TAX COURT OPINION

Case: Carol D. Gomez
Docket Number: 3339-24S
Judge: Leyden
Opinion Type: bench
Filed: 01/29/2025
Pages: 15

United States Tax Court Washington, DC 20217 CAROL D. GOMEZ, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 3339-24S ORDER 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 Special Trial Judge Diana L. Leyden at the Standalone Remote Trial Session, on December 11, 2024, containing her 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 respondent. (Signed) Diana L. Leyden Special Trial Judge Served 01/29/25 RECEIVED 1/09/25 IN THE UNITED STATES TAX COURT In the Matter of: CAROL D. GOMEZ, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Docket No. 3339-24S ) ) ) ) ) ) ) ) ) ) ) ) Pages: 1 through 13 Place: Washington, DC (Remote Proceeding) Date: December 11, 2024 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1 IN THE UNITED STATES TAX COURT In the Matter of: CAROL D. GOMEZ, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Docket No. 3339-24S ) ) ) ) ) ) ) ) ) ) ) ) United States Tax Court 400 Second Street, NW South Courtroom, 3rd Floor Washington, DC 20217 (Remote Proceeding) December 11, 2024 The above-entitled matter came on for bench opinion, 15 pursuant to notice at 4:00 p.m. HONORABLE DIANA L. LEYDEN Special Trial Judge BEFORE: APPEARANCES: For the Petitioner: No Appearance For the Respondent: No Appearance 16 17 18 19 20 21 22 23 24 25 2 P R O C E E D I N G S (4:00 p.m.) THE CLERK: Recalling docket number 3339-24S, Carol D. Gomez. (Whereupon, a bench opinion was rendered.) 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 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 Bench Opinion by Judge Diana L. Leyden December 11, 2024 3 Carol D. Gomez v. Commissioner of Internal Revenue Docket No. 3339-24S THE COURT: The Court has decided to render oral findings of fact and opinion in this case and the following represents the Court's oral findings of fact and opinion. The oral findings of fact and opinion shall not be relied upon as precedent in any other case. The oral findings of fact and opinion are made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code and Tax Court Rule 152. Rule references in this opinion are to the Tax Court Rules of Practice and Procedure, and section references are to the Internal Revenue Code, in effect at all relevant times. The Court uses the term "IRS" to refer to administrative actions taken outside these proceedings. The Court uses the term "respondent" to refer to the Commissioner of Internal Revenue Service, who is the head of the IRS, and is the respondent in this case, and to refer to actions taken in connection with this case. The trial in this case was conducted on December 11, 2024, in the Court's remote Standalone Trial Session. Petitioner appeared on behalf of herself. Sarah J. Case appeared on behalf of respondent. 1 2 3 4 5 6 7 8 9 10 11 12 In a letter dated January 18, 2024, the IRS 4 issued its final determination to petitioner that her request for innocent spouse relief under sections 6015(b), 6015(c), and 6015(f) were denied. Petitioner timely filed a Petition to challenge that denial. Respondent filed a certified administrative record pursuant to Rule 93 and petitioner has not moved to complete or supplement the record. The parties did not move to admit any other documents at the time of trial. Petitioner testified on her behalf at the trial. On the evidence before us, and using the burden- of-proof principles explained below, the Court finds the 13 following facts: 14 15 16 17 18 19 20 21 22 23 24 25 Background Petitioner resided in California at the time she filed her Petition in this case. Petitioner and her husband filed a joint federal income tax return for 2014 dated and signed by both of them on April 14, 2015. Petitioner prepared the return using tax software and both she and her husband reviewed the return before it was filed. Petitioner's husband withdrew funds from an IRA and another retirement plan during 2014. Petitioner reported the amounts withdrawn relying upon information forms that her husband had received. On the return she wasDLDL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 reported IRA distributions of $6,000 but a taxable amount 5 of zero. She also reported pensions and annuities of $103,174, but a taxable amount of $555. The record is not clear how petitioner determined the taxable amounts, and in her testimony, she testified she could not remember. The return reported total tax of $2,801, withholding of $30,608, and a refund of $27,807. Petitioner and her husband received that refund. In July 2017 the IRS audited petitioner's and her husband's joint 2014 return and determined that they owed $24,414 in additional tax because of the retirement distributions that were reported on the return and an accuracy-related penalty under I.R.C. section 6662. However, petitioner and her husband were able to convince the IRS to waive the accuracy related penalty. Petitioner and her husband established an installment agreement in December 2017 and made payments from February 2018 through May 2019. Several income tax refunds from the couple's joint income tax returns for 2017, 2019, and 2020 were applied to the balance due for 2014. The first offset of a refund was applied in April 22 2018. 23 24 25 Petitioner, while still married to her husband, has lived apart from him since June 11, 2012. Petitioner is a 22-year veteran and served in Desert Storm. She of 22 yearsDL 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 testified that she has not been diagnosed with PTSD 6 because of her service. Petitioner's husband filed for bankruptcy protection in May 2019. Petitioner filed a Form 8857 dated November 15, 2022, to request relief from joint and several liability for 2014 which the IRS treated as a request for relief under sections 6015(b), (c), and (f). On the Form 8857 petitioner checked the boxes "No" to the questions: "Are you afraid of [your husband]?" and "Does [your husband] pose a danger to you, your children, or other members of your family?" Petitioner also checked the box "No" to the question "Were you or a member of your family a victim of abuse or domestic violence by [your husband]? (Abuse includes physical, psychological, sexual, emotional, or financial abuse, and can include the abuser making you afraid to disagree with him or her or causing you to fear for your safety.)" Discussion The Court now turns to substantive law. In general, married taxpayers may elect to file a joint federal income tax return. I.R.C. § 6013(a). After making that election, each spouse is jointly and severally liable for the entire amount of the tax reported on the return as well as any the liability of any deficiency subsequently determined, even if all the items giving rise to the tax 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 liability are allocable to only one of them. See I.R.C. § 7 6013(d)(3); Cheshire v. Commissioner, 115 T.C. 183, 188 (2000), aff'd 282 F. 3rd. 326 (5th Cir. 2002); Butler v. Commissioner, 114 T.C. 276, 282 (2000); Treas. Reg. § 1.6013-4(b). The Petition in this case was filed after July 1, 2019, so section 6015(e)(7) limits the scope of review to the administrative record and any newly discovered or previously unavailable evidence. The Court will also consider petitioner's testimony because it was "unavailable evidence" at the time of the administrative proceeding. See Thomas v. Commissioner, 162 T.C., slip op. at 11 (Jan. 30, 2024). The Court applies a de novo scope of review based on the record. Sec. 6015(e)(7). I. Petitioner is not eligible for relief under Section 6015(b) and Section 6015(c) because her claim was 17 untimely. 18 19 20 21 22 23 The IRS determined, and respondent asserts, that petitioner is not entitled to relief under either section 6015(b) or section 6015(c) because she filed her claim more than two years after the IRS began collection activity-namely an offset of a federal tax overpayment reported on the couple's 2017 tax return to the 2014 24 liability. As a procedural matter, a spouse seeking 25 1 2 3 4 5 6 7 8 9 innocent spouse relief under section 6015(b) or section 8 6015(c) must submit a claim for relief within two years of the date on which the Commissioner begins "collection activities" with respect to such spouse. See I.R.C. § 6015(b)(1)(E), (c)(3)(B). For purposes of the foregoing, "collection activities" include "an offset of an overpayment of the requesting spouse against a liability under section 6402." Treas. Reg. § 1.6015-5(b)(2)(i); see also Campbell v. Commissioner, 121 T.C. 290, 292-93 10 (2003). 11 12 13 14 15 16 17 18 19 Sometime in April 2018 the IRS offset an overpayment of federal income tax that the couple claimed on their joint 2017 federal tax return. Petitioner's request for relief under either section 6015(b) or section 6015(c) was filed on November 15, 2022, which is more than two years after the offset of overpayment. Accordingly, petitioner is not entitled to claim relief under either section 6015(b) or section 6015(c) for 2014. II. Petitioner is not entitled to equitable relief under 20 section 6015(f). 21 22 23 24 25 Having determined that petitioner is not entitled to relief under section 6015(b) or section 6015(c) for 2014, the Court considers whether petitioner is entitled to equitable relief from the understatement pursuant to section 6015(f) with respect to the erroneous item reported on her joint federal income tax return for 9 2014. See Capehart v. Commissioner, T.C. Memo. 2004-268, aff'd, 204 23 Fed. Appx. 618 (9th Cir. 2006). Under Rev. Proc. 2013-34, § 4.03(2), 2013-43 I.R.B. 397, 400-03, sets forth seven nonexclusive factors to be considered in determining whether a requesting spouse is entitled to equitable relief under section 6015(f): (1) marital status; (2) economic hardship; (3) knowledge or reason to know that the tax liability would not be paid; (4) legal obligation to pay the outstanding income tax liability; (5) receipt of a significant benefit from the unpaid income tax liability; (6) compliance with the income tax laws; and (7) the mental or physical health of the requesting spouse. All these factors are to be weighed appropriately, and no one factor is determinative. See Pullins v. Commissioner, 136 T.C. 432, 448 (2011); Kellam v. Commissioner, T.C. Memo. 2013-186 at *26. The Court considers those factors in the present case as follows. 1. Marital status. This factor weighs in favor of relief because petitioner has been separated from her husband since 2012. 2. Economic Hardship. This factor weighs against relief because in her Form 8857 petitioner indicated that her income exceeded her expenses. 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 ofDLerroneous item 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. Knowledge or reason to know. This factor 10 weighs against relief because petitioner knew that her husband had withdrawn the IRA and pension funds and she in fact reported it on the 2014 joint return. 4. Legal obligation to pay the outstanding income tax liability. This factor is neutral. There is not any indication that the petitioner and her husband have determined who has an obligation to pay the outstanding income tax liability. Petitioner testified that her husband did not complete the requirements for bankruptcy and therefore implied that both she and he are obligated to pay the income tax liability. 5. Significant benefit. This factor weighs in favor of relief. Petitioner testified that her husband pawned her truck to pay his gambling debts. From this the Court concludes that petitioner did not receive a significant benefit from the withdrawn retirement funds. 6. Compliance with the tax laws. This factor weighs in favor of relief as petitioner has filed her federal tax returns and the record does not indicate that she has incurred any 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 future liabilities. 11 7. Mental or physical health. Petitioner on her Form 8857 answered no to the questions about abuse and did not state any evidence of mental or physical health problems. She testified that she does not suffer from PTSD. At trial, she asserted that she could not confront the problems she experienced with her husband and that she was scared that loan sharks trying to collect her husband's debts might harm her. However, the Court notes that currently petitioner lives a far distance from her husband so that any risk of harm due to loan sharks seeking to hurt her husband does not appear to be a risk of harm to petitioner. The Court does not merely add up the factors for, against, and neutral to make its determination. Rather the factor of knowledge is often a key factor in determining whether a spouse should qualify for equitable relief. Given that petitioner had knowledge of the retirement distributions, reported the amount on the couple's tax return that she prepared, and that she did not fear any physical or mental abuse from her husband for not reporting the full amounts as taxable, the Court concludes that petitioner is not entitled to equitable relief under section 6015(f). Conclusion 12 The Court concludes that petitioner is not entitled to relief from joint and several liability for the 2014 joint income tax liability under sections 6015(b), (c), or (f). In order to give effect to our disposition of the case, a decision will be entered for respondent. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 4:15 p.m., the above-entitled matter was concluded.) 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 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 CERTIFICATE OF TRANSCRIBER AND PROOFREADER 13 CASE NAME: Carol D. Gomez v. Commissioner DOCKET NO.: 3339-24S We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 13 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Cassidy B. Holland on December 11, 2024 before the United States Tax Court at its remote session in Washington, DC, in accordance with the applicable provisions of the current verbatim reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording. _______________________________________________ Susan Patterson, CDLT-174 12/17/24 Transcriber Date _______________________________________________ Traci Fine, CDLT-169 Proofreader 1/5/25 Date