                  T.C. Summary Opinion 2010-177



                     UNITED STATES TAX COURT



   ESTATE OF HARRIET SOMMER, DECEASED, SHARI SOMMER CHERNACK,
                  ADMINISTRATRIX, Petitioner1 v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 4664-09S.              Filed December 28, 2010.



     Frank Agostino, Erica Son, and Jeffrey Dirmann (student),

for petitioner.

     Marie E. Small, for respondent.



     PANUTHOS, Chief Special Trial Judge:   This case was heard

pursuant to the provisions of section 7463 of the Internal



     1
      This case was called for trial and heard on Apr. 12, 2010.
Harriet Sommer died on May 9, 2010. The administratrix of the
Estate of Harriet Sommer filed a motion for substitution of
parties and to change caption on Aug. 4, 2010. The Court granted
that motion on Aug. 17, 2010.
                                - 2 -

Revenue Code in effect when the petition was filed.2      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.

     This proceeding was commenced under section 6015 for review

of respondent’s determination that Harriet Sommer (Mrs. Sommer)

is not entitled to relief from joint and several liability with

respect to an underpayment of Federal income tax reported on a

joint Federal income tax return filed for 2005.

                             Background

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

The stipulations and the attached exhibits are incorporated

herein by this reference.    Mrs. Sommer resided in the State of

New York at the time the petition was filed.

     At the time of trial Mrs. Sommer was a 72-year-old school

teacher.   She held a master’s degree in education and had taught

for over 20 years.   Mrs. Sommer was widowed in 2006 after 43

years of marriage.   Her now-deceased husband (Mr. Sommer) was a

self-employed attorney.    Mrs. Sommer was not involved with Mr.

Sommer’s legal practice.    In 2005 Mr. Sommer received

remuneration that was in excess of his usual earnings.      Mrs.

Sommer asked Mr. Sommer to set aside one-half of the proceeds to


     2
      Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended. All Rule
references are to the Tax Court Rules of Practice and Procedure.
                                - 3 -

pay the tax that would be due on the remuneration, which Mr.

Sommer agreed to do.   Contrary to the understanding, Mr. Sommer

did not set aside any money for the payment of the tax owed.

     Mr. Sommer made all of the business and financial decisions

for the household, and Mrs. Sommer trusted Mr. Sommer’s decisions

and declarations concerning those matters, which included the

filing of the couple’s joint Federal income tax returns.    Mr.

Sommer timely requested and received extensions to file the

couple’s joint Federal income tax returns for tax years 2000

through 2004.    Mrs. Sommer did not review the 2000 through 2004

returns before signing them.    Although no remittance was made

with any of the returns, all balances due were paid before any

collection activity had commenced.

     As he had in the preceding tax years, Mr. Sommer timely

requested and was granted an extension to file the couple’s 2005

joint Federal income tax return (the return).    Mr. Sommer died on

June 23, 2006, after requesting an extension but before the

return was filed.   Mr. Sommer’s accountant signed the return as

the preparer on July 5, 2006, and mailed it to Mrs. Sommer for

her signature.   Mrs. Sommer signed the return shortly thereafter

as a surviving spouse, and the return was received by the

Internal Revenue Service (IRS) on August 4, 2006.    The return

reflected tax due of $37,692.    No payment was remitted with the

return.
                                 - 4 -

     Mrs. Sommer received “a letter from the IRS” explaining that

it might place a lien3 upon her property if the 2005 tax

liability was not paid.   She contacted the accountant who

prepared the return to request his assistance with the matter,

but her request was not answered.    Mrs. Sommer paid a lump sum of

$25,000 on April 15, 2007, and entered into an installment

agreement to pay $600 each month to satisfy the remainder of the

2005 liability.    No explanation was given as to the source of the

$25,000 payment.

     Mrs. Sommer filed Form 8857, Request for Innocent Spouse

Relief, on September 26, 2007.    Respondent sent Mrs. Sommer a

Notice of Determination Concerning Your Request for Relief from

Joint and Several Liability under section 6015(f) denying her

request for relief.   The stated reason for the denial was Mrs.

Sommer’s failure to establish that she had a reasonable belief

the tax would be paid by Mr. Sommer.     Mr. Sommer was deceased

when the return was filed.   At the time of filing the 2005 return

Mrs. Sommer owed more than $50,000 in tax, including interest and

additions to tax for failure to pay the tax shown on the return

and estimated tax.




     3
      There is no notice of Federal tax lien filing in the
record.
                                - 5 -

     At the time of his death Mr. Sommer owed State income tax,

credit card debt, and a mortgage debt of approximately $300,000,

in addition to the Federal income tax debt.      Mrs. Sommer

alleviated a portion of her financial burden by refinancing the

mortgage on the marital home.   Mrs. Sommer and her bank came to

an agreement wherein the bank would refinance her mortgage and

include the amount necessary to pay off her Federal income tax

liability in full in her new loan.      At the time of trial Mrs.

Sommer no longer had a Federal income tax liability.

                             Discussion

     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 for that year.   Sec. 6013(d)(3); Butler v.

Commissioner, 114 T.C. 276, 282 (2000).      A surviving spouse may

file a joint return on behalf of herself and the deceased spouse

if no executor or administrator is appointed before the due date

of the return.   Sec. 6013(a)(3).   A spouse who has filed a joint

return may seek relief from joint and several liability under

procedures set forth in section 6015.      Sec. 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 either

section 6015(b) or (c), the taxpayer may seek equitable relief
                                - 6 -

under section 6015(f).    The Secretary has discretion to grant

equitable relief to a spouse who filed a joint return with an

unpaid liability or to one who has a deficiency (or any portion

of either).    Sec. 6015(f); sec. 1.6015-4(a), Income Tax Regs.

     Except as otherwise provided in section 6015, the taxpayer

bears the burden of proving that he or she is entitled to section

6015 relief.    Rule 142(a); Alt v. Commissioner, 119 T.C. 306, 311

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

and standard of our review in cases requesting equitable relief

from joint and several income tax liability are de novo.     Porter

v. Commissioner, 132 T.C. 203 (2009).

Jurisdiction

     Respondent argues that the Court does not have jurisdiction

because Mrs. Sommer limited her request to a refund of the

section 6651(a)(2) and 6654 additions to tax.    Respondent relies

upon Block v. Commissioner, 120 T.C. 62 (2003), to argue that the

Court does not have jurisdiction over Mrs. Sommer’s case because

section 6015(e) “presupposes that the liability for any unpaid

tax or deficiency is not in dispute and does not provide for an

individual’s challenge to the existence or amount of his or her

underlying liability.”

     Respondent’s reliance on Block is misplaced.     The taxpayer

in Block sought to amend her petition to assert a statute of

limitations defense.    The Court held:   “The relief from joint and

several liability available in a section 6015(e) ‘stand alone’
                                 - 7 -

petition does not incorporate preassessment procedures.      Section

6015 assumes that the electing taxpayer is to be relieved from an

existing joint tax liability, not whether the underlying joint

tax liability exists.”   Id. at 68.      The Court also held that “the

issue we have jurisdiction to address in a ‘stand alone’ petition

under section 6015(e) is whether the Commissioner erroneously

denied equitable relief from an existing joint and several tax

liability.”   Id. at 66-67.    That is precisely what Mrs. Sommer

requested from the Court.     See secs. 6665(a)(2), 7463(f)(1).

     Accordingly, we shall consider whether Mrs. Sommer is

eligible for innocent spouse relief and a refund.

Innocent Spouse Relief

     Mrs. Sommer is not eligible for relief under section 6015(b)

or (c) because she had an underpayment of tax on a joint return,

not a deficiency or an understatement of tax.      See Rev. Proc.

2003-61, sec. 2.04, 2003-2 C.B. 296, 297.      Therefore, her only

avenue for relief is under section 6015(f).      As directed by

section 6015(f) and section 1.6015-4, Income Tax Regs., the

Commissioner has prescribed guidelines for determining whether a

spouse qualifies for relief under subsection (f).      See Rev. Proc.

2003-61, supra.

     Respondent conceded that Mrs. Sommer met the threshold

conditions to be eligible for section 6015(f) relief found in

Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. at 297.      If the

threshold conditions are met, the IRS will ordinarily grant
                                 - 8 -

equitable relief with respect to underpayments on joint returns

if the following elements are satisfied generally:   (1) On the

date of the request for relief, the requesting spouse is no

longer married to the nonrequesting spouse; (2) on the date the

requesting spouse signed the joint return, the requesting spouse

had no knowledge or reason to know that the nonrequesting spouse

would not pay the income tax liability; and (3) the requesting

spouse will suffer economic hardship if the IRS does not grant

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

IRS denied relief on the basis of Mrs. Sommer’s failure to meet

elements (2) and (3).

     Rev. Proc. 2003-61, sec. 4.03, 2003-2 C.B. at 298-299,

provides a list of factors for determining whether to grant

equitable relief under section 6015(f) to taxpayers who do not

qualify for relief under Rev. Proc. 2003-61, sec. 4.02.

According to the revenue procedure, no single factor is

determinative.   Id.; see Jonson v. Commissioner, 118 T.C. 106,

125 (2002), affd. 353 F.3d 1181 (10th Cir. 2003).    We find that

the factors of knowledge or reason to know of the underpayment

and lack of economic hardship weigh heavily against granting Mrs.

Sommer innocent spouse relief.

     In an underpayment case, the pertinent question is whether

the requesting spouse did not know or had no reason to know that

the nonrequesting spouse would not pay the income tax liability.

Merendino v. Commissioner, T.C. Memo. 2006-2 (typically, in the
                                - 9 -

case of a reported but unpaid tax liability, the relevant

knowledge is that the tax would not be paid when the return was

signed); Rev. Proc. 2003-61, sec. 4.03(2)(a)(iii)(A), 2003-2 C.B.

at 298.    Mrs. Sommer signed the return after her husband died.

When Mrs. Sommer signed the return, she did not remit any

payment.    Mrs. Sommer testified that after she signed the return

she did not think about it again until alerted by the IRS that

the 2005 tax liability was still outstanding.    At that point she

made a payment to the IRS.    The record is void of any evidence as

to any plan Mrs. Sommer might have had to pay the tax liability

reported on the return before being contacted by the IRS.

     Mrs. Sommer asserted that she did not know that the tax

would not be paid because she reasonably believed that her

husband had set aside funds for that purpose.    The fact that

funds for payment of taxes are readily available is relevant to

the inquiry of whether Mrs. Sommer believed that the taxes would

be paid.    See Banderas v. Commissioner, T.C. Memo. 2007-129 (a

reasonable belief that taxes would be paid must at a minimum

include a belief that funds would be on hand within a reasonably

short period of time to pay the taxes).

     After Mr. Sommer died in June 2006, Mrs. Sommer assumed

responsibility for filing the joint return and remitting the

payment for the 2005 tax liability.     See sec. 6013(a)(3); George

v. Commissioner, T.C. Memo. 2004-261 (a taxpayer cannot rely on a

deceased spouse to pay a tax liability).    As previously stated,
                               - 10 -

Mrs. Sommer signed the joint return on behalf of herself and her

deceased husband in July 2006 and filed the return without

remittance.    The 2005 liability was paid in part in April 2007,

after contact by the IRS, and later the balance of the liability

was paid in full after the refinancing of the mortgage on the

marital home.    Thus, while Mrs. Sommer may have initially

believed that there were sufficient funds to pay the 2005

liability, soon after her husband’s death and before the signing

and filing of the return she must have discovered that, in fact,

there were insufficient funds.    Mrs. Sommer testified that Mr.

Summer left her sufficient funds to pay only his funeral

expenses.4    Since Mrs. Sommer was primarily responsible for the

filing of the return and in the best position to know whether the

tax would be paid, this factor, knowledge or reason to know,

favors denial of relief.

     Another factor used to determine whether innocent spouse

relief is proper is whether the requesting spouse will suffer

economic hardship if the IRS does not grant relief.    To determine

economic hardship, the IRS will use the factors provided in

section 301.6343-1(b)(4), Prosed. & Admin. Regs.    Rev. Proc.

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


     4
      Very limited evidence was presented as to the assets and
liabilities of Mr. Sommer’s estate or to the identity of his
heirs. Such information would have been helpful to determine
whether Mrs. Sommer may have had a reasonable belief that the
2005 tax liability could be paid.
                                - 11 -

4.02(1)(c)).   The pertinent factors here are:      (1) Mrs. Sommer’s

age, employment status and history, ability to earn, and number

of dependents; (2) the amount reasonably necessary for food,

clothing, housing (including utilities, homeowners insurance,

homeowners dues, and the like), medical expenses (including

health insurance), transportation, and current tax payments

(including Federal, State, and local); (3) the cost of living in

the geographic area in which Mrs. Sommer resided; and (4) any

other factor that Mrs. Sommer claimed bears on economic hardship.

See sec. 301.6343-1(b)(4)(ii), Proced. & Admin. Regs.       We will

examine each factor in turn.

     At the time of trial Mrs. Sommer was 72 years old.      She was

employed full time as a teacher and had been teaching for 22

years.   Although at the time of trial Mrs. Sommer suffered from a

relapse of cancer that might have affected her ability to earn,

she was entitled to a pension valued at more than $200,000.

There was no evidence presented that Mrs. Sommer had any

dependents.

     It would appear that Mrs. Sommer did have enough income to

satisfy her basic living expenses.       On Form 8857 Mrs. Sommer

listed her sources of monthly income and expenses.       There was a

surplus of a little more than $200.       Mrs. Sommer’s testimony

corroborated the amounts of wages and the mortgage payments.

Many of the other expenses Mrs. Summer listed exceeded the

national and local standards.    See Internal Revenue Manual pt.
                                  - 12 -

5.15.1.3, 5.15.1.8 - 5.15.1.10 (May 9, 2008).5      No evidence was

presented to explain the circumstances of these expenses nor why

they exceeded both local and national standards.

       As to the fourth factor, Mrs. Sommer testified to additional

bills that Mr. Sommer left unpaid at the time of his death, which

included State taxes, credit card debt, and a mortgage.         Mrs.

Sommer testified that she paid these debts except for the 30-year

mortgage.       Before refinancing her mortgage Mrs. Sommer made a

$25,000 payment on the 2005 tax liability and entered into a

$600-a-month installment agreement to pay the remainder of the

tax liability.       As previously indicated, no evidence was

presented to explain the source of the $25,000 payment to the

IRS.       Mrs. Summer also failed to explain the source of the

additional $600 a month for the installment agreement or how she

was able to pay all of her other creditors.

       After weighing the pertinent factors of section 301.6343-

1(b)(4)(ii), Proced. & Admin. Regs., the Court finds that the

economic hardship factor supports denial of relief.

Conclusion

       Although there are a number of factors the Court may look to

in granting or denying innocent spouse relief, the factors of

knowledge or reason to know of the underpayment and lack of

economic hardship weigh so heavily against Mrs. Sommer that we

       5
      Mrs. Sommer’s transportation and medical expenses did not
exceed the national and local standards.
                              - 13 -

need not go further.   Mrs. Sommer is ineligible for innocent

spouse relief for the 2005 Federal income tax liability.

     We have considered the parties’ arguments and, to the extent

not discussed herein, we conclude the arguments are irrelevant,

moot, or without merit.

     To reflect the foregoing,


                                         Decision will be entered

                                    for respondent.
