                  T.C. Summary Opinion 2005-154



                     UNITED STATES TAX COURT



                WENDY L. CHADWICK, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 4991-04S.               Filed October 17, 2005.


     John W. Hart, for petitioner.

     Timothy B. Heavner, for respondent.



     GOLDBERG, Special Trial Judge:    This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.    The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority.    Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code in

effect for the years in issue.
                                 - 2 -

     This case arises from a request for relief under section

6015 with respect to unpaid taxes reported on joint returns filed

by petitioner and her former spouse for tax years 1995, 1997, and

1998.   Respondent determined that petitioner was not entitled to

any relief under section 6015.    Petitioner timely filed a

petition seeking review of respondent’s determination.

     The issue for decision is whether petitioner is entitled to

relief from joint and several liability for the taxable years

1995, 1997, and 1998, pursuant to section 6015.

                            Background

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.    Petitioner resided in

Ahoskie, North Carolina, on the date the petition was filed in

this case.

     Petitioner and her former spouse, David A. Tillotson (Mr.

Tillotson), were married on April 29, 1990.    During 1995, 1997,

and 1998, the years in issue, petitioner was married to Mr.

Tillotson.

     During 1995, petitioner was employed by JCPenney Life

Insurance and Graphic Products, Inc.     During 1995, Mr. Tillotson

was employed by Draperies and More, Inc.    JCPenney Life Insurance

prepared a 1995 Form W-2, Wage and Tax Statement, for petitioner

indicating wage income of $5,525.90 and Federal income tax
                                 - 3 -

withheld of $7.06.   Graphic Products, Inc. prepared a 1995 Form

W-2 for petitioner indicating wage income of $20,282.89 and

Federal income tax withheld of $1,745.49.   Draperies and More,

Inc. prepared a 1995 Form W-2 for Mr. Tillotson indicating wage

income of $8,343.27 and Federal income tax withheld of $243.

     Petitioner and Mr. Tillotson timely filed with the Internal

Revenue Service a joint Form 1040, U.S. Individual Income Tax

Return, for taxable year 1995.    On their jointly filed Form 1040,

petitioner and Mr. Tillotson reported:   (1) Wage income of

$34,152; (2) taxable interest income of $21; (3) taxable income

of $22,623; (4) Federal income tax withheld of $1,995; and (5) an

amount owed of $1,399.   Petitioner and Mr. Tillotson did not

satisfy the underpayment when they filed their joint 1995 Federal

income tax return.

     During 1997, petitioner was employed by JCPenney Life

Insurance and ODESCO.    During 1997, Mr. Tillotson was employed by

Intellect Network Technologies for part of the year.   Mr.

Tillotson was also self-employed during 1997.   JCPenney Life

Insurance prepared a 1997 Form W-2 for petitioner indicating wage

income of $9,434.92 and Federal income tax withheld of $584.83.

ODESCO prepared a 1997 Form W-2 for petitioner indicating wage

income of $1,283 and Federal income tax withheld of $118.01.

Intellect Network Technologies prepared a 1997 Form W-2 for Mr.
                               - 4 -

Tillotson indicating wage income of $884.54 and Federal income

tax withheld of $39.92.

     Petitioner and Mr. Tillotson timely filed with the Internal

Revenue Service a joint Form 1040 for taxable year 1997.     On

their jointly filed Form 1040, petitioner and Mr. Tillotson

reported:   (1) Wage income of $11,603, (2) business income of

$8,306, (3) pension and annuity income of $192, (4) taxable

income of $7,134, (5) self-employment tax of $1,173, (6) Federal

income tax withheld of $743, and (7) an amount owed of $1,548.

Petitioner and Mr. Tillotson attached a Schedule C, Profit or

Loss From Business, to their jointly filed 1997 Federal income

tax return.   On the Schedule C, Mr. Tillotson was identified as

the proprietor of a business named “Contract Installations”.

Petitioner and Mr. Tillotson did not satisfy the underpayment

when they filed their joint 1997 Federal income tax return.

     During 1998, petitioner was employed by ODESCO, Blair

Graphics, Inc., and Wyatt & Associates.   During 1998, Mr.

Tillotson was self-employed.   ODESCO prepared a 1998 Form W-2 for

petitioner indicating wage income of $72 and no Federal income

tax withheld.   Blair Graphics, Inc. prepared a 1998 Form W-2 for

petitioner indicating wage income of $4,994.10 and Federal income

tax withheld of $477.75.   Wyatt & Associates prepared a 1998 Form

W-2 for petitioner indicating wage income of $12,986.38 and

Federal income tax withheld of $1,262.68.
                               - 5 -

     Petitioner and Mr. Tillotson timely filed with the Internal

Revenue Service a joint Form 1040 for taxable year 1998.   On

their jointly filed Form 1040, petitioner and Mr. Tillotson

reported:   (1) Wage income of $18,052, (2) business income of

$6,059, (3)taxable income of $11,183, (5) self-employment tax of

$856, (6) Federal income tax withheld of $1,741, and (7) an

amount owed of $791.   Petitioner and Mr. Tillotson attached a

Schedule C to their jointly filed 1998 Federal income tax return.

On the Schedule C, Mr. Tillotson was identified as the proprietor

of the business, “Contract Installations”.   Petitioner and Mr.

Tillotson did not satisfy the underpayment when they filed their

joint 1998 Federal income tax return.

     Petitioner and Mr. Tillotson were divorced on November 27,

2000, by a divorce decree entered by the District Court of Hunt

County, Texas.   The divorce decree states, in pertinent part:

          IT IS ORDERED AND DECREED that DAVID ALLEN TILLOTSON
     and WENDY LANETTE TILLOTSON shall be equally responsible for
     all federal income tax liabilities of the parties from the
     date of marriage through December 31, 1998, and each party
     shall timely pay 50 percent of any deficiencies,
     assessments, penalties, or interest due thereon and shall
     indemnify and hold the other party and his or her property
     harmless from 50 percent of such liabilities unless such
     additional tax, penalty, and/or interest resulted from a
     party’s omission of taxable income or claim of erroneous
     deductions. In such case, the portion of the tax, penalty,
     and/or interest relating to the omitted income of claims of
     erroneous deductions shall be paid by the party who earned
     the omitted income or proffered the claim for an erroneous
     deduction. The parties agree that nothing contained herein
     shall be construed as or is intended as a waiver of any
     rights that a party has under the “Innocent Spouse”
     provisions of the Internal Revenue Code.
                              - 6 -

     On August 6, 2001, petitioner submitted to respondent a Form

8857, Request for Innocent Spouse Relief.    Attached to the Form

8857 was a letter dated July 21, 2001.   In the letter petitioner

states:

          I was not aware of the outstanding monies owing until
     after my separation and right before my divorce from David
     A. Tillotson, which was final on November 22, 2000.

          After reviewing my records, I believe the monies owed
     for the years 1995, 1997, and 1998 were due to my ex-
     husband’s, David A. Tillotson, unemployment and/or self-
     employment. I maintained a full-time job in which taxes
     were taken out through my employer. Therefore, I do not
     feel I am responsible for the taxes owed.

          David A. Tillotson was solely responsible for the
     paying of these taxes, as he was [responsible for] all of
     the household bills. I was not aware that he had not been
     paying them. Due to the fact that he was home more than I,
     he would always retrieve the mail before I had the
     opportunity to do so. Therefore, if there was
     correspondence between you and my household, I had no
     knowledge of it.

     By letter dated August 15, 2001, respondent’s examiner

requested that petitioner complete and submit:   (1) A statement

explaining why she believed she qualified for relief; and (2)

Form 886-A, Innocent Spouse Questionnaire.

     By letter dated September 8, 2001, petitioner submitted a

statement explaining why she believed that she qualified for

relief and she attached to the letter a completed Form 886-A.

Petitioner stated in her letter, in pertinent part:

          I believe I would qualify for relief for the following
     reasons. I was unaware that they [the 1995, 1997, and 1998
     reported tax liabilities] had not been paid. I was not
     responsible for any of the bill paying during my entire
                              - 7 -

     marriage to David Tillotson. I did not get or open any of
     the mail; therefore I was not aware if [sic] any
     correspondence between the IRS and my household. The only
     thing I have to show me why there are taxes due are
     printouts that the IRS sent me and by looking at them it
     shows that David Tillotson had unemployment and self
     employment. I paid my taxes through my employer and feel
     that David should be responsible for the taxes that are due
     for this year [sic].

          To give you a background of my situation, I was married
     to David Tillotson in 1990 and divorced in 2000. I do not
     have any records in my possession. They are ALL in the
     possession of David. At the time I left I was only able to
     take my clothes and a few personal items. As stated above,
     he was responsible for paying any and all of the bills. I
     was not included or involved in paying any of the bills at
     all. I supplied him with my paycheck and put my trust in
     him, as my husband, to take care [sic] them. If I knew what
     I know now, I would have never filed a joint return.

     By letter dated April 26, 2002, respondent denied

petitioner’s request for relief.   On May 17, 2002, petitioner

submitted a Form 12509, Statement of Disagreement, to respondent

appealing respondent’s denial of relief under section 6015.

Petitioner stated on Form 12509:

          I, Wendy Chadwick, disagree with the Internal Revenue
     Service determination because I feel I am not responsible
     for the taxes owed at this time. Please review the attached
     letters with attached documents which were sent to the IRS
     previously.

          As you see I was not aware that payments were not being
     made until after the separation. I had no knowledge that
     the monies owed at the time of filing were not being paid as
     David kept this information from me. David was solely
     responsible for paying all household bills. As most people
     that are married, you trust that the other is taking care of
     things when they say they are. I promise you I would have
     made sure the taxes were paid if I knew they were there.

          In response the [sic] the denial letter I received, I
     did not feel I needed to adjust my withholdings because I
                                - 8 -

     was not aware that David wasn’t paying the taxes due after
     filing the return.

     By letter dated September 26, 2002, respondent acknowledged

receipt of petitioner’s request for an appeal.    By letter dated

January 29, 2003, respondent’s Appeals Office acknowledged

receipt of petitioner’s case for consideration.    In a letter

dated March 26, 2003, respondent’s Appeals officer assigned to

consider petitioner’s request acknowledged assignment of the case

and her intent to schedule a conference with petitioner.

     Respondent’s Appeals officer, by letter dated March 27,

2002, attempted to contact petitioner’s former spouse, Mr.

Tillotson, to inform him of respondent’s initial determination

and to determine whether he had additional information to provide

for consideration in his former spouse’s case.    In a letter dated

August 11, 2003, respondent’s Appeals officer requested

additional information from petitioner regarding her claim for

relief.

     On August 28, 2003, respondent received from petitioner a

copy of the letter previously sent to her on August 11, 2003,

with her responses to the request for additional information

attached.    Petitioner’s responses, in pertinent part, are as

follows:

     1.    List your current monthly income:
           Response - $1,352.59 monthly
                               - 9 -

     2.   List your monthly expenses:
          Response - Mortgage: None
                          Rent: $250
                          Utilities: $200 (Average)
                          Food: $100
                          Clothing: $100
                          Vehicle expense: $525
                          All other expenses: $45 (IRS)
                          TOTAL EXPENSES: $1,220 per month

     3.   List all people currently residing in your household:
          Response - Mark Burge, roommate

     4.   Are you currently renting or buying your residence?
          Response - Renting (roommates)

     5.   Explain why you feel paying these taxes would cause you
          an economic hardship.
          Response - I am having a hard time making ends meet now.

     By letter dated September 8, 2004, respondent’s Appeals

officer scheduled an Appeals conference with petitioner to be

held by telephone on September 23, 2003.   Respondent’s Appeals

officer made unsuccessful attempts to contact petitioner by

telephone on September 23, 2003.

     By facsimile dated October 20, 2003, petitioner submitted a

letter and additional information to respondent’s Appeals officer

for consideration.   Petitioner’s letter stated:

          Following is some information to consider for my
     innocent spouse claim. I have created a breakdown showing
     earnings and deductions for my ex-husband, David Tillotson
     and myself by using information I have in my files. Also
     attached for your review is a copy of the Collection
     Information Statement that I completed for the Offer in
     Compromise request I am sending in today.

          I hope that you will review this information and see
     that I have paid my share of taxes through my employer. The
     taxes owning [sic] for the above-referenced years [1995,
     1997, and 1998] were due to David’s unemployment and/or
                             - 10 -

     self-employment, therefore I do not feel it is fair and just
     for me to pay them. As you can see, it would cause me great
     hardship to pay all of this amount owing, but that is why I
     am sending in the Offer in Compromise.

          I would also like to point out that I have been making
     payments of $45.00 per month since I believe July of 2001
     without any tardiness. If I would have known that Mr.
     Tillotson was not paying the debt, I would have made sure it
     was paid when it was due instead of waiting until now to
     clear this up. He had a tendency to hide things from me and
     spend money on other things instead of bills.

     By letter dated November 10, 2003, respondent’s Appeals

officer sent to petitioner a notice of her determination that

petitioner was not entitled to relief under section 6015(f) for

the following amounts of unpaid tax liabilities, including

interest, for taxable years 1995, 1997, and 1998:   $2,860,

$2,568, and $1,299, respectively.   Respondent’s Appeals officer

issued to petitioner a Notice of Determination Concerning Your

Request for Relief under the Equitable Relief Provision of

Section 6015(f) on December 19, 2003, denying relief under

section 6015(f) for the taxable years 1995, 1997, and 1998.

     On March 18, 2004, petitioner filed a petition with this

Court for review of respondent’s determination denying her

request for relief from joint and several liability with respect

to the 1995, 1997, and 1998 tax years.

                           Discussion

     In general, taxpayers filing a joint Federal income tax

return are each responsible for the accuracy of their return and

are jointly and severally liable for the entire tax liability due
                                - 11 -

for that year.    Sec. 6013(d)(3); Butler v. Commissioner, 114 T.C.

276, 282 (2000).    In certain circumstances, however, a spouse may

obtain relief from joint and several liability by satisfying the

requirements of section 6015.

       Section 6015 applies to tax liabilities arising after July

22, 1998, and to tax liabilities arising on or before July 22,

1998, that remain unpaid as of such date.    Internal Revenue

Service Restructuring and Reform Act of 1998, Pub. L. 105-206,

sec. 3201(g), 112 Stat. 740.    In the present case, petitioner and

Mr. Tillotson’s tax liabilities arose during taxable years 1995,

1997, and 1998.    However, these liabilities remained unpaid as of

July 22, 1998; therefore, section 6015 applies to the case at

bar.    See Washington v. Commissioner, 120 T.C. 137, 155 (2003).

       Section 6015(a)(1) provides that a spouse who has made a

joint return may elect to 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 a spouse who is eligible to do

so may elect to limit that spouse’s liability for any deficiency

with respect to a joint return under section 6015(c).    Relief

from joint and several liability under section 6015(b) or (c) is

available only with respect to a deficiency for the year for

which relief is sought.    Sec. 6015(b)(1)(D) and (c)(1); see H.

Conf. Rept. 105-599, at 252-254 (1998), 1998-3 C.B. 747, 1006-
                                - 12 -

1008.     If relief is not available under either section 6015(b) or

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

6015(f), which may be granted by the Commissioner in his

discretion.

      In this case, petitioner contends that she is entitled to

full relief from liability under section 6015.    Our jurisdiction

to review petitioner’s request for relief is conferred by section

6015(e), which allows a spouse who has requested relief from

joint and several liability to contest the Commissioner’s denial

of relief by filing a timely petition in this Court.    We address

petitioner’s request for relief under subsections (b), (c), and

(f) of section 6015 in turn.

A.   Section 6015(b)

      Section 6015(b) provides a spouse relief from joint

liability for an “understatement” (as defined in section

6662(d)(2)(A)) of tax attributable to erroneous items of the

other spouse.1    With regard to the present case, petitioner does

not seek relief from an understatement of tax but rather from the

tax liabilities reported as due on the 1995, 1997, and 1998

returns that were not paid when the returns were filed.     Because

there is no understatement of tax for 1995, 1997, and 1998,

relief is not available to petitioner under section 6015(b).    See


      1
      Sec. 6662(d)(2)(A) defines an understatement as the excess
of the amount of tax required to be shown on the return over the
tax imposed which is shown on the return, reduced by any rebate.
                              - 13 -

Washington v. Commissioner, supra at 146-147; see also Hopkins v.

Commissioner, 121 T.C. 73, 88 (2003).

B.   Section 6015(c)

      Section 6015(c) provides relief from joint liability for

spouses who filed a joint return if they are no longer married,

are legally separated, or have lived apart for a 12-month period.

Such spouses may elect to be treated, for purposes of determining

tax liability, as if separate returns had been filed.   Section

6015(c)(1) provides proportionate relief for any “deficiency

which is assessed with respect to the return”.   Relief is not

available under section 6015(c) with respect to an unpaid

liability for tax reported on the return.   As noted, in the

present case, petitioner is seeking relief of the unpaid tax

liabilities reported as due on the 1995, 1997, and 1998 joint

returns.   Because there is no “deficiency” for 1995, 1997, and

1998, relief is not available to petitioner under section

6015(c).   See Washington v. Commissioner, supra; see also Hopkins

v. Commissioner, supra.

C.   Section 6015(f)

      Therefore, the only remaining opportunity for relief

available to petitioner is section 6015(f).   Section 6015(f)

provides as follows:

           SEC. 6015(f). Equitable Relief.--Under procedures
      prescribed by the Secretary, if-–
                                - 14 -

               (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.

     As directed by section 6015(f), the Commissioner has

prescribed guidelines in Rev. Proc. 2000-15, 2000-1 C.B. 447,2 to

be considered in determining whether an individual qualifies for

relief under section 6015(f).    Rev. Proc. 2000-15, sec. 4.01,

2000-1 C.B. at 448, lists threshold conditions which must be

satisfied before the Commissioner will consider a request for

relief under section 6015(f).    Respondent concedes that

petitioner meets these threshold conditions for equitable

innocent spouse relief.

     Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B. at 448-449, lists

nonexclusive factors that the Commissioner will consider in

determining whether, taking into account all the facts and

circumstances, it is inequitable to hold the requesting spouse

liable for all or part of the unpaid income tax liability


     2
      This revenue procedure was superseded by Rev. Proc. 2003-
61, 2003-2 C.B. 296. Rev. Proc. 2003-61, supra, is effective
either for requests for relief filed on or after Nov. 1, 2003, or
for requests for which no preliminary determination letter was
issued as of Nov. 1, 2003. In the present case, the request for
relief was filed on Aug. 6, 2001, and the preliminary
determination letter was issued on Apr. 26, 2002; therefore, Rev.
Proc. 2000-15, 2000-1 C.B. 447 is applicable in the present
situation.
                              - 15 -

or deficiency, and full or partial equitable relief under section

6015(f) should be granted.   Rev. Proc. 2000-15, sec. 4.03(1),

2000-1 C.B. at 448-449, provides that the following factors weigh

in favor of the Commissioner’s granting equitable relief:    (1)

Marital status, (2) economic hardship, (3) abuse, (4) no

knowledge or reason to know, (5) nonrequesting spouse’s legal

obligation, and (6) attributable to nonrequesting spouse.    Rev.

Proc. 2000-15, sec. 4.03(2), 2000-1 C.B. at 449, provides that

the following factors weigh against the Commissioner’s granting

equitable relief:   (1) Attributable to requesting spouse, (2)

knowledge, or reason to know, (3) significant benefit, (4) lack

of economic hardship, (5) noncompliance with Federal income tax

laws, and (6) requesting spouse’s legal obligation.   Further,

Rev. Proc. 2000-15, supra, provides that no single factor will be

determinative, but that all relevant factors, regardless of

whether the factor is listed in Rev. Proc. 2000-15, sec. 4.03,

will be considered and weighed.

     To prevail under section 6015(f), petitioner must show that

respondent’s denial of equitable relief from joint liability

under section 6015(f) was an abuse of discretion.   See Washington

v. Commissioner, 120 T.C. at 146; Jonson v. Commissioner, 118

T.C. 106, 125 (2002) (citing Butler v. Commissioner, 114 T.C.

276, 292 (2000)), affd. 353 F.3d 1181 (10th Cir. 2003).     Action

constitutes an abuse of discretion under this standard where it
                               - 16 -

is arbitrary, capricious, or without sound basis in fact or law.

Woodral v. Commissioner, 112 T.C. 19, 23 (1999).     The question of

whether respondent’s determination was arbitrary, capricious, or

without sound basis in fact is a question of fact.     Cheshire v.

Commissioner, 115 T.C. 183, 198 (2000), affd. 282 F.3d 326 (5th

Cir. 2002).   In deciding whether respondent’s determination that

petitioner is not entitled to relief under section 6015(f) was an

abuse of discretion, we consider evidence relating to all the

facts and circumstances.

      Respondent contends that his denial of petitioner’s request

for equitable relief from joint liability under section 6015(f)

was not an abuse of discretion.   We now address each of the

factors of Rev. Proc. 2000-15, sec. 4.03, separately.

1.   Marital Status

      During 1995, 1997, and 1998, petitioner and Mr. Tillotson

were married and resided in the same household.    Petitioner and

Mr. Tillotson were divorced on November 27, 2000.    This factor

weighs in favor of granting relief to petitioner.

2.   Economic Hardship

      Respondent contends that petitioner offered no evidence that

she would suffer economic hardship if relief were denied.

Pursuant to section 301.6343-1(b)(4)(ii), Proced. & Admin. Regs.,

economic hardship exists if a levy will cause a taxpayer to be

unable to pay his/her reasonable basic living expenses.
                              - 17 -

Respondent maintains that respondent’s collection activity would

not leave petitioner unable to pay her basic living expenses.3    In

addition, respondent asserts that petitioner provided no

documentation to contradict these contentions or to demonstrate

an economic hardship.




     3
      Sec. 301.6343-1(b)(4)(ii), Proced. & Admin. Regs.,
provides:

     (ii) Information from taxpayer. In determining a reasonable
     amount for basic living expenses the director will consider
     any information provided by the taxpayer including–-

          (A) The taxpayer’s age, employment status and history,
          ability to earn, number of dependents, and status as a
          dependent of someone else;

          (B) The amount reasonably necessary for food,
          clothing, housing, (including utilities, home-owner
          insurance, home-owner dues, and the like), medical
          expenses (including health insurance), transportation,
          current tax payments (including federal, state, and
          local), alimony, child support, or other court-ordered
          payments, and expenses necessary to the taxpayer’s
          production of income (such as dues for a trade union or
          professional organization, or child care payments which
          allow the taxpayer to be gainfully employed);

          (C) The cost of living in the geographic area in which
          the taxpayer resides;

          (D) The amount of property exempt from levy which is
          available to pay the taxpayer’s expenses;

          (E) Any extraordinary circumstances such as special
          education expenses, a medical catastrophe, or natural
          disaster; and

          (F) Any other factor that the taxpayer claims bears on
          economic hardship and brings to the attention of the
          director.
                               - 18 -

      During the appeals process, petitioner reported that her

monthly income was $1,352.59, and she reported that her monthly

expenses totaled $1,220.

      It appears from the record that petitioner earns sufficient

income such that she would not experience economic hardship if

required to pay some or all of the tax deficiencies at issue in

the present case.   Petitioner has not presented any documentation

or testimony to contradict the above claims or the determination

of respondent; therefore, we find that petitioner will not suffer

economic hardship if relief is not granted.   This factor favors

denying relief.

3.   Abuse

      At trial, petitioner testified that she was physically and

verbally abused by Mr. Tillotson during their marriage.

Petitioner did not present any documentation to substantiate such

a claim, other than her testimony.    However, we find petitioner’s

testimony, on this issue, to be credible and find that petitioner

was abused by Mr. Tillotson during their marriage.   Spousal abuse

is a factor listed in Rev. Proc. 2000-15, sec. 4.03(1), that will

weigh in favor of equitable relief, if found, but will not weigh

against equitable relief if not present in a case.   Therefore,

this factor favors granting relief.
                               - 19 -

4.   Knowledge or Reason To Know

      In the case of an income tax liability that arose from

failure to pay a reported liability, the fact that the requesting

spouse did not know and had no reason to know that the reported

liability would be unpaid at the time the return was signed is a

factor in favor of granting relief.     Rev. Proc. 2000-15, sec.

4.03(1)(d).   By contrast, the fact that the requesting spouse

knew or had reason to know that the reported liability would be

unpaid at the time the return was signed is a factor weighing

against relief.   Rev. Proc. 2000-15, sec. 4.03(2)(b).

      Petitioner contends that she did not know and had no reason

to know that Mr. Tillotson did not satisfy the reported

liabilities on their joint tax returns for taxable years 1995,

1997, and 1998.

      As previously stated, petitioner submitted to respondent a

Form 8857, Request for Innocent Spouse Relief.     Attached to the

Form 8857 was a letter dated July 21, 2001.     In the letter

petitioner states:

           I was not aware of the outstanding monies owing until
      after my separation and right before my divorce from David
      A. Tillotson, which was final on November 22, 2000.

           After reviewing my records, I believe the monies owed
      for the years 1995, 1997, and 1998 were due to my ex-
      husband’s, David A. Tillotson, unemployment and/or self-
      employment. I maintained a full-time job in which taxes
      were taken out through my employer. Therefore, I do not
      feel I am responsible for the taxes owed.
                               - 20 -

          David A. Tillotson was solely responsible for the
     paying of these taxes, as he was [responsible for] all of
     the household bills. I was not aware that he had not been
     paying them. Due to the fact that he was home more than I,
     he would always retrieve the mail before I had the
     opportunity to do so. Therefore, if there was
     correspondence between you and my household, I had no
     knowledge of it.

     The record shows that petitioner voluntarily signed the

1995, 1997, and 1998 joint returns.     Petitioner testified, at

trial, that she did not review the joint returns before filing.

Petitioner further testified that she and Mr. Tillotson did not

have a joint bank account and that when she received a paycheck

she would negotiate the paycheck and give the cash to Mr.

Tillotson.   Additionally, petitioner testified that she assumed

the liabilities reported on the joint tax returns were paid by

Mr. Tillotson and that she had no reason of knowing that such

liabilities were not paid.

     It should be noted that the majority of the income tax

liability for taxable year 1995 was a result of petitioner’s wage

income.   Also, petitioner has not offered any documentary

evidence supporting her testimony that she did not know or had no

reason to know that the reported liabilities would be unpaid at

the time the return was signed.   It is well settled that we are

not required to accept self-serving testimony in the absence of

corroborating evidence.   Lerch v. Commissioner, 877 F.2d 624,

631-632 (7th Cir. 1989), affg. T.C. Memo. 1987-295; Niedringhaus

v. Commissioner, 99 T.C. 202, 212 (1992).     Upon the basis of the
                                 - 21 -

record in the case at bar, we find petitioner knew or had reason

to know that the reported liability would be unpaid at the time

the return was signed.   This factor favors denying relief to

petitioner.

5.   Nonrequesting Spouse’s Legal Obligation

      As previously noted, petitioner and Mr. Tillotson were

divorced on November 27, 2000, by a divorce decree entered by the

District Court of Hunt County, Texas.     The divorce decree states,

in pertinent part:

           IT IS ORDERED AND DECREED that DAVID ALLEN TILLOTSON
      and WENDY LANETTE TILLOTSON shall be equally responsible for
      all federal income tax liabilities of the parties from the
      date of marriage through December 31, 1998, and each party
      shall timely pay 50 percent of any deficiencies,
      assessments, penalties, or interest due thereon and shall
      indemnify and hold the other party and his or her property
      harmless from 50 percent of such liabilities unless such
      additional tax, penalty, and/or interest resulted from a
      party’s omission of taxable income or claim of erroneous
      deductions. In such case, the portion of the tax, penalty,
      and/or interest relating to the omitted income of claims of
      erroneous deductions shall be paid by the party who earned
      the omitted income or proffered the claim for an erroneous
      deduction. The parties agree that nothing contained herein
      shall be construed as or is intended as a waiver of any
      rights that a party has under the “Innocent Spouse”
      provisions of the Internal Revenue Code.

      Rev. Proc. 2000-15, sec. 4.03(1)(e), indicates that if Mr.

Tillotson had a legal obligation under the divorce decree to pay

the tax liabilities, then that fact would weigh in favor of

granting relief to petitioner.    Likewise, if the divorce decree

placed the obligation to pay the taxes on petitioner, then that

fact would weigh against granting relief to her as indicated in
                                - 22 -

Rev. Proc. 2000-15, sec. 4.03(2)(f).     In the present case where

the divorce decree holds each party equally responsible for all

Federal income tax liabilities of the parties from the date of

marriage through December 31, 1998, this factor is considered

neutral.

6.   Attributable to Nonrequesting Spouse

      As previously stated, the majority of the income tax

liability for taxable year 1995 was a result of petitioner’s wage

income.    However, the income tax liabilities of $1,509.92 and

$822.64 for taxable years 1997 and 1998, respectively, are

attributable to Mr. Tillotson’s self employment and his failure

to pay any estimated taxes.    As to the income tax liabilities of

$1,509.92 and $822.64 for taxable years 1997 and 1998,

respectively, this factor favors granting petitioner equitable

relief.

7.   Significant Benefit

      Respondent contends that petitioner received benefits from

the proceeds of Mr. Tillotson’s self-employment in the form of

payment of joint household expenses and living expenses.

      Petitioner testified at trial that Mr. Tillotson would pay

household and living expenses with both his paychecks and her

paychecks.    Petitioner also testified at trial that Mr. Tillotson

was responsible for paying the bills.     Rev. Proc. 2000-15, sec.

4.03(2)(c), states that “The requesting spouse has significantly
                                 - 23 -

benefitted (beyond normal support) from the unpaid liability or

items giving rise to the deficiency.”      Due to the use of Mr.

Tillotson’s income to pay household and living expenses during

taxable years 1995, 1997, and 1998, we find that petitioner did

not benefit “beyond normal support” from the income which led to

the income tax liabilities for taxable years 1995, 1997, and

1998.     Therefore, this factor is a neutral factor.

8.   Noncompliance With Federal Income Tax Laws

        There is no evidence in the record as to this factor.

Therefore, we consider this factor neutral.

                              Conclusion

        The factors that weigh against granting relief to petitioner

outweigh those factors favoring relief.      Therefore, under these

facts and circumstances, we hold that respondent did not abuse

his discretion in denying equitable relief to petitioner under

section 6015(f).

        Reviewed and adopted as the report of the Small Tax Case

Division.


                                      Decision will be entered

                                 for respondent.
