                   T.C. Summary Opinion 2003-72



                     UNITED STATES TAX COURT



                  BARBARA A. ROOKS, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11874-02S.              Filed June 11, 2003.



     Barbara A. Rooks, pro se.

     James A. Kutten, for respondent.



     DINAN, Special Trial Judge:    This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.    The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority.   Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code as

amended.
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     This case is before the Court on petitioner’s petition to

review respondent’s denial of relief under section 6015 with

respect to petitioner’s 1992 and 1993 taxable years.

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

The stipulations of fact and the attached exhibits are

incorporated herein by this reference.    Petitioner resided in St.

Louis County, Missouri, on the date the petition was filed in

this case.

     In November 1994, petitioner and her now deceased husband,

Thomas Rooks, filed joint Federal income tax returns for taxable

years 1989 through 1993 on Forms 1040, U.S. Individual Income Tax

Return.1   After applying various payments and credits to the

years 1989 through 1991, all liabilities with respect thereto

have been satisfied.   The remaining returns, those for 1992 and

1993, reflected outstanding tax liabilities of $4,872 and $5,294,

respectively.   No payment was made with respect to these amounts

at the time the returns were filed.

     Mr. Rooks died on August 30, 1996.   In November 1996,

petitioner submitted amended returns for each of 1992 and 1993 on

Forms 1040X, Amended U.S. Individual Income Tax Return.

Respondent accepted the changes made by these amended returns,


     1
      Respondent previously had prepared substitute returns for
petitioner and Mr. Rooks for 1989 through 1992. However,
petitioner’s and Mr. Rook’s account was adjusted to reflect the
liabilities shown on the filed returns after they were received
by the Internal Revenue Service.
                               - 3 -

resulting in a reduction of taxes due.   After application of

various penalties, credits, and interest, respondent’s records

indicated outstanding liabilities on September 30, 2002, of

$12,298 for 1992 and $9,473 for 1993.

     Petitioner’s request for section 6015(f) relief was made

with respect to the unpaid tax liabilities for taxable years 1992

and 1993.   In respondent’s notice of determination denying

petitioner relief, respondent stated in relevant part:

     With Tax Underpayment cases, the Burden of Proof is on the
     Requesting Spouse (Barbara Rooks) to show that it is
     Inequitable to hold her jointly liable for the unpaid tax
     liabilities. One of the strongest factors that must be
     considered is whether the Requesting Spouse reasonably
     believed that the Non Requesting Spouse (Thomas Rooks) could
     and would pay the Tax Underpayments. In this case, Barbara
     Rooks has not shown that she reasonably believed (on
     November 1, 1994) that Thomas Rooks would and could pay the
     1992 and/or 1993 Tax Underpayments.

     Barbara Rooks states that she signed blank tax returns
     for 1992 and 1993 tax years in April 1993 and April
     1994, respectively. Accordingly, she states that she
     was unaware of the Tax Underpayments. She may indeed
     have signed those tax returns, however, since they were
     not filed, she did not become jointly liable for such
     returns.

     Barbara Rooks signed the 1992 and 1993 joint tax
     returns that were filed on November 1, 1994 (along with
     the 1989, 1990, and 1991 tax returns). She does not
     indicate that she signed those returns in the blank
     format. In fact, she states that she signed “Amended”
     returns. (The 1989, 1990, and 1991 returns filed in
     November 1994 did amend the tax accounts for those
     years.) These returns therefore caused her to be
     jointly liable for the 1992 and 1993 Tax Underpayments.
     It is at this point in time that we must analyze
     whether she reasonably believed that the 1992 and/or
     1993 Tax Underpayments could or would be paid by Thomas
     Rooks.
                                 - 4 -

     Given the fact that they filed the 1989, 1990, 1991,
     1992, and 1993 returns simultaneously, with a
     cumulative Tax Underpayment of $25,919, plus penalties
     and interest; the fact that they did not have more than
     $6,000; and the fact that she acknowledges that he
     would have had a great deal of trouble paying the tax
     liabilities, it is not reasonable that she thought (in
     November 1994) that Thomas could pay the 1992 or 1993
     tax liabilities.

     (If she did sign those returns in blank format,
     Innocent Spouse Relief cannot be automatically granted
     as she chose to shield herself from the situation.
     More importantly, we would still focus on whether she
     would have thought in November 1994 that Thomas Rooks
     could have been able to pay the Tax Underpayments.)

     In addition to showing that she reasonably believed
     that Thomas Rooks could and would pay the Tax
     Underpayments, Barbara Rooks did not establish that she
     would suffer an Economic Hardship [if she] is held
     liable for the Tax Underpayments.

Petitioner challenges respondent’s denial of section 6015 relief.

     Spouses who file a joint Federal income tax return generally

are jointly and severally liable for the payment of the tax shown

on the return or found to be owing.      Sec. 6013(d)(3); Cheshire v.

Commissioner, 115 T.C. 183, 188 (2000), affd. 282 F.3d 326 (5th

Cir. 2002).   However, relief from joint and several liability is

available to certain taxpayers under section 6015.     There are

three avenues for relief under this section--section 6015(b),

(c), and (f).   Petitioner requested relief under each of these

provisions.

     Section 6015(b) applies only to “an understatement of tax

attributable to erroneous items of 1 individual filing the joint

return”.   Sec. 6015(b)(1)(B).   Section 6015(c) applies only with
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respect to liability for deficiencies.    Sec. 6015(c)(1).   In

general terms, and for purposes of this case, both an

“understatement” and a “deficiency” are equal to the amount of

tax required to be shown on a return less the amount of tax

actually shown on the return.    Secs. 6015(b)(3), 6662(d)(2)(A),

6211(a).    The unpaid tax liabilities in this case result from

amounts shown as due on the returns filed by petitioner and Mr.

Rooks.    These underpayments have been assessed by respondent.

Because respondent does not assert that the amounts of tax shown

on petitioner’s returns as filed (and as reduced by the amended

returns) were less than the amounts required to be shown thereon,

there is neither an understatement nor a deficiency in this case,

making section 6015(b) and (c) inapplicable.

     The remaining avenue for relief under section 6015 is the

equitable relief which may be afforded by section 6015(f).      This

relief is available to taxpayers who are not otherwise entitled

to section 6015 relief if, taking into account all the facts and

circumstances, it is inequitable to hold the taxpayer liable for

any unpaid tax or deficiency (or portion thereof).    Sec.

6015(f)(1) and (2).    Section 6015(f) relief is available to

petitioner--because that provision applies to any unpaid tax

liability--and this Court may review respondent’s denial of such

relief.    Ewing v. Commissioner, 118 T.C. 494 (2002).

     Equitable relief under section 6015(f) is discretionary, and
                               - 6 -

we review the Commissioner’s denial of such relief for an abuse

of his discretion.   Cheshire v. Commissioner, supra at 198.     The

Commissioner’s exercise of discretion is entitled to due

deference; in order to prevail, the taxpayer must demonstrate

that in not granting relief, the Commissioner exercised his

discretion arbitrarily, capriciously, or without sound basis in

fact or law.   Woodral v. Commissioner, 112 T.C. 19, 23 (1999);

Mailman v. Commissioner, 91 T.C. 1079, 1082-1084 (1988).2

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

prescribed procedures in Rev. Proc. 2000-15, 2000-1 C.B. 447,

that the Commissioner will use in determining whether an

individual qualifies for relief under that section.   Rev. Proc.

2000-15, sec. 4.02, 2001-1 C.B. at 448, lists several conditions

which if met ordinarily will entail the granting of relief from

unpaid liabilities reported on a joint return.   As applicable

here, these conditions are:

          (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


     2
      Respondent argues that, because the standard of review in
this case is one of abuse of discretion, “the record in this case
is limited to the administrative record, and the Court should not
allow any testimony.” Because of our holding in this case,
however, we need not address this argument further. See, e.g.,
Mellen v. Commissioner, T.C. Memo. 2002-280.
                               - 7 -

     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 * * * .

If relief is not available pursuant to section 4.02, the

Commissioner may nevertheless grant relief pursuant to the

general provisions of Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B.

at 448.   That section lists several nonexclusive factors to be

considered in determining eligibility for relief.   Several of the

factors are repetitive of the above three factors; whether a

requesting spouse knew or had reason to know that the

nonrequesting spouse would not pay the liability is considered to

be “an extremely strong factor”.   Other factors to be considered

include the presence of abuse, the existence of a legal

obligation by either spouse to pay the liability, to whom the

liability is attributable, the receipt of a significant benefit

from the unpaid liability, and whether the requesting spouse has

made a good faith effort to comply with Federal income tax laws.

     In denying petitioner section 6015(f) relief, respondent

primarily relied on his determination that (a) it would not have

been reasonable for petitioner to have believed that Mr. Rooks

would pay the reported liabilities, and (b) petitioner would not

suffer economic hardship if relief were not granted.    Petitioner

argues that she nevertheless should not be responsible for

payment of the liabilities at issue.   She asserts that Mr. Rooks
                                 - 8 -

“is the one who failed to properly file the tax returns in

question” and that “the taxes owed are my ex-spouse’s and not

mine.”

     The circumstances surrounding the filing of the tax returns

for 1989 through 1993 by petitioner and Mr. Rooks are unclear.

Prior to trial, petitioner asserted that she signed blank tax

returns for each of the years 1989 through 1993 prior to the time

when each individual return was due in the corresponding month of

April.   She claimed that she signed blank returns because “the

tax deadline was so close”.   She further maintained that the

returns which were filed in November 1994 were amended returns

meant to correct errors on the original returns.    Petitioner

specifically asserted that these amended returns were made on

Forms 1040X.   However, it is clear from the record that the

returns filed in November 1994 were on Forms 1040.    Petitioner

stated at trial that the returns she signed in each April must

not have been filed, but she did not explain why the November

1994 returns also would have been filed on Forms 1040.    She

further testified that the forms she signed in November 1994 were

blank, stating that “there were extenuating circumstances about”

the returns.   Petitioner, however, did not offer any testimony

specifically addressing what the circumstances were in November

1994 which caused her to sign blank returns, since no deadlines

were approaching at that time.    Finally, petitioner’s various
                               - 9 -

assertions that Mr. Rooks was committing “fraud” in connection

with the returns are unfounded based upon the record before this

Court.   Although the returns were delinquent, they actually

overstated the income tax liabilities of petitioner and Mr.

Rooks:   The amended returns filed after Mr. Rooks’s death reduced

the liabilities owed by petitioner and Mr. Rooks.   However, the

amended returns did incorrectly reflect the amounts shown as due

on the original returns as amounts which had been paid with those

returns.   Petitioner’s testimony at trial reinforces this error--

she testified that the amended returns showed that she “had no

tax owed”, and that these returns resulted in refunds due to her.

In fact, the “refunds” were shown on the amended returns as such

only because of the above-mentioned error.

     Based on petitioner’s unclear assertions and testimony

concerning the tax returns at issue, we find that petitioner

essentially turned a “blind eye” toward the filing of the Federal

income tax returns and the failure to pay the taxes shown on them

for the years in issue.   A taxpayer who signs a return without

reviewing it, or who signs a blank return, is charged with

constructive knowledge of the tax due shown on that return.

Castle v. Commissioner, T.C. Memo. 2002-142.   Thus, even if

petitioner did sign blank returns, she should have known of the

liabilities shown thereon.

     Petitioner argues that she received no benefit from her
                              - 10 -

husband’s retirement income, which income she asserts is a

primary reason for the underpayments.    She also argues that she

was unaware of Mr. Rooks’s noncompliance with Federal tax law,

before and during the years at issue, because he had actively

deceived her during that time concerning taxes and other

financial matters.   Finally, petitioner argues that she was

subjected to mental abuse by Mr. Rooks, and petitioner points to

medical problems suffered by petitioner, Mr. Rooks, and

petitioner’s father.   Petitioner did not corroborate her cursory

testimony concerning these assertions:   She failed to show that

she did not benefit from the retirement income, she failed to

show a pattern of deception, she failed to provide examples of

mental abuse, and she failed to show that any medical condition

somehow affected her in a manner relevant to the payment of the

income tax liabilities.

     Petitioner admits that she signed the returns that were

filed in November 1994.   These returns are the basis for the

joint and several liability for the 1992 and 1993 taxable years.

Petitioner signed these returns which showed balances due, along

with the returns for 1989 through 1991, months or years after

they were required to be filed.   We agree with respondent that

the central issue in this case centers around the lack of payment

of the liabilities shown on these clearly delinquent returns.

Petitioner has not provided this Court with credible evidence to
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call into doubt respondent’s determination that she could not

have reasonably believed that Mr. Rooks would pay the relevant

tax liabilities at the time she signed these returns.    Nor is

there any indication that petitioner would suffer economic

hardship if relief is not granted.    Based on the record before

this Court, we do not find respondent’s denial of section 6015

relief to be arbitrary, capricious, or without sound basis in

fact or law.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                      Decision will be entered

                                 for respondent.
