T.C. Summary Opinion 2021-14
UNITED STATES TAX COURT
MARIA CLAUDIA GINOS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6147-17S. Filed May 19, 2021.
Erin H. Stearns, Samantha A. Galvin, and Haley K. Mills (student), for
petitioner.
Michael T. Garrett, Gretchen W. Altenburger, and Matthew A. Houtsma, for
respondent.
SUMMARY OPINION
CARLUZZO, Chief Special Trial Judge: This case was heard pursuant to
the provisions of section 74631 of the Internal Revenue Code in effect when the
1 Unless otherwise indicated, section references are to the Internal Revenue (continued...)
Served 05/19/21 -2-
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.
The issue for decision is whether petitioner qualifies for relief under section
6015(f) from her outstanding 2008 Federal income tax liability.
Background
Some of the facts have been stipulated and are so found. Petitioner lived in
Colorado when the petition was filed.
Years before the year in issue, petitioner met Ronald Leon in Bogota,
Colombia. She was a citizen and resident there; he lived in California and was in
Bogota for business reasons. She later moved to California where they were
married in 1999 and where they were divorced in 2012. After they were married,
they purchased a house in California (marital residence). Later, petitioner’s two
daughters moved in with them. Her daughters continued to live with Mr. Leon
even after petitioner had moved out.
While married, petitioner and Mr. Leon routinely elected to file joint
Federal income tax returns, and they did so for 2008. The income reported on
1 (...continued) Code of 1986, as amended and in effect for the relevant period. Rule references are to the Tax Court Rules of Practice and Procedure. -3-
their joint 2008 Federal income tax return was attributable to Mr. Leon’s
construction business (business) started at least in part with money borrowed or
gifted from petitioner’s grandmother. Otherwise, petitioner had no obligation to
file a Federal income tax return for that year. Although she was not being paid,
petitioner is shown in public records as an officer of the business, and she was
active in the business in many ways including recordkeeping and other
administrative duties, as well as performing physical labor.2
Mr. Leon was unable to obtain the credit he needed in order to operate the
business. According to petitioner, this is because before their marriage, he
initiated a bankruptcy proceeding in order to avoid paying Federal income tax
liabilities from previous years. Because of Mr. Leon’s poor credit, petitioner
opened at least one credit card account in her name that he used for business
purposes.
Taking into account the taxable income reported on the return, their joint
and several income tax liability for that year totaled $22,611. Only some of that
liability was satisfied by prepayments. The return shows $18,737 as the amount
due (tax due), but none of it was paid with the return. Of the total amount of tax
2 In 2006 petitioner enrolled in an interior design program and was awarded an associate’s degree in interior design in 2008. She provided some decorating services to the business. -4-
shown on the return, $6,146 consisted of the income tax imposed by section 1, and
$16,465 consisted of the tax imposed by section 1401, the tax on net earnings
from self-employment.3
A paid income tax return preparer prepared the return. As was petitioner’s
practice with respect to their joint Federal income tax returns filed for other years,
she assembled the information necessary and provided it to the return preparer.
Petitioner knew that the return showed the tax due when she signed it and
submitted it to the Internal Revenue Service (IRS).
Nothing in the record shows that petitioner and Mr. Leon discussed the tax
due when the return was filed. According to petitioner, however, during 2011
while their divorce proceeding was pending, Mr. Leon assured her that he would
pay the tax due if she did not contest the divorce. Petitioner held up her end of the
bargain. She defaulted in the divorce proceeding and was awarded neither
property nor spousal support of any kind in the final divorce decree.4 If Mr. Leon,
3 Technically, the tax imposed by sec. 1401 is an income tax, but the tax applies only to net earnings from self-employment. See sec. 1402. Both parties are well represented in this case, but neither focused on this distinction. We will follow their lead and proceed as though the distinction need not be taken into account in connection with the relief petitioner seeks in this proceeding. 4 Substantially all of the marital assets were awarded to Mr. Leon, including the business, the marital residence, home furnishings, and motor vehicles. -5-
in fact, did make such a promise, then he did not keep it; he has not paid the tax
due. We note that nothing in their separation agreement or divorce decree refers
to the tax due.
In connection with their divorce, on September 7, 2011, petitioner executed
a quitclaim deed conveying her interest in the marital residence to Mr. Leon. At
the same time and even though they were going through divorce proceedings,
petitioner designated Mr. Leon as her power of attorney to handle real property
transactions and tax matters.
Starting in 2010 and continuing into 2011, petitioner was employed by a
nonprofit organization. Her salary was $45,000 per year. Although still married
to Mr. Leon, she filed a separate 2011 Federal income tax return, but as relevant
here, she failed to include the cancellation of indebtedness income realized from a
debt discharged by one of her creditors. She has been assessed but has not paid
the deficiency in income tax that resulted from that failure. According to
petitioner, the discharged debt related to the business.
In 2012 petitioner moved to England and began working for a different
nonprofit organization that provided medical and surgical care for underprivileged
children. After that job ended, petitioner remained in England until August 10,
2013, when she moved back to California. -6-
At some point during 2013 petitioner received a $10,000 gift from her
mother. Shortly after returning to California she met Milton Ginos. They married
on July 29, 2014. In 2016 they moved from California to Colorado. On
November 18, 2016, petitioner and Mr. Ginos purchased a house (Colorado
house). Although the Colorado house was titled in both names as joint tenants,
Mr. Ginos provided the funds for the purchase.
As of the close of 2015 a significant amount of the tax due remained unpaid.
That being so, the refund claimed on their joint 2015 Federal income tax return
was applied against that tax.
Petitioner was not employed when she met and married Mr. Ginos or, as
relevant here, at anytime afterwards. Since they married, Mr. Ginos has supported
her financially. We see no need to provide the detail of his financial situation.
Suffice it to note that he was financially comfortable. Mr. Ginos paid all of
petitioner’s living expenses and from time to time made deposits into one of her
bank accounts for her to spend as she saw fit.
Petitioner maintained at least two bank accounts. As of March 2018 the
balances in the accounts totaled slightly more than $3,000. For the most part, the
balances represented amounts petitioner saved from money given to her by Mr.
Ginos. Petitioner used the $10,000 gift from her mother to open a joint brokerage -7-
account with Mr. Ginos, who managed it. He invested the $10,000 mostly in
stock; as of April 2018, the value of the stock portfolio held in the brokerage
account was approximately $4,000.
On September 16, 2015, respondent received petitioner’s Form 8857,
Request for Innocent Spouse Relief (the form), requesting relief from joint and
several liability for 2008 and 2011.5 On the form petitioner: (1) reported that she
had no assets, no income, and no expenses; (2) indicated that when the return was
filed she and Mr. Leon were having financial problems and were unable to pay
some of their bills; and (3) claimed that she was a victim of spousal abuse during
her marriage with Mr. Leon. In a letter dated September 10, 2015, attached to the
form, petitioner explained that in 2008 “the stock market crashed and it became
very difficult to fulfill various financial obligations.”
In response to a letter dated October 1, 2015, from the IRS requesting
additional financial information, petitioner submitted an updated financial
statement showing monthly income of $717 and expenses of $3,150. Apparently
Mr. Ginos assisted petitioner in drafting the response.
5 By order dated June 8, 2017, so much of this case as relates to 2011 was dismissed for lack of jurisdiction. -8-
Discussion
Generally, married taxpayers may elect to file a joint Federal income tax
return. Sec. 6013(a). After making this election, each spouse is responsible for
the accuracy of the items shown on the joint return, and each spouse is jointly and
severally liable for the entire amount of the income tax liability reported on the
joint return. Sec. 6013(d)(3); see Butler v. Commissioner, 114 T.C. 276, 282
(2000).
Section 6015 provides various ways in which a spouse can be relieved of
the joint and several income tax liability that results from the filing of a joint
return--commonly referred to as “innocent spouse relief”. If, as here, the tax due
arises from an underpayment of tax, such relief is available only under section
6015(f). Pursuant to that section, the Commissioner may grant equitable relief
from joint and several liability if “taking into account all the facts and
circumstances, it is inequitable to hold the individual liable for any unpaid tax or
any deficiency (or any portion of either)”. Sec. 6015(f)(1)(A).
Petitioner, as the requesting spouse, bears the burden of proving that she is
entitled to relief under section 6015(f). See Rule 142(a); see also Porter v.
Commissioner, 132 T.C. 203, 210 (2009); Boyle v. Commissioner, T.C. Memo.
2016-87. The Court applies a de novo scope and standard of review in deciding -9-
whether a taxpayer is entitled to relief under section 6015(f). Sec. 6015(e)(7);6
Porter v. Commissioner, 132 T.C. at 210.
The Commissioner has outlined procedures for determining whether a
requesting spouse qualifies for equitable relief under section 6015(f) in Rev. Proc.
2013-34, sec. 4.01, 2013-43 I.R.B. 397, 399-400. Although the Court considers
those procedures when reviewing the Commissioner’s denial of section 6015(f)
relief in cases such as this one, we are not bound by them; our determination
ultimately rests on an evaluation of all the facts and circumstances. See Sleeth v.
Commissioner, 991 F.3d 1201, 1205 (11th Cir. 2021), aff’g T.C. Memo. 2019-
138; Pullins v. Commissioner, 136 T.C. 432, 438-439 (2011); Boyle v.
Commissioner, T.C. Memo. 2016-87; Williams v. Commissioner, T.C. Memo.
2015-198; Sriram v. Commissioner, T.C. Memo. 2012-91.
Rev. Proc. 2013-34, sec. 4.01, 2013-43 I.R.B. at 399, lists seven threshold
conditions, all of which a spouse must meet to qualify for relief under section
6015(f). Respondent concedes that petitioner meets these qualifying conditions.
According to Rev. Proc. 2013-34, sec. 4.02, 2013-43 I.R.B. at 400, if the
threshold requirements have been satisfied, then the Commissioner considers
whether the requesting spouse qualifies for streamlined relief. The requesting
6 As in effect when the petition was filed. - 10 -
spouse is eligible for streamlined relief under Rev. Proc. 2013-34, sec. 4.02, only
in cases in which that spouse establishes that: (1) on the date the IRS makes its
determination, the requesting spouse, as relevant here, is no longer married to, or
is legally separated from, the nonrequesting spouse; (2) the requesting spouse will
suffer economic hardship if relief is not granted; and (3) on the date the joint
return was filed, the requesting spouse did not know or have reason to know the
nonrequesting spouse would not or could not pay the underpayment of the tax
reported on the joint return. Respondent concedes that petitioner meets the first
qualifying condition for streamlined relief. According to petitioner, all three
conditions have been satisfied. According to respondent, petitioner is not entitled
to streamlined relief if only because she has failed to satisfy the second
requirement, that is, that she would suffer economic hardship if relief is not
granted.
Economic hardship, as defined in Rev. Proc. 2013-43, sec. 4.03(2)(b), 2013-
43 I.R.B. at 401, results if satisfaction of the tax liability, in whole or in part,
would result in the requesting spouse’s being unable to meet his or her reasonable
basic living expenses.
Whether the requesting spouse will suffer economic hardship is determined based on rules similar to those provided in Treas. Reg. § 301.6343-1(b)(4), and the Service will take into consideration a - 11 -
requesting spouse’s current income and expenses and the requesting spouse’s assets. In determining the requesting spouse’s reasonable basic living expenses, the Service will consider whether the requesting spouse shares expenses or has expenses paid by another individual (such as a family member, including a current spouse). * * * [Id.]
According to petitioner, she has “limited assets” and “no income” that could
be used to satisfy the tax due, or any portion of it. That might be so, but with
limited assets and no income, she has little exposure to forced collection efforts
available to respondent. Furthermore, because she has been supported by Mr.
Ginos, who has paid all of her living expenses, basic and otherwise, we wonder
what financial hardship she faces if she remains obligated for the tax due. We
agree with respondent that petitioner does not qualify for streamlined relief if only
because she has failed to show she would suffer economic hardship if she were not
relieved of liability from the tax due.
If, as in this case, a requesting spouse meets the threshold conditions for
section 6015 relief but fails to qualify for streamlined relief, then the
Commissioner will take into account the following nonexclusive list of factors set
forth in Rev. Proc. 2013-34, sec. 4.03, 2013-43 I.R.B. at 400-403, in determining
whether to grant relief: (1) whether the requesting spouse is separated or divorced
from the nonrequesting spouse; (2) whether the requesting spouse will suffer - 12 -
economic hardship if relief is not granted; (3) whether on the date the joint return
was filed the requesting spouse did not know and had no reason to know that the
nonrequesting spouse would not or could not pay the tax liability; (4) whether the
requesting or nonrequesting spouse has a legal obligation to pay the tax liability
pursuant to a decree of divorce or other agreement; (5) whether the requesting
spouse received a significant benefit from the unpaid income tax liability; and
(6) whether the requesting spouse has made a good-faith effort to comply with the
Federal income tax laws for the taxable years following the taxable year(s) to
which the request for relief relates. Two additional factors that the Commissioner
may consider in favor of granting relief are whether: (1) the nonrequesting spouse
abused the requesting spouse and (2) the requesting spouse was in poor mental or
physical health when the joint return was filed or when the requesting spouse
requested relief. See id. sec. 4.03(2)(c)(iv), (g), 2013-43 I.R.B. at 402, 403.7
Respondent, in denying petitioner section 6015 relief, considered each
factor, found some to weigh in favor of relief, some to be neutral, and others to
weigh against relief. Needless to say, petitioner’s scorecard is marked differently.
7 Rev. Proc. 2013-43, sec. 3.01, 2013-43 I.R.B. 397, 398, recognizes that the issue of abuse can be relevant to the analysis of various factors and can negate the presence of certain factors. The abuse complained of and experienced by petitioner is given little weight in our analysis. After all, petitioner allowed her daughters to remain living with Mr. Leon after she moved out. - 13 -
Our review follows. We keep in mind that we are not bound to consider, or
limited to, the list of factors. Furthermore, we proceed as though no one factor, if
considered, is determinative, and relief or denial of relief is not a simple
mathematical exercise of counting those factors considered to favor relief against
those factors that do not.
1. Marital Status
If the requesting spouse is no longer married to the nonrequesting spouse as
of the date that the IRS makes its determination, this factor weighs in favor of
relief. Rev. Proc. 2013-43, sec. 4.03(2)(a), 2013-43 I.R.B. at 400. Petitioner and
Mr. Leon were divorced before the IRS made its determination denying petitioner
spousal relief. This factor weighs in favor of relief.
2. Economic Hardship
As discussed above, petitioner has failed to establish that denying her
spousal relief will cause her to suffer economic hardship. Under Rev. Proc. 2013-
34, sec. 4.03(2)(b), the absence of economic hardship is a neutral factor.
Nonetheless, respondent, relying on Hale v. Commissioner, T.C. Memo. 2018-93,
argues that the economic hardship factor should weigh against relief. We find the
facts in Hale to be distinguishable from the facts before us and, consistently with
Rev. Proc. 2013-43, sec. 4.03(2)(b), consider this factor neutral. - 14 -
3. Knowledge or Reason To Know
In the case of an underpayment of tax due, this factor turns on whether, as of
the date 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 at that time or
within a reasonable time after the filing of the return. Rev. Proc. 2013-34, 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.
When petitioner signed and submitted the return to the IRS, she
acknowledged that she was aware that the tax due was not paid, but she now
argues that it was reasonable for her to believe that Mr. Leon would pay it because
of their financial situation/income during the relevant period and Mr. Leon’s
history of satisfying his Federal income tax liabilities. The evidence does not
support her position.
In statements made in her September 10, 2015, letter, petitioner explained
that the stock market crash in 2008 made it “very difficult to fulfill various
financial obligations”. She also had access to her and Mr. Leon’s business and
personal financial records. She was aware that Mr. Leon had poor credit and used - 15 -
Federal bankruptcy proceedings to avoid paying Federal income tax liabilities for
periods before they were married. See Pullins v. Commissioner, 136 T.C. at 444-
445. We conclude that the financial difficulties petitioner described in her letter
should have put her on notice when the return was filed that Mr. Leon would not
or could not pay the tax due. See Stolkin v. Commissioner, T.C. Memo. 2008-211
(holding that the requesting spouse’s knowledge of the couple’s financial
difficulties deprives the requesting spouse of reason to believe that the
nonrequesting spouse will pay the tax liability).
Petitioner further contends that Mr. Leon verbally and emotionally abused
her during their marriage, negating this factor. See Rev. Proc. 2013-34, sec. 3.01,
2013-43 I.R.B. at 398. Spousal abuse can negate an otherwise negative factor
“[i]f the requesting spouse establishes that * * * [the spouse] was the victim of
abuse prior to the time the return was filed, and that, as a result of prior abuse,
* * * was not able to question the payment of any balance due reported on the
return, for fear of the nonrequesting spouse’s retaliation”. Id. sec. 4.01(7)(d),
2013-43 I.R.B. at 400.
There is enough evidence in the record to conclude that Mr. Leon belittled
and embarrassed petitioner in front of their friends. We are not convinced,
however, that Mr. Leon exercised such control over petitioner as would have - 16 -
prevented her from questioning the payment of the tax due, and we therefore find
that whatever abuse she suffered need not be taken into account. See Deihl v.
Commissioner, T.C. Memo. 2012-176, aff’d, 603 F. App’x 527 (9th Cir. 2015);
Gaitan v. Commissioner, T.C. Memo. 2012-3; see also Rev. Proc. 2013-34, sec.
4.01(7)(d). Therefore, this factor weighs against relief.
4. Legal Obligation
This factor will weigh in favor of relief if the nonrequesting spouse has the
sole legal obligation to pay the outstanding tax liability pursuant to a divorce
decree or other legally binding agreement. Rev. Proc. 2013-34, sec. 4.03(2)(d),
2013-43 I.R.B at 402.
The divorce decree does not address who is responsible for paying the tax
due. Respondent argues and petitioner concedes that this factor is neutral. We
agree.
5. Significant Benefit
This factor calls for an evaluation of whether petitioner received a
significant benefit, beyond normal support, such as the “benefits of a lavish
lifestyle”, from the underpayment of tax. See id. sec. 4.03(2)(e), 2013-43 I.R.B.
at 402; see also sec. 1.6015-2(d), Income Tax Regs. If so, this factor will weigh
against relief. Normal support is measured by the circumstances of the particular - 17 -
parties. Porter v. Commissioner, 132 T.C. at 212. On the other hand, “[i]f only
the nonrequesting spouse significantly benefitted from the unpaid tax * * *, 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.” Rev. Proc. 2013-34, sec. 4.03(2)(e).
Respondent concedes that petitioner did not enjoy the benefits of a lavish
lifestyle as a result of the underpayment of the underlying liability. According to
respondent, this factor is neutral.
Because of a motorcycle Mr. Leon purchased during the relevant period,
petitioner suggests that he significantly benefited from the underpayment of tax
and therefore the factor should weigh in support of relief. We hardly consider Mr.
Leon’s purchase of the motorcycle to be extravagant and note from the divorce
decree that at least a portion of the purchase price was financed. We find this
factor is neutral.
6. Compliance With Tax Laws
If the requesting spouse is in compliance with the income tax laws for
taxable years following the taxable years to which the request for relief relates,
this factor will weigh in favor of relief. Id. sec. 4.03(2)(f)(i), 2013-43 I.R.B. - 18 -
at 402. If the requesting spouse is not in compliance, then this factor will weigh
against relief. Id.
Petitioner filed a separate tax return for 2011, but she failed to report the
cancellation of indebtedness income she realized upon the debt discharged by a
credit card issuer. See Wang v. Commissioner, T.C. Memo. 2014-206 (holding
that unreported items indicate a lack of compliance for purposes of this factor
despite claims that the amount may ultimately have no impact on a taxpayer’s
Federal income tax liability). Consequently, petitioner has an outstanding Federal
income tax liability for 2011. According to petitioner, she has made a good-faith
effort to comply with income tax laws following 2008 because she plans to pay the
outstanding Federal income tax liability for 2011. Petitioner’s intent, good faith
notwithstanding, to come into compliance with Federal tax laws is the not the
same as actually being in compliance. See Pugsley v. Commissioner, T.C. Memo.
2010-255. We note that upon receiving the gift from her mother in 2013 she opted
to open a brokerage account with the money rather than pay her then-outstanding
2011 Federal income tax liability or any portion of it. We find that this factor
weighs against relief. - 19 -
7. Mental or Physical Health
This factor will weigh in favor of relief if the requesting spouse was in poor
mental or physical health when the relevant return was filed or when she requested
relief. Rev. Proc. 2013-34, sec. 4.03(2)(g), 2013-43 I.R.B. at 403. If the
requesting spouse was in neither poor physical nor poor mental health, then this
factor is neutral. Id.
Petitioner testified that her mental health started to deteriorate as a result of
her being “embarrassed” that she brought her Federal income tax issues into her
marriage with Mr. Ginos and that she continued to suffer from poor mental health
from that time through the time of trial. She further testified that her poor mental
health resulted in certain physical symptoms such as nausea and vomiting and that
in an effort to address her health she sought professional counseling. No doubt the
ongoing consequences of her marriage to, and divorce from, Mr. Leon caused her
stress in her current marriage, but other than the counseling, any ill effects she
suffered from the stress apparently were not sufficient enough for her to seek
medical attention for any physical health issues that resulted from the stress. We
fail to see how the mental condition she described might have affected her ability
to meet her Federal tax obligations. See Banderas v. Commissioner, T.C. Memo.
2007-129. Therefore, we find that this factor is neutral. - 20 -
Conclusion
After taking into account the foregoing factors and weighing all of the facts
and circumstances of this case, we conclude that it would not be inequitable to
deny petitioner spousal relief for the year in issue. It follows that petitioner is not
entitled to section 6015(f), and we so hold.
To reflect the foregoing,
Decision will be entered for