T.C. Summary Opinion 2008-133 

UNITED STATES TAX COURT

BRENDA H. JENNINGS AND ROBIN D. JENNINGS, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 4939-06S. Filed October 16, 2008. 

Brenda H. Jennings and Robin D. Jennings, pro sese.

James H. Harris, Jr., for respondent.

NIMS, Judge: This case was heard pursuant to the provisions

of section 7463 of the Internal Revenue Code in effect when the

petition was filed. Pursuant to section 7463(b), the decision to

be entered is not reviewable by any other court, and this opinion

shall not be treated as precedent for any other case. Unless 
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otherwise indicated, subsequent section references are to the

Internal Revenue Code, and all Rule references are to the Tax

Court Rules of Practice and Procedure. 

Background

Some of the facts have been stipulated and are so found. 

When this petition was filed, Brenda H. Jennings and Robin D.

Jennings resided in Pennsylvania. At all relevant times, Mr. and

Ms. Jennings were married, though at the time of trial the two

were in the process of obtaining a divorce. 

In 2003 Mr. and Ms. Jennings shared the same house. During

that year, Mr. Jennings withdrew $16,990 from a section 401(k)

plan from a previous employer. Mr. Jennings did so without the

knowledge of Ms. Jennings. He then attempted to purchase a

vehicle for his own use, using $12,000 of the proceeds from the

withdrawal and financing the remainder. Mr. Jennings then

returned the vehicle and received $9,800 of his downpayment in

return. Mr. Jennings then used an undetermined amount of the

funds from the withdrawal to replace the floor in the kitchen of

the Jennings’ house, purchase new kitchen appliances, and improve

steps and walls in other areas of the house. The floor was

replaced due to water damage caused by Mr. Jennings. 

On their 2003 joint income tax return, Mr. and Ms. Jennings

included the $16,990 withdrawal as income but did not report the

section 72(t) early withdrawal addition to tax. In addition, the
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Jenningses failed to include $9,850 of unemployment compensation

Mrs. Jennings received from the Commonwealth of Pennsylvania. 

On the basis of the original return, respondent determined a

$3,689 deficiency in the Jenningses’ 2003 Federal income tax. 

The deficiency was due to the two items identified above. In

November of 2005 Mr. and Ms. Jennings amended their 2003 return

to correct these two items, and they calculated that they owed

$2,677 in tax and penalties, of which $1,699 is attributable to

the section 72(t) additional tax. The parties now agree that

this figure is the correct amount of the underpayment, and this

amount remains unpaid. 

Two weeks after amending their 2003 return, the Jenningses

received a notice of deficiency based upon the original 2003

return. The petition seeking redetermination of the original

deficiency was filed with this Court on March 9, 2006. 

On August 3, 2006, after petitioning this Court, Ms.

Jennings filed with respondent a Form 8857, Request for Innocent

Spouse Relief, seeking to avoid liability for the early

withdrawal additional tax. At the time of her request, Ms.

Jennings still resided with Mr. Jennings. In January 2007

respondent denied Ms. Jennings’ request for innocent spouse

relief. Ms. Jennings did not amend the petition to challenge

respondent’s determination to deny her relief from joint and

several liability. 
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Trial was held on March 10, 2008. The parties consented to

the introduction of the innocent spouse issue at trial pursuant

to Rule 41(b). Because the parties and respondent have agreed to

the correct amount of the underpayment, the sole issue for

decision is whether respondent abused his discretion in denying

Ms. Jennings relief from joint and several liability as to the

portion of the underpayment that represents an additional tax for

early withdrawal under section 72(t). 

Discussion

A. Jurisdiction

At trial, there was a question as to whether either Mr.

Jennings or Ms. Jennings had signed the petition. Both Mr. and

Ms. Jennings claimed not to have signed the petition. 

Handwriting samples were taken in open court from both

individuals by the presiding Judge and compared with the

purported signatures on the petition. Based upon the testimony

of the parties and the handwriting samples, we find that Ms.

Jennings did in fact sign the petition, but Mr. Jennings did not. 

There is no evidence that Mr. Jennings permitted any other party

to sign on his behalf, and at trial Mr. Jennings refused to

accept the petition as filed. As a result, the Court lacks

jurisdiction over Mr. Jennings. Because the Court retains 
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jurisdiction over Ms. Jennings, we may now proceed to the

substance of her argument. For purposes of convenience, Ms.

Jennings will hereafter be referred to as petitioner. 

B. Relief From Joint and Several Liability

Petitioner argues that she should not be held responsible

for $1,699 of the underpayment because that amount represents an

additional tax on Mr. Jennings’s early withdrawal from a section

401(k) plan. Petitioner contends that she did not know of the

distribution to Mr. Jennings when the distribution was made and

that she received no benefit from the distribution. 

Section 6015 provides that an individual may seek relief

from joint and several liability on a joint income tax return

provided that individual meets the requirements of section

6015(b) or (c). In addition, section 6015(f) provides that even

if the taxpayer does not qualify under section 6015(b) or (c),

the taxpayer may be relieved of liability in the event the

Secretary determines that it is “inequitable to hold the

individual liable for any unpaid tax or any deficiency (or any

portion of either)”. 

Petitioner does not qualify for relief under section

6015(b). Section 6015(b)(1)(C) requires that the taxpayer

establish that she had no reason to know of the understatement. 

Even if we accept petitioner’s statement that she did not know of

the section 401(k) distribution at the time it was made, the
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distribution was reported on petitioner’s original tax return,

and petitioner signed the return. Petitioner cannot rely solely

on ignorance of the tax consequences of an item giving rise to a

deficiency to satisfy her burden under section 6015(b)(1)(C). 

See Price v. Commissioner, 887 F.2d 959, 964 (9th Cir. 1989);

Hopkins v. Commissioner, 121 T.C. 73, 78 n.11 (2003). Thus,

petitioner had reason to know of the understatement. She cannot

satisfy the conditions of section 6015(b). 

Furthermore, petitioner cannot qualify under section

6015(c). Section 6015(c)(3)(A) requires petitioner, at the time

she applied for relief, to be either: (1) Divorced from the

individual with whom she filed the joint return; (2) legally

separated from that individual; or (3) not a member of the same

household as that individual for any time during the 12-month

period before the application is made. At the time petitioner

applied for relief, she was neither divorced nor legally

separated from Mr. Jennings, and the two lived together. 

Therefore, petitioner cannot satisfy the conditions of section

6015(c).

Having failed to qualify for relief from joint and several

liability under section 6015(b) or (c), petitioner may only

qualify for relief, if at all, under section 6015(f). Section

6015(f) allows relief from joint and several liability if,

“taking into account all the facts and circumstances, it is
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inequitable to hold the individual liable”. Pursuant to

respondent’s discretionary authority to grant relief under

section 6015(f), the Commissioner has prescribed procedures, set

forth in Rev. Proc. 2003-61, 2003-2 C.B. 296, which the

Commissioner applies in determining whether a spouse is eligible

for relief. 

As a threshold matter, Rev. Proc. 2003-61, sec. 4.01, 2003-2

C.B. at 297, lists seven conditions that must be met to be

eligible to submit a request for equitable relief. Of these

seven conditions, respondent concedes that petitioner has met the

first three. The fourth condition is met if there has been no

fraudulent transfer of assets between the spouses. There is no

evidence to suggest that any fraudulent transfer between the

spouses has occurred here. The fifth condition is met if there

has been no transfer of “disqualified assets” between the

spouses, which under section 6015(c)(4)(B) are assets transferred

for the purpose of the avoidance of tax. There is no indication

that any such transfer took place. The sixth condition is met if

the requesting spouse did not file the return with fraudulent

intent, which petitioner did not. The seventh condition is met

if the item of income that gave rise to the liability is

attributable to the nonrequesting spouse. Here, the section

401(k) withdrawal giving rise to the section 72(t) additional tax

at issue was made by Mr. Jennings at his sole request. That item
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of income is attributable to Mr. Jennings. Therefore, petitioner

has met all seven of the threshold conditions. From there, we

must determine whether petitioner is entitled to equitable

relief. 

Rev. Proc. 2003-61, sec. 4.02, 2003-2 C.B. at 298, creates a

safe harbor for those seeking equitable relief. If the liability

reported on the return is unpaid, as it is here, and the

requesting spouse’s situation meets all of the circumstances

listed, equitable relief will ordinarily be granted. If not, the

requesting spouse may only qualify for relief on the basis of a

balancing of factors listed in Rev. Proc. 2003-61, sec. 4.03,

2003-2 C.B. at 298. 

The first condition of the safe harbor is the same condition

of section 6015(c): The requesting spouse must have been

divorced or legally separated from the nonrequesting spouse, or

the spouses have lived apart for more than 12 months. As

discussed above, that condition is not met here. Thus,

petitioner does not qualify for the safe harbor, and must submit

to the balancing of factors listed in Rev. Proc. 2003-61, sec.

4.03.

Rev. Proc. 2003-61, sec. 4.03, lists six factors the

Commissioner considers in determining whether to grant equitable

relief: (1) Marital status; (2) economic hardship; (3) knowledge

or reason to know; (4) nonrequesting spouse’s legal obligation;
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(5) significant benefit; and (6) compliance with income tax laws. 

In addition to these, there are two additional factors that, when

present, weigh in favor of relief, but do not weigh against

relief when not present. These two factors are: (1) Whether the

nonrequesting spouse abused the requesting spouse; and (2)

whether the requesting spouse was in poor mental or physical

health at the time the return was signed or at the time that

spouse requested relief. We will discuss each of these factors

in turn to determine whether respondent abused his discretion in

denying petitioner’s request for relief from joint and several

liability.

First, the marital status factor asks whether the requesting

spouse is divorced or separated from the nonrequesting spouse. 

At the time the request was filed, petitioner was neither

divorced nor separated from Mr. Jennings. They are now living

apart and are in the process of obtaining a divorce. Respondent

concedes that this factor weighs in favor of granting relief.

Second, the economic hardship factor asks whether the

requesting spouse will suffer economic hardship if she must pay

the liability. The issue is whether the requesting spouse will

be able to pay her reasonable living expenses if relief is not

granted. See Alt v. Commissioner, 119 T.C. 306, 314-315 (2002),

affd. 101 Fed. Appx. 34 (6th Cir. 2004); sec. 301.6343-1(b)(4),

Proced. & Admin. Regs. Petitioner has not alleged that paying
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this liability will result in economic hardship, and she has not

provided any information about her current living expenses that

would allow us to determine whether she would suffer economic

hardship. This factor weighs against relief. 

Third, the knowledge factor asks whether the requesting

spouse did not know and had no reason to know that the nonrequesting spouse would not pay the income tax liability. 

Consideration is given to the requesting spouse’s level of

education, deceit on the part of the nonrequesting spouse, and

the requesting spouse’s involvement in household financial

matters and financial expertise, and any lavish or unusual

expenditures compared to past spending levels. Rev. Proc. 2003-

61, sec. 4.03(2)(a)(iii)(C), 2003-2 C.B. at 298. Petitioner

amended her return to reflect the existence of the section 72(t)

additional tax and made little effort to see that Mr. Jennings

paid that portion of the deficiency. Petitioner and Mr. Jennings

disagree as to whether Mr. Jennings orally agreed to pay this

liability. Although this oral agreement required petitioner to

satisfy the remaining portion of the liability, she has not done

so, which shows either that the agreement never existed or that

neither party considered it to have any binding effect. In any

case, we do not need to accept petitioner’s self-serving 
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statement on this score. See Tokarski v. Commissioner, 87 T.C.

74, 77 (1986). As a result, this factor weighs against granting

relief. 

Fourth, the legal obligation factor asks whether the nonrequesting spouse has a legal obligation to pay the outstanding

income tax liability pursuant to a divorce decree or agreement. 

No such agreement exists, and so neither party has a legal

obligation to satisfy the liability. This factor is neutral.

Fifth, the significant benefit factor asks whether the

requesting spouse received significant benefit from the unpaid

income tax liability or item giving rise to the deficiency. 

Significant benefit is defined as any benefit in excess of normal

support. Sec. 1.6015-2(d), Income Tax Regs. Mr. Jennings spent

$12,000 of the section 401(k) withdrawal to purchase an

automobile. However, Mr. Jennings subsequently returned the

vehicle to the dealership and received in return $9,800. 

Petitioner acknowledged that an undetermined amount of this money

was spent for a new floor and several appliances for the kitchen

of the Jenningses’ house, as well as new steps and walls for

other areas of the home. The kitchen floor was replaced due to

water damage caused by Mr. Jennings. Petitioner contends that

this work was done in a year other than 2003, but petitioner

offers no tangible evidence as to the timing and amount of these

transactions. Without information regarding the scope and
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expense of this renovation, we cannot determine whether the

renovation represents a significant benefit or ordinary support.

Respondent determined that this work represented a significant

benefit, and petitioner has given us no reason to question that

determination. This factor weighs against relief. 

Sixth, the compliance factor asks whether the requesting

spouse has made a good faith effort to comply with the income tax

laws in the years following the year to which the request for

relief relates. Petitioner did not file a return for her 2006

tax year until 2008 and did not file for any extension of time to

file the return. This does not represent a good faith effort to

comply with the income tax laws. This factor weighs against

relief.

Next, we turn to the two factors that, if present, weigh in

favor of relief but do not weigh against relief if not present. 

Petitioner did not allege either that she was the victim of abuse

or was in poor health at the time the return was filed or the

time the request was made. In a question posed to Mr. Jennings,

petitioner asserted that a protection from abuse order had been

filed against Mr. Jennings at the time of the disbursement, but

she did not present evidence that such order existed, and she did

not offer sworn testimony that would show that she was the victim

of abuse. These two factors do not enter into the consideration

of this case. 
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Of the first six factors, only one weighs in favor of

relief, while the rest either weigh against relief or are

neutral. As a result, we hold that petitioner has not met her

burden to show that she is entitled to relief from joint and

several liability. We have considered all the arguments made by

the parties, and to the extent not addressed in this opinion, we

conclude that they are moot, irrelevant, or without merit. In

accordance with the foregoing,

An appropriate order

and decision will be entered.