PURSUANT TO INTERNAL REVENUE CODE SECTION 7463(b),THIS OPINION MAY NOT BE TREATED AS PRECEDENT FOR ANY OTHER CASE. T.C. Summary Opinion 2014-32
UNITED STATES TAX COURT
RONALD ARTHUR RASCHKE, Petitioner, AND SUSANNAH JULIETTE RASCHKE, Intervenor v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2279-13S. Filed April 7, 2014.
Ronald Arthur Raschke, pro se.
Susannah Juliette Raschke, pro se.
Alicia A. Mazurek, for respondent.
SUMMARY OPINION
ARMEN, Special Trial Judge: This case was heard pursuant to the
provisions of section 7463(f)(1) of the Internal Revenue Code in effect when the -2-
petition was filed.1 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.
By final notice of determination dated December 18, 2012, respondent
denied petitioner’s claim for relief from joint and several liability with regard to
Federal income tax for 2009. Petitioner timely filed a petition with this Court
under section 6015(e) for review of respondent’s determination. Thereafter,
petitioner’s former spouse filed a notice to intervene pursuant to Rule 325(b) to
oppose any relief to petitioner under section 6015.
The sole issue for decision is whether petitioner is entitled to relief from
joint and several liability under section 6015 for 2009.2
1 Unless otherwise indicated, all subsequent 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. 2 At trial petitioner and respondent stipulated that petitioner is entitled to partial relief, i.e., for the portion of the tax deficiency attributable to the unreported income of intervenor. Petitioner argues that he should be granted full relief, i.e., not only for the portion of the tax deficiency attributable to intervenor’s unreported income but also for the portion attributable to his own unreported income. In contrast, intervenor argues that petitioner should not be granted any relief whatsoever. -3-
Background
Some of the facts have been stipulated and are so found. The stipulation of
facts, the stipulation of settled issues, and the accompanying exhibits are
incorporated herein by this reference. Petitioner resided in the State of Michigan
when the petition was filed.
Petitioner and intervenor were married in 1996. Sometime during their
marriage, petitioner was diagnosed with chronic obstructive pulmonary disease
(COPD) and emphysema and retired from working as a truck driver.
Subsequently, petitioner applied for and began receiving Social Security disability
benefits.
During 2009 petitioner received Social Security disability benefits. Also
during 2009 petitioner maintained an individual retirement account (IRA) and
received taxable distributions of $5,124.
During 2009 intervenor received income from working as a sales clerk for
Meijer, Inc., a local retail store. She also received income of $4,264 from
delivering newspapers for The Salesman, Inc., a publisher of a weekly community
newspaper covering items of local interest. At all relevant times petitioner knew
that intervenor worked as a sales clerk and delivered newspapers and that she
derived income from those activities. -4-
During their marriage and for tax years before 2009 petitioner and
intervenor always filed joint income tax returns. In that regard their practice was
to prepare the return by sitting down together at home in front of the computer
with intervenor entering the data using return preparation software and then filing
the return electronically.
On January 25, 2010, a joint income tax return for petitioner and intervenor
was filed electronically from petitioner’s residence for the 2009 tax year. The
return did not report petitioner’s IRA distributions, nor did it report intervenor’s
income from The Salesman, Inc.
The 2009 return claimed a refund of $2,212. A Form 8888, Direct Deposit
Of Refund To More Than One Account, was attached to the return. Pursuant to
that form, one portion of the claimed refund, $1,462, was deposited into a bank
account maintained solely by intervenor, and the remaining $750 was deposited
into another bank account also maintained solely by intervenor. Neither of these
accounts belonged to or could be accessed by petitioner.
By late January 2010 petitioner became aware that the 2009 tax return did
not report the distributions from his IRA or intervenor’s income from The
Salesman, Inc. Petitioner did not at any time attempt to file a separate return, -5-
amend the 2009 purported joint return, contact the IRS, or seek professional tax
advice.
In May 2010 intervenor filed for divorce from petitioner. The divorce was
finalized in February 2011. The divorce decree did not include any provision that
either petitioner or intervenor had the legal obligation to pay any outstanding tax
liability.
In April 2011 respondent issued a notice of deficiency to petitioner and
intervenor for 2009. Neither petitioner nor intervenor filed a petition with this
Court in response to the notice, and in due course the deficiency was assessed
against both of them.
In 2011 petitioner remarried. Petitioner’s new wife is a nursing student. In
addition, his stepdaughter lives with the couple, and he supports the household.
Petitioner receives approximately $24,000 per year, which amount includes
his Social Security disability benefits as well as income from part-time
employment as a parts inspector. Petitioner’s ability to find work has been
negatively affected by his COPD and emphysema, as his lung capacity on the date
of trial was only about 14%.
In November 2011 petitioner filed a Form 8857, Request For Innocent
Spouse Relief, for the 2009 tax year. Respondent issued a final determination in -6-
December 2012 denying petitioner’s request for relief. Petitioner then filed a
timely petition with this Court in January 2013.
Intervenor filed a notice of intervention in March 2013 in which she
contends that petitioner should not be granted relief from joint and several
As previously noted, petitioner and respondent stipulated at trial that
petitioner is entitled to partial relief, i.e., for the portion of the tax deficiency
attributable to intervenor’s unreported income from The Salesman, Inc. Petitioner
argues that he should also granted relief for the portion of the tax deficiency
attributable to his unreported income from his IRA distributions. In contrast,
intervenor argues that petitioner should not be granted any relief whatsoever.
Discussion
Married taxpayers may elect to file a joint Federal income tax return. Sec.
6013(a). Generally, each spouse filing the return is jointly and severally liable for
the entire tax due. Sec. 6013(d)(3). Pursuant to section 6015, however, a taxpayer
may seek relief from joint liability.
Petitioner contends that he is entitled to relief from joint and several liability
pursuant to section 6015(b), (c), or (f). Generally, the spouse requesting relief
bears the burden of proof. See Rule 142(a); Alt v. Commissioner, 119 T.C. 306, -7-
311 (2002), aff’d, 101 Fed. Appx. 34 (6th Cir. 2004). However, to the extent that
the Commissioner is no longer an adverse party to the taxpayer (here as to the
portion of the tax deficiency attributable to intervenor’s unreported income from
The Salesman, Inc.) and the intervenor opposes relief, the burden of proof would
presumably shift to the intervenor. See Stergios v. Commissioner, T.C. Memo.
2009-15, 2009 WL 151485, at *4 (citing King v. Commissioner, 115 T.C. 118
(2000), and Corson v. Commissioner, 114 T.C. 354, 363 (2000)). We need not
decide whether the burden of proof shifts to intervenor in the instant case because
we decide the issues by a preponderance of the evidence. See Stergios v.
Commissioner, T.C. Memo. 2009-15; see also Porter v. Commissioner, 132 T.C.
203, 210 (2009) (holding that in reviewing the Commissioner’s determination
under section 6015(b), (c), or (f), the Court applies a de novo standard of review
as well as a de novo scope of review).
I. Joint Federal Income Tax Return for 2009
Section 6013(a) provides that a husband and wife may file a joint income
tax return.3 Generally, a joint income tax return must be signed by both spouses.
Sec. 1.6013-1(a)(2), Income Tax Regs.
3 Because their divorce was not finalized until 2011, petitioner and intervenor were eligible to file a joint return for 2009. -8-
Petitioner argues that he is not liable for tax arising from the 2009 purported
joint return because it is not his return. Petitioner claims that because intervenor
filed the return without his knowledge or consent and without his signature, he
never acquiesced to the filing of the return. Intervenor claims that petitioner was
present while she prepared the return and then filed it but that he did not give her
information regarding his IRA distributions for the year.
Whether an income tax return is a joint return or a separate return of the
other spouse is a question of fact. Harrington v. Commissioner, T.C. Memo.
2012-285, at *8 (citing Heim v. Commissioner, 27 T.C. 270 (1956), aff’d, 251
F.2d 44 (8th Cir. 1958)) (involving an electronically filed return). The
determinative factor in deciding whether a filed return qualifies as a joint return is
whether a husband and wife intended to file a joint return. Ziegler v.
Commissioner, T.C. Memo. 2003-282, 2003 WL 22255664, at *3 n.4 (citing Stone
v. Commissioner, 22 T.C. 893 (1954)). In evaluating intent, this Court has
considered whether the nonsigning spouse filed a separate return, whether the
nonsigning spouse objected to the joint filing, and whether the prior filing history
indicates an intent to file jointly. Harrington v. Commissioner, at *8.
Although the Commissioner’s determination of “jointness” generally has a
presumption of correctness and the taxpayer has the burden of proving it wrong, -9-
Welch v. Helvering, 290 U.S. 111, 115 (1933), in the case of a spouse who does
not sign a purported joint return the presumption is removed and the burden of
producing additional evidence that a joint return was filed shifts to the
Commissioner. O’Connor v. Commissioner, 412 F.2d 304, 309 (2d Cir. 1969),
aff’g in part, rev’g in part T.C. Memo. 1967-174; Carrick v. Commissioner, T.C.
Memo. 1991-502.
There is an exception to the general rule that, to have a valid joint return, the
return must be signed by both taxpayers. This exception holds that if an “income
tax return is intended by both spouses as a joint return, the absence of the
signature of one spouse does not prevent their intention from being realized.”
Estate of Campbell v. Commissioner, 56 T.C. 1, 12 (1971). The rule is generally
applied when one spouse signs a joint return (usually for both spouses) and it is
shown that the other spouse has tacitly consented to the joint return filing. This is
commonly referred to as the tacit consent rule. See, e.g., Hennen v.
Commissioner, 35 T.C. 747, 748 (1961); Reifler v. Commissioner, T.C. Memo.
2013-258, at *15; Harris v. Commissioner, T.C. Memo. 1961-324.
Accordingly, although the ultimate burden of proof remains with the
taxpayer, the Commissioner bears the burden of going forward with evidence from
which the Court could conclude that the nonsigning spouse intended to file the - 10 -
purported joint return. Esposito v. Commissioner, T.C. Memo. 1991-262 (citing
Douglass v. Commissioner, T.C. Memo. 1984-369).
Respondent has satisfied his burden of production. First, petitioner did not
file (or even inquire whether he was required to file) a separate return for 2009,
even though he had income from Social Security disability benefits and from IRA
distributions. Second, petitioner and intervenor had historically filed their Federal
income tax returns as “married filing jointly”. Third, by late January 2010
petitioner knew that an electronic return had been filed, but he did not attempt to
disavow it. Finally, petitioner never attempted to amend such return, nor did he
seek professional tax advice. Instead petitioner tacitly consented to the joint
return. In light of these facts, petitioner has not satisfied his burden of
establishing that he did not intend to file a joint return with intervenor.
Consequently, the return filed for 2009 is a valid joint return. The fact that the
return was signed electronically does not alter this conclusion. See, e.g.,
Harrington v. Commissioner, T.C. Memo. 2012-285.
II. Relief Under Section 6015
As previously stated, when a husband and wife elect to file a joint Federal
income tax return pursuant to section 6013(a), each spouse becomes jointly and
severally liable for the tax due on the spouses’ aggregate income. See sec. - 11 -
6013(d)(3). Nevertheless, an individual who has made a joint return may elect to
seek relief from joint and several liability under subsections (b), (c), and (f) of
section 6015. Sec. 6015(a), (f). Such relief may, or may not, be available
depending on the particular facts and circumstances of the individual’s situation.
A. Relief Under Section 6015(b) and (c)
To qualify for relief pursuant to section 6015(b), the requesting spouse must
establish that: (1) A joint return was filed; (2) there was an understatement of tax
attributable to erroneous items of the nonrequesting spouse; (3) at the time of
signing the return, the spouse seeking relief did not know and did not have reason
to know of the understatement; (4) the requesting spouse sought relief within two
years of the first collection activity relating to the liability; and (5) taking into
account all the facts and circumstances, it is inequitable to hold the spouse seeking
relief liable for the deficiency in tax attributable to the understatement. Sec.
6015(b)(1).
Section 6015(c)(3) permits a requesting spouse to seek relief from joint or
several liability by electing to allocate to the nonrequesting spouse the portion of a
deficiency attributable to the nonrequesting spouse if the following conditions are
satisfied: (1) A joint return was filed; (2) at the time of the election, the requesting
spouse was separated or divorced from the nonrequesting spouse or had not been a - 12 -
member of the same household as the nonrequesting spouse at any time during the
12-month period ending on the date of the request for relief; (3) the requesting
spouse sought relief within two years of the first collection activity; and (4) the
requesting spouse did not have actual knowledge, at the time of signing the return,
of the nonrequesting spouse’s item giving rise to the deficiency.4
As discussed above, petitioner and intervenor filed a valid joint Federal
income tax return for 2009. At the time that the return was signed, petitioner
knew that intervenor received income in 2009 from The Salesman, Inc., for
delivering newspapers, and he learned within a few days thereafter that the return
did not include that income. Accordingly, petitioner is not entitled to relief
pursuant to section 6015(b) or (c) from the 2009 liability attributable to the
unreported income allocable to intervenor.
B. Equitable Relief Under Section 6015(f)
A requesting spouse who is unable to qualify for relief pursuant to section
6015(b) or (c) may nonetheless avoid joint and several liability if, taking into
account all of the facts and circumstances, it is inequitable to hold that individual
liable for any unpaid tax or deficiency. Sec. 6015(f)(1) and (2). Where the
4 An election is invalid if the Commissioner demonstrates that assets were transferred between individuals filing a joint return as part of a fraudulent scheme by such individuals. Sec. 6015(c)(3)(A)(ii). - 13 -
Commissioner denies a requesting spouse equitable relief under section 6015(f),
such individual may petition the Court to determine the appropriate relief
available. Sec. 6015(e)(1)(A). Our statutory charge under section 6015 is to
decide whether a taxpayer is entitled to equitable relief on the basis of all the facts
and circumstances. Sriram v. Commissioner, T.C. Memo. 2012-91. We decide de
novo whether equitable relief is warranted under section 6015(f). Porter v.
Commissioner, 132 T.C. at 210.
Pursuant to his grant of authority under section 6015(f), the Commissioner
has established guidelines for determining whether an individual qualifies for
equitable relief. Rev. Proc. 2013-34, 2013-43 I.R.B. 397, modifying and
superseding Rev. Proc. 2003-61, 2003-2 C.B. 296.5 The Court considers these
guidelines in light of the attendant facts and circumstances to decide whether
equitable relief is appropriate, but the Court is not bound by them. Pullins v.
Commissioner, 136 T.C. 432, 438-439 (2011); Sriram v. Commissioner, T.C.
Memo. 2012-91.
5 Rev. Proc. 2013-34, 2013-43 I.R.B. 397, modifies and supersedes Rev. Proc. 2003-61, 2003-2 C.B. 296, and is effective for requests for relief filed on or after September 16, 2013, or for requests for equitable relief pending on September 16, 2013, whether with the IRS, its Office of Appeals, or in a case docketed in a Federal court. Rev. Proc. 2013-34, sec. 7, 2013-43 I.R.B. at 403. - 14 -
The guidelines begin by establishing threshold requirements that, the
Commissioner contends, must be satisfied before an equitable relief request may
be considered. Rev. Proc. 2013-34, sec. 4.01, 2013-43 I.R.B. at 399-400. The
threshold requirements are: (1) The spouse filed a joint return for the taxable year
for which the spouse seeks relief; (2) relief is not available to the 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) with several exceptions,6 the tax liability from which the spouse
seeks relief is attributable to an item of the nonrequesting spouse. Id. 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.
A requesting spouse that satisfies the threshold conditions listed above must
then demonstrate that equitable relief is appropriate under certain factors. Id. secs.
6 These exceptions are: (1) Attribution solely due to the operation of community property law; (2) nominal ownership; (3) misappropriation of funds intended for the payment of tax; (4) abuse; and (5) fraud committed by the nonrequesting spouse as the reason for the erroneous item. Rev. Proc. 2013-34, sec. 4.01(7), 2013-43 I.R.B. at 399-400. - 15 -
4.02 and 4.03, 2013-43 I.R.B. at 400. If the requesting spouse then satisfies the
so-called streamlined conditions under Rev. Proc. 2013-34, sec. 4.02, relief will be
granted. If, however, relief is not available under Rev. Proc. 2013-34, sec. 4.02,
then the Commissioner will look to the facts and circumstances as set forth in Rev.
Proc. 2013-34, sec. 4.03, 2013 I.R.B. at 400-403, to determine whether relief from
joint and several liability is available to the requesting spouse.
Respondent concedes that petitioner meets the first six conditions in respect
of the entire tax deficiency.7 Respondent also concedes that petitioner satisfies the
seventh condition in respect of the portion of the tax deficiency attributable to
intervenor’s unreported income from The Salesman, Inc. However, respondent
argues that petitioner fails the seventh condition in respect of the remaining
portion of the tax deficiency because it is attributable to his unreported income
from his IRA distributions. It is thus petitioner’s burden to establish that he meets
an exception to this threshold requirement. See Rule 142(a). In addition,
intervenor argues that petitioner is not entitled to relief from joint and several
liability in respect of any portion of the tax deficiency. Accordingly, we discuss in
7 Rev. Proc. 2013-34, supra, relaxed the timely filing requirements of Rev. Proc. 2003-61, supra. As respondent concedes that petitioner satisfied the more restrictive timely filing requirements of the earlier revenue procedure, he has necessarily satisfied the more liberal one of the current revenue procedure. - 16 -
turn whether petitioner is entitled to relief from joint and several liability in
respect of each portion of the tax deficiency.
1. Partial Relief for Portion of Tax Deficiency Attributable to Unreported Income of Nonrequesting Spouse
When the threshold conditions have been satisfied, the Commissioner will
ordinarily grant relief with respect to an underpayment of tax if the requesting
spouse meets each of the so-called streamlined requirements set forth in Rev. Proc.
2013-34, sec. 4.02.8 Petitioner does not satisfy all of the streamlined
requirements: As discussed above, petitioner knew at the time that the return was
signed that intervenor received income in 2009 from The Salesman, Inc., by
delivering newspapers, and he learned within a few days thereafter that the return
did not include that income. Therefore, petitioner is not entitled to relief from
joint and several liability under the so-called streamlined provisions of Rev. Proc.
2013-34, sec. 4.02.
8 Rev. Proc. 2013-34, sec. 4.02, 2013-43 I.R.B. at 400, permits relief if all of the following requirements are satisfied: (1) On the date the Service makes a determination, the requesting spouse is no longer married to the nonrequesting spouse; (2) on the date the requesting spouse reasonably believed the joint return was filed, the requesting spouse did not know or have reason to know of the item giving rise to the understatement; and (3) the requesting spouse would suffer economic hardship if relief were not granted. - 17 -
Where, as here, a requesting spouse fulfills the threshold requirements of
Rev. Proc. 2013-34, sec. 4.01, but fails to qualify for relief under Rev. Proc. 2013-
34, sec. 4.02, the Commissioner may nevertheless consider criteria set forth in
Rev. Proc. 2013-34, sec. 4.03, and grant spousal relief under section 6015(f). In
determining whether it is inequitable to hold the requesting spouse liable for all or
part of the unpaid income tax deficiency, and whether full or partial equitable
relief under section 6015(f) should be granted, all the facts and circumstances of
the case are taken into account. Id. sec. 4.03(2). In evaluating a claim for relief,
no one factor or a majority of factors necessarily determines the outcome. Id. The
degree of importance of each factor varies depending on the requesting spouse’s
facts and circumstances. Id.
Rev. Proc. 2013-34, sec. 4.03(2), provides a list of nonexclusive factors that
the Commissioner may weigh in making his determination relating to innocent
spouse relief, including: (1) Whether the requesting spouse is separated or
divorced from the nonrequesting spouse; (2) whether the requesting spouse would
suffer economic hardship if relief is not granted; (3) in understatement cases
whether, on the date the requesting spouse signed the joint return, the requesting
spouse did not have knowledge or reason to know of the item giving rise to the
deficiency; (4) whether the nonrequesting spouse has a legal obligation to pay the - 18 -
tax liability pursuant to a decree of divorce or other agreement; (5) whether the
requesting spouse received a significant benefit from the item giving rise to the
deficiency; (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 to which the request for relief; and (7) whether the requesting spouse
was in poor mental or physical health at the time he signed the return or requested
relief.
At the time petitioner filed for innocent spouse relief, he and intervenor
were divorced. This factor weighs in favor of relief.
Petitioner earns approximately $24,000 per year between his Social Security
disability benefits and income from part-time employment, and he supports his
current wife and his stepdaughter. Petitioner would suffer economic hardship if
relief is not granted. This factor weighs in favor of relief.
As discussed above, petitioner knew at the time that the return was signed
that intervenor received income in 2009 from The Salesman, Inc., by delivering
newspapers and he learned within a few days thereafter that the return did not
include that income. This factor weighs against relief.
Intervenor does not have a legal obligation to pay the tax liability pursuant
to a decree of divorce or other agreement. This factor is neutral. - 19 -
Petitioner did not receive significant benefit (or arguably any benefit) from
the item giving rise to the deficiency because the refund money was deposited into
bank accounts held in intervenor’s name only over which petitioner had no
authority; moreover, at the time that the refund money was deposited, petitioner
and intervenor were only a couple of months away from a divorce proceeding.
This factor weighs in favor of relief.9
The record does not indicate whether petitioner has attempted to comply
with Federal income tax laws after 2009. This factor is neutral.
Finally, petitioner suffers from COPD and emphysema, with his lungs
functioning at 14% capacity. These conditions were present in 2009 and have
continued to the date of trial. These conditions affect petitioner’s ability to find
full-time employment. This factor weighs in favor of relief.
After considering and weighing all the factors, we find it would be
inequitable to hold petitioner liable for the 2009 tax liability that is attributable to
intervenor’s unreported income from The Salesman, Inc. Accordingly, petitioner
9 Although the amount of the tax deficiency in the instant case might be viewed as modest in an absolute sense, it was not modest relative to the financial circumstances of either petitioner or intervenor. Accordingly, and in view of all of the facts and circumstances, and particularly those highlighted in the text, we regard the significant benefit factor as weighing in favor of relief rather than as neutral. See Rev. Proc. 2013-34, sec. 4.03(2)(e), 2013-43 I.R.B. at 402. - 20 -
is entitled to partial relief pursuant to section 6015(f) for 2009 for the portion of
the tax liability attributable to intervenor’s unreported income.
2. Partial Relief for Portion of Tax Deficiency Attributable to Unreported Income of Requesting Spouse
As stated above, respondent contends that petitioner fails the seventh
threshold requirement (namely, that the tax liability from which the requesting
spouse seeks relief is attributable to an item of the nonrequesting spouse) set forth
in Rev. Proc. 2013-34, sec. 4.01, for relief from joint and several liability in
respect of the tax deficiency attributable to petitioner’s unreported income from
his IRA distributions. It is thus petitioner’s burden to establish that he meets an
exception to this threshold requirement. See Rule 142(a).
Petitioner appears to rely on the fraud exception in arguing that intervenor
filed their 2009 joint return without his signature, knowledge, or consent. We
disagree. We have already concluded that the 2009 joint return was a valid joint
return. Further, petitioner did not prove that the omission of his income from the
IRA distributions on the return was due to fraud by intervenor. Therefore, the
fraud exception to the seventh threshold requirement for equitable relief set forth
in Rev. Proc. 2013-34, sec. 4.01, is inapplicable. Petitioner has thus failed to
satisfy the threshold conditions for equitable relief set forth in Rev. Proc. 2013-34, - 21 -
supra. Accordingly, petitioner is not entitled to equitable relief under section
6015(f) for the portion of the tax deficiency attributable to his own unreported
income.
Conclusion
We have considered all of the substantive issues regarding petitioner’s
entitlement to relief from joint and several liability under section 6015. To the
extent that we have not specifically addressed any argument made by the parties,
we conclude that it is irrelevant, moot, or without merit.
To reflect the foregoing, and in order to give effect to the stipulation of
settled issues between petitioner and respondent regarding the partial relief to
which petitioner is entitled,
Decision will be entered
under Rule 155.