TAX COURT OPINION

Case: Ann Louise Pifer
Docket Number: 11121-10S
Judge: Goeke
Opinion Type: bench
Filed: 06/27/2011
Pages: 8

UNITED S/ATES TAX COURT WASHINGTON, DC 20217 ANN LOUIS PIFER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ) O R D E R Docket No. 11121-10S. 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 Joseph Robert Goeke at Tampa, Florida, on June 10, 2011, containing his oral findings of fact and opinion rendered at t he conclusion of the trial. In accordance with the o al findings of fact and opinion, a decision will be entered for respondent. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. June 27, 2011 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 BENCH OPINION BY JUDGE ROBERT JOSEPH GOEKE, ANN LOUISE PIFER v. COMMISSIONER DOCKET NO . : 11121- i OS DATE: June 10, 2019 THE COURT:I The Court has decided to render oral findings of fa4t and opinion in this case and the following represent4 the Court's oral findings of fact and opinion. The o al findings of fact and opinion shall not be relied upon as precedent in any other case. This case was heard pursuant to the provisions of Section 7463 of the Internal Revenue Code in effect at the time the petition was filed. Pursuant to Section 7463 (b) the decision to be entered is not reviewable by any other court. - Section re erences after this are to the Internal Revenue Code in effect for the year 2006, which is the year in issue in the case, and Rule references are to the Tax Court Rules of Practice and Procedure. This case is before the Court based upon our jurisdiction to review timely requestSmade after Respondent has determined that Section 6015 relief is not available to the taxpayer based upon the review by Respondent ' s Appeals Of f i ce . Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4 In the pr sent case the underlying liabilities were accepted by the Petitioner and her husband when they did not dispute the liabilities after receipt of a otice of Deficiency. Subsequently the Petitioner has sought review to determine whether she should be held to be jointly and severally liable for the deficiency amounts. Section 6Ò13(d) (3) provides that married taxpayers who file å joint return will be jointly and severally liable fo tax arising from that return. Sectiong 6015(b) (c) specify two specific sets of circumstances under which relief from joint and several liability iá available. Section 6015(f) authorizes the Secrètary of the Treasury to grant equitable relief if it is inequitable to hold a requesting spouse liable for the unpaid taxes or deficiencies. This is the statutory scheme which underlies our analysis of the present case. The facts are straightforward. The Petitioner filed a joint income tax return using Fo m 1040-EZ with her husband for 2006. The return reflected Petitioner's wages and no other income items. Petitioner had interest income in the amount of $604, which she failed to report. In addition, her husband had two items of income, $15,300 Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 5 from Administrative Concepts, and $65,925 from his construction firm Which he failed to report. In 2006 the Petitioner married her husband and during that year she worked for his company. So there's no question that the Petitioner was aware that her husband had income in the year in question, and she does not deny that . Nor does she deny that she had interest income in 2006. She cleariy has not established that she is entitled to relief elative to this interest income. ·So we will focus on whether she is entitled to relief from the items of income which her husband failed to report on the Joint Federal Income Tax Return Form 1040-EZ which was filed to 2006. The retur was executed by both the Petitioner and her husband. Petitioner testified at trial that she simpiy did not understand the consequences of filing ederal Income Tax Return. She said she felt she should file a joint return because she knew sh was married, and she also realized she would receive benefits in the fact that her income tax rate would be less filing a joint return. She simply stated she was not aware she would be liable for the income tax debts of her husband by filing the joint redurn. Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 6 In analyzing whether Petitioner was entitled to relief under Section 6015 we first look at Section 6015 (b) and (c) . Because the Petitioner was aware that her husband did not report income on the return that she signed with her husband, she's not eligible for relief under Section 6015 (b) . For similar reasons, and also because she remained married to her husband for 12 months prior to her request for innocent spouse relief and lived in the same household as her husband duri g that time, she is not entitled to relief under Section 6015(c). The only ½emaining avenue which potentially could provide Petitfoner relief would be Section 6015(f). Respondent has developed a revenue procedure which sets forth prbcedures Respondent will use in making determinations under Section 6015 (f) . And the application of his procedure has been accepted by Federal Courts analyzing such cases. The Revenue Procedure is 2003-61. The Revenue Procedure sets forth various considerations to be taken into account for understatements attributable to a taxpayer's spouse. In the prdsent case the Appeals Office considered whether Petitioner's spouse income would be subject to such rel ef. The first factor to be Heritage Reporting Corporation 202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 7 considered in this context is marital status. Here the Petitioner and her husband remain married and live together to the present day. The second factor to be considered is econdmic hardship, and the Appeals Office determined that Petitioner would be subject to economic hardship as a result of the payment of the liability in question. The third factor is knowledge or reason to know of the item giving rise to the deficiency. The Appeals Office determined that Petitioner had knowledge and reason to know because she worked at the s me company from which her husband received income. Petitioner does not deny that she knew her husband haçi income in 2006. And, we agree with the Appeals Ofl~ice determination, that Petitioner had knowledge of the unreported income. The fourth factor is whether the tax liability of the non- requesting spouse iá the legal obligation of the non- requesting spouse. IHere, because Petitioner and her husband remained married, there is no state court judgmentf that woul determine that the legal obligation for the t axes falls on Petitioner's husband. The fifth factor is significant benefit. There's no showing ¢hat Petitioner received an unusual benefit . from the un eported income, and the Appeals Office determined this factor was not applicable. The Heritage Reporting Corporation 202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 8 sixth factor is whether Petitioner is in compliance with income tax laws. The Appeals Office determined that Petitioner is in compliance with Federal Income Tax laws to the present date. Additional factors, such as abuse or mental health are not applicable to the facts of this càse. The Appea s Office, in weighing these factors, determinedl that Petitioner was not entitled to relief, relying þrimarily upon her knowledge of her husband's income. þe take into account the lack of sophistication of Petitioner's filing and her unwillingness to ac¢ept the fact that at the time she submitted the joint return she was taking on joint liability for her h sband's taxes. While Petitioner may not have realiz4d this was the case, she chose to file a joint return and she realized that joint return included her husband. She also realized she would benefit from filing the joint return and that the tax rate would be less. Petitioner's lack of sophistication does not rise to the level that would relieve her of joint and £edesal liability because she had clear knowledge that her husband had income, which was not reflected on the return. While we analyzp stand-alone Section 6015 cases Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2s 9 on a de novo basis, in applying our own judgment to the facts of this case we find no error in the determination that Detitioner is not entitled to elief under Section 6015(f) having applied the factors in Revenue Procedure 2003-61. Given our opinion in this case a decision will be entered for Respondent. This concl des the Court's oral findings of fact and opinion in this case. (Whereupon at 9:07 a.m., the bench opinion in the above-entitled matter was concluded.) // // // / // // // // // // // // // // Heritage Reporting Corporation (202) 628-4888