                         T.C. Memo. 2002-201



                       UNITED STATES TAX COURT



               TRACY JODETTE AUGUST, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 10065-00.               Filed August 12, 2002.


     Tracy August, pro se.

     A. Gary Begun, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:    This case arises from a request for

equitable relief (relief) under section 6015(f)1 with respect to

petitioner’s taxable years 1990, 1992, and 1993 (years at issue).

The issue for decision is whether respondent abused his



     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect at all relevant times.
                               - 2 -

discretion in denying petitioner relief under section 6015(f) for

the years at issue.

                         FINDINGS OF FACT

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

The stipulation of facts, the deemed admissions, and the attached

exhibits are incorporated herein by this reference.    At the time

she filed her petition, petitioner resided in Hesperia, Michigan.

     Petitioner was 15 years old when she married Michael August

(Mr. August) in 1980.   Petitioner was married to Mr. August

during the years at issue.   Petitioner and Mr. August divorced

sometime after April 1994, and Mr. August was given custody of

their three children.

     Each month petitioner receives $531 from Supplemental

Security Income (SSI) and $462 from Family Assistance.    These

amounts are petitioner’s only income.   The only asset that

petitioner owns is a car valued at $700 or less.   She is not

required to pay child support because she is on SSI.

     Petitioner has a history of mental illness and was

hospitalized for mental illness and incarcerated at various times

before and after her marriage to Mr. August.   Petitioner also has

suffered from alcohol and drug addiction.   Petitioner attended

school only through the eighth grade but obtained her general

equivalency diploma (GED).
                               - 3 -

     Petitioner and Mr. August filed joint tax returns for the

years at issue.   The tax returns for 1990 and 1993 were prepared

by a C.P.A. firm, and the 1992 return was prepared by H&R Block.

All of the income reported on these returns came from Mr.

August’s carpet installation business and was reported on

Schedule C, Profit or Loss From Business.   The tax returns list

petitioner as a homemaker or housewife.   Petitioner signed these

returns.   The taxes reported on the returns as due have not been

fully paid.   Petitioner’s and Mr. August’s outstanding tax

liabilities for the years at issue are the result of these

underpayments of tax.2

     In March 1999, petitioner filed Form 8857, Request for

Innocent Spouse Relief, for each of the years at issue.

Petitioner attached the following statement to each Form 8857:

          My ex husband had all the money for our taxes to
     be paid before our divorce and instead he used approx
     13,000.00 for an attorney for our divorce. He is
     living as they say “High on the hog.” Since our
     divorce he has bought a new work van all brand new
     appliances, fax machine. All I have is a van 79 Dodge
     that is valued at 700.00 and does not run most of the
     time. I have applied for disability do to post
     tramatic stress disorder, obsessive compulsive
     disorder, panic attacks, anxiety attacks, and
     borderline personality disorder. I’m basically
     homeless, and living off family and friends. Please
     concider taking me off his account for the years owed.
     For I had no part of his business or knowledge he did
     not pay off taxes until after our divorce and I filed
     my taxes and they went towards his account. I filed a


     2
        As of Aug. 10, 2000, the remaining liabilities were
$1,670 for 1990, $4,820 for 1992, and $4,656 for 1993.
                                - 4 -

     joint return but I thought as a dependent and his wife
     I was suppose to. I never benefited at all from his
     business. If you were to audit him his lifestyle
     exceeds what he claims on taxes. However some property
     he has in his father-n-law’s name or his present wife.
     He has been looking to buy land, “Cash money” so he can
     put it in his present wife’s name.

On August 9, 1999, Mr. August filed a letter objecting to

petitioner’s request.   On January 21, 2000, after concluding that

petitioner had not responded to his request for additional

financial information, respondent sent her a letter in which

respondent preliminarily determined that she was not entitled to

relief under section 6015(f).   On February 7, 2000, in response

to the preliminary determination, petitioner sent respondent a

letter stating that she had sent respondent the requested

information.   Respondent interpreted petitioner’s letter as a

protest to the preliminary determination and forwarded her

request for relief to the Appeals Office for further

consideration.

     On May 12, 2000, Appeals Officer David Stauffer (Mr.

Stauffer) invited petitioner to a conference to discuss her

request for relief.   When she met with Mr. Stauffer, petitioner

was upset and agitated throughout the meeting.   Petitioner told

Mr. Stauffer that there had been domestic abuse throughout her

marriage and that Mr. August had hidden assets from the IRS in

order not to pay tax liabilities.
                                 - 5 -

     On August 10, 2000, respondent issued a Notice of

Determination Concerning Relief from Joint and Several Liability

Under Section 6015, determining that petitioner was not entitled

to relief under section 6015(f).    On September 25 and October 30,

2000, petitioner filed a timely petition and an amended petition,

respectively, with the Court requesting relief for the years at

issue.   Respondent notified Mr. August of the petitions.

                              OPINION

     Petitioner requests that the Court grant her relief from

these taxes under section 6015(f).

     Respondent argues that he did not abuse his discretion in

denying petitioner’s claim for relief under section 6015(f)

because petitioner presented no evidence supporting her claim,

and, therefore, petitioner did not qualify for relief under the

criteria provided in Rev. Proc. 2000-15, 2000-1 C.B. 447 (the

revenue procedure).

     Generally, spouses filing a joint tax return are each fully

responsible for the accuracy of their return and for the full tax

liability.   Sec. 6013(d)(3); Butler v. Commissioner, 114 T.C.

276, 282 (2000).   Section 6015 provides exceptions to this

general rule in certain circumstances.    Butler v. Commissioner,

supra.

     Section 6015(f) provides:

          SEC. 6015(f). Equitable Relief.--Under procedures
     prescribed by the Secretary, if--
                              - 6 -

               (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.

     Respondent denied petitioner relief under section 6015(f).

We have jurisdiction to review such a denial of relief.    Ewing v.

Commissioner, 118 T.C. 494 (2002) (holding that the Court had

jurisdiction over the requesting spouse’s claim for equitable

relief pursuant to section 6015(f) regarding the underpayment of

tax shown on the joint return).   Respondent’s denial of relief is

reviewed under an abuse of discretion standard.   Cheshire v.

Commissioner, 115 T.C. 183, 198 (2000); Butler v. Commissioner,

supra at 292.

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

procedures in the revenue procedure to be used in determining

whether an individual qualifies for relief under that section.

Section 4.01 of the revenue procedure lists seven threshold

conditions that must be satisfied before the Commissioner will

consider a request for relief under section 6015(f).   Respondent

concedes that petitioner meets all of the threshold conditions.

     Where, as here, the requesting spouse satisfies the

threshold conditions, section 4.02(1) of the revenue procedure
                                - 7 -

provides elements under which relief under section 6015(f) will

ordinarily be granted in a case in which a tax liability reported

on a joint return is unpaid.    These elements are:

          (a) At the time relief is requested, the
     requesting spouse is no longer married to, or is
     legally separated from, the nonrequesting spouse * * *;

          (b) At the time the return was signed, the
     requesting spouse had no knowledge or reason to know
     that the tax would not be paid. * * *; and

          (c) The requesting spouse will suffer economic
     hardship if relief is not granted. For purposes of
     this section, the determination of whether a requesting
     spouse will suffer economic hardship will be made by
     the Commissioner or the Commissioner’s delegate, and
     will be based on rules similar to those provided in
     section 301.6343-1(b)(4) of the Regulations on
     Procedure and Administration.

Rev. Proc. 2000-15, sec. 4.02(1), 2000-1 C.B. at 448.   First, at

the time relief was requested in March 1999, petitioner was no

longer married to Mr. August.    Second, petitioner testified that,

during their marriage, she was completely dependent upon Mr.

August regarding the filing of their tax returns and the payment

of the taxes.   Although Mr. August offered conflicting testimony

on this point, we found petitioner to be credible after having

observed her appearance and demeanor at trial.    On the basis of

her limited education, marriage at age 15, history of mental

illness, and dependence on Mr. August for tax matters, we

conclude that petitioner had no knowledge or reason to know that

the taxes would not be paid at the time the returns were signed.
                                     - 8 -

     Third, we conclude that petitioner will suffer economic

hardship if relief under section 6015(f) is not granted.3

Petitioner’s only income is public assistance.            This income is

exempt from levy.       Sec. 6334(a)(11).4       Petitioner’s income is so

minimal that she is not required to pay child support.

Additionally, petitioner suffers from mental illness which

affects her ability to earn a living.


     3
       Sec. 301.6343-1(b)(4)(ii), Proced. & Admin. Regs.,
provides factors that will be considered in determining whether
satisfaction of the levy will cause an individual taxpayer
economic hardship because she will be unable to pay her
reasonable living expenses. These factors include the taxpayer’s
age, her employment status and history, her ability to earn, the
number of dependents, any extraordinary circumstances, and any
other factor that the taxpayer claims bears on economic hardship
and brings to the attention of the director.
     4
         Sec. 6334(a)(11) provides:

          SEC. 6334(a).        Enumeration.--There shall be exempt
     from levy--

                    *      *     *    *      *      *    *

                 (11) Certain Public Assistance
            Payments.--Any amount payable to an
            individual as a recipient of public
            assistance under--

                      (A) title IV or title XVI
                 (relating to supplemental security
                 income for the aged, blind, and
                 disabled) of the Social Security
                 Act, or

                       (B) State or local government
                 public assistance or public welfare
                 programs for which eligibility is
                 determined by a needs or income
                 test.
                                 - 9 -

     Taking into account all the facts and circumstances, we

conclude that petitioner has satisfied each element under section

4.02(1) of the revenue procedure and it would be inequitable to

hold her liable for the unpaid taxes.    On the basis of the record

before us, we hold that respondent abused his discretion in

denying petitioner’s claim for relief under section 6015(f).

     In reaching our holding, we have considered all arguments

made by the parties, and, to the extent not mentioned above, we

find them to be irrelevant or without merit.

     To reflect the foregoing,

                                               Decision will be

                                          entered for petitioner.
