                    T.C. Summary Opinion 2011-63



                        UNITED STATES TAX COURT



              PAMELA ANNETTE WHITLEY, Petitioner,
                AND JACK G. WOODS, Intervenor v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 24236-09S.               Filed June 1, 2011.



     Pamela Annette Whitley, pro se.

     Jack G. Woods, pro se.

     Amber N. Becton, for respondent.



     RUWE, Judge:     This case was heard pursuant to the provisions

of section 74631 of the Internal Revenue Code in effect when the

petition was filed.    Pursuant to section 7463(b), the decision to




     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended.
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be entered is not reviewable by any other court, and this opinion

shall not be treated as precedent for any other case.

     The only issue is whether petitioner is entitled to spousal

relief under section 6015(f) regarding her joint tax liabilities

for 2003 and 2004.

                            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.

     At the time the petition was filed, petitioner resided in

Tennessee.

     Petitioner and intervenor (herein sometimes referred to as

the taxpayers) timely filed joint Federal income tax returns for

taxable years 2003 and 2004.   Petitioner prepared the returns for

both years.   For taxable year 2003 the taxpayers filed a Schedule

C, Profit or Loss From Business, for petitioner on which they

reported income of $13,546 and claimed expenses of $68,302,

resulting in a net loss of $54,756.    The taxpayers also filed a

Schedule C-EZ, Net Profit From Business, for intervenor on which

they reported income of $18,272 and claimed no expenses.

Petitioner and intervenor also reported early distributions from

their qualified retirement plans of $1,542 and $1,049,

respectively, for 2003.
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     With their 2004 return the taxpayers filed a Schedule C for

petitioner on which they claimed expenses of $28,243 and a net

loss of $29,959.   Respondent audited the taxpayers’ 2003 and 2004

returns and issued them a statutory notice of deficiency with

respect to their income tax liabilities for those years.    In the

notice of deficiency respondent disallowed part of the Schedule C

expenses, exemptions, and itemized deductions the taxpayers

claimed for 2003 and 2004.   The disallowed deductions for both

years were attributable to petitioner’s Schedules C.   Respondent

also determined that the taxpayers were liable for the accuracy-

related penalty under section 6662 for the 2003 and 2004 taxable

years, as well as additional tax on early distributions from

qualified retirement plans under section 72(t) for 2003.

Petitioner and intervenor did not file a petition to the Court in

response to the notice of deficiency.

     Subsequently, on January 10, 2007, following her bankruptcy

attorney’s advice, petitioner informed the Internal Revenue

Service (IRS) that she was going to file for bankruptcy and

requested that the IRS place a lien on her residence in

Knoxville, Tennessee, which she owned jointly with intervenor.

Petitioner believed that if a lien were placed on the home before

she filed for bankruptcy, any eventual sale would lead to the

satisfaction of her income tax liabilities for 2003 and 2004.     On

February 2, 2007, petitioner filed a chapter 7 bankruptcy
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petition.   On April 25, 2007, the IRS filed a proof of claim

listing $11,235.21 in unsecured priority claims for tax years

2002, 2003, and 2004 and $2,453.92 in unsecured general claims

for penalties.   As part of petitioner’s bankruptcy proceeding,

the jointly owned residence was sold.     The residence was the only

significant asset in the bankruptcy estate.     After the

outstanding mortgage on the property and the administrative

expenses associated with the sale were paid, the proceeds were

divided equally between petitioner’s bankruptcy estate and

intervenor.   The IRS was to receive $2,630.14 for its unsecured

priority claim as a distribution from the bankruptcy trustee.

     On June 19, 2007, an order of discharge was entered in

petitioner’s bankruptcy case.   Petitioner and intervenor divorced

in July 2007.

     On October 10, 2008, petitioner submitted to respondent a

Form 8857, Request for Innocent Spouse Relief, in which she

requested relief from joint tax liabilities for 2003 and 2004.

Respondent issued petitioner a preliminary determination, dated

June 10, 2009, that she was not entitled to relief from the joint

liabilities as an innocent spouse.      In response to respondent’s

preliminary determination, petitioner filed a statement of

disagreement with respondent.   On July 16, 2009, respondent

issued a final Appeals determination denying petitioner’s request
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for relief.    On October 13, 2009, petitioner filed a petition

with this Court.

                              Discussion

     Petitioner’s only argument is that she in entitled to

equitable relief under section 6015(f) because the IRS should

have filed a lien against her residence before she filed for

bankruptcy.    She alleges that had that been done, all or most of

her unpaid tax liabilities would have been satisfied.     Petitioner

contends that respondent made affirmative misrepresentations to

her regarding the existence of a tax lien on her home before its

sale in bankruptcy and that those misrepresentations led to her

home being sold by the bankruptcy trustee without her tax

liabilities being fully satisfied.      Petitioner argues that she is

entitled to equitable relief because she requested that the IRS

place a lien on her home before it was sold in bankruptcy and the

IRS incorrectly assured her that one had been put in place before

the sale.2    Petitioner contends that as a result of respondent’s

misrepresentations her tax liabilities were not satisfied by the

sale and, therefore, respondent should be equitably estopped from

collecting the liabilities.    We must decide whether petitioner is




     2
      At trial and on brief, petitioner did not contend that she
meets the requirements to qualify as an innocent spouse under
sec. 6015(b) or (c) or make any other argument for equitable
relief.
                                - 6 -

relieved from liability for the understatements of tax by

equitable estoppel.

     Equitable estoppel is a judicial doctrine that precludes a

party from denying his or her own acts or representations which

induced another to act to his or her detriment.    Hofstetter v.

Commissioner, 98 T.C. 695, 700 (1992); Graff v. Commissioner, 74

T.C. 743, 761 (1980), affd. 673 F.2d 784 (5th Cir. 1982).    It is

well settled that the Government may not be estopped “on the same

terms as any other litigant.”    Office of Personnel Management v.

Richmond, 496 U.S. 414, 419 (1990); Heckler v. Cmty. Health

Servs. Inc., 467 U.S. 51, 60 (1984).    Equitable estoppel should

be applied “against the Government with utmost caution and

restraint”.   Schuster v. Commissioner, 312 F.2d 311,(9th Cir.

1962), affg. in part and revg. in part 32 T.C. 998 (1959).    Any

successful attempt to invoke equitable estoppel against the

Commissioner must outweigh the policy consideration in favor of

“an efficient collection of the public revenue”.    Id.

     In order to invoke the doctrine of equitable estoppel

against the Government, petitioner must satisfy the following

conditions:   “(1) A false representation or wrongful, misleading

silence by the party against whom the opposing party seeks to

invoke the doctrine; (2) an error in a statement of fact and not

in an opinion or statement of law; (3) ignorance of the true

facts; (4) reasonable reliance on the acts or statements of the
                               - 7 -

one against whom estoppel is claimed; and (5) adverse effects of

the acts or statement of the one against whom estoppel is

claimed.”   Norfolk S. Corp. v. Commissioner, 104 T.C. 13, 60

(1995), affd. 140 F.3d 240 (4th Cir. 1998); see also Miller v.

Commissioner, T.C. Memo. 2001-55.

     In addition, estoppel requires at least a minimum showing of

some affirmative misconduct by a Government agent.   United States

v. Guy, 978 F.2d 934, 937 (6th Cir. 1992).   To establish

affirmative misconduct, the party claiming equitable estoppel

against the Government must establish “‘more than mere

negligence, delay, inaction, or failure to follow an internal

agency guideline’”.   Fisher v. Peters, 249 F.3d 433, 445 (6th

Cir. 2001) (quoting Ingalls Shipbuilding, Inc. v. Office of

Workers’ Comp. Programs, U.S. Dept. of Labor, 976 F.2d 934, 938

(5th Cir. 1992)).

     Even if the Court were to accept petitioner’s testimony as

to respondent’s misrepresentations regarding the status of the

lien, we conclude that petitioner has not established the

elements necessary for estoppel because she failed to show that

respondent’s misrepresentations amounted to affirmative

misconduct.   It is well settled that a Government agent’s

providing inaccurate information does not constitute affirmative

misconduct.   See Socop-Gonzalez v. INS, 272 F.3d 1176, 1184 (9th

Cir. 2001) (negligently providing misinformation or incorrect
                                - 8 -

advice is not affirmative misconduct); United States v. Manning,

787 F.2d 431, 437 (8th Cir. 1986).

     On the basis of the foregoing, we hold that the doctrine of

equitable estoppel cannot be invoked to relieve petitioner from

liability for the understatements of tax for the years at issue.

    To reflect the foregoing,


                                            Decision will be entered

                                        for respondent.
