Court Opinion

ID: 9945927
Source: CourtListenerOpinion
Date Created: 2024-02-28 20:02:13.37345+00
Date Added: 2024-06-11T14:23:20.255373
License: Public Domain

United States Tax Court

                                T.C. Memo. 2024-26

                            ZOFIA KRASZEWSKA,
                                 Petitioner,
                          AND SIMON P. RICKS, JR.,
                                 Intervenor

                                           v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                      __________

Docket No. 10508-21.                                      Filed February 28, 2024.

                                      __________

Zofia Kraszewska, pro se.

Simon P. Ricks, Jr., pro se.

Paulmikell A. Fabian, for respondent.

         MEMORANDUM FINDINGS OF FACT AND OPINION

       VASQUEZ, Judge: Zofia Kraszewska (petitioner) and Simon P.
Ricks, Jr. (intervenor), filed a joint federal income tax return for tax year
2017. By notice of deficiency dated February 26, 2021, respondent
determined a deficiency in their 2017 federal income tax of $6,931 and
a section 6662(a)1 accuracy-related penalty of $1,377.40. Petitioner
seeks review of the notice of deficiency. The sole issue for decision is
whether petitioner is entitled to relief under section 6015(b).

       Intervenor did not petition this Court in response to the notice of
deficiency but later intervened in this case to oppose petitioner’s request

       1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C., in effect at all relevant times, and Rule references are to the Tax
Court Rules of Practice and Procedure.

                                  Served 02/28/24
                                         2

[*2] for relief from joint and several liability. Petitioner and respondent
agree that she is entitled to section 6015(b) relief for the year at issue.
However, intervenor opposes such relief.

        For the reasons that follow, we hold that petitioner is entitled to
full relief from the deficiency and accuracy-related penalty under section
6015(b).

                             FINDINGS OF FACT

         Some of the facts have been stipulated and are so found here and
throughout. The Stipulation of Facts and the accompanying Exhibits are
incorporated by this reference. Petitioner and intervenor resided in
states where an appeal would normally lie to the U.S. Court of Appeals
for the Ninth Circuit when the Petition and Notice of Intervention were
filed. 2 See § 7482(b).

I.     Petitioner and Intervenor’s Marriage

        Petitioner and intervenor met in 2014. When petitioner first met
intervenor, she was residing and working in the United States on an L–1
visa. 3 Petitioner was not a citizen of the United States, but her job
required frequent international travel. Upon the conclusion of her work
assignment, she left the United States but maintained a long-distance
relationship with intervenor.

       Petitioner visited intervenor in the United States multiple times,
without remaining in the country permanently. She and intervenor
married in September 2016, and petitioner moved to the United States
to reside with intervenor.

      Before the marriage, petitioner was consistently employed and
earned a comfortable living. However, petitioner ceased to be employed
when she moved to the United States, and for the duration of her
unemployment petitioner remained financially reliant on intervenor.

      The couple maintained separate and joint bank accounts, and
intervenor remained secretive about his finances. Intervenor did not

       2 By Order issued August 1, 2022, the Court sealed petitioner’s contact

information.
        3 The L–1 nonimmigrant visa enables an executive, manager, or employee with

specialized knowledge to work and reside in the United States if that individual has
been employed continuously for one year by a sponsoring employer. 8 U.S.C.
§ 1101(a)(15)(L).
                                          3

[*3] share his financial information with petitioner and refused to
answer questions about the details of the household finances.
Consequently, from the outset of the marital relationship, intervenor
controlled the financial aspects of their life together. In this regard,
intervenor was not forthcoming with any financial information, was
consistently evasive, and when approached with questions would not
provide petitioner with answers.

       Over time, the marriage became strained. Tensions between
petitioner and intervenor erupted in March 2019 when intervenor
demanded that petitioner vacate their residence and ejected her from
the premises. 4 Petitioner did not return to their marital home, and her
communication with intervenor was limited. At some point thereafter,
the parties obtained a divorce decree.

II.    Control of Financial Matters

       Throughout their marriage intervenor controlled all financial
aspects of the household. He was the primary breadwinner and
maintained a joint checking account through which all of his income and
expenses flowed, including the tax refund issued as a result of the 2017
tax return. By the 2017 tax year, petitioner was employed and reported
income of her own on their joint return. Nevertheless, petitioner’s
knowledge of intervenor’s finances as reported on the 2017 return was
limited to the activity in their joint checking account, which was
minimal.

III.   Preparation of the 2017 Joint Tax Return

      Petitioner and intervenor’s 2017 tax return was prepared by
intervenor as “married filing jointly” and electronically filed using
TurboTax. Intervenor told petitioner that he did not want her to be
involved in the tax preparation process because she lacked familiarity
with the American tax system. Petitioner therefore turned over her
relevant tax documents to intervenor, but her participation ended there.

       After preparing the return, intervenor instructed petitioner to
electronically sign it with a personal identification number (PIN), 5

       4 The parties dispute the events leading up to petitioner’s departure from their

mutual home.
       5 In lieu of a wet signature, a taxpayer who files a return electronically will

apply an electronic signature. To do so, the taxpayer selects a five-digit PIN. The
                                      4

[*4] which she did. Intervenor did not show her any part of the return,
other than the portion where she entered her electronic signature.

IV.    Tax Reporting and Notice of Deficiency

       Petitioner and intervenor filed their 2017 joint tax return on
April 7, 2018. They reported wages of $148,727 and itemized deductions
of $77,543, including unreimbursed employee expenses of $30,987
attributable to intervenor and $6,296 attributable to petitioner.

V.     Petitioner’s Request for Innocent Spouse Relief

        Petitioner timely filed a Petition with this court in which she
asserted that she was entitled to innocent spouse relief under section
6015; however, she did not request redetermination. Intervenor did not
respond to the notice of deficiency and therefore defaulted on it. Instead,
intervenor filed a Notice of Intervention on May 10, 2022, disputing
petitioner’s claim for innocent spouse relief but not the underlying
liability.

       On August 20, 2019, the Internal Revenue Service’s (IRS)
Cincinnati Centralized Innocent Spouse Operation received petitioner’s
Form 8857, Request for Innocent Spouse Relief, in which she requested
relief for the 2017 tax year under section 6015(b), (c), or (f). She
submitted a 4-page letter, a 1-page F8857 Amendment, bank account
statements, and 83 pages of additional documents.

      In her application petitioner explained that she did not review the
return before it was filed because intervenor prevented her from doing
so. She further stated that she had no knowledge of the contents of the
return, nor did she at any time have any indication that the return
contained erroneous items.

      Petitioner’s submissions to respondent also indicated, in relevant
part, that intervenor (1) made her afraid to disagree with him,
(2) controlled all aspects of their finances, (3) was “very secretive”
regarding all financial matters.

      In response to petitioner’s administrative request for relief,
intervenor filed Form 12508, Questionnaire for Non-Requesting Spouse,
and subsequently a Notice of Intervention. Intervenor disputed

taxpayer will input this five-digit PIN into his tax preparation software after
completing his return, before transmitting into the Internal Revenue Service.
                                    5

[*5] petitioner’s assertions and alleged, among other things, that
petitioner had (1) helped prepare their tax return, (2) reviewed the
return before it was filed, (3) was aware of every step of the tax
preparation process, and (4) received part of the tax refund.

       The tax examiner assigned to the case informed intervenor that,
if he had additional documents to provide, those documents would be
weighed in the decision whether to grant relief.

       However,      intervenor    never    provided    any    additional
documentation. Relying on petitioner’s statements and documentation
alone, the examiner concluded that petitioner was unaware of the
deductions which gave rise to the deficiency; therefore, the IRS granted
petitioner relief for the 2017 tax year under section 6015(b).

      Despite granting relief to petitioner, respondent subsequently
issued a notice of deficiency to both petitioner and intervenor for their
2017 tax year. The notice of deficiency does not incorporate the
administrative determination that petitioner is entitled to section
6015(b) relief.

        Petitioner timely filed her Petition with this Court on March 30,
2021. Pursuant to section 6015(e)(4) and Rule 325, intervenor
subsequently became a party to this case, opposing relief. At trial,
respondent agreed with petitioner that she is entitled to section 6015(b)
relief for the year at issue.

                                OPINION

I.    Jurisdiction

       There are three jurisdictional bases for the Court to review a
taxpayer’s entitlement to section 6015 relief. See Maier v. Commissioner,
119 T.C. 267, 270–71 (2002), aff’d, 360 F.3d 361 (2d Cir. 2004). First, a
spouse can file a petition pursuant to section 6015(e)(1). See Maier, 119
T.C. at 270–71. Second, the Court can review the claim in the context of
a CDP case under section 6330(d)(1). See Maier, 119 T.C. at 271. Third,
the claim can be asserted by a spouse as an affirmative defense in a
proceeding to redetermine a deficiency pursuant to section 6213(a). See
Maier, 119 T.C. at 270.

       Petitioner timely petitioned this Court in response to the notice
of deficiency. She raised her claim for relief as an affirmative defense to
the deficiency and penalty determined therein. Accordingly, this Court
                                    6

[*6] has jurisdiction to review petitioner’s claim for relief under section
6213(a).

II.    Evidentiary Matter

       The parties filed Simultaneous Opening and Answering Briefs as
directed by the Court. Petitioner’s and intervenor’s briefs contain factual
assertions that are not part of the trial record. Statements in briefs do
not constitute evidence. Rule 143(c); Evans v. Commissioner, 48 T.C.
704, 709 (1967), aff’d per curiam, 413 F.2d 1047 (9th Cir. 1969);
Chapman v. Commissioner, T.C. Memo. 1997-147, 1997 WL 125770,
at *4; Berglund v. Commissioner, T.C. Memo. 1995-536, 1995 WL
670068, at *4. The record in this case was closed at the conclusion of
trial on May 1, 2023. In reaching our conclusion, we have considered
only the testimony and other evidence admitted at trial and ignore those
portions of petitioner’s and intervenor’s Briefs that are not supported by
the trial record.

III.   Section 6015

       Generally, married taxpayers may elect to file a joint federal
income tax return. See § 6013(a). If a joint return is made, the tax is
computed on the spouses’ aggregate income, and each spouse is fully
responsible for the accuracy of the return and is jointly and severally
liable for the entire amount of tax shown on the return or found to be
owing. § 6013(d)(3); Butler v. Commissioner, 114 T.C. 276, 282 (2000).
Nevertheless, under certain circumstances, a spouse who has made a
joint return may seek relief from joint and several liability under
procedures set forth in section 6015, which provides a spouse with three
alternatives: (1) full or partial relief under subsection (b),
(2) proportionate relief under subsection (c), or (3) if relief is not
available under subsection (b) or (c), equitable relief under
subsection (f).

       Generally, the spouse requesting relief bears the burden of proof.
See Rule 142(a); Alt v. Commissioner, 119 T.C. 306, 311 (2002), aff’d, 101
F. App’x 34 (6th Cir. 2004). However, to the extent that the
Commissioner is no longer an adverse party to the taxpayer and the
intervenor opposes relief, the burden of proof would presumably shift to
the intervenor. See Stergios v. Commissioner, T.C. Memo. 2009-15, 2009
WL 151485, at *4 (first citing King v. Commissioner, 115 T.C. 118 (2000);
and then citing Corson v. Commissioner, 114 T.C. 354, 363 (2000)). We
need not decide whether the burden of proof shifts in the instant case
                                    7

[*7] because we decide the issues by a preponderance of the evidence.
See id.; see also Porter v. Commissioner, 132 T.C. 203, 214 (2009).

       For the reasons below, we will grant petitioner full relief under
section 6015(b).

IV.   Qualifications for Section 6015(b) Relief

      To qualify for relief from joint and several liability under section
6015(b)(1), a taxpayer must establish that:

             (A) a joint return has been made for a taxable year;
             (B) on such return there is an understatement of tax
      attributable to erroneous items of one individual filing the
      joint return;
             (C) the other individual filing the joint return
      establishes that in signing the return he or she did not
      know, and had no reason to know, that there was such
      understatement;
             (D) taking into account all the facts and
      circumstances, it is inequitable to hold the other individual
      liable for the deficiency in tax for such taxable year
      attributable to such understatement; and
             (E) the other individual elects (in such form as the
      Secretary may prescribe) the benefits of this subsection not
      later than the date which is 2 years after the date the
      Secretary has begun collection activities with respect to the
      individual making the election, . . . .

      The requirements of section 6015(b)(1) are stated in the
conjunctive. Accordingly, a failure to meet any one of them prevents a
requesting spouse from qualifying for relief offered therein.

      It is undisputed that a joint return has been made for the taxable
year at issue, that there was an understatement of tax on that return,
and that petitioner’s request for relief was timely filed. Therefore, we
need not address subparagraphs (A), (B), and (E).

       Accordingly, we next address (1) whether petitioner had
knowledge or reason to know of the understatement under
subparagraph (C) and (2) whether it is inequitable to hold her liable for
the deficiency in tax and the penalty attributable to the understatement
under subparagraph (D).
                                     8

[*8]   A.    Petitioner Has      Met     the   Requirements    of   Section
             6015(b)(1)(C)

       Respondent and petitioner agree that she did not know or have
reason to know about the understatement in the 2017 joint tax return.
Conversely, intervenor asserts that petitioner was sufficiently involved
in the preparation of their joint 2017 tax return that she had reason to
know of the deductions and, therefore, the understatement. For the
reasons below, we resolve this disagreement in petitioner’s favor.

      Because of intervenor’s concealment of all aspects of his finances
from petitioner, we find that for tax year 2017 petitioner neither knew,
nor had reason to know, of the origin of intervenor’s deductions claimed
on the joint income tax return. Because petitioner was not involved in
intervenor’s employment or business activities and the parties
maintained separate bank accounts, petitioner could not obtain any
knowledge of intervenor’s finances, income, or expenses. Without this
information, petitioner could not have had any knowledge of the
underlying expenses.

      Additionally, other than providing intervenor with her tax
documents, petitioner did not participate in the return preparation.
Although intervenor solicited petitioner’s electronic signature, and
although petitioner provided it, she was never given the opportunity to
examine the contents of the return and may have been prevented from
doing so.

       At trial, petitioner credibly testified that intervenor was secretive
and evasive regarding all of the household finances during their
marriage. We found petitioner’s testimony credible and consistent with
her allegations in the administrative record.

       We further find that petitioner’s lack of involvement was by the
design of intervenor, and with respect to the 2017 joint return, petitioner
had no actual or constructive knowledge of its contents. In the light of
the foregoing, petitioner satisfies the lack of knowledge requirement for
the year at issue.

       B.    Petitioner Has      Met     the   Requirements    of   Section
             6015(b)(1)(D)

       Under section 6015(b)(1)(D), we must determine whether, taking
into account all facts and circumstances, it is inequitable to hold
petitioner liable for the deficiency in tax attributable to the
                                     9

[*9] understatement. The factors we consider in determining inequity
for purposes of section 6015(b)(1)(D) are the same factors that we
consider in determining inequity for purposes of section 6015(f).
Garavaglia v. Commissioner, T.C. Memo. 2011-228, 2011 WL 4448913,
at *32, aff’d, 521 F. App’x 476 (6th Cir. 2013); Crouse v. Commissioner,
T.C. Memo. 2011-97.

       In Rev. Proc. 2013-34, § 4.03, 2013-43 I.R.B. 397, 400–03,
modifying and superseding Rev. Proc. 2003-61, 2003-2 C.B. 296, the
Commissioner provided a list of nonexclusive factors to take into account
when determining whether to grant equitable relief under section
6015(f): (1) marital status; (2) economic hardship; (3) in the case of an
understatement, knowledge or reason to know of the item giving rise to
the understatement; (4) legal obligation; (5) significant benefit;
(6) compliance with tax laws; and (7) mental or physical health. We will
address each factor in turn.

             1.     Marital Status

      If the requesting spouse is no longer married to the nonrequesting
spouse as of the time of our determination, this factor will weigh in favor
of granting relief. See Rev. Proc. 2013-34, § 4.03(2)(a), 2013-43 I.R.B.
at 400. Petitioner and intervenor have obtained a divorce decree.
Therefore, we find that this factor weighs in favor of relief to petitioner.

             2.     Economic Hardship

      We find that petitioner will experience economic hardship if relief
from the liability is not granted given her current level of income. See
Walters v. Commissioner, T.C. Memo. 1998-111; Dillon v. Commissioner,
T.C. Memo. 1998-5. Therefore, we find that this factor weighs in favor of
granting relief to petitioner.

             3.     Knowledge or Reason to Know

        As we concluded above, petitioner did not know and had no reason
to know of the items giving rise to the understatement for the year at
issue. Therefore, we find that this factor weighs in favor of granting
relief to petitioner.
                                     10

[*10]         4.     Petitioner’s History of Tax Compliance

        The record does not establish a history of tax noncompliance by
petitioner. Therefore, we find that this factor weighs in favor of granting
relief to petitioner.

              5.     Legal Obligation, Significant Benefit, and Health

       On the basis of the record, we conclude that the parties have not
otherwise agreed to allocate the tax liability. The record does not
establish that petitioner received a benefit due to the understatement of
tax. However, petitioner offered extensive medical records at trial that
indicated a history of various health problems. Therefore, we find that
the legal obligation, significant benefit, and mental or physical health
factors collectively weigh in favor of granting relief to petitioner.

V.      Conclusion

        Accordingly, we find that petitioner has satisfied all the
requirements for relief under section 6015(b) and is therefore entitled to
relief from joint and several liability on the joint return for the year at
issue.

       We have considered all arguments made in reaching our decision
and, to the extent not mentioned, we conclude that they are moot,
irrelevant, and without merit.

        To reflect the foregoing,

        Decision will be entered for petitioner.