TAX COURT OPINION

Case: Shahadah Guy-Fabiyi
Docket Number: 16086-17
Judge: Kerrigan
Opinion Type: bench
Filed: 06/11/2018
Pages: 8

SEC UNITED STATES TAX COURT WASHINGTON, DC 20217 SHAHADAH GUY-FABIYI, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. ) ) ) ) ) 16086-17. ORD 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 Kathleen Kerrigan at Atlanta, Georgia on May 14, 2018, containing her oral findings of fact and opinion rendered at the conclusion of the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Kathleen Kerrigan Judge Dated: Washington, D.C. June 11, 2018 SERVED Jun 13 2018 3 1 2 3 4 5 6 7 8 9 Bench Opinion by Judge Kathleen Kerrigan May 15, 2018 Shahadah Guy-Fabiyi v. Commissioner of Internal Revenue Docket No. 16086-17 THE COURT: The Court has decided to render in this case the following as its oral findings of fact and opinion, which shall not be relied upon as precedent in any other case. This Bench Opinion is made pursuant to the authority granted by section 7459(b) of the Internal 10 Revenue Code and Rule 152 of the Tax Court Rules of 11 Practice and Procedure. 12 The issue for our consideration is whether 13 petitioner is entitled to innocent spouse relief pursuant 14 15 to section 6015(b). Unless otherwise indicated, all section references are to the Internal Revenue Code in 16 effect at all relevant times, and all Rule references are 17 to the Tax Court Rules of Practice and Procedure. All 18 monetary amounts are rounded to the nearest dollar. 19 20 21 Trial of this case was conducted on May 14, 2018, in Atlanta, GA. Petitioner represented herself. Lawrence D. Sledz represented respondent. The parties' 22 stipulation of facts and attached exhibits were admitted 23 into evidence. We find the following facts: 24 25 FINDINGS OF FACT Petitioner resided in Georgia when she filed the (973}406-2250|operationseescribers.net|www.escribers.net petition. In August of 2012 petitioner married Michael 4 Fabiyi. They were divorced on March 27, 2015. For tax year 2013 petitioner and Mr. Fabiyi filed a joint tax return. On the return, petitioner's bank account was listed as the account for the deposit of the refund. This same account number was listed on petitioner's individual income tax return for tax year 2015. On July 6, 2015, respondent sent a notice of 1 2 3 4 5 6 7 8 9 10 deficiency to Mr. Fabiyi's Texas address. Petitioner's 11 12 name was on the notice of deficiency. She did not receive the notice of deficiency. She was living in Georgia when 13 the notice of deficiency was received by Mr. Fabiyi. 14 15 16 17 18 The notice of deficiency alleged that petitioner and Mr. Fabiyi failed to report income of $13,791 on their 2013 tax return. On January 4, 2016, respondent assessed the tax stated in the notice of deficiency. On February 22, 2016, respondent applied $3,911 of petitioner's income 19 tax refund toward the 2013 joint liability. 20 21 22 On February, 19, 2016, petitioner filed Form 8857, Request for Innocent Spouse Relief, for taxable year 2013. On September 28, 2016, respondent issued a 23 preliminary determination proposing to grant petitioner 24 relief under section 6015(b). On October 13, 2016, Mr. 25 Fabiyi sent respondent Form 12509, Statement of (973)406-2250|operationseescrbers.net|www.escribers.net I 1 2 3 4 5 6 7 8 9 10 11 Disagreement, in response to respondent's preliminary 5 determination. On December 15, 2016, respondent issued a revised preliminary determination granting petitioner relief under section 6015(c). In response to the revised preliminary notice of determination, petitioner submitted Form 12509. On May 26, 2017, respondent issued a final appeals determination determining that petitioner was entitled to relief under section 6015(c). OPINION Generally, spouses who elect to file a joint 12 Federal income tax return are jointly and severally liable 13 for the entire amount of tax reported on the return as 14 well as for any deficiency subsequently determined. Sec. 15 6013(d)(3). A requesting spouse may seek relief from 16 joint and several liability under section 6015(b) or, if 17 eligible, may allocate liability under section 6015(c). 18 19 Sec. 6015(a). If a requesting spouse is not eligible for relief under section 6015(b) or (c), a requesting spouse 20 may be eligible for equitable relief under section 21 6015(f). Olson v. Commissioner, T.C. Memo. 2009-294, slip 22 op. at 10-11. Generally, the spouse requesting relief 23 bears the burden of proof. See Rule 142(a); Alt v. 24 Commissioner, 119 T.C. 306, 311 (2002), aff'd 101 Fed. 25 Appx. 34 (6th Cir. 2004). (9733406-2250|operationseescréers.netlwww.escribers.net Respondent has determined that petitioner is 6 entitled to relief under section 6015(c). Section 6015(c) differs from the provisions of subsection (b) under which relief may be denied if the party requesting relief had constructive knowledge of the item giving rise to the deficiency. See Culver v. Commissioner, 116 T.C. 189, 197 (2001). Section 6015(c) also differs from subsection (b) in that no credit or refund is allowed as result of the election and obtainment of subsection (c) relief. Sec. 6015(g) (3); Ordlock v. Commissioner, 126 T.C. 47, 57 (2006). In order to be entitled to relief under section 6015(b), the requesting spouse must satisfy the following conditions: (1) a joint return has been made for a taxable year; (2) on such return there is an understatement of tax attributable to erroneous items of the nonrequesting spouse; (3) the requesting spouse did not know and had no reason to know of the understatement 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 at the time that the return was signed; (4) taking into 20 account all the facts and circumstances, it is inequitable 21 to hold the requesting spouse liable for that year's 22 deficiency in tax attributable to such understatement; and 23 (5) the requesting spouse timely elects relief under 24 section 6015(b). Sec. 6015(b)(1). These conditions are 25 stated in the conjunctive and, thus, a failure to meet any MIEEl 9733406-2250|operations©escribetsmet|www.escribers.net 7 1 2 3 4 5 6 7 8 9 one of them precludes the requesting spouse from being entitled to relief under section 6015(b). Alt v. Commissioner, 119 T.C. at 313; Haltom v. Commissioner, T.C. Memo. 2005-209, slip op. at 9. If a spouse seeking relief under section 6015(b) has actual knowledge of the underlying item that produced income that was omitted from a joint return, relief from joint and several liability will be denied. See sec. 6015(b)(1)(C); see also Cheshire v. Commissioner, 115 T.C. 10 183, 192-193 (2000), aff'd, 282 F.3d 326, 332-334 (5th 11 Cir. 2002). The rules pertaining to a requesting spouse's 12 actual knowledge are set forth in section 1.6015-3(c)(2), 13 Income Tax Regs. Sec. 1.6015-2(c), Income Tax Regs. ; see 14 15 16 17 18 19 also Cheshire v. Commissioner, 115 T.C. at 195 (stating that the knowledge standard for purposes of section 6015(c)(3)(C) is an actual and clear awareness of the existence of the item giving rise to the deficiency). In the case of omitted income, knowledge of the item includes knowledge of receipt of the income. Sec. 1.6015- 20 3(c)(2)(i)(A), Income Tax Regs. 21 The facts and circumstances to be considered to 22 determine whether a requesting spouse had knowledge or 23 reason to know include, but are not limited to: the 24 nature of the erroneous item and the amount of the 25 erroneous item relative to other items; the couple's (973)406-2250|operationseescrbers.net|www.escribers.net financial situation; the requesting spouse's educational 8 background and business experience; the extent of the requesting spouse's participation in the activity that resulted in the erroneous item; whether the requesting spouse failed to inquire, at or before the time the return was signed, about items on the return or omitted from the return that a reasonable person would question; and whether the erroneous item represented a departure from a recurring pattern reflected in prior years' returns. Sec. 1 2 3 4 5 6 7 8 9 10 1.6015-2(c), Income Tax Regs. Section 6015(b)(1)(C) 11 12 13 requires that in signing the return, the individual seeking relief did not know and had no reason to know of the understatement. Section 6015 thus does not protect a 14 spouse who turns a blind eye to facts readily available. 15 Charlton v. Commissioner, 114 T.C. 333, 340 (2000). 16 17 18 Petitioner contends that she is eligible for relief under section 6015(b). The understatement of tax is attributable to petitioner's former husband's 19 distributions from a retirement account and health savings 20 21 account. Petitioner testified that she was not aware of the unreported income. She testified that she filed a 22 joint return with Mr. Fabiyi for tax year 2013 and 23 provided him with information for the return. However, 24 she did not ask to see the return and did not review it. 25 She was aware that they received a refund for tax year (973)406-2250|operationseescribers.net|www.escribers.net 9 1 2 3 4 5 6 7 8 9 10 11 2013. Petitioner did not meet the burden of proof of showing that she was entitled to relief under section 6015(b). She turned a blind eye to the content of the return. Petitioner should have read and reviewed the return. See Hayman v. Commissioner, 992 F.2d 1256, 1262 (2d Cir. 1993) (no relief where requesting spouse failed to read return), aff'g T.C. Memo. 1992-228. We conclude that petitioner is not entitled to relief under section 6015(b). A decision will be entered for respondent. This concludes the Court's oral Findings 12 of Fact and Opinion in this case. 13 14 15 16 17 18 19 20 21 22 23 24 25 (Whereupon, at 2:10 p.m., the above-entitled matter was concluded.) (973)406-2250|operationseestraaers.net|www-escribers.net