Court Opinion

ID: 8210373
Source: CourtListenerOpinion
Date Created: 2022-09-29 19:01:35.204728+00
Date Added: 2024-06-11T16:41:50.253537
License: Public Domain

United States Tax Court

                        T.C. Summary Opinion 2022-20

                            STEPHEN H. COLLINS,
                                 Petitioner

                                          v.

              COMMISSIONER OF INTERNAL REVENUE,
                          Respondent

                                    —————

Docket No. 14017-17S.                                  Filed September 29, 2022.

                                    —————

Stephen H. Collins, pro se.

Emly B. Berndt, John D. Davis, and Nancy P. Klingshirn, for
respondent.

                             SUMMARY OPINION

       PARIS, Judge: This case was heard pursuant to the provisions of
section 7463 of the Internal Revenue Code in effect when the Petition
was filed. 1 Pursuant to section 7463(b), the decision to be entered is not
reviewable by any other court, and this Opinion shall not be treated as
precedent for any other case.

       Petitioner seeks review pursuant to section 6015(e)(1) of
respondent’s final determination with respect to petitioner’s request for
innocent spouse relief. Respondent granted relief under section 6015(c)
for an understatement of tax on petitioner’s jointly filed 2013 return but
denied a request for a refund. Petitioner filed a Petition with the Court
and requests a refund of amounts he paid to his former spouse and she

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

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

                                 Served 09/29/22
                                    2

remitted in payment of the liability. Petitioner filed a Petition with the
Court on June 26, 2017.

                              Background

       Petitioner resided in Ohio when he filed the Petition in this case.
Petitioner’s former spouse, Arnette G. Poore, was provided notice of her
right to intervene pursuant to Rule 325(a). Ms. Poore filed a Notice of
Intervention but was dismissed as intervenor for lack of prosecution by
Order dated September 23, 2019.

      Petitioner and Ms. Poore were married from 1980 until their
divorce in 2014. They timely filed a joint tax return for 2013, on which
they reported a tax liability of $33,044 and withholding of $27,440.
There was an underpayment of tax at the time of filing of $5,604,
excluding penalties and interest.

       Pursuant to the divorce decree issued by the Stark County
Domestic Relations Court on October 3, 2014, petitioner was ordered to
pay the underpayment of $5,604. Respondent’s certified transcript of
petitioner’s account reflects that the underpayment was satisfied by the
end of 2015.

        On November 16, 2015, respondent issued a notice of deficiency
to petitioner and Ms. Poore, reflecting an increase in tax for 2013 of
$9,549, a withholding credit of $6,681, and a penalty of $574
(collectively, understatement). Ms. Poore’s unreported withdrawal of
$33,408 from the Ohio Deferred Compensation Plan and unreported
interest income of $23 from her CSE Federal Credit Union account gave
rise to the notice of deficiency. Although the withdrawal occurred before
petitioner and Ms. Poore filed for divorce, petitioner was unaware of the
withdrawal until he received the notice of deficiency from respondent.

       In April 2016 petitioner submitted Form 8857, Request for
Innocent Spouse Relief, to the Internal Revenue Service. Respondent
issued a final determination denying relief for the underpayment under
section 6015(f), granting full relief from the understatement under
section 6015(c), and denying petitioner’s refund request.

       On August 10, 2016, the Domestic Relations Court ordered Ms.
Poore to pay the additional tax due for 2013, including any penalties and
interest. The Domestic Relations Court also ordered petitioner to
reimburse Ms. Poore for one-half of the additional tax by increasing his
                                    3

spousal support payment by $500 per month until his share was fully
paid, as follows:

      Wife is to pay any remaining Federal and State income tax
      due and owing for tax year 2013, including any penalties
      and interest. She is to fully account for the total amount
      expended and provide that accounting to Husband.
      Husband is to reimburse her for his one half share of the
      additional Federal and State tax including interest and
      penalties by paying additional spousal support. Husband
      is to reimburse Wife at the rate of $500.00 per month,
      beginning on September 1, 2016, and continuing for six
      months for a total of $3,000.00. This additional $500.00 per
      month is non-taxable to the Wife and non-deductible to the
      Husband. If Husband’s share of the taxes, interest and
      penalties is less than the $3,000.00 ordered paid herein,
      Wife is to reimburse him the difference within 30 days after
      the final tax liability is determined. If Husband’s share of
      the taxes, interest and penalties is more than the $3,000.00
      ordered paid herein, the additional $500.00 per month will
      recommence until his share has been fully paid. It would
      behoove both parties to cooperate fully in filing an
      amended return with the State of Ohio so that the liability
      to the State of Ohio can be fixed as soon as possible. This
      will help prevent an overpayment of Husband’s spousal
      support.

      Petitioner paid the additional $500 beginning September 1, 2016,
and continuing for seven to nine months, until the Domestic Relations
Court ordered the increased payment to cease.

       Ms. Poore made a payment of $3,945.14 to satisfy the 2013 joint
income tax liability on November 23, 2016, directly to the Internal
Revenue Service. The record does not indicate whether an amended
2013 Ohio State tax return was filed or what the additional liability on
that return was.

        Petitioner timely filed a Petition in which he requests a refund of
$3,000 for amounts paid to Ms. Poore that were used to satisfy the
liability.
                                          4

                                    Discussion

        Married taxpayers may elect to file a joint federal income tax
return. § 6013(a). If a joint return is made, generally each spouse is
jointly and severally liable for the entire tax due on their aggregate
income for that year. § 6013(d)(3). In certain circumstances, however,
section 6015 allows a spouse to obtain relief from joint and several
liability. § 6015(a). Under section 6015(a), a spouse may seek relief from
joint and several liability under section 6015(b) or, if eligible, may
allocate liability according to provisions set forth in section 6015(c). If a
taxpayer does not qualify for relief under section 6015(b) or (c), the
taxpayer may seek equitable relief under section 6015(f).

       A taxpayer may seek relief from joint and several liability by
raising the matter as an affirmative defense in a petition for
redetermination of a deficiency or, as in this case, by filing a stand-alone
petition challenging the Commissioner’s final determination denying
the taxpayer’s claim for such relief (or his failure to rule on the
taxpayer's claim within six months of its filing). See § 6015(e)(1); Maier
v. Commissioner, 119 T.C. 267, 270–71 (2002), aff’d, 360 F.3d 361 (2d
Cir. 2004).

       In determining whether a taxpayer is entitled to relief under
section 6015(b), (c), or (f), we apply a de novo standard and scope of
review. 2 Porter v. Commissioner, 132 T.C. 203, 210 (2009). Petitioner
generally bears the burden of proving that he is entitled to equitable
relief under section 6015(f). See Porter, 132 T.C. at 210; see also Rule
142(a)(1).

      Respondent determined, and petitioner agrees, that petitioner is
not entitled to relief with respect to the underpayment on the 2013
return. Petitioner does not dispute that determination.

       With respect to the understatement, respondent granted relief
under section 6015(c) but denied petitioner’s refund request. Petitioner
argues that, in addition to relief from joint and several liability, he
should be entitled to a refund of $3,000 for the amounts he was ordered
to pay, and did pay, to Ms. Poore in satisfaction of the liability. Petitioner
contends that, because he was ordered by the Domestic Relations Court
to pay additional spousal support as reimbursement to Ms. Poore for

       2 Because petitioner filed his Petition before July 1, 2019, section 6015(e)(7)

does not apply to this case. See Sutherland v. Commissioner, 155 T.C. 95, 104 (2020).
                                     5

one-half of the liability with respect to the understatement, he
effectively paid the tax himself.

       Section 6015(g)(1) provides: “Except as provided in paragraphs (2)
and (3), notwithstanding any other law or rule of law (other than section
6511, 6512(b), 7121, or 7122), credit or refund shall be allowed or made
to the extent attributable to the application of this section.” Section
6015(g)(3) limits the availability of a credit or refund, providing that
“[n]o credit or refund shall be allowed as a result of an election under
subsection (c).” Thus, petitioner may only be eligible for a refund if he is
entitled to relief under section 6015(b) or (f).

       The Court need not reach that question, however, because
petitioner has not demonstrated entitlement to a refund. Even assuming
arguendo that petitioner is eligible for relief under section 6015(b) or (f),
he would not be entitled to a refund because he did not remit any tax
payments to respondent with respect to the understatement. Before any
taxpayer may be allowed a refund or credit, there must be a
determination that the taxpayer made an overpayment. Minihan v.
Commissioner, 138 T.C. 1, 8 (2012); Cutler v. Commissioner, T.C. Memo.
2013-119, at *27. A taxpayer makes an overpayment if he remits funds
to the Secretary in excess of the tax for which he is liable. Jones v.
Liberty Glass Co., 332 U.S. 524, 531 (1947); Minihan, 138 T.C. at 9. To
prove that he has made an overpayment, the requesting spouse must
establish that he (and not the nonrequesting spouse) provided the funds
for the overpayment, and that the payments were not made with the
joint return and were not joint payments or payments that the
nonrequesting spouse made. Minihan, 138 T.C. at 9 (and cases cited
thereat); Cutler, T.C. Memo. 2013-119, at *28; see also Rev. Proc. 2013-
34, § 4.04, 2013-43 I.R.B. 397, 403.

       Pursuant to the order of the Domestic Relations Court dated
August 10, 2016, Ms. Poore was responsible for payment of the liability
with respect to the understatement due and owing, and she paid that
amount by check on November 23, 2016. Petitioner was ordered to
reimburse Ms. Poore for a portion of that liability and any related state
tax liability in the form of increased spousal support payments, which
he began making on September 1, 2016, and continued to make for seven
to nine months. Petitioner did not make any payments directly to the
Internal Revenue Service, and, indeed, most of his increased spousal
                                             6

support payments were not paid until after the liability was satisfied. 3
Accordingly, petitioner cannot be said to have made or been the source
of an overpayment. Petitioner’s request for refund is denied.

       The Court has considered all arguments made in reaching its
decision and, to the extent not mentioned herein, concludes that they
are moot, irrelevant, or without merit.

        To reflect the foregoing,

        Decision will be entered for respondent.

        3 Even if, given the fungible nature of money, petitioner can be said to have

indirectly paid a portion of the 2013 federal tax liability, the record is silent on whether
any additional Ohio state tax was due (and if so, what amount) or whether petitioner
received any reimbursement from Ms. Poore, as ordered by the Domestic Relations
Court.