Court Opinion

ID: 4338014
Source: CourtListenerOpinion
Date Created: 2018-11-14 03:40:08.156705+00
Date Added: 2024-06-11T09:38:18.242887
License: Public Domain

T.C. Memo. 2010-34

                      UNITED STATES TAX COURT

                  DANIKA K. KOSOLA, Petitioner
               AND JASON A. KOSOLA, Intervenor v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

     Docket No. 16020-06.             Filed February 23, 2010.

     Jan R. Pierce, for petitioner.

     Jason A. Kosola, pro se.

     Nhi T. Luu, for respondent.

             MEMORANDUM FINDINGS OF FACT AND OPINION

     MARVEL, Judge:   This case arises from petitioner’s request

for relief from joint and several liability under section
                               - 2 -

6015(f)1 with respect to liabilities reported on petitioner’s

2000 and 2001 joint Federal income tax returns.   Respondent

determined petitioner was not entitled to relief.   Petitioner

timely petitioned the Court seeking review of respondent’s

determination.   The sole issue for decision is whether petitioner

is entitled to relief under section 6015(f).

                         FINDINGS OF FACT

     Some of the facts have been stipulated.    The stipulation of

facts is incorporated herein by this reference.   Many of the

remaining facts are drawn from petitioner’s testimony at trial,

which we found to be credible.2   Petitioner resided in Oregon

when her petition was filed.

Background

     Petitioner and intervenor met in 1997 in Park City, Utah,

and began living together shortly thereafter.   Their relationship

was troubled from the beginning, and in January 1999 petitioner

briefly moved out of the home they shared.   During this

     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
     2
      In his reply brief, respondent calls our attention to
several alleged inconsistencies in petitioner’s statements with
respect to whether joint Federal income tax returns were filed
for petitioner and intervenor for 2000 and 2001, whether
petitioner saw the returns before they were filed or knew of the
underpayments reported on the returns, and whether petitioner and
intervenor had a joint checking account during the years at
issue. We do not find convincing respondent’s allegation that
petitioner made inconsistent statements.
                               - 3 -

separation, intervenor broke into the apartment petitioner was

renting, tore petitioner’s clothing, vandalized her schoolwork,

CDs, and other possessions, and urinated on her bed.   Around the

same time, intervenor was arrested for assaulting petitioner

after an incident in which he hit petitioner, put her in a

headlock, and refused to let her out of his truck.

     Despite these incidents the couple reconciled, and in

February or March 1999 petitioner discovered she was pregnant

with intervenor’s child.   The child was born in November 1999,

and the couple married on August 27, 2000.

     At the beginning of the marriage, intervenor owned a

painting business.   Intervenor maintained a separate checking

account for the business in 2000 and 2001.   Petitioner did not

participate in intervenor’s business and had no access to the

separate checking account or to intervenor’s business records.

In 2001 petitioner and intervenor moved from Utah to Oregon, and

intervenor began working for Hansen Architectural Systems.

Petitioner had a high school education during the relevant period

and rarely worked outside the home.    In 2000 petitioner earned no

income; in 2001 petitioner earned wages of $1,297 and nonemployee

compensation of $1,290.

     Petitioner and intervenor opened a joint bank account around

the time they moved to Oregon in 2001.   The account statements

were mailed to the couple’s home; petitioner had access to the
                                 - 4 -

statements and sometimes reviewed them.    Intervenor continued to

maintain a separate business account throughout the marriage, and

he paid the couple’s bills and managed the couple’s finances.

The couple lived a modest lifestyle in 2000 and 2001 and did not

take expensive vacations, buy expensive jewelry, or purchase

other luxuries.

     Petitioner occasionally asked intervenor whether he was

paying his taxes, and intervenor assured her he was.    In fact,

intervenor did not file timely Federal income tax returns for

2000 or 2001.    On or about April 3, 2003, intervenor untimely

filed joint Federal income tax returns for 2000 and 2001.     The

returns showed balances due of $14,6603 and $1,726 for 2000 and

2001, respectively.     Intervenor did not pay the taxes shown as

due on the returns.     On April 28, 2003, the Internal Revenue

Service (IRS) assessed the amounts shown on the returns.

     Petitioner did not review or sign the joint returns;

intervenor simply signed petitioner’s name without discussing the

returns with her.     The parties agree, however, that the returns

were valid joint Federal income tax returns.

         Intervenor continued to abuse petitioner physically and

emotionally throughout their marriage.     On one occasion,

intervenor shoved petitioner while she was holding their son.       On

     3
      Of the $14,660 of tax reported as due on the 2000 return,
$9,246, or 63 percent, was self-employment tax attributable to
intervenor’s business income.
                               - 5 -

another occasion petitioner was holding her keys and intervenor

squeezed her hand so hard that she fell to the ground and the

keys cut her hand.4   Petitioner sought and was granted a

restraining order after the latter incident.   Petitioner and

intervenor separated in 2004 and were divorced on March 31, 2005.

     As of the trial date, petitioner was living with her father

in Chula Vista, California.   Petitioner’s only source of income

as of the date of trial was unemployment benefits, her only asset

of significant value was a car for which she was making monthly

loan payments, and she testified that she had monthly expenses of

$1,525, not including rent, food, clothing, and personal care

items.5

     In the summer of 2003 petitioner learned for the first time

that intervenor had not timely filed joint returns for the couple

for 2000 and 2001 and that there was a balance due with respect

to each year.   On or about July 13, 2005, petitioner signed a

Form 8857, Request for Innocent Spouse Relief, for 2000 and 2001.

The IRS received the Form 8857 on July 21, 2005.   The tax

liabilities from which petitioner sought relief under section

     4
      Intervenor, who testified at trial, does not deny that he
abused petitioner. He suggested, however, that petitioner was
abusive toward him as well and that all of the incidents were
“two-way incidents”.
     5
      Petitioner testified that she had the following monthly
expenses: Automobile payment, $350; automobile insurance, $105;
credit card payments, $350; child support payment, $491; cellular
phone payment, $79; and student loan payment, $150.
                                - 6 -

6015 were underpayments of taxes reported on the couple’s 2000

and 2001 joint Federal income tax returns.   Petitioner also

completed a Form 12510, Questionnaire for Requesting Spouse, on

or about August 30, 2005.    On the Form 12510, petitioner stated

that she had “all access” to the couple’s joint checking account

and sometimes reviewed monthly bank statements but did not

balance the checkbook.   Petitioner also reported that she earned

$2,400 and spent $2,360 per month.

     On November 17, 2005, the IRS issued a preliminary

determination denying petitioner’s request for relief under

section 6015.   On December 4, 2005, petitioner completed and

signed a Form 12509, Statement of Disagreement, in which she

formally disagreed with the IRS’ preliminary determination.

Because petitioner disagreed with the IRS’ preliminary

determination, petitioner’s request for section 6015(f) relief

was forwarded to the IRS’ Office of Appeals for consideration.

On February 1, 2006, petitioner’s request for relief was assigned

to Appeals Officer Roland Banks (Mr. Banks).   Over the next few

months, Mr. Banks reviewed petitioner’s request and spoke to

petitioner and intervenor.

     On or about June 15, 2006, petitioner received an undated

Notice of Determination Concerning Your Request for Relief Under

the Equitable Relief Provision of Section 6015(f) (notice of

determination).   The notice of determination stated that the
                               - 7 -

Office of Appeals had denied petitioner’s request for relief

under section 6015(f) for 2000 and 2001.   According to the notice

of determination, the tax liabilities for which petitioner

remained liable, including penalties and accrued interest through

May 18, 2006, were $26,375.14 and $2,272.70 for 2000 and 2001,

respectively.

     The notice of determination was accompanied by an Appeals

case memorandum (memorandum), which included a check-the-box

analysis of petitioner’s request for section 6015(f) relief and a

brief narrative.   In the check-the-box portion of the memorandum,

the Office of Appeals concluded that petitioner failed to

establish that it was reasonable for her to believe that

intervenor would pay the reported liability.   The Office of

Appeals made no determination with respect to whether petitioner

would face economic hardship if respondent denied her request for

relief.   In the narrative portion of the memorandum, the Office

of Appeals concluded:   “The testimony given by the * * *

[intervenor] was credible and gave a more accurate account of the

events leading up to underpayment [sic] than that offered by

* * * [petitioner].”6

     6
      The analysis contained in the notice of determination and
memorandum was superficial, summary, and incomplete. The
memorandum concluded, for example, that petitioner knew the taxes
for 2000 and 2001 would not be paid when she signed the returns
in 2003; in fact, petitioner never signed the 2000 or 2001 joint
Federal income tax returns. Moreover, the memorandum concluded
                                                   (continued...)
                               - 8 -

     The IRS applied the following credits to petitioner and

intervenor’s joint Federal income tax liabilities (including

penalties and interest):   (1) An overpayment credit of $530.43

from intervenor’s 2004 taxable year, which was applied on April

15, 2005; (2) an overpayment credit of $1,187.15 and accrued

interest of $5.85 from intervenor’s 2006 taxable year, which were

applied on April 15, 2007; and (3) an overpayment credit of

$1,337.79 and accrued interest of $559.37 from intervenor’s 2007

taxable year, which were applied on April 15, 2008.    As a result

the 2001 Federal income tax liability has been satisfied.    The

2000 joint Federal income tax liability remains unpaid.

                              OPINION

I.   Section 6015(f)

     In general, married taxpayers who file a joint Federal

income tax return are jointly and severally liable for the tax

reported or reportable on the return.    Sec. 6013(d)(3); Butler v.

Commissioner, 114 T.C. 276, 282 (2000).     Under section 6015,

however, a spouse may obtain relief from joint and several

liability in certain circumstances.     Section 6015(a)(1) provides

     6
      (...continued)
that petitioner had not established she would face economic
hardship if her request for relief were denied, but there is no
indication that the Office of Appeals conducted a meaningful
analysis of petitioner’s financial situation. Finally, some of
the analysis contained in the memorandum apparently came from
another taxpayer’s case and was simply cut from the other
taxpayer’s document and pasted into the memorandum without
changing the other taxpayer’s name.
                                - 9 -

that a spouse who has made a joint return may seek relief from

joint and several liability under section 6015(b) (dealing with

relief from liability for an understatement of tax on a joint

return).    Section 6015(a)(2) provides that an eligible spouse may

elect to limit his or her liability for a deficiency with respect

to a joint return under section 6015(c) (dealing with relief from

joint and several liability for taxpayers who are no longer

married or who are legally separated or no longer living

together).    If relief is not available under section 6015(b) or

(c), an individual may seek equitable relief under section

6015(f).    Section 6015(f) provides:

           SEC. 6015(f). Equitable Relief.--Under procedures
      prescribed by the Secretary, if--

                 (1) taking into account all the facts and
            circumstances, it is inequitable to hold the
            individual liable for any unpaid tax or any
            deficiency (or any portion of either); and

                 (2) relief is not available to such
            individual under subsection (b) or (c),

      the Secretary may relieve such individual of such
      liability.

Petitioner contends she is entitled to relief from joint and

several liability under section 6015(f).

II.   Jurisdiction

      The Tax Court is a court of limited jurisdiction, and it may

exercise its jurisdiction only to the extent authorized by

Congress.    See sec. 7442; Moore v. Commissioner, 114 T.C. 171,
                              - 10 -

175 (2000); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).     Our

jurisdiction to review petitioner’s request for equitable relief

is conferred by section 6015(e), which allows a spouse who has

sought relief under section 6015(b), (c), or (f) to contest the

Commissioner’s denial of relief by timely filing a petition in

the Tax Court.   Before December 20, 2006, section 6015(e)(1)

provided that we had jurisdiction to review the Commissioner’s

denial of relief under section 6015 “In the case of an individual

against whom a deficiency has been asserted and who elects to

have subsection (b) or (c) apply”.     Thus, in Billings v.

Commissioner, 127 T.C. 7, 16-17 (2006), we held that former

section 6015(e)(1) did not provide us with jurisdiction to review

a nondeficiency, stand-alone petition.     Soon after our decision

in Billings, Congress amended section 6015(e)(1) to provide that

this Court has jurisdiction over nondeficiency, stand-alone

petitions and added to that section the words “or in the case of

an individual who requests equitable relief under subsection

(f)”.   See Tax Relief and Health Care Act of 2006, Pub. L. 109-

432, div. C, sec. 408(a), 120 Stat. 3061; Kollar v. Commissioner,

131 T.C. __, __ (2008) (slip. op. at 5-6).    The amendment applies

to tax liabilities arising or remaining unpaid on or after

December 20, 2006.   Kollar v. Commissioner, supra at __ (slip.

op. at 6).   Some part of petitioner’s tax liability for each of

the years 2000 and 2001 remained unpaid on December 20, 2006.
                                - 11 -

Accordingly, we have jurisdiction to review petitioner’s request

for equitable relief.

III. The Standard and Scope of Review

      In cases brought under section 6015(f) we apply a de novo

standard of review as well as a de novo scope of review.      Porter

v. Commissioner, 132 T.C. __, __    (2009) (slip. op. at 12).7

Petitioner bears the burden of proving that she is entitled to

relief under section 6015(f).    See id.; see also Rule 142(a).

IV.   Rev. Proc. 2003-61

      The Commissioner evaluates requests for section 6015(f)

relief filed on or after November 1, 2003, using procedures set

forth in Rev. Proc. 2003-61, 2003-2 C.B. 296.     Porter v.

Commissioner, supra at __ (slip. op. at 12) (citing Banderas v.

Commissioner, T.C. Memo. 2007-129).      Rev. Proc. 2003-61, supra,

supersedes Rev. Proc. 2000-15, 2000-1 C.B. 447, and is effective

for petitioner’s request for relief, which was filed after

November 1, 2003.   Rev. Proc. 2003-61, secs. 6 and 7, 2003-2 C.B.

at 299.

      7
      Respondent disagrees with our recent holding in Porter v.
Commissioner, 132 T.C. __, __ (2009) (slip. op. at 12).
Respondent argues that the appropriate standard of review in sec.
6015(f) cases is abuse of discretion and the scope of review
should be limited to the administrative record. We decline to
revisit our holding in Porter v. Commissioner, supra, at this
time. We note, however, that respondent’s determination was so
superficial and incomplete, see supra note 6, that we might well
have concluded that respondent abused his discretion if the
appropriate standard of review were abuse of discretion as
respondent contends.
                               - 12 -

     A.    Section 4.01:   The Threshold Requirements

     Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. at 297-298, sets

forth seven threshold conditions a requesting spouse must satisfy

to be eligible to submit a request for relief under section

6015(f):   (1) The taxpayer filed joint Federal income tax returns

for the taxable year or years for which relief is sought; (2) the

taxpayer does not qualify for relief under section 6015(b) or

(c); (3) the taxpayer applies for relief no later than 2 years

after the date of the Commissioner’s first collection activity

after July 22, 1998, with respect to the taxpayer;8 (4) no assets

were transferred between the spouses filing the joint returns as

part of a fraudulent scheme by such spouses; (5) there were no

disqualified assets transferred to the taxpayer by the

nonrequesting spouse; (6) the taxpayer did not file the returns

with fraudulent intent; and (7) the liability from which relief

is sought is attributable to an item of the nonrequesting spouse.

Respondent concedes, and we agree, that petitioner satisfies all

of the threshold conditions.

     B.    Section 4.02:   The Safe Harbor Requirements

     If a requesting spouse fulfills the threshold requirements

of Rev. Proc. 2003-61, sec. 4.01, the Commissioner ordinarily

will grant relief from joint and several liability with respect

     8
      This Court has invalidated the 2-year limitation. Lantz v.
Commissioner, 132 T.C. ___ (2009), on appeal (7th Cir., Sept. 21,
2009); see Olson v. Commissioner, T.C. Memo. 2009-294 n.10.
                              - 13 -

to underpayments on a joint Federal income tax return, provided

all of the following additional requirements are satisfied:    (1)

On the date of the request for relief, the requesting spouse is

no longer married to, or is legally separated from, the

nonrequesting spouse; (2) on the date the requesting spouse

signed the joint return, the requesting spouse did not know, and

had no reason to know, that the nonrequesting spouse would not

pay the tax liability; and (3) the requesting spouse will suffer

economic hardship if the Commissioner does not grant relief.

Rev. Proc. 2003-61, sec. 4.02, 2003-2 C.B. at 298.

     Respondent concedes that petitioner was divorced from

intervenor on the date she requested relief under section

6015(f).   However, respondent contends that petitioner has not

established that she had no knowledge or reason to know, on the

date the 2000 and 2001 joint Federal income tax returns were

signed, that the underpayments reported on those returns would

not be paid or that she would face economic hardship if her

request for relief were denied.   Accordingly, respondent argues

that petitioner has not satisfied the Rev. Proc. 2003-61, sec.

4.02, safe harbor requirements.   We disagree.

           1.   Knowledge or Reason To Know

     Respondent observes that this case boils down to a question

of witness credibility and that we are under no obligation to

accept self-serving, uncorroborated testimony.   See Ishizaki v.
                              - 14 -

Commissioner, T.C. Memo. 2001-318 (citing Tokarski v.

Commissioner, 87 T.C. 74, 77 (1986)).    Respondent contends that

petitioner’s trial testimony was inconsistent with statements she

made earlier on Forms 8857 and 12510 and that petitioner has

therefore failed to establish that she did not know, and had no

reason to know, that the underpayments reported on her 2000 and

2001 joint Federal income tax returns would not be paid.    We find

respondent’s argument unpersuasive.    Indeed, the statements

respondent highlighted as examples of petitioner’s supposedly

inconsistent testimony are, in fact, consistent.

     On the basis of the record before us, we conclude that

petitioner did not know, and had no reason to know, that the

underpayments reported on her 2000 and 2001 joint Federal income

tax returns would not be paid.   Petitioner asked intervenor

whether he had paid the couple’s taxes, and he assured her

everything was fine.   Petitioner neither signed nor reviewed the

2000 and 2001 joint Federal income tax returns; intervenor signed

petitioner’s name and submitted the returns without her

knowledge.9

     Even if petitioner had reviewed the returns, she would not

have known or had reason to know that the liabilities reported on

the returns would not be paid.   Although petitioner had access to

     9
      In reaching this conclusion, we specifically find that
intervenor’s testimony on these disputed factual issues is not
credible.
                               - 15 -

the couple’s joint checking account and bank statements,

petitioner had, at best, an incomplete picture of her and

intervenor’s financial situation.   Intervenor was responsible for

paying bills, balancing the couple’s checkbook, and managing the

couple’s finances.   Moreover, petitioner was not involved in

intervenor’s business and had no access to intervenor’s business

checking account.    Thus, even if petitioner had reviewed the 2000

and 2001 joint Federal income tax returns and seen that there was

a balance due, she would not have known, or had reason to know,

that intervenor would not pay the tax liabilities.   Finally, the

couple lived a modest lifestyle during the time at issue and did

not make any lavish purchases that should have caused petitioner

to suspect intervenor had not paid the couple’s tax liabilities.

          2.    Economic Hardship

     In determining whether a requesting spouse will suffer

economic hardship if the Commissioner denies his or her request

for section 6015(f) relief, Rev. Proc. 2003-61, sec. 4.02,

directs the Commissioner to base his decision on rules similar to

those found in section 301.6343-1(b)(4), Proced. & Admin. Regs.,

which provides that an economic hardship exists if an individual

is unable to pay reasonable basic living expenses.   In

determining a reasonable amount for basic living expenses, the

Commissioner shall consider information provided by the taxpayer,

including:   (1) The taxpayer’s age, employment status and
                              - 16 -

history, ability to earn, number of dependents, and status as a

dependent of someone else; (2) the amount reasonably necessary

for food, clothing, housing, utilities, medical expenses,

transportation, child support, and other necessities; (3) the

cost of living in the geographical area in which the taxpayer

lives; (4) the amount of property available to pay the taxpayer’s

expenses; (5) any extraordinary expenses, including educational

expenses; and (6) any other factor that the taxpayer claims bears

on economic hardship and brings to the Commissioner’s attention.

Sec. 301.6343-1(b)(4)(ii), Proced. & Admin. Regs.

     Respondent argues that petitioner has failed to establish

she would suffer economic hardship if her request for relief were

denied because she failed to substantiate her income and

expenses.   Although we are not required to accept petitioner’s

uncorroborated testimony, see Ishizaki v. Commissioner, supra,

neither are we required to reject petitioner’s testimony if we

find it credible, see, e.g., Washington v. Commissioner, 120 T.C.
137, 150 (2003).

     Petitioner testified that she was unemployed and had never

earned more than $14 per hour even when she was employed.   She

further testified that her only source of income as of the date

of trial was unemployment benefits and her only asset of

significant value was a car for which she was making monthly loan

payments.   Moreover, petitioner testified that she had expenses
                             - 17 -

of $1,525 per month, not including food, clothing, housekeeping

supplies, personal care, and other necessities.   Finally,

petitioner testified that she was not paying rent to her father

as of the trial date but that she hoped to begin paying rent as

soon as she could find a job and that she moved in with her

father only because she could not survive financially in Oregon.

Although much of petitioner’s testimony, including her monthly

expenses, was unsubstantiated, we find her testimony to be

honest, forthright, and credible.   Thus, we conclude on the basis

of petitioner’s testimony that petitioner would face economic

hardship if her request for relief under section 6015(f) were

denied.

     In summary, we conclude petitioner has satisfied the Rev.

Proc. 2003-61, sec. 4.02, safe harbor requirements and is

therefore entitled to equitable relief under section 6015(f).

     C.   Section 4.03: Factors for Determining Whether To Grant
          Equitable Relief

     Although we conclude that petitioner qualifies under the

safe harbor of Rev. Proc. 2003-61, sec. 4.02, because respondent

based his determination on the factors enumerated in Rev. Proc.

2003-61, sec. 4.03, 2003-2 C.B. at 298-299, we shall also review

whether petitioner qualifies for equitable relief under Rev.

Proc. 2003-61, sec. 4.03.

     If a requesting spouse satisfies the threshold requirements

of Rev. Proc. 2003-61, sec. 4.01, but fails to satisfy one or
                              - 18 -

more of the safe harbor requirements of Rev. Proc. 2003-61, sec.

4.02, the Commissioner may still grant relief under section

6015(f) on the basis of a variety of factors.       Rev. Proc. 2003-

61, sec. 4.03(1).   The following list is not exclusive, and no

single factor is determinative:

          (a) Factors that may be relevant to whether the
     Service will grant equitable relief include, but are
     not limited to, the following:

          (i) Marital status. Whether the requesting spouse
     is separated (whether legally separated or living
     apart) or divorced from the nonrequesting spouse. * * *

          (ii) Economic hardship. Whether the requesting
     spouse would suffer economic hardship (within the
     meaning of section 4.02(1)(c) of this revenue
     procedure) if the Service does not grant relief from
     the income tax liability.

          (iii) Knowledge or reason to know.

          (A) Underpayment cases. In the case of an income
     tax liability that was properly reported but not paid,
     whether the requesting spouse did not know and had no
     reason to know that the nonrequesting spouse would not
     pay the income tax liability.

               *     *    *    *    *    *      *

          (C) Reason to know. For purposes of (A) and (B)
     above, in determining whether the requesting spouse had
     reason to know, the Service will consider the
     requesting spouse's level of education, any deceit or
     evasiveness of the nonrequesting spouse, the requesting
     spouse's degree of involvement in the activity
     generating the income tax liability, the requesting
     spouse's involvement in business and household
     financial matters, the requesting spouse's business or
     financial expertise, and any lavish or unusual
     expenditures compared with past spending levels.

          (iv) Nonrequesting spouse’s legal obligation.
     Whether the nonrequesting spouse has a legal obligation
                           - 19 -

     to pay the outstanding income tax liability pursuant to
     a divorce decree or agreement. This factor will not
     weigh in favor of relief if the requesting spouse knew
     or had reason to know, when entering into the divorce
     decree or agreement, that the nonrequesting spouse
     would not pay the income tax liability.

          (v) Significant benefit. Whether the requesting
     spouse received significant benefit (beyond normal
     support) from the unpaid income tax liability or item
     giving rise to the deficiency. See Treas. Reg. §
     1.6015-2(d).

          (vi) Compliance with income tax laws. Whether the
     requesting spouse has made a good faith effort to
     comply with income tax laws in the taxable years
     following the taxable year or years to which the
     request for relief relates.

Rev. Proc. 2003-61, sec. 4.03(2)(a).

          (b) Factors that, if present in a case, will weigh
     in favor of equitable relief, but will not weigh
     against equitable relief if not present in a case,
     include, but are not limited to, the following:

          (i) Abuse. Whether the nonrequesting spouse
     abused the requesting spouse. The presence of abuse is
     a factor favoring relief. A history of abuse by the
     nonrequesting spouse may mitigate a requesting spouse's
     knowledge or reason to know.

          (ii) Mental or physical health. Whether the
     requesting spouse was in poor mental or physical health
     on the date the requesting spouse signed the return or
     at the time the requesting spouse requested relief.
     The Service will consider the nature, extent, and
     duration of illness when weighing this factor.

Rev. Proc. 2003-61, sec. 4.03(2)(b).

We now consider each of the factors discussed above.

          1.   Marital Status

     Respondent concedes that petitioner was divorced when she

filed her request for relief.   This factor favors petitioner.
                                 - 20 -

          2.   Economic Hardship

     For the reasons discussed above, see supra pp. 16-18, we

believe petitioner would face economic hardship if her request

for relief under section 6015(f) were denied.    This factor favors

petitioner.

          3.   Knowledge or Reason To Know

     Rev. Proc. 2003-61, sec. 4.03, lists six factors to be

considered when determining whether a requesting spouse had

knowledge or reason to know that a deficiency or underpayment

reported on a joint Federal income tax return would not be paid:

(1) The requesting spouse’s level of education; (2) any deceit or

evasiveness of the nonrequesting spouse; (3) the requesting

spouse’s degree of involvement in the activity generating the

income tax liability; (4) the requesting spouse’s involvement in

business and household financial matters; (5) the requesting

spouse’s business or financial expertise; and (6) any

expenditures that are lavish or unusual compared with past

spending levels.   All six factors favor petitioner.   Petitioner

has a high school education.10    Intervenor was deceitful to

petitioner; when she inquired whether he was paying the couple’s

taxes, he assured her everything was fine.    Petitioner had no

involvement in intervenor’s business, and she did not have access

     10
      Although petitioner has taken some college courses, none
of the courses was in accounting, business, or finance.
                             - 21 -

to his business records or his business checking account.

Petitioner, who had no business or financial expertise, was only

minimally involved in household financial matters, and intervenor

handled the couple’s finances.    Finally, the couple did not make

any lavish or unusual purchases during the relevant period.    As a

result, we conclude this factor favors petitioner.

          4.   Nonrequesting Spouse’s Legal Obligation

     Petitioner and intervenor’s divorce decree provides for the

distribution of various debts but does not list the tax

liabilities as a debt of the marriage, nor does it assign

responsibility for paying the tax liabilities.   Under the

circumstances, this factor is neutral.

          5.   Significant Benefit

     There is no evidence that petitioner significantly

benefited, beyond ordinary support, from the underpayment of tax.

This factor favors petitioner.

          6.   Compliance With Federal Income Tax Laws

     Petitioner has made a good-faith effort to comply with

Federal income tax laws in the years following the years to which

her request for relief relates.   This factor favors petitioner.

          7.   Abuse

     Petitioner contends, and intervenor does not deny, that

intervenor abused petitioner physically and emotionally before,

during, and after their marriage.    This factor favors petitioner.
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           8.     Mental or Physical Health

     There is no suggestion in the record that petitioner was in

poor mental or physical health on the date the returns were

filed, at the time she requested relief, or at any other relevant

time.   This factor is neutral.

     In summary, six of the eight factors favor granting relief

and two are neutral.    The factors as a whole overwhelmingly favor

granting petitioner relief under section 6015(f).      Accordingly,

we conclude that petitioner is entitled to relief from joint and

several liability under section 6015(f).

V.   Conclusion

     On the basis of the foregoing, we conclude that petitioner

satisfied the threshold conditions of Rev. Proc. 2003-61, sec.

4.01, and the safe harbor requirements of Rev. Proc. 2003-61,

sec. 4.02, because she established:      (1) She was divorced from

intervenor when she filed her request for relief; (2) she did not

know, and had no reason to know, that the tax liabilities

reported on the 2000 and 2001 returns would not be paid; and (3)

she would suffer economic hardship if her request for relief were

not granted.    Alternatively, even if we were to conclude that

petitioner did not satisfy the requirements of the safe harbor,

our analysis of the factors set forth in Rev. Proc. 2003-61, sec.

4.03, overwhelmingly favors granting petitioner’s request for

equitable relief under section 6015(f).       We therefore hold that
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petitioner is entitled to relief from joint and several liability

under section 6015(f).

     Although our holding encompasses the 2001 tax liability,

paid in full after respondent issued his notice of determination,

from overpayment credits of intervenor, we note that our holding

will not result in a refund for petitioner.    Petitioner did not

claim a refund for 2001, nor did she prove that she is entitled

to one.

     We have considered the parties’ remaining arguments for

results contrary to those discussed herein, and to the extent not

discussed above, we conclude those arguments are irrelevant,

moot, or without merit.

     To reflect the foregoing,

                                      Decision will be entered for

                                 petitioner.