T.C. Summary Opinion 2010-153

UNITED STATES TAX COURT

MARVINA DARLENE HARPER, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 10792-09S. Filed October 14, 2010.

Marvina Darlene Harper, pro se.

Alicia A. Mazurek, for respondent.

ARMEN, Special Trial Judge: This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.1 Pursuant to section

7463(b), the decision to be entered is not reviewable by any

1 Unless otherwise indicated, all subsequent section

references are to the Internal Revenue Code of 1986, as amended,

and all Rule references are to the Tax Court Rules of Practice

and Procedure.
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other court, and this opinion shall not be treated as precedent

for any other case.

Pursuant to section 6015, petitioner made an administrative

request for relief from joint and several liability for Federal

income taxes for 2001, 2002, and 2003. By notice respondent

denied petitioner’s request for relief. Petitioner timely filed

a petition with this Court under section 6015(e) for review of

respondent’s determination.

The sole issue for decision is whether petitioner is

entitled to relief from joint and several liability under section

6015(f) for 2001, 2002, and 2003.

Background

Some of the facts have been stipulated, and they are so

found. We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits. Petitioner resided in the State

of Michigan when the petition was filed.

Petitioner and Frederick Verdell Harper (Mr. Harper) met

while petitioner was a resident at Harper House, a substance

abuse treatment facility run by Mr. Harper. Petitioner and Mr.

Harper were married in April 1996. During their marriage,

petitioner and Mr. Harper assumed traditional roles: Mr. Harper

was the sole breadwinner and managed the household finances while

petitioner maintained the home; her only source of income was

Social Security benefits. Although petitioner would occasionally
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help out at Harper House by driving female residents to

appointments, she was not involved in the bookkeeping or finances

of the business.

All of the couple’s assets were owned in Mr. Harper’s sole

name; petitioner did not have a bank account in her name, nor did

she and Mr. Harper have any joint accounts. Although petitioner

testified that she and Mr. Harper had what she thought was a good

marriage, she did not have any money of her own (other than

modest Social Security benefits) and had to ask Mr. Harper for

money to make most purchases.

Petitioner and Mr. Harper filed joint Federal income tax

returns for 2001, 2002, and 2003. Mr. Harper had each of the

returns prepared by a professional tax return preparer and did

not need to request documents or records from petitioner to

facilitate the completion of the returns. At Mr. Harper’s

request, petitioner signed each of the tax returns but did not

review the returns for accuracy. Because Mr. Harper handled all

of the financial matters for the household and business,

petitioner did not know that tax debts were accumulating.

Petitioner and Mr. Harper were divorced in May 2006, and Mr.

Harper died in May 2008.

On November 25, 2008, the Internal Revenue Service (IRS)

received petitioner’s Form 8857, Request for Innocent Spouse

Relief. Ultimately, the IRS denied petitioner’s request for
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relief from joint and several liability under section 6015(f) on

the basis that petitioner had not shown that she did not know and

had no reason to know that the taxes would not be paid.

Petitioner filed the petition in this case on May 6, 2009.

Discussion

A spouse may be relieved from joint and several tax

liability under section 6015(f) if, taking into account all the

facts and circumstances, it is inequitable to hold the spouse

liable. The spouse requesting relief generally bears the burden

of proof. See Rule 142(a); Alt v. Commissioner, 119 T.C. 306,

311 (2002), affd. 101 Fed. Appx. 34 (6th Cir. 2004). The record

establishes that petitioner satisfies the threshold conditions of

Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. 296, 297-298.

We consider all relevant facts and circumstances in

determining whether the taxpayer is entitled to innocent spouse

relief. Porter v. Commissioner, 132 T.C. 203, 210 (2009). We

may consider evidence introduced at trial even if it was not

included in the administrative record. Porter v. Commissioner,

130 T.C. 115, 117 (2008). In determining whether relief is

justified, we give no deference to the IRS’ determination that

petitioner is not entitled to relief. See Porter v.

Commissioner, 132 T.C. at 210.

If a requesting spouse fulfills the threshold requirements

of Rev. Proc. 2003-61, sec. 4.01, the Commissioner will
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ordinarily grant relief from joint and several liability with

respect to underpayments on a joint Federal income tax return,

provided all of the following additional requirements are

satisfied: (1) On the date of the request for relief, the

requesting spouse is no longer married to, or is legally

separated from, the nonrequesting spouse; (2) on the date the

requesting spouse signed the joint return, the requesting spouse

did not know, and had no reason to know, that the nonrequesting

spouse would not pay the tax liability; and (3) the requesting

spouse will suffer economic hardship if the Commissioner does not

grant relief. Rev. Proc. 2003-61, sec. 4.02, 2003-2 C.B. at 298.

Respondent concedes that petitioner was divorced from Mr.

Harper on the date she requested relief under section 6015(f). 

However, respondent contends that petitioner has not established

that (1) she had no knowledge or reason to know, on the dates

that the 2001, 2002, and 2003 joint Federal income tax returns

were signed, that the underpayments reported on those returns

would not be paid or (2) she would face economic hardship if her

request for relief were denied. Accordingly, respondent argues

that petitioner has not satisfied the requirements of Rev. Proc.

2003-61, sec. 4.02, and is therefore not entitled to equitable

relief under section 6015(f). We disagree.
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1. Knowledge or Reason To Know

Respondent contends that because petitioner did not review

the returns before signing them and did not know there was a

balance due when she signed the returns, she could not have

believed that Mr. Harper would pay the balance due.

Even if petitioner had reviewed the returns, she would not

have known or had reason to know that the liabilities reported on

the returns would not be paid. Mr. Harper handled all of the

couple’s financial affairs for both the household and his

business, and petitioner was responsible for maintaining the

home. During the years in issue petitioner did not have a bank

account in her own name, nor did she have access to a jointly

held bank account; all accounts were in Mr. Harper’s sole name. 

Thus, even if petitioner had reviewed the 2001, 2002, and 2003

joint Federal income tax returns and seen that there were

balances due, she would not have known, or had reason to know,

that Mr. Harper would not pay the tax liabilities, nor would she

have had access to resources to pay the liabilities herself or

even to ascertain whether the liabilities had been paid.

2. Economic Hardship

Respondent contends that petitioner would not experience

economic hardship if her request for equitable relief were

denied.
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To ascertain whether a requesting spouse will suffer

economic hardship if the Commissioner denies his or her request

for section 6015(f) relief, Rev. Proc. 2003-61, sec. 4.02,

directs the Commissioner to base his decision on rules similar to

those found in section 301.6343-1(b)(4), Proced. & Admin. Regs. 

Those rules provide that an economic hardship exists if an

individual is unable to pay reasonable living expenses. In

determining a reasonable amount for basic living expenses, the

Commissioner shall consider information provided by the taxpayer,

including: (1) The taxpayer’s age, employment status and

history, ability to earn, number of dependents, and status as a

dependent of someone else; (2) the amount reasonably necessary

for food, clothing, housing, utilities, medical expenses,

transportation, child support, and other necessities; (3) the

cost of living in the geographical area in which the taxpayer

lives; (4) the amount of property available to pay the taxpayer’s

expenses; (5) any extraordinary circumstances, e.g., special

education expenses, a medical catastrophe, or a natural disaster;

and (6) any other factor bearing on economic hardship. Sec.

301.6343-1(b)(4)(ii), Proced. & Admin. Regs.

Although we are not required to accept petitioner’s

testimony uncritically, see Ishizaki v. Commissioner, T.C. Memo.

2001-318, neither are we required to reject petitioner’s

testimony if we find it credible, see, e.g., Washington v.
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Commissioner, 120 T.C. 137, 150 (2003). Indeed, we find

petitioner’s testimony, as well as that of her witness, to be

honest, forthright, and credible.

In addition, the IRS has issued guidelines for allowable

expenses. “Necessary expenses are those that meet the necessary

expense test; i.e., ‘they must provide for a taxpayer’s * * *

health and welfare and/or the production of income’ and they must

be reasonable.” Schulman v. Commissioner, T.C. Memo. 2002-129

n.6 (quoting Internal Revenue Manual pt. 5.15.1.3(2) (Mar. 31,

2000). There are three types of necessary expenses: (1) Those

based on national standards, e.g., food, housekeeping supplies,

clothing, and personal care products and services; (2) those

based on local standards, e.g., housing, utilities, and

transportation; and (3) other expenses, which are not based on

national or local standards. Id.

When petitioner and Mr. Harper divorced in 2006, petitioner

was left with nothing: Mr. Harper took the car, and there was no

joint property to divide between them. Petitioner pulled herself

up by her bootstraps, went back to school, and earned a degree,

and she now works as a substance abuse counselor. Petitioner is

employed part time at a hospital, typically working 20 hours per

week and earning $18 an hour. Petitioner’s salary is

supplemented by the occasional bonuses given by the hospital. 

Petitioner’s testimony regarding her expenses, augmented by the
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national standards, indicates that her expenses equal, if they do

not exceed, her income.

Thus, we conclude that petitioner would face economic

hardship if her request for relief under section 6015(f) were

denied.

Accordingly, based on our review of all the facts and

circumstances, we hold that petitioner is entitled to relief from

joint and several liability under section 6015(f) for the 3 years

in issue.

Conclusion

We have considered all of the substantive arguments made by

respondent regarding the issue of petitioner’s entitlement to

relief from joint and several liability under section 6015(f).2

To the extent that we have not specifically addressed any of

2 At trial on Mar. 1, 2010, as well as in a posttrial

memorandum brief, respondent also invoked sec. 1.6015-5(b)(1),

Income Tax Regs., and argued that petitioner had failed to file

her claim for relief within the 2-year period specified in the

regulation. In Lantz v. Commissioner, 132 T.C. 131 (2009), this

Court invalidated sec. 1.6015-5(b)(1), Income Tax Regs.; however,

on June 8, 2010, our decision in that case was reversed by the

Court of Appeals for the Seventh Circuit. Lantz v. Commissioner,

607 F.3d 479 (7th Cir. 2010). Nevertheless, at this time in

circuits other than the Seventh Circuit, Lantz v. Commissioner,

132 T.C. 131 (2009), remains the law of this Court. Hall v.

Commissioner, 135 T.C. (Sept. 22, 2010); cf. Golsen v.

Commissioner, 54 T.C. 742, 756-757 (1970), affd. on other issues

445 F.2d 985 (10th Cir. 1971). As petitioner’s case would be

appealable to the Court of Appeals for the Sixth Circuit were it

not a small tax case, see sec. 7463(b), we follow this Court’s

decisions in Lantz and Hall.
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those arguments, we conclude that they are irrelevant, moot, or

without merit.

To reflect the foregoing,

Decision will be entered

for petitioner.