TAX COURT OPINION

Case: Ana C. Torres
Docket Number: 15143-11
Judge: Vasquez
Opinion Type: bench
Filed: 12/05/2012
Pages: 8

UNITED STATES TAX COURT WASHINGTON, DC 20217 RMM ANA C. TORRES, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 15143-11. ) ) ) ) ) ) ) ) ) O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Juan F. Vasquez at El Paso, Texas, on October 16, 2012, containing his oral findings of fact and opinion rendered at the conclusion of the trial. In accordance with the oral findings of fact and opinion, decision will be entered for petitioner. (Signed) Juan F. Vasquez Judge Dated. Washington, D.C. December 5, 2012 SERVED Dec 06 2012 . Capital Reporting Company Ana C. Torres 10-16-2012 1 Bench Opinion by Judge Juan F. Vasquez 10/16/2012 3 2 3 Ana C. Torres Docket No. 15143-11 THE COURT: The Court has decided to render 4 oral findings of fact and opinion in this case. The 5 oral findings of fact and opinion shall not be relied 6 upon as precedent in any other case. This bench 7 opinion is made pursuant to the authority granted by 8 virtue of section 7459(b) and Rule 152. All section 9 references are to the Internal Revenue Code in effect 10 11 12 for the years in issue and all Rule references are to the Tax Court Rules of Practice and Procedure. This is the case of Ana C. Torres, 13 petitioner, versus Commissioner of Internal Revenue, 14 15 respondent; docket number 15143-11. Petitioner and Edgar Modesto Jacobsen, her 16 ex-husband whom we shall refer to as the 17 nonrequesting spouse, got married on September 2, 18 19 1983. During their marriage petitioner was a stay- at-home wife and the nonrequesting spouse was self- 20 employed. He operated a business purchasing used 21 office trailers, fixing or remodeling them, and then 22 reselling them in Mexico. He did not permit 23 petitioner to participate or have any involvement in 24 the business. He did not allow her to open any mail 25 addressed to him or his business, and he maintained (866) 448 - DEPO www.CapitalReportingCompany.com 2012 C O O Capital Reporting Company Ana C. Torres 10-16-2012 4 1 2 complete control over household financial matters, including preparation of their joint tax returns. 3 Petitioner signed the returns without any opportunity 4 5 to examine them or ask any questions. Petitioner and the nonrequesting spouse 6 divorced on February 26, 2009. On November 29, 2010, 7 8 9 10 11 12 respondent received petitioner's timely filed Form 8857 (SP), Request for Innocent Spouse Relief. On January 18, 2011, respondent mailed petitioner Letter 3279C, Final Determination, denying her request for relief. Pursuant to section 6015(e) (1), petitioner timely filed a petition for redetermination, seeking 13 review of respondent's determination that she is not 14 entitled to relief from joint and several liability 15 16 17 18 under section 6015(f) with respect to her Federal income tax liabilities for 2004 and 2005. She resided in Texas at the time she filed the petition. In general, a spouse who files a joint 19 Federal income tax return is jointly and severally 20 liable for the entire tax liability. Section 21 22 23 6013(d) (3). However, a spouse may be relieved from joint and several liability under section 6015(f) if: (1)taking into account all the 24 facts and circumstances, it would be inequitable to 25 hold her liable for any unpaid tax; and (2) relief is (866) 448 - DEPO www.CapitalReportingCompany.com 2012 0 O Capital Reporting Company Ana C. Torres 10-16-2012 5 1 2 not available to the spouse under section 6015 (b) or (c). The parties agree -that petitioner is not 3 eligible for relief under section 6015 (b) or (c) . 4 5 6 7 8 9 The Commissioner has published revenue procedures listing the factors the Commissioner normally considers in determining whether section 6015(f) relief should be granted. See Rev. Proc. 2003-61, 2003-2 C.B. 296; see also Notice 2012-8, 2012-4 1.R.B. 309. We reach the same conclusion under both 10 Rev. Proc. 2003-61, supra, and the proposed revenue 11 procedure under Notice 2012-8, supra. 12 In determining whether petitioner is 13 entitled to section 6015(f) relief we apply a de novo 14 15 standard of review as well as a de novo scope of review. Porter v. Commissioner, 132 T.C. 203 (2009); 16 Porter v. Commissioner, 130 T.C. 115 (2008) . 17 Petitioner bears the burden of proving that she is 18 entitled to relief. See Rule 142(a); Alt v. 19 Commissioner, 119 T.C. 306, 311 (2002), affirmed 101 20 21 22 23 Fed. Appx. 34 (6th Cir.2004). The parties agree that petitioner meets the threshold conditions for relief. When the threshold conditions have been met, the Commissioner will 24 ordinarily grant relief with respect to an 25 underpayment of tax if the requesting spouse (866) 448 - DEPO www.CapitalReportingCompany.com 2012 . " Capital Reporting Company Ana C. Torres 10-16-2012 6 1 satisfies the following three conditions: (1) On the 2 3 4 date of the request for relief the requesting spouse is no longer married to, or is legally separated from, the nonrequesting spouse, or has not been a 5 member of the same household as the nonrequesting 6 7 spouse at any time during the 12-month period ending on the date of the request for relief (Marital Status 8 Condition); (2) on the date the requesting spouse 9 signed the return she had no knowledge or reason to 10 11 12 know that the nonrequesting spouse would not pay the income tax liability (Knowledge Condition); and (3) the requesting spouse will suffer economic hardship 13 if relief is not granted (Economic Hardship 14 Condition). See Rev. Proc. 2003-61, section 4.02; 15 Notice 2012-8, section 4.02. 16 I. Marital Status Condition 17 18 19 Petitioner satisfies the marital status condition if she establishes that she was divorced or legally separated from the nonrequesting spouse at 20 the time she filed the request for relief. 21 Petitioner and the nonrequesting spouse were divorced 22 23 on February 26, 2009. Petitioner filed the request for innocent spouse relief on November 29, 2010. 24 Therefore, petitioner satisfies the marital status 25 condition. (866) 448 - DEPO www.CapitalReportingCompany.com 2012 C . O C Capital Reporting Company Ana C. Torres 10-16-2012 7 1 2 3 4 5 6 II. Knowledge Condition Petitioner satisfies the knowledge condition if she establishes that she did not know or have reason to know that the nonrequesting spouse would not or could not pay the taxes reported on the joint income tax returns for 2004 and 2005. In making the 7 determination whether petitioner had reason to know, 8 9 10 11 12 we give consideration to, among other things, her level of education, her involvement in business and household financial matters, and her business or financial expertise. When it came to financial matters, 13 petitioner was kept in the dark during the marriage. 14 15 She did not participate or have any involvement in the nonrequesting spouse's business. She was not 16 permitted to open any mail addressed to him or his 17 business. He took care of the Federal income tax 18 returns. It was understood by petitioner that she 19 was to sign the tax returns without asking any 20 questions. The nonrequesting spouse did not explain 21 any of the items on the returns and petitioner was 22 not provided with an opportunity to examine them. 23 Accordingly, we find that petitioner did not know or 24 have any reason to know whether the nonrequesting 25 spouse could pay the tax liabilities reported on the (866) 448 - DEPO www.CapitalReportingCompany.com 2012 C C Capital Reporting Company Ana C. Torres 10-16-2012 8 1 2 3 4 5 6 returns. III. Economic Hardship Condition Petitioner satisfies the economic hardship condition if she establishes that paying the tax liabilities would prevent her from paying her reasonable basic living expenses. Alioto v. 7 Commissioner, T.C. Memo. 2008-185; Butner v. 8 Commissioner, T.C. Memo. 2007-136. Petitioner must 9 demonstrate that imposing joint and several liability 10 is "'inequitable in present terms'; see Von 11 Kalinowski v. Commissioner, T.C. Memo. 2001-21, and 12 poses a present economic hardship"; see Pullins v. 13 Commissioner, 136 T.C. at 446. 14 15 Petitioner stated on her request for innocent spouse relief that she does not have an 16 automobile or other property, and her monthly 17 18 expenses meet her monthly income. She is a stay-at- home wife and her current husband works as an 19 automobile mechanic. She credibly testified at trial 20 21 that she does not have the financial means to pay the tax liabilities. Accordingly, we find that petitioner 22 would suffer economic hardship if we do not grant her 23 relief . 24 25 IV. Conclusion Petitioner satisfies all three conditions for a (866) 448 - DEPO www.CapitalReportingCompany.com 2012 . 0 O Capital Reporting Company Ana C. Torres 10-16-2012 9 1 streamlined determination of relief under section 2 6015(f). She was not married at the time she filed 3 4 the request for relief; she did not know or have reason to know that the nonrequesting spouse would 5 not or could not pay the tax liabilities; and she 6 would suffer economic hardship if we do not grant her 7 relief. Accordingly, we conclude that petitioner is 8 entitled to relief from joint and several liability 9 under section 6015(f) for 2004 and 2005. 10 11 12 13 14 The foregoing represents the Court's oral findings of fact and opinion in this case. In reaching our holdings herein, we have considered all arguments made, and to the extent not mentioned above, we conclude that they are moot, irrelevant or 15 without merit. 16 17 18 This concludes the Court's oral findings of fact and opinion. THE COURT: And that concludes this session 19 of the U.S. Tax Court in El Paso, Texas. And I thank 20 21 22 23 24 25 everybody in the courtroom. Ms. Shannon, our court reporter, thank you. I think we're off the record now. (Whereupon, at 2:28 p.m., the bench opinion in the above-entitled matter was concluded.) (866) 448 - DEPO www.CapitalReportingCompany.com 2012