                    T.C. Summary Opinion 2007-158



                       UNITED STATES TAX COURT



         FLOYD WILLIAM MUNSINGER & AUDREANNE ELISE LEWALLEN,
           f.k.a. AUDREANNE ELISE MUNSINGER, Petitioners v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 19896-06S.                Filed September 10, 2007.


     Audreanne Elise Lewallen, pro se.

     Michael W. Lloyd, for respondent.



     ARMEN, Special Trial 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


     1
        Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for the
taxable year in issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
                                 - 2 -

other court, and this opinion shall not be treated as precedent

for any other case.

     Respondent determined a deficiency in petitioners’ Federal

income tax for 2004 of $1,684.    As petitioners have conceded the

deficiency, the sole issue remaining for decision is whether

petitioners are each entitled to relief from joint and several

liability from the deficiency under section 6015.

                             Background

     Some of the facts have been stipulated, and they are so

found.   We incorporate by reference the parties’ stipulations of

facts at trial and accompanying exhibits.

     At the time the petition was filed, Floyd William Munsinger

(Mr. Munsinger) and Audreanne Elise Lewallen (Ms. Lewallen),

jointly referred to herein as petitioners, resided in Wyoming.

     For the taxable year 2004, petitioners were married and

filed a joint Federal income tax return.    The return was prepared

by H&R Block based on information and documents furnished by

petitioners.

     Petitioners erroneously omitted $8,203 of wage income from

their 2004 return, $2,886 of which was attributable to Ms.

Lewallen and $5,317 of which was attributable to Mr. Munsinger.

The omitted wage income represented one-third of petitioners’

total income for the year.   Ms. Lewallen had actual knowledge of

Mr. Munsinger’s various employments, specifically including his
                                - 3 -

employment as a welder for Progress Rail Services; it was this

wage income attributable to Mr. Munsinger that was omitted from

the 2004 return.

      Petitioners divorced in November 2005.     Their divorce decree

is silent regarding the allocation of responsibility for any

outstanding Federal tax liabilities.

      The notice of deficiency, sent jointly to petitioners on

August 21, 2006, determined a deficiency of $1,684.      The

deficiency stemmed solely from the omitted items of wage income.

      Although petitioners subsequently conceded the deficiency in

its entirety, they each seek relief from the joint and several

liability created by the filing of their 2004 return.

      Only Ms. Lewallen appeared at trial.2

                              Discussion

A.   Relief From Joint and Several Liability

      Generally, married taxpayers may elect to file a joint

Federal income tax return.    Sec. 6013(a).    After making the

election, each spouse is jointly and severally liable for the

entire tax due.    Sec. 6013(d)(3).   Section 6015 provides three

avenues for relief from that liability (sometimes referred to as

“innocent spouse relief”) to a taxpayer who has filed a joint

return:   (1) Section 6015(b) allows relief for understatements of


      2
        Although respondent moved to dismiss Mr. Munsinger’s case
for lack of prosecution, we denied the motion as Mr. Munsinger
had signed a stipulation of facts in the case.
                                - 4 -

tax attributable to certain erroneous items on a return; (2)

section 6015(c) provides relief for a portion of an

understatement of tax to taxpayers who are separated or divorced;

and (3) section 6015(f) more broadly confers on the Secretary the

discretion to grant equitable relief to taxpayers who otherwise

do not qualify under section 6015(b) or (c).    See also sec.

6015(e).

     Except as otherwise provided in section 6015, the taxpayer

bears the burden of proof to show his or her entitlement to

relief.    Rule 142(a); Alt v. Commissioner, 119 T.C. 306, 311

(2002), affd. 101 Fed. Appx. 34 (6th Cir. 2004).

B.   Mr. Munsinger

     Mr. Munsinger jointly filed the petition giving rise to the

instant action, and he signed a stipulation of facts.    However,

he did not appear in person at trial to testify.

     Mr. Munsinger’s stipulation of facts did not address the

issue before us, namely, his request for relief from joint and

several liability.   It merely conceded the deficiency stemming

from, in part, his own receipt of gross income from wages in the

amount of $5,317.

     As noted above, the taxpayer bears the burden of

establishing entitlement to relief.     Rule 142(a); Alt v.

Commissioner, supra.   Mr. Munsinger has not met his burden, and
                                 - 5 -

accordingly, we hold that he is not entitled to relief under

section 6015 for the taxable year in issue.

C.   Ms. Lewallen

     Ms. Lewallen earned approximately one-third of the income

giving rise to the understatement of tax.    Mr. Munsinger earned

the bulk of it.     In both the petition and at trial, Ms. Lewallen

requested that she not be held liable for more than half of the

deficiency resulting from the underreporting of wages.    However,

despite the understandable nature of her request, the Court is a

court of limited jurisdiction, and we are not at liberty to make

decisions based solely in equity.    See Commissioner v. McCoy, 484

U.S. 3, 7 (1987); Woods v. Commissioner, 92 T.C. 776, 784-787

(1989); Estate of Rosenberg v. Commissioner, 73 T.C. 1014,

1017-1018 (1980); Hays Corp. v. Commissioner, 40 T.C. 436,

442-443 (1963), affd. 331 F.2d 422 (7th Cir. 1964).     In addition,

we are bound by the constraints imposed by the Internal Revenue

Code, and any ability we have to grant Ms. Lewallen relief from

complete joint and several liability must be made within section

6015’s framework.

     1.   Relief Under Section 6015(b)

     Section 6015(b) provides full or apportioned relief from

joint and several liability for tax (including interest,

penalties, and other amounts) to the extent that such liability

is attributable to an understatement of tax.    To be eligible for
                                 - 6 -

relief, the requesting spouse must establish that in signing the

return, he or she “did not know, and had no reason to know” of

the understatement.   Sec. 6015(b)(1)(C), (2).   Ms. Lewallen does

not satisfy the applicable statutory requirements.

     Where a spouse seeking relief from joint and several

liability has actual knowledge of the underlying transaction that

produced the omitted income, relief is unavailable.    See sec.

6015(b)(1)(C); Cheshire v. Commissioner, 115 T.C. 183, 192-193

(2000), affd. 282 F.3d 326 (5th Cir. 2002).   Ms. Lewallen had

actual knowledge of the item of income omitted from the 2004

return attributable to Mr. Munsinger, namely, his employment with

Progress Rail Services.   Therefore, petitioner is not entitled to

relief under section 6015(b).3

     2.   Relief Under Section 6015(c)

     Section 6015(c) allows proportionate tax relief (if a timely

election is made) through allocation of the deficiency between

individuals who filed a joint return and are no longer married,

are legally separated, or have been living apart for a 12-month

period.   Generally, this avenue of relief allows a spouse to

elect to be treated as if a separate return had been filed.       Rowe



     3
        Further, the items that were omitted from petitioners’
2004 Federal income tax return giving rise to the understatement
included income items attributable to Ms. Lewallen herself; it
would not be inequitable to hold her liable for the
understatement attributable to her omitted income. See sec.
6015(b)(1)(D).
                               - 7 -

v. Commissioner, T.C. Memo. 2001-325.    Relief under section

6015(c), however, is not available if the Commissioner

demonstrates that the requesting spouse had actual knowledge, at

the time the return was signed, of any item giving rise to a

deficiency (or portion thereof) that is not allocable to such

individual.4   Sec. 6015(c)(3)(C); Hopkins v. Commissioner, 121

T.C. 73, 86 (2003); Cheshire v. Commissioner, supra at 193-194.

As noted above, Ms. Lewallen had actual knowledge of Mr.

Munsinger’s employment with Progress Rail Services, the item

giving rise to the underpayment not allocable to her; therefore,

relief is not available to Ms. Lewallen under section 6015(c).

     3.   Relief Under Section 6015(f)

     Section 6015(f) grants the Commissioner discretion to

relieve an individual, where relief is not available under

section 6015(b) or (c), from joint liability if taking into

account all the facts and circumstances, it is inequitable to



     4
        The knowledge requirement under sec. 6015(c)(3)(C) does
not require the requesting spouse to possess actual knowledge of
the tax consequences arising from the item giving rise to the
deficiency. Hopkins v. Commissioner, 121 T.C. 73, 86 (2003);
Cheshire v. Commissioner, 115 T.C. 183, 194 (2000), affd. 282
F.3d 326 (5th Cir. 2002); sec. 1.6015-3(c)(2), Income Tax Regs.
Rather, the statute mandates only a showing that the requesting
spouse actually knew of the item on the return that gave rise to
the deficiency (or portion thereof), without regard as to whether
he or she knew of the tax consequences. Mitchell v.
Commissioner, 292 F.3d 800, 805 (D.C. Cir. 2002), affg. T.C.
Memo. 2000-332; Cheshire v. Commissioner, supra. In the instant
case, however, we are convinced that Ms. Lewallen also knew that
wages are includable as income and fully taxable.
                               - 8 -

hold the individual liable for any unpaid tax or deficiency.5

Sec. 6015(f).   As previously discussed, Ms. Lewallen is not

entitled to relief under section 6015(b) or (c).

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

prescribed guidelines in Rev. Proc. 2003-61, 2003-2 C.B. 296,

modifying Rev. Proc. 2000-15, 2000-1 C.B. 447, that are to be

used in determining whether it is inequitable to hold a

requesting spouse liable for all or part of the liability for any

unpaid tax or deficiency.6   Rev. Proc. 2003-61, sec. 4.01, 2003-2

C.B. at 297, sets forth seven threshold conditions that must

generally be satisfied before the Commissioner will consider a

request for equitable relief under section 6015(f).

     Insofar as her own omitted wage income is concerned, Ms.

Lewallen does not satisfy all of the threshold conditions.

Condition 7 of Rev. Proc. 2003-61, sec. 4.01, requires that the

income tax liability from which the requesting spouse seeks

relief is attributable to an item of the “nonrequesting spouse”,



     5
        Although normally the Court will review the
Commissioner’s denial of relief under sec. 6015(f) under an abuse
of discretion standard, see, e.g., Jonson v. Commissioner, 118
T.C. 106, 125 (2002), affd. 353 F.3d 1181 (10th Cir. 2003), the
request for relief in this case was not made until the petition
was filed.
     6
        Rev. Proc. 2000-15, 2000-1 C.B. 447, was superseded by
Rev. Proc. 2003-61, 2003-2 C.B. 296, which is effective as to
requests for relief filed on or after Nov. 1, 2003, and for
requests for relief pending on Nov. 1, 2003, as to which no
preliminary determination letter had been issued as of that date.
                               - 9 -

i.e., Mr. Munsinger, unless one of the enumerated exceptions

applies, which none do.

     As to the omitted wage income attributable to Mr. Munsinger,

Ms. Lewallen does satisfy the seven threshold conditions.     The

inquiry then turns to whether any circumstances are present under

which relief would normally be granted.   See id., sec. 4.02,

2003-2 C.B. at 298.   Ms. Lewallen testified at trial that she

would not suffer economic hardship if relief were not granted,

and no special circumstances are present in this case.

     Consequently, we must examine whether, taking into account

all the facts and circumstances, it is inequitable to hold Ms.

Lewallen liable for all or part of the deficiency stemming from

the omission of Mr. Munsinger’s wage income.    See id., sec. 4.03,

2003-2 C.B. at 298.   We hold that it is not.

     Petitioners’ divorce decree is silent on the allocation of

outstanding Federal tax debts, and, as noted above, Ms. Lewallen

would not suffer economic hardship if relief were not granted.

Most importantly, however, Rev. Proc. 2003-61, sec. 4.03,

specifically states that actual knowledge by the requesting

spouse of the item giving rise to the deficiency is a strong

factor weighing against relief and may be overcome only if the

factors in favor of equitable relief are particularly compelling.

Unfortunately for Ms. Lewallen, no compelling factors present
                                - 10 -

themselves in this case, and Ms. Lewallen is not entitled to

relief under section 6015(f).

                           Conclusion

     For the reasons discussed above, neither petitioner is

entitled to relief from joint and several liability from the

deficiency determined by respondent for 2004.

     To reflect our disposition of the disputed issue as to each

petitioner,



                                          Decision will be entered

                                     for respondent.
