                        T.C. Memo. 2005-36



                      UNITED STATES TAX COURT



                 YVONNE C. LOPEZ, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2524-03.                Filed February 28, 2005.


     Yvonne C. Lopez, pro se.

     Kenneth P. Dale, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     MARVEL, Judge:   This case arises from a request for relief

under section 60151 with respect to petitioner’s 1992, 1993,

1994, and 1995 taxable years.   Respondent determined petitioner



     1
      All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure. Monetary amounts are
rounded to the nearest dollar.
                                - 2 -

was not entitled to any relief from joint and several liability

under section 6015.    Petitioner timely filed a petition seeking

review of respondent’s determination.   The issue for decision is

whether respondent’s denial of relief under section 6015(f) was

an abuse of discretion.

                          FINDINGS OF FACT

     Some of the facts have been stipulated.   We incorporate the

stipulated facts into our findings by this reference.   Petitioner

resided in Tacoma, Washington, when her petition in this case was

filed.

Background

     During the years in issue, petitioner was married to Thomas

W. Cowdery (Mr. Cowdery).   In May 1997, petitioner and Mr.

Cowdery divorced.

     Petitioner is a high school graduate and has completed some

college course work.   During the years in issue, petitioner

identified her occupation as either child care provider or

teacher.   Mr. Cowdery changed jobs frequently while married to

petitioner, working in construction, drafting, and pyrotechnics.

     During their marriage, petitioner and Mr. Cowdery maintained

a joint bank account, and they discussed their household bills.

Mr. Cowdery, however, generally handled their household finances.

During the years at issue, petitioner was not aware of any

problems with Mr. Cowdery’s handling of their finances, but in
                                - 3 -

1999, she discovered he had made late bill payments that had

adversely affected her credit report.

Tax Returns

     Petitioner and Mr. Cowdery filed joint Federal income tax

returns for 1992, 1993, 1994, and 1995.   Their returns reflected

unpaid income tax liabilities (tax liabilities) of $806, $1,729,

$1,705, and $1,394 for 1992, 1993, 1994, and 1995, respectively.

The tax liabilities resulted from underwithholding of wages

attributable to both petitioner and Mr. Cowdery.

     Mr. Cowdery had their joint returns prepared by a tax return

preparer.   Petitioner gave Mr. Cowdery her Forms W-2, Wage and

Tax Statement, to take to the preparer.   When petitioner and Mr.

Cowdery received the completed returns and saw the amounts due,

Mr. Cowdery assured petitioner that he had talked to the return

preparer about payment plans and that he would make monthly

payments on the liabilities.   Petitioner thought Mr. Cowdery was

making the payments on the tax liabilities because of Internal

Revenue Service (IRS) payments she believed to be in envelopes

she saw in their mailbox.    Petitioner did not know exactly what

was in the envelopes, however, and she never asked Mr. Cowdery

what was in them.   Petitioner also never saw any checks written

to the IRS by Mr. Cowdery.

     Sometime around October 1995, the IRS levied petitioner and

Mr. Cowdery’s bank account.    Petitioner first became aware that
                               - 4 -

Mr. Cowdery was not making payments to the IRS because of the

levy.   Although petitioner was aware of the IRS action against

their account, she nevertheless filed her 1995 return jointly

with Mr. Cowdery.

Tax Liability Payments

     On May 9, 1997, the County Clerk of Pierce County,

Washington, entered a Decree of Dissolution with respect to

petitioner and Mr. Cowdery’s marriage.   The divorce decree stated

that Mr. Cowdery was responsible for providing spousal support to

petitioner and for paying the IRS liabilities.   Mr. Cowdery,

however, consistently failed to make any such payments.

     Petitioner received a court judgment against Mr. Cowdery for

his failure to make the support and tax liability payments.     On

October 28, 1999, the County Clerk of Pierce County, Washington,

entered a Judgment for Past Due Spousal Maintenance and Payments

Made to IRS, which stated in pertinent part, the following:

     3.5   JUDGMENT FOR PAST SPOUSAL MAINTENANCE

                YVONNE LOPEZ shall have judgment against
                THOMAS COWDERY in the amount of $3,575.00
                for unpaid spousal maintenance for the period
                from 6/16/98 through 7/15/99.

     3.6   OTHER RECOVERY AMOUNTS

                YVONNE LOPEZ shall have judgment against
                THOMAS COWDERY for $1,246.32 for the payments
                petitioner has made to the IRS.

Despite the judgment, however, petitioner received no money from

Mr. Cowdery.   Because of Mr. Cowdery’s failure to pay the income
                                - 5 -

tax liabilities, petitioner also made payments to the IRS of

$1,533,2 $375, $916, and $510 for 1992, 1993, 1994, and 1995,

respectively.3

Petitioner’s Innocent Spouse Claim

     On November 4, 1999, petitioner filed Form 8857, Request for

Innocent Spouse Relief.    Petitioner requested equitable relief

under section 6015(f) for taxable years 1992, 1993, 1994, and

1995.    On July 29, 2000, petitioner prepared and signed a Form

433-A, Collection Information Statement for Individuals.

Petitioner also filed a completed Form 886-A, Innocent Spouse

Questionnaire.

     On October 31, 2002, respondent issued a Notice of

Determination that denied petitioner’s request for relief for

each of the years in issue.4   On February 7, 2003, petitioner’s


     2
      After petitioner’s divorce, she filed her tax returns
separately from Mr. Cowdery. The IRS kept petitioner’s refunds
from the years following the divorce to offset the prior tax
liabilities. The $1,533 payment toward the 1992 liability thus
includes refund offsets of $75, $75, $91, and $270, from 1993,
1996, 1997, and 1998, respectively.
     3
      Respondent determined that if petitioner had filed
separately rather than jointly with Mr. Cowdery during the years
in issue, she would have owed $403, $902, $818, and $509 for each
of those years, respectively. When respondent provided
petitioner with his determination on Aug. 26, 2000, petitioner
promptly obtained money orders for the amounts she would have
owed and paid those amounts to the IRS.
     4
      The notice of determination erroneously stated that relief
was denied with respect to 1991, 1992, 1993, 1994, 1995, and
1996. Respondent concedes in his pretrial memorandum, however,
                                                   (continued...)
                                 - 6 -

petition contesting respondent’s determination was filed with

this Court.   The petition did not conform with Rule 321(b).

Consequently, on February 11, 2003, we ordered petitioner to file

a proper “Amended Petition for Determination of Relief From Joint

and Several Liability on a Joint Return” (amended petition) by

March 11, 2003.    Petitioner submitted an amended petition that we

filed on March 12, 2003.

                                OPINION

     In general, spouses who file joint Federal income tax

returns are jointly and severally liable for the full amount of

the tax liability.    Sec. 6013(d)(3); Butler v. Commissioner, 114

T.C. 276, 282 (2000).    Pursuant to section 6015, however, a

spouse may seek relief from joint and several liability.5

     One form of relief from joint and several liability is

equitable relief under section 6015(f).    Section 6015(f)

provides:

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

                  (1) taking into account all the facts and


     4
      (...continued)
that the reference to 1991 and 1996 in the notice of
determination was erroneous and that the only years in issue are
1992 through 1995.
     5
      Sec. 6015 applies to tax liabilities arising after July 22,
1998, and to tax liabilities arising on or before July 22, 1998,
but remaining unpaid as of such date. Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec.
3201(g), 112 Stat. 740.
                                - 7 -

            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.[6]

The Commissioner uses guidelines prescribed in Rev. Proc. 2000-

15, 2000-1 C.B. 447, to determine whether a taxpayer qualifies

for relief from joint and several liability under section

6015(f).7   We review the Commissioner’s determination using an

abuse of discretion standard.   See Washington v. Commissioner,

120 T.C. 137, 146 (2003); Butler v. Commissioner, supra at 292.

Under this standard of review, we defer to the Commissioner’s

determination unless it is arbitrary, capricious, or without

sound basis in fact.    Jonson v. Commissioner, 118 T.C. 106, 125

(2002), affd. 353 F.3d 1181 (10th Cir. 2003).    The taxpayer

requesting section 6015(f) relief bears the burden of proof.      See

Rule 142(a); Jonson v. Commissioner, supra at 113.




     6
      Because petitioner seeks relief from underpayments of tax
rather than understatements, relief under subsecs. (b) and (c) of
sec. 6015 is not available to her. Sec. 6015(b) and (c); see
also Washington v. Commissioner, 120 T.C. 137, 145-147 (2003).
     7
      On Aug. 11, 2003, the Commissioner issued Rev. Proc. 2003-
61, 2003-2 C.B. 296, which supersedes Rev. Proc. 2000-15, 2000-1
C.B. 447, effective for requests for relief filed on or after
Nov. 1, 2003, and for requests for relief pending on Nov. 1,
2003, for which no preliminary determination letter has been
issued as of that date.
                               - 8 -

     Before the Commissioner will consider a taxpayer’s request

for relief under section 6015(f), the taxpayer must satisfy seven

threshold conditions listed in Rev. Proc. 2000-15, sec. 4.01,

2000-1 C.B. at 448.   Respondent concedes that petitioner

satisfies these conditions.

A.   Revenue Procedure 2000-15, Section 4.02

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

provides that equitable relief will ordinarily be granted as to

unpaid liabilities if the seven threshold conditions and each of

the following three elements are satisfied:

          (a) At the time relief is requested, the
     requesting spouse is no longer married to * * * 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. The requesting spouse
     must establish that it was reasonable for the
     requesting spouse to believe that the nonrequesting
     spouse would pay the reported liability. * * *; and

          (c) The requesting spouse will suffer economic
     hardship if relief is not granted. * * *

Relief under Rev. Proc. 2000-15, sec. 4.02 is only available,

however, to the extent that the unpaid liability is allocable to

the nonrequesting spouse.   Rev. Proc. 2000-15, sec. 4.02(2)(b).

     Respondent concedes that petitioner satisfied the first

element because she was divorced from Mr. Cowdery at the time she

requested relief.   The parties, however, dispute whether

petitioner satisfied the second and third elements.
                                - 9 -

     1.    Knowledge or Reason To Know

     This element is satisfied if the requesting spouse did not

know or have reason to know when she signed the returns that the

taxes would not be paid.    Accordingly, petitioner must establish

that it was reasonable for her to believe that Mr. Cowdery would

pay the reported liabilities.

     During their marriage, petitioner and Mr. Cowdery discussed

their unpaid income tax liabilities as well as their other

household finances.    Petitioner and Mr. Cowdery also maintained a

joint bank account.    There is no evidence, and petitioner does

not allege, that Mr. Cowdery kept their financial documents, such

as bills or bank statements, from her.    Petitioner contends,

however, that she never questioned Mr. Cowdery about the payments

he said he would make on the liabilities, despite being aware of

the annual underpayments of income tax shown on their joint

returns.   Petitioner also does not appear to have requested any

records from the IRS regarding what payments had been made, to

have examined bank records for payments, or to have done anything

at all to verify whether Mr. Cowdery made any payments toward the

tax liabilities.   What petitioner did do was continue to file

jointly with Mr. Cowdery after she knew he was not making

payments to the IRS.

     While we are sympathetic to petitioner’s situation with her

former husband, we have consistently applied the principle that
                               - 10 -

the provisions providing relief from joint and several liability

are “‘designed to protect the innocent, not the intentionally

ignorant’”.    Morello v. Commissioner, T.C. Memo. 2004-181

(quoting Dickey v. Commissioner, T.C. Memo. 1985-478).

Petitioner has not established that she did not have reason to

know the tax liabilities shown on her returns for the years at

issue would not be paid when she signed them and that it was

reasonable for her to believe Mr. Cowdery would pay those

liabilities.    Consequently, petitioner does not satisfy the

knowledge or reason to know element of Rev. Proc. 2000-15, sec.

4.02 and does not qualify for equitable relief under that section

of the revenue procedure.   For the sake of completeness, however,

we also address the economic hardship factor.

     2.   Economic Hardship

     Rev. Proc. 2000-15, sec. 4.02 requires that the

determination of whether a requesting spouse will suffer economic

hardship be based on rules similar to those in section 301.6343-

1(b)(4), Proced. & Admin. Regs.    Rev. Proc. 2000-15, sec.

4.02(1)(c).    Economic hardship is present if satisfaction of the
                              - 11 -

tax liability in whole or in part will cause the taxpayer to be

unable to pay her reasonable basic living expenses.8   Sec.

301.6343-1(b)(4), Proced. & Admin. Regs.

     In 2000, petitioner filed a Form 433-A with respondent.

Petitioner reported on the Form 433-A that she was employed by

the Puget Sound Blood Center as a technician, with an annual

salary of approximately $25,600.9   Petitioner reported her

monthly income as $2,133 and her monthly expenses as $2,078.

Petitioner’s stated monthly expenses included housing and utility

expenses of $1,398, transportation expenses of $425, and health

care expenses of $60.   Petitioner also included $195 of monthly

credit card payments in her expenses but testified at trial she




     8
      Sec. 301.6343-1(b)(4)(ii), Proced. & Admin. Regs., lists
factors that will be considered in determining a reasonable
amount for basic living expenses. These factors include the
taxpayer’s age, employment status and history, ability to earn,
number of dependents, extraordinary circumstances, and any other
factor that the taxpayer claims bears on economic hardship and
brings to the attention of the director.
     9
      Petitioner did not include a Form W-2, Wage and Tax
Statement, with her Form 433-A from the Blood Center. She
provided only a pay stub that showed her net pay for the pay
period ending July 22, 2000 (the length of this pay period is not
provided), and some year-to-date information regarding her
salary.
                                 - 12 -

no longer has any credit cards.     Petitioner’s reported assets

consisted of a 1999 model Kia Sophia,10 a “402B” account

established through her employer,11 and her home.

     Petitioner purchased her home on February 1, 1999.     As of

February 16, 2004, the value of the home was $111,500.

Petitioner purchased the home from her parents for $98,000.     She

obtained a $78,000 mortgage and made a $20,000 downpayment, the

funds for which were given to her by her parents.     She

subsequently refinanced her mortgage, and its balance as of

February 2004 was $101,000.     Petitioner contends she did not use

the gift from her parents or the money she received from the

refinancing to pay the tax liabilities because “my ex-husband is

supposed to pay it.     I’m not.”

     Petitioner testified that her situation has changed since

2000 in that she no longer has credit card debt, has refinanced

her home, and is now caring for a blind uncle, but that her

situation is otherwise the same as when she filed the Form 433-A.

Petitioner contends it would be a hardship for her to pay the tax

liabilities because of her mortgage payments and the expense of

caring for her uncle.     She did not introduce into evidence any

financial records regarding her current salary, basic living


     10
      Petitioner reported that her Kia Sophia was worth $5,500
and that she had a $3,500 liability with respect to the car.
     11
          The record is silent as to the value of the 402B account.
                              - 13 -

expenses, the existence and amount of other debts, or the nature

and amount of the expenses she pays to care for her uncle.

Consequently, we conclude that petitioner has failed to prove

that she would be unable to pay her basic living expenses and

would suffer economic hardship if relief under section 6015(f)

were denied.

B.   Revenue Procedure 2000-15, Section 4.03

     Where the requesting spouse fails to qualify for relief

under Rev. Proc. 2000-15, sec. 4.02, the Commissioner may

nonetheless grant relief under Rev. Proc. 2000-15, sec. 4.03,

2000-1 C.B. at 448.   Rev. Proc. 2000-15, sec. 4.03 provides that,

where the seven threshold conditions have been satisfied and the

requesting spouse does not qualify for relief under Rev. Proc.

2000-15, sec. 4.02, equitable relief may be granted under section

6015(f) if, taking into account all facts and circumstances, it

is inequitable to hold the requesting spouse liable.   Rev. Proc.

2000-15, sec. 4.03(1) and (2), 2000-1 C.B. at 448-449, contains a

list of positive and negative factors that the Commissioner will

take into account in determining, on the facts and circumstances,

whether to grant full or partial equitable relief under section

6015(f).   As Rev. Proc. 2000-15, sec. 4.03 makes clear, no single

factor is determinative in any particular case, all factors are

to be considered and weighed appropriately, and the listing of
                             - 14 -

factors is not intended to be exhaustive.   See Washington v.

Commissioner, 120 T.C. at 148; Jonson v. Commissioner, 118 T.C.

at 125.

     Rev. Proc. 2000-15, sec. 4.03(1) lists the following six

positive factors that the Commissioner will weigh in favor of

granting equitable relief:

          (a) Marital status. The requesting spouse is
     separated * * * or divorced from the nonrequesting
     spouse.

          (b) Economic hardship. The requesting spouse
     would suffer economic hardship (within the meaning of
     section 4.02(1)(c) of this revenue procedure) if relief
     from the liability is not granted.

          (c) Abuse. The requesting spouse was abused by
     the nonrequesting spouse, but such abuse did not amount
     to duress.

          (d) No knowledge or reason to know. In the case
     of a liability that was properly reported but not paid,
     the requesting spouse did not know and had no reason to
     know that the liability would not be paid. * * *

          (e) Nonrequesting spouse’s legal obligation. The
     nonrequesting spouse has a legal obligation pursuant to
     a divorce decree or agreement to pay the outstanding
     liability. This will not be a factor weighing in favor
     of relief if the requesting spouse knew or had reason
     to know, at the time the divorce decree or agreement
     was entered into, that the nonrequesting spouse would
     not pay the liability.

          (f) Attributable to nonrequesting spouse.   The
     liability for which relief is sought is solely
     attributable to the nonrequesting spouse.

Rev. Proc. 2000-15, sec. 4.03(2) lists the following six negative

factors that the Commissioner weighs against granting equitable

relief:
                             - 15 -

          (a) Attributable to the requesting spouse. The
     unpaid liability or item giving rise to the deficiency
     is attributable to the requesting spouse.

          (b) Knowledge, or reason to know. A requesting
     spouse knew or had reason to know * * * that the
     reported liability would be unpaid at the time the
     return was signed. This is an extremely strong factor
     weighing against relief. Nonetheless, when the factors
     in favor of equitable relief are unusually strong, it
     may be appropriate to grant relief under §6015(f) in
     limited situations where a requesting spouse knew or
     had reason to know that the liability would not be
     paid, * * *

          (c) Significant benefit. The requesting spouse
     has significantly benefitted (beyond normal support)
     from the unpaid liability * * *. See §1.6013-5(b).

          (d) Lack of economic hardship. The requesting
     spouse will not experience economic hardship (within
     the meaning of section 4.02(1)(c) of this revenue
     procedure) if relief from the liability is not granted.

          (e) Noncompliance with federal income tax laws.
     The requesting spouse has not made a good faith effort
     to comply with federal income tax laws in the tax years
     following the tax year or years to which the request
     for relief relates.

          (f) Requesting spouse’s legal obligation. The
     requesting spouse has a legal obligation pursuant to a
     divorce decree or agreement to pay the liability.

The knowledge or reason to know factor, the economic hardship

factor, and the legal obligation factor in Rev. Proc. 2000-15,

sec. 4.03(2)(b), (d), and (f), respectively, are the opposites of

the knowledge or reason to know factor, the economic hardship

factor, and the legal obligation factor in Rev. Proc. 2000-15,

sec. 4.03(1)(d), (b), and (e), respectively.   The attribution

factor in Rev. Proc. 2000-15, sec. 4.03(2)(a) is substantially
                                - 16 -

the opposite of the attribution factor in Rev. Proc. 2000-15,

sec. 4.03(1)(f).   Consequently, in our review of the

Commissioner’s determination denying relief under section

6015(f), we have held that a finding with respect to the reason

to know, economic hardship, legal obligation, and attribution

factors ordinarily will weigh either in favor of or against

granting equitable relief under section 6015(f).     Ewing v.

Commissioner, 122 T.C. 32, 45 (2004).    We have also held that a

finding that a requesting spouse did not receive a significant

benefit from the item giving rise to the deficiency weighs in

favor of granting relief under section 6015(f).     Id.   Finally, we

treat evidence that the remaining positive and negative factors

are not applicable as evidence weighing neither in favor of nor

against granting equitable relief (i.e., as neutral).      Id.   In

accordance with the above, we shall consider each of the positive

and negative factors enumerated in Rev. Proc. 2000-15, sec. 4.03.

     1.   Positive Factors

          a.   Marital Status

     Petitioner and Mr. Cowdery divorced in 1997.    Respondent

concedes this factor weighs in favor of granting relief.

          b.   Economic Hardship

     For the reasons stated in our analysis of this factor under

Rev. Proc. 2000-15, sec. 4.02, we conclude that petitioner has
                                - 17 -

failed to establish she will suffer economic hardship if she is

not granted equitable relief.    This positive factor does not

apply.

          c.   Abuse by Nonrequesting Spouse

     Petitioner does not allege that Mr. Cowdery abused her.

This positive factor does not apply.     Ewing v. Commissioner,

supra at 46; Washington v. Commissioner, supra at 149.

          d.   No Knowledge or Reason To Know

     For the reasons stated in our analysis of this factor under

Rev. Proc. 2000-15, sec. 4.02, we conclude petitioner has failed

to establish that she did not have reason to know when the

returns were filed that the tax liabilities shown as due on the

1992, 1993, 1994, and 1995 returns would not be paid.    This

positive factor does not apply.

          e.   Nonrequesting Spouse’s Legal Obligation

     Under petitioner and Mr. Cowdery’s 1997 divorce decree, Mr.

Cowdery bears the legal obligation for paying the tax liabilities

for each of the years in issue.    Respondent concedes this factor

weighs in favor of granting relief.

          f.   Liabilities Solely Attributable to Nonrequesting
               Spouse

     The unpaid tax liabilities resulted from underwithholding of

both petitioner’s and Mr. Cowdery’s wages, and, therefore, the

liabilities are not solely attributable to Mr. Cowdery.

Consequently, we conclude this positive factor does not apply.
                               - 18 -

     2.   Negative Factors

          a.    Attributable to the Requesting Spouse

     Because the unpaid liabilities are attributable to both

petitioner and Mr. Cowdery, this factor weighs against granting

petitioner equitable relief.

          b.    Knowledge or Reason To Know

     As discussed, supra, we conclude that petitioner had reason

to know when she signed the returns that the tax liabilities

would not be paid.   This factor weighs heavily against granting

petitioner equitable relief.   Rev. Proc. 2000-15, sec.

4.03(2)(b).

          c.    Significant Benefit

     Respondent does not contend that petitioner significantly

benefited from the unpaid liabilities, and the record does not

reflect otherwise.   This factor weighs in favor of granting

petitioner equitable relief.

          d.   Lack of Economic Hardship

     As discussed, supra, petitioner has failed to establish that

she will suffer economic hardship if relief is not granted.

This negative factor applies and weighs against granting relief.

          e.    Noncompliance With Federal Income Tax Laws in
                Subsequent Years

     Respondent does not contend that this factor applies, and he

did not otherwise argue on brief or at trial that petitioner did

not make a good-faith effort to comply with her Federal income
                               - 19 -

tax obligations in the years subsequent to those in issue here.

Consequently, we conclude this negative factor does not apply.

See Ewing v. Commissioner, supra at 46-47.

           f.   Requesting Spouse’s Legal Obligation

     With respect to the positive counterpart to this factor, we

concluded that Mr. Cowdery, rather than petitioner, bears the

legal obligation to pay the liabilities at issue in this case.

Consequently, this negative factor does not apply.

     3.    Conclusion

     Three factors weigh in favor of granting petitioner relief.

Although three factors also weigh against granting petitioner

relief, the knowledge or reason to know factor weighs heavily

against relief.   All other factors are neutral.   After

considering all the facts and circumstances, we find that

respondent did not abuse his discretion in denying petitioner

equitable relief from joint and several liability under section

6015(f).

     We have carefully considered all remaining arguments made by

the parties for results contrary to those expressed herein and,

to the extent not discussed above, find those arguments to be

irrelevant, moot, or without merit.

     To reflect the foregoing,

                                           Decision will be entered

                                      for respondent.
