she had a mental or physical
health problem at either time. The health factor is neutral.10 See Rev. Proc. 2013-
34, sec. 4.03(2)(g), 2013-43 I.R.B. at 403.
Finally, we note that petitioner cites one additional factor that we do not
find to be persuasive here. She contends that Mr. Pike “emotionally mistreated”
her and this manner of mistreatment constitutes abuse by Mr. Pike, which favors
granting relief to her. The 2009 and 2010 joint returns were filed not only
approximately 1-1/2 years after the dissolution of petitioner and Mr. Pike’s
marriage but also after petitioner married Mr. Johnson, while the claimed “abuse”
occurred when petitioner and Mr. Pike were living under the same roof.
Consequently, there is no nexus between the claimed “abuse” and the kind of
10 The fact that petitioner may have allegedly experienced some health challenges in late 2012 and during 2014 on account of two pregnancies after her divorce from Mr. Pike does not “moderately favor[]”, as petitioner contends, the granting of relief. See Chou v. Commissioner, T.C. Memo. 2007-102, slip op. at 22-23. -24-
[*24] abuse described in Rev. Proc. 2013-34, supra, that would alter any of the
factors specified in Rev. Proc. 2013-34, sec. 4.03(2), so as to militate in favor of
granting petitioner relief. Tellingly, on her Form 8857 petitioner did not check
the box that would have indicated that she was the victim of spousal abuse or
domestic violence (or suffering the effects of such abuse) during the years at issue
or when the 2009 and 2010 joint returns were filed; only at trial did she first raise
her “abuse” claim. See Hardin v. Commissioner, T.C. Memo. 2016-141, at *25
(denying threshold relief where abuse was not alleged on the Form 8857 but raised
as “an afterthought” during the Tax Court proceedings). There is simply no
evidence in the record that Mr. Pike mentally (or physically) abused petitioner “in
any sense to which the tax law or common experience will accord any
recognition.” Ogonoski v. Commissioner, T.C. Memo. 2004-52, slip op. at 17-18
(analyzing the factors set forth in a predecessor revenue procedure to Rev. Proc.
2013-34, supra).
Upon the basis of our examination of the entire record before us, we find
that petitioner has failed to carry her burden of establishing that it would be
inequitable to hold her liable for the entirety of the underpayments for the years at
issue and thus that she is entitled to relief under section 6015(f) with respect to
those years. -25-
[*25] We have considered all of the arguments made by the parties and, to the
extent they are not addressed herein, we find them to be moot, irrelevant, or
without merit.
To reflect the foregoing,
Decision will be entered for
respondent.