Court Opinion

ID: 4336769
Source: CourtListenerOpinion
Date Created: 2018-11-14 02:59:53.936968+00
Date Added: 2024-06-11T14:47:03.632013
License: Public Domain

129 T.C. No. 11

                   UNITED STATES TAX COURT

SUZANNE VANCE FAIN, a.k.a. SUZANNE FAIN-POISSON, Petitioner v.
         COMMISSIONER OF INTERNAL REVENUE, Respondent

   Docket No. 214-07.               Filed October 2, 2007.

        P sought review of respondent’s denial of
   innocent-spouse relief under section 6015, triggering
   respondent’s obligation to notify her husband of his
   right to intervene. Her husband died before receiving
   the notice. Respondent moved for a continuance to
   allow notification of any heirs or personal
   representatives of his estate.

        Held: A nonrequesting spouse’s right to intervene
   survives death, and respondent is obliged to try
   appropriate means to notify any heirs, executors, or
   administrators.

        Thomas E. Crowe, for petitioner.

        Derek W. Kaczmarek, for respondent.
                                 - 2 -

                              OPINION

     HOLMES, Judge:   Suzanne Vance Fain filed this case when the

Commissioner refused to grant her innocent-spouse relief from her

unpaid tax liability for 1999.    Her case was already on a trial

calendar when Commissioner’s counsel realized that the IRS had

not notified her husband of his right to intervene.   That turned

out to be impossible--he was dead.

     We are called to plug a small but noticeable gap in the tax

law--is a nonrequesting spouse’s right to intervene extinguished

by death or does it instead pass to a successor-in-interest?

                            Background

     According to the pleadings already filed in this case, the

Fains filed a joint tax return for 1999.   It showed that they

owed about $15,000, but neither Fain paid.   The couple later

separated, and eventually the Commissioner began to try to

collect the unpaid tax.

     In February 2006, Suzanne filed a request for innocent-

spouse relief under section 60151 with the Commissioner.   He

denied it in September 2006, and Suzanne filed a petition seeking

review with this Court.   Section 6015(e)(4) required us to issue

rules that provide nonrequesting spouses “with adequate notice

     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code for the year in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
                                - 3 -

and an opportunity to become a party.”    Our Court’s Rule 325--

which we promulgated to answer that section’s call--requires the

IRS to serve notice that a petition has been filed "on the other

individual filing the joint return” no later than 60 days from

the date that the petition itself was served.    The Commissioner

overlooked this obligation here until the case was already on a

trial calendar.    Then he learned that Robert Fain had died in

2002.

                             Discussion

     The first question we have to answer is whether Robert’s

right to intervene survives his death.    There's no clear answer

in the Code or regulations, so we rely on analogy, some

background principles of law, and a nod to reasonableness.    We

start with the language of section 6015(e)(4), which gives a

nonrequesting spouse the unconditional right to “become a party.”

We have already held that this means that he has a right to

intervene within the meaning of rule 24(a)(1) of the Federal

Rules of Civil Procedure.    Van Arsdalen v. Commissioner, 123 T.C.

135, 143 (2004).    And it is generally the case that a right to

intervene passes to a decedent’s estate.    See, e.g., Salt River

Pima-Maricopa Indian Cmty. v. United States, 231 Ct. Cl. 1033

(1982).   An estate’s right to intervene in some cases does not,

of course, imply a general rule that all rights to intervene sur-

vive death.   But Franklin observed long ago that nothing in life
                                - 4 -

is certain but death and taxes.    And the Internal Revenue Code

makes sure that taxes survive even death.    Sec. 6901(a)(1)(A)(i),

(h).    The survival of a decedent’s tax liability means that as a

practical matter his heirs or beneficiaries may be affected by

the outcome of an innocent-spouse case.    The opportunity to

intervene is an opportunity to protect those interests, because

granting innocent-spouse relief will make the estate of the

nonrequesting spouse the only source of payment for any unpaid

tax the deceased has left behind.

       Turning to the Code again, we find that it also states, as a

general rule, that any person acting for another person in a

fiduciary capacity shall assume the powers, rights, duties, and

privileges of that person with respect to taxes, sec. 6903, and

that the word "fiduciary" includes executors and administrators,

sec. 7701(a)(6).

       We have already applied these sections to allow executors

and administrators to seek innocent-spouse relief, e.g., Jonson

v. Commissioner, 118 T.C. 106 (2002) (estate of deceased spouse

able to request relief under section 6015), affd. 353 F.3d 1181,

1184 (10th Cir. 2003), and the Commissioner himself has ruled

likewise, Rev. Rul. 2003-36, 2003-1 C.B. 849.    Construing the

Code to allow executors and administrators to intervene to oppose

relief seems equally justified.
                                - 5 -

       We finally note that allowing intervention is reasonable be-

cause it likely will increase the probability that we'll reach

the right result in any particular case.    This is why we’ve con-

strued the right of a living spouse to intervene not just to op-

pose a petition, e.g., King v. Commissioner, 115 T.C. 118, 125

(2000), but also to support it, e.g., Van Arsdalen, 123 T.C. at

142.

       We note that this is our construction of a statutory right,

and should not be confused with the issue of whether someone who

is jointly liable on a tax debt has constitutional standing to

challenge the Commissioner’s decision to let another taxpayer off

the hook for that debt.    The Ninth Circuit--the circuit to which

this case would be appealed because Suzanne was a Nevada resident

when she filed her petition--has held that a nonrequesting spouse

lacks standing to challenge on appeal our decision to grant

innocent-spouse relief precisely because the spouse’s liability

would remain the same whether or not relief was granted,

Baranowicz v. Commissioner, 432 F.3d 972, 975 (9th Cir. 2005),

affg. T.C. Memo. 2003-274, and we are not faced with that issue

here.

       The last question is what the Commissioner should do when

neither he nor the requesting spouse has any idea whether there

is an estate and whether it has a personal representative.    While

there may well be circumstances in which the Court’s discretion
                              - 6 -

points in another direction, in this case we agree with the

Commissioner that it is appropriate to use an analogy to our

long-followed procedure in deficiency cases.    That procedure, as

described in Nordstrom v. Commissioner, 50 T.C. 30, 32 (1968), is

to file an order requiring both parties

          to furnish the Tax Court, insofar as
          ascertainable and to the best of their
          abilities, the names and addresses of the
          heirs at law of the decedent, under the law
          of the jurisdiction wherein the decedent was
          a resident when his death occurred

and for the Court to then notify the heirs.     Id.

     We think this is the most reasonable procedure in the

absence of a statute or regulation providing differently.    To

enable the parties to search for heirs, this case will be

continued,

                                      And an appropriate order will

                               be issued.