T.C. Mem o. 2 01 5- 19 8

UNITED STAT ES TAX COURT

MARK A. W ILLIAMS, Pe ti ti on er v . COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 12 77 7- 13
. Fi le d Oct ob er 7 , 20 15
. Greg ory M. McC au le y , forpe ti ti on er. Harry J. Negro an d J oh n A. Dara zs di , forres po nd en t.

MEMORANDUM FINDINGS OF FACT AND OPINION LAUBER, Ju dg e: Pet it io ne r se ek s re vi ew of th e d et erm in at io n b y

th e In te rna l Re ve nu e Servi ce (I RS o r res po nd en t) t ha t h e is no t el ig ib le forrel ie f fro m joi nt
an d s ev eral li ab il it y

fortax y ears 20 00 th ro ug h 2 00 3. Th e so le qu es ti on pre se nt ed- 2 -

[* 2] is whethe r he is eli gi bl e fo r su chrel ie f un de r se ct io n 6 01 5( f). W e h ol d t ha t 1 he is no t s o e nt it le d. FINDINGS OF FACT So m e o f th e fac ts ha ve be enst ip ul at edan d a re s o fo un d. Th e st ip ul at io n o f fact s an d t he att ach edex hi bi ts are i nc or po rat edby thi s re fere nc e. MarkA. W il
li am s (p et it io ne r) an d Kathl eenW il li am s wer e m arri edin19 87 . They are s ti ll
m arri edan d h av e b eenli vi ng to ge th er co nt in uo us ly sin ce the n. Th ey res id edin Pen ns y lv an iawhen pe ti ti on er fi le d h is pe ti ti on . Bac kg ro un d Pet it io ne r gr adua te d fr om hi gh sch oo l an d a tt en de d t wo years o f co m m un it y co ll eg e. He ha s h el d ava rie ty of m an ag eri al job s dur in g h is care er. Dur in g 2 00 0 he work edas abu il di ng m an ag er fo r anarch it ectur al firm an d fo r HUSA Cig na Co rp or at io n. Du rin g 2 00 1- 20 02 he work edforBas em en t Do ct orW at erp ro of in g Co m pa ny (Base m en t Do ct or ) an d l at er as a pr ojec t m an ag er fo r Bel fo urTele co m . He was un em

pl oyed dur in g 2 00 3. Unl es s o th erwi se in di cat ed , all sec ti on refe ren ces are t o t he Int ern al Rev e- 1 nu e Co de ineffe ctat a ll rel ev an t t im es ; al l Ru le refe ren ces are t o t he Tax C ou rt Ru le s o f Prac ti ce an d P ro cedur e; an d a ll do ll ar am ou nt s ar e ro un de d t o the ne ares t do ll ar. Pet it io ne r in it ia ll y so ug htrel ie f fro m

joi ntan d s ev eral li ab il it y un de r se cti on s 6 01 5( b) , (c), an d (f

). At tr ia l h is att orne y

st at edth atpe ti ti on er s eek s re li ef on ly und er s ub se ct io n (f

). W e tr eatth is as aco nc es si on th athe is no t en ti tl edto rel ie f un de r subs ect io n (b ) or(c).- 3 -

[* 3] Mrs . W il li am s h as a hi gh sch oo l educ at io n. Fro m 19 87 un ti l Oct ob er 2 00 4 sh e worke d a s a r ecep ti on is t an d s ecre ta ry forBern ardBag di s, an att orne y . Her du ti es in cl ud edtypin g l et te rs , fil in g, an d p ay in g o ffi ce b il ls
. Thro ug ho utth ei r m arri ag e Mrs . W il li am s h as be enpri m ari ly resp on si bl e fo r th e fam il y ’s fin an ces . Peti ti on er kne w wher e th e co up le ba nk edan d h ow m an y acco un ts th ey

ha d, b uthe rare ly wro te ch eck s o n t ho se acco un ts . For m ajorex pe nd itur es , su chas h om e im pr ov em en ts , pet it io ne r an d M rs . W il li am s wo ul d
co ns ul t t o d et erm in e h ow m uc h the y co ul d a ffo rd ; p et it io ne r wou ldth ende ci de wha t t o b uy. Pet it io ne r an d M rs . W il li am s fi le d jo in t Fe de ral in co m e ta x re turn s fo r 19 87 th ro ug h 1 99 5. Onth es e returns th ey rep orte d i n fu ll th e sa la ry in co m e th ateach of th em earn ed . Peti ti on er p rep aredth es e returns hi m se lf a nd , inso m e y ears , hi s fathe r rev ie wedth em

foraccu racy. By

19 95 pe ti ti on er h adga in edex pe rie nc e in pr ep ari ng tax returns . Mr. Ba gd is durin g t hi s p eri odwas p ro m ot in g avarie ty of ta x- ev as io n sc he m es th atul ti m at el y

ledto hi s i m

pr is on m en t fo r ta x c rimes. In 1 99 5 o r 19 96 he off eredon e o f th es e sc he m es to Mrs . W il li am s. He t ol d h er tha t s he co ul d br in g h om e m or e in co m e fro m he r se cret ari al job if s he were p ai d t hr ou gh Adm in is ta r Co rp or at io n, a Del aware C co rp or at io n t ha t h e o wne d. Un de r th is- 4 -

[* 4] sc he m e Mr. Ba gd is pro po se d t o d ep os itsu m s equa l t o h er p ret ax sal ary in an Adm in is ta r ch eck in g a cco un t o ve r whi chMrs . W il li am s wo ul d h av e co nt ro l. Sh e co ul d t he n wri te ch eck s o n thi s ac co un t t o p ay he r fam il y ’s li vi ng ex pe ns es witho utrep orti ng any

of h er s al ary in co m e o n h er t ax returns . Mrs . W il li am s as ke d p et it io ne r se ve ral ti m es whet he r he th ou gh t s he sh ou ld pa rti ci pa te inth e Adm in is ta r sc he m e. Pet it io ne r in it ia ll y sai d n o, an d M rs . W il
li am s d idno t p art ic ip at e in th is sch em e in 19 95 or 1 99 6. Ra th er, s he co nt in ue d t o rece iv e, an d s he an d p et it io ne r co nt in ue d t o re po rt f orFed eral in co m e ta x p ur po se s, h er u su al sal ary fro m Mr. Bag di s. In19 97 Mrs . W il li am s ag ai n b ro ach edwith p et it io ne r th e p os si bi li ty of pa rti ci pa ti ng inth e Adm in is ta r sc he m e. Thi s t im e p et it io ne r ag reedto sp eakwith Mr. Ba gd is ab ou t i t. Pet it io ne r di d n otaskMr. Bag di s t o e xp la in ho w th is pl an wou ldwork . He si m

pl y ask edMr. Bag di s wh ethe r th e sc he m e was “ le ga l,” a nd Mr. Ba gd is sai d “ y es .” Pet it io ne r th enag reedto Mrs . W il li am s’ parti ci pa ti on ; be fo re d oi ng so , he d idno t s eekou ts id e advi ce co nc ern in g t he sch em e’s le gi ti m acy. So m et im e dur in g 1 99 7 M r. Bag di s ce as edis su in g s al ary ch eck s t o M rs . W il li am s an d i ns te adde po si te d i n a n Ad min is ta r ch eck in g a cco un t s um s equa l t o he r pr et ax sal ary. Mrs . W il li am s wro te ch eck s o n t hi s ac co un t t o p ay th e li vi ng- 5 -

[* 5] ex pe ns es th atsh e an d p et it io ne r in curred . Mrs . W il li am s co nt in ue d t o re cei ve he r co m pe ns at io n fr om

Mr. Bag di s i n t hi s way thr ou gh Octo be r 20 04 . Mrs
. W il li am s s ig ne d e ve ry

ch eckwrit te n o n the Adm in is ta r acc ou ntth ro ug h 2 00 3. Dur in g 2 00 1 p et it io ne r earne d $ 21 ,80 0 a s co m pe ns at io n fr om

Bas em en t Doc to r. Mr. Bag di s was a pr in ci pa l s hareh ol de r of Bas em en t Do ct or . Peti ti on er’s
earn in gs fro m

Bas em en t Do ct orwere d ep os it edin to th e sa m e Adm in is ta r acc ou nt
ov er wh ic h M rs . W il li am s ex erci se d c on tro l. Fo r 19 96 -1 99 9 p et it io ne r an d M rs . W il li am s fi le d F ed eral in co m e ta x re tu rn s as m arri edfil in g s ep arat el y . (The re co rddo es no t cl earl y est ab li sh who pre pa redth e 1 99 6- 19 99 returns bu t the Co urt i nf ers th atso m eo ne inMr. Bag di s’ law of fic e p rep aredth em .) For

20 00 -2 00 3 p et it io ne r an d M rs . W il li am s re su m edth e fil in g o f joi ntFed eral in co m e ta x re tu rn s. So m eo ne at M r. Bag di s’ off ic e p rep ared th e 2 00 0- 20 03 joi ntreturns us in g i nf orm at io n t ha t p et it io ne r an d M rs . W il li am s supp li ed
. The in fo rm at io n p et it io ne r supp li edfor20 00 -2 00 3 i nc lu de d F orm s W-2, W ag e an d Tax Sta te m en t, re po rti ng hi s wag es fro m so ur ces ot he r th anBas em en t Doc to r. Pet it io ne r rev ie wedth e returns th atMr. Bag di s’ off ic e p rep ared . He and Mrs . W il li am s s ig ne d t he se returns , andsh e to okth em to he r of fic e to be fil ed
. The se returns rep orte d n on e o f Mrs . W il li am s’ sec ret ari al in co m e an d n on e o f- 6 -

[* 6] pe ti ti on er’s Bas em en t Do ct orin co m e th atMr. Bag di s h adde po si te d i n t he Adm in is ta r acc ou ntth atMrs . W il li am s co nt ro ll ed
. As a re su ltof h er i nv ol ve m en t i n M r. Bag di s’ sch em es , Mrs . W il li am s fa ced cri m in al ch arg es . She ul ti m at el y pl ead edgu il ty to o ne co un t o f fi li ng a fal se Fed eral in co m e ta x re tu rnfor 20 01 invi ol at io n o f se ct io n 7 20 6( 1) . In h er g ui lt y pl ea s he st ip ul at edth atsh e h adals o wi ll fu ll y fil edfal se returns for20 00 , 20 02 , an d 2 00 3. Fo ll owi ng co nc lu si on of t he cri m in al pro ceed in g, the IRS ex am in edth e joi ntreturns th atpe ti ti on er an d M rs . W il li am s fi le d fo r 20 00 -2 00 3. In Apri l 2 00 6 pe ti ti on er an d M rs . W il li am s s ig ne d F orm 45 49 , Inc om e Tax Exam in at io n Ch an ge s, ag reei ng to de fic ie nc ie s an d c iv il frau d p en al ti es rel at in g t o t he ir wa ge s th atha d b eendi ve rte d t o Ad m in is ta r du rin g t hi s p eri od . The d efi ci en ci es an d frau d p en al ti es to whi chpe ti ti on er an d M rs . W il li am s ag reedare as fol lo ws:

Year Defi ci en cy Pen al ty se c. 66 63 20 00 $1 0,0 08 $7 ,50 6 20 01 10 ,94 6 8,2 08 20 02 7,8 63 5,8 97 20 03 4,7 24 3,5 43- 7 -

[* 7] Pet it io ne r te st ifi edth athe di d n otha ve ass is ta nc e o f co un se l wh enhe si gn ed th e Fo rm 45 49 . He tes ti fie d t ha t h e si gn edth is Fo rm aft er Mr s. Will ia m s t ol d h im th atsh e “ wou ldgo to jail ” if he di d n otsi gn it . In Ap ril 20 08 th e IRS ass es se d t he de fic ie nc ie s an d p en al ti es setforth ab ov e. Pet it io ne r kn ew th atMrs . W il li am s earn eda sa la ry work in g fo r Mr. Ba gd is du rin g 2 00 0- 20 03 an d kne w th athe r sa la ry was n otrep orte d o n t he ir jo in t re tu rn s fo r th os e y ears . Peti ti on er kne w th athe earn edco m pe ns at io n wo rk in g fo r Bas em en t Do ct or

du rin g 2 00 1 a ndkn ew th atth is co m pe ns at io n was no t re po rte d o n th ei r 20 01 joi ntreturn. Pe ti ti on er kne w th atall of t hi s m on ey was b ei ng pa idto Adm in is ta r an d t ha t M rs . W il li am s was writ in g c he ck s o n a n Ad m in is ta r ba nkacco un t t o d efra y

th ei r joi ntho us eh ol d andli vi ng expe ns es . Peti ti on er d oe s n ot
cu rren tl y ha ve an y he al th pro bl em s an d d idno t h av e an y su chpro bl em s atth e ti m e he si gn edth e 2 00 0- 20 03 joi ntreturns . He has ne ve r be ena vi ct im of s po us al ab us e o r do m es ti c v io le nc e. InDecem be r 20 10 pe ti ti on er fi le d areque stforrel ie f fro m joi ntan d s ev eral li ab il it y un de r se ct io n 6 01 5( b) , (c), an d (f ) fo r ta x years 2 00 0- 20 03 . On March 11 , 20 13 , res po nd en t m ai le d h im a Fi na l Ap pe al s Det erm in at io n d en y in g t hi s re qu es t fo r rel ie f. On J un e 6 , 20 13 , pet it io ne r ti m el y so ug htrev ie w inth is Co urt p ur su an t to sec ti on 60 15 (e)( 1)
.- 8 -

[* 8] OPINION I. Bu rd enof P ro of Exc ep t as othe rwis e p ro vi de d i n s ect io n 6 01 5, the tax pa y er b ears th e b ur de n of pro vi ng th athe or s he is en ti tl edto rel ie f fro m joi ntan d s ev eral li ab il it y . Rul e 14 2( a); Altv. Co m

m is si on er, 1 19 T.C. 30 6, 3 11 (20 02 ), aff’d, 1 01 F. App ’x 34 (6 th Cir . 20 04 ). Bo th th e sc op e an d s ta nd ardof o ur rev ie w incas es reque st in g rel ie f fro m

joi ntan d s ev eral li ab il it y are d e n ov o. Po rte r v. C omm is si on er, 1 32 T.C. 20 3, 2 10 (20 09 ). II. Rel ie f Und er Se ct io n 6 01 5( f) Marrie d t ax pa y ers m ay

ele ctto fil e a joi ntFed eral in co m e ta x re tu rn . Sec. 60 13 (a). Aft er m ak in g t hi s el ect io n, ea chsp ou se is joi nt ly andsev eral ly liab le for th e en ti re t ax du e fo r th aty ear. Se c. 60 13 (d )(3 ); B ut le r v. C omm is si on er, 1 14 T.C. 27 6, 2 82 (20 00 ). In c ert ai n c irc um st an ces , ho wev er, a s po us e who ha s fi le d ajoi nt return m ay

see k re li ef fro m

joi ntan d s ev eral li ab il it y un de r pr oc edur es setforth in
se ct io n 6 01 5. Sect io n 6 01 5( b) sp eci fie s p ro cedur es for rel ie f fro m

li ab il it y forall joi nt fil ers , andsubs ect io n (c ) sp eci fie s p ro cedur es to li m itli ab il it y fortax pa y ers who
are n o l on ge r m arri edor a re l iv in g s ep arat el y . Peti ti on er co nc ed es th athe is no t
en ti tl edto rel ie f un de r subs ect io n (b ) or(c).- 9 -

[* 9] Sect io n 6 01 5( f) p ro vi de s tha t “ equi tabl e rel ie f” m ay be affo rd edto a ta xpa y er i f “ rel ie f is no t av ai labl e to su chin di vi du al un de r subs ect io n (b ) or (c).”

“ Und er p ro cedur es pre sc rib edby the Secr et ary” suc h re li ef m ay be av ai labl e if

,

“ ta ki ng in to acco un t al l the fact s an d c irc um st an ces , itis in equi tabl e to ho ldth e in di vi du al li ab le foran y

unpa idtax or a ny defi ci en cy (oran y po rti on of e ithe r).” Sec. 6 01 5( f)(1 ); s ec. 1 .60 15 -4 (a), In co m e Tax Reg s. Th e Co m m is si on er h as sp eci fie d the pro cedur es go ve rn in g e qu it ab le rel ie f in Rev enue Pro cedur e 2 01 3- 34 , sec ti on 4.0 1, 2 01 3- 43 I.R.B. 3 97 , 39 9- 40 0. 2 Rev enue Pro cedur e 2 01 3- 34 , supr a, se ts forth sev enth res ho ldco nd it io ns th ata reque st in g s po us e m us t s at is fy

to be eli gi bl e fo r equi tabl e rel ie f. A requ es ti ng sp ou se who sat is fie s the se co nd it io ns m ay qu al ify for a “ st ream li ne d de te rm in at io n o f equi tabl e rel ie f” i f (am on g o th er thi ng s) he or s he is “ no lo ng er

Rev enue Pro cedur e 2 01 3- 34 , 20 13 -4 3 I.R .B. 39 7, wh ic h m od ifi edan d 2 supe rs ed edRev enue Pro cedur e 2 00 3- 61 , 20 03 -2 C.B. 2 96 , app li es to reque st s fo r rel ie f fro m

joi ntan d s ev eral li ab il it y th atwere fi le d o n o r aft er Se pt em be r 16 , 20 13 , or tha t (l ik e p et it io ne r’s reque st ) were p en di ng inFed eral co urt o n t ha t d at e. Altho ug h we a re n otbo un d b y th e g ui de li ne s s etforth inRev enue Pro cedur e 20 13 -3 4, s up ra, we co ns ul t tho se gu id el in es inde te rm in in g wh ethe r a t axpa y er i s en ti tl edto equi tabl e rel ie f. See Pu ll in s v . Comm is si on er, 1 36 T.C. 43 2, 4 38 -4 39 (2 01 1) ; Sr ira m

v. Co m mis si on er, T.C. Mem o. 2 01 2- 91 , 10 3 T.C.M . (CCH) 1 48 2, 14 84 -1 48 5.- 10 -

[* 10 ] m arri edto th e n on reque st in g s po us e.” Id ., sec . 4.0 2. We ass um e wit ho ut de ci di ng th atpe ti ti on er m eet s the se sev enth res ho ldco nd it io ns . Howev er, h e was 3 in el ig ib le fora “ st ream li ne d d et erm in at io n” be cau se he was andrem ai ns m arri ed to Mrs . W il li am s. A reque st in g s po us e who m eet s the th res ho ldco nd it io ns bu t d oe s n otqu al ify fora “ st ream li ne d d et erm in at io n” m ay ne ve rth el es s b e g ran te d e qu it ab le rel ie f
un de r Rev enue Pro cedur e 2 01 3- 34 , sec ti on 4.0 3. Th atsec ti on set s o uta no ne xc lu si ve li stof f

act or s re le va ntinass es si ng a ta xp ay er’s en ti tl em en t t o s uc h rel ie f. Neit he r an y

si ng le fact orno r a m ajor it y of f act or s co ntro ls th is de te rm in at io n; th e d eg ree o f im po rta nc e o f eac h fa ct orva rie s d ep en di ng on th e reque st in g s po us e’s fact s an d c irc um st an ces . See i d. s ec. 4 .03 (2 ). Rel ie f m ay be de ni edev enwher e a m ajor it y of f act or s fa vo rs rel ie f an d v ic e v ers a. See i d. s ec. 3.0 5, 2 01 3- 43 I.R.B. at39 8. Th e Co urt m ay ch oo se to ass ig n v arying weig htto th e li st edfact or s, o r to in cl ud e o th er fac to rs , dep en di ng on th e ci rcu m st an ces of th e cas e. See Hal l v . Comm is si on er, T.C. Mem o. 2 01 4- 17 1, at*3 8.

The sev en thco nd it io n c on si de rs th e ex te ntto whi chth e li ab il ity is att ri- 3 bu tabl e to anit em

of t he no nr eque st in g s po us e. Rev . Pro c. 20 13 -3 4, s ec. 4 .01 (7 ), 20 13 -4 3 I.R .B. at 3 99 . Thatco nd it io n i s m ethe re o nl y inpa rt, b ecau se a po rti on of th e d efi ci en cy

for20 01 is attrib ut ab le to pe ti ti on er’s u nr ep orte d i nc om e fro m Bas em en t Do ct or .- 11 -

[* 11 ] Rev enue Pro cedur e 2 01 3- 34 , sec ti on 4.0 3, d ire ct s o uratt en ti on to th e fo llo win g fa ct or s: (1) m ari ta l s ta tu s, (2 ) eco no m ic ha rd sh ip , (3) leg al ob li ga ti on to pa y th e Fed eral tax li ab il it y , (4) m en ta l o r ph y si cal he al th , (5) subs eque ntco m pl ian ce wi th Fed eral tax laws , (6) si gn ifi can t b en efi t, an d (7 ) kn owl ed ge or r eas on to kn ow ab ou t the de fic ie nc y or u np ai d t ax li ab il it y . W e fi ndth atth e fi rs t fo ur of th es e fac to rs are n eu tra l. Pet it io ne r is st il l m arri edto Mrs . W il li am s; he ha s n ot sh own th athe wou ldsu ffereco no m ic ha rd sh ip if re li ef i s d en ie d; th ere was no le ga l o bl ig at io n (s uc h a s a d iv or ce d ecre e) tha t m ad e ei th er s po us e sp eci fic al ly
res po ns ib le forFed eral in co m e ta xe s; an d p et it io ne r ha d n o m ed ic al or p hysic al he al th pro bl em s dur in g t he rel ev an t years. The fif th fact oris als o n eu tra l. As f ar as th e rec or d s ho ws, p et it io ne r ap pe ars to ha ve co m

pl ie d wi th hi s Fe de ral tax ob li ga ti on s af te r th e IRS di sc ov ered th e Adm in is ta r sc he m e in20 04 . Whe re the reque st in g s po us e rem ai ns m arri edto
an d fi le s jo in t t ax returns with t he no nr eque st in g s po us e, “ th is fact or wil l b e n eu tra l i f th e joi ntreturns are co m pl ia ntwith the tax laws .” Hall , at * 41 ; Re v. Pr oc . 20 13 -3 4, s ec. 4 .03 (2 )(f)( ii ), 20 13 -4 3 I.R .B. at 4 02
. The si xt h fa ct orfav or s p et it io ne r sl ig ht ly. Whi le he rece iv edbe ne fit s fr om th e und ers ta te m en ts of i nc om e, th es e ap pe ar t o h av e co ns is te d o f th e p aym en t o f joi ntho us eh ol d e xp en se s ra th er tha n “ th e b en efi ts of alav is h l ife st y le .” Rev . Pro c.- 12 -

[* 12 ] 20 13 -3 4, s ec. 4 .03 (2 )(e) . There is no ev id en ce tha t h e rec ei ve d “ si gn ifi can t be ne fit(be y on d n orm al supp ort) f ro m th e unp ai d i nc om e ta x l iabi li ty.” Ibid .; s ee Pu ll in s v . Comm is si on er, 1 36 T.C. 43 2, 4 51 (20 11 ). At tria l the parti es foc us edch ie fly onth e la stfact orenum erat edab ov e, na m el y , whet he r pe ti ti on er “ kn ew orsh ou ldha ve kn own ” ab ou t the un de rs ta te m en ts of i nc om e o n t he 20 00 -2 00 3 jo in t re tu rn s. Where th e und ers ta te m en t ar is es fro m om it te d i nc om e, we em

pl oy a “ kn owl ed ge of t he tra ns act io n” tes t. Thi s t es t requi res us to de te rm in e whe th er the reque st in g s po us e was aware o f th e ci rcu m st an ces th atga ve ris e to th e und ers ta te m en t o f in co m e. See B okum v. Co m m is
si on er, 9 4 T.C. 1 26 , 14 6 (1 99 0) , aff’d, 9 92 F.2d11 32 (11 th Cir . 19 93 ). W e fi ndth atpe ti ti on er h adactua l kno wled ge of t he cir cu m st an ces th atga ve ris e to th e 2 00 0- 20 03 un de rs ta te m en ts of i nc om e. He si gn edth e Fo rm 45 49 ag reei ng th athe was l iabl e fo r a fraudpe na lt y foreachy ear. Th is in di cat es th athe
was aware c on te m

po ran eo us ly of th e 2 00 0- 20 03 om is si on s fr om in co m e. His on ly
an swe r whe n que st io ne d a t tria l ab ou t wh y he si gn edth e Fo rm

45 49 was t ha t M rs . W il li am s t ol d h im

sh e “ wou ldgo to jail ” if

he di d n otsi gn th e Fo rm . For wh at ev er reas on , he s ig ne d t he Fo rm vo lunt ari ly, an d h e th ereb y adm it te d t ha t h e kne w ab ou t the om is si on s fr om in co m e.- 13 -

[* 13 ] Who ll y

ap artfro m

th e Fo rm 45 49 , othe r ev id en ce es tabl is he s tha t p et it io ne r kn ew orha d re as on to kn ow ab ou t the om it te d i nc om e. He pe rs on al ly prep ared th e co up le ’s tax returns for19 87 -1 99 5 a ndin va riabl y rep orte d M rs . W il li am s’ wag es as t ax ab le in co m e. He kn ew th atMrs . W il li am s co nt in ue d t o e arnaft er 19 95 th e sa m e wag es sh e h adearn edfro m Mr. Bag di s p rev io us ly; th athe r po st 19 96 co m pe ns at io n was be in g d iv ert edin to anAdm in is ta r ba nkacco un t; an d t ha t Mrs . W il li am s was writ in g c he ck s o n t ha t ac co un t, as on anord in ary ba nk
acco un t, t o d efra y

th ei r li vi ng ex pe ns es . He kn ew th atth e p ur po se of t hi s arra ng em en t was to eli m in at e ta xe s o n h er wag es as we ll as t o e li m in at e ta xe s o n hi s co m pe ns at io n fr om

Bas em en t Do ct or , so th atth e co up le co ul d t ak e h om e m or e m on ey an d t hu s en ha nc e th ei r st an da rdof l iv in g. Th is ev id en ce m ak es cle ar tha t pe ti ti on er was aware o f th e ci rcu m st an ces th atga ve ris e to th e o mis si on s fr om th ei r 20 00 -2 00 3 jo in t re turn s o f bo th hi s an d M rs . W il li am s’ in co m e. Pet it io ne r te st ifi edth athe th ou gh t Adm in is ta r was pa y in g t ax es on th e in
co m e d iv ert edto itan d t ha t thi s re li ev edhi m an d h is wife of a ny tax li ab il it y . W e fo un d thi s t es ti m on y

unpe rs ua si ve forsev eral reas on s. Fi rs t, p et it io ne r was no t a cred ib le witne ss . His t es ti m on y on th is po in t was va gu e an d c on cl us ory . It h ada ro te qu al it y

an d app eare d t o b e fro m a sc rip t tha t h e h adm em or iz ed
.- 14 -

[* 14 ] Seco nd , pet it io ne r pl ai nl y ha d m is gi vi ng s ab ou t the Adm in is ta r sc he m e. Fo r 19 95 an d 1 99 6 h e advi se d h is wife ag ai ns t p art ic ip at in g i n i t. He acqui es ced in he r do in g s o i n 1 99 7, b uthe de cl in edto fil e a joi nttax return wi thhe r fo r th at y ear o r fo r th e n ex t two years. Ev enth ou gh th e Adm in is tar sc he m e so un de d t oo go odto be tru e, he m ad e n o m ean in gf ul in qu iry int o i ts leg it im acy befo re ag reei ng to hi s wi fe’s p art ic ip at io n. An d h e m ad e n o m ean in gf ul in qu iry befo re s ig ni ng up fo r th is sch em e h im se lf i n 2 00 1. He t oo k n o s te ps what ev er t o v eri fy th atAdm in ist ar was actua ll y

fil in g t ax returns an d p ay in g t ax on th e d iv ert edin co m e, as he cl ai m edto be li ev e. He th us ev id en cedwil lfu l b li nd ne ss to th e trut h. Rev enue Pro cedur e 2 01 3- 34 , sec ti on 4.0 3( 2) , no te s tha t the sev enfact or s di sc us se d abo ve are “ no t i nt en de d t o c om pr is e anex cl us iv e li st ” an d t ha t “ [o ]the r fact or s re le va ntto a sp eci fic cla im forrel ie f m ay

als o b e ta ke n i nt o a cco un t.” Se e Hall , at * 38 (no ti ng th atwe co ns id er the li st edgu id el in e fac to rs “ as well as a ny ot he r rel ev an t fa ct or s” ). W e co nc lu de th atanad di ti on al fact or weig hs ag ai ns t 4 equi tabl e rel ie f he re. The ev id en ce es tabl is he d t ha t M rs . W il li am s d idno t s ig n up See, e.g ., Torri si v. Co m

m is si on er, T.C. Mem o. 2 01 1- 23 5, 1 02 T.C.M. 4 (CCH) 33 8, 3 46 (co ns id eri ng as a dd it io na l fa ct orweig hi ng ag ai ns t re li ef tha t the ta xp ay er h adde pl et edli fe i ns ur an ce p ro ceed s d es pi te ou ts ta nd in g F ed eral in co m e ta x l iabi li ty); Haig h v . Comm is si on er, T.C. Mem o. 2 00 9- 14 0, 9 7 T.C.M . (CCH) 17 94 , 18 04 (co ns id eri ng as a dd it io na l fa ct orth atno nr eque st in g s po us e h adpo st ed a b on d t ha t was us edto sat is fy th e d efi ci en cy

de te rm in edby the Co m

mis si on er).- 15 -

[* 15 ] forth e Adm in is ta r sc he m e unt il pe ti ti on er g av e h is ap pr ov al an d tha t s he
wou ldno t h av e p art ic ip at edinth is sch em e b utforth e fac t tha t p et it io ne r ha d gi ve n h is ap pr ov al . Peti ti on er, the refo re, n oton ly hadactua l kno wled ge of t he
om is si on s fr om

in co m e; he was a ls o aco nt rib ut in g c au se of tho se om is si on s b y co nd on in g M rs . W il li am s’ parti ci pa ti on inMr. Bag di s’ sch em e. Insu m , we fin d t ha t p et it io ne r ha d a ctua l kno wled ge of t he im pr op er o m is
si on s o f in co m e fro m

th e 2 00 0- 20 03 joi ntreturns an d t ha t h e was a si gn ifi can t
co nt rib ut in g c au se of t ho se om is si on s. Weig hi ng all th e fac to rs th atwe be li ev e are r el ev an t t o p et it io ne r’s cl ai m forrel ie f, we co nc lu de th athe ha s fa il edto carry hi s b ur de n o f pr ov in g t ha t h e is en ti tl edto equi tabl e rel ie f un de r se ct io n 6 01 5( f). To re fle ctth e fo reg oi ng , Deci si on wil l b e en te redfor
res po nd en t.