                  T.C. Summary Opinion 2011-139



                     UNITED STATES TAX COURT



                ALVARO N. GALLEGO, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12958-10S.            Filed December 28, 2011.



     Brian C. Power, Marissa K. Rensen, and Thomas C. Durham, for

petitioner.

     Erika B. Cormier, for respondent.



     PANUTHOS, Chief Special Trial Judge:   This case was heard

pursuant to the provisions of section 7463 of the Internal

Revenue Code in effect when the petition was filed.1   Pursuant to


     1
      Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the year in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
                                - 2 -

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 petitioner is not entitled to

relief from joint and several liability with respect to

underpayments of Federal income tax reported on his Form 1040,

U.S. Individual Income Tax Return, filed for 2003,2 2004, and

2005.

                            Background

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

The stipulation of facts, the supplemental stipulation of facts,

and the attached exhibits are incorporated herein by this

reference.   Petitioner resided in Massachusetts at the time the

petition was filed.

     Petitioner was born in Colombia and later moved to Mexico,

where he studied and practiced medicine.   Petitioner married

Xochitl Lagunes Viveros Gallego (Viveros) in Mexico in 1989, and

they had three daughters.   Petitioner and Viveros moved to the

United States with their children in 1996.   Petitioner’s medical

credentials were not recognized, and he was unable to work as a

doctor in the United States.


     2
      The parties agree that petitioner’s claim for relief for
the 2003 taxable year is no longer in issue.
                               - 3 -

     Petitioner worked at various jobs before starting a business

as a sole proprietorship called Norman’s Cleaning.   Petitioner

was primarily responsible for cleaning clients’ properties, and

Viveros was responsible for maintaining the business’ financial

records and office.

     Petitioner and Viveros provided financial documents to a

return preparer each February in order to have their Federal

income tax return prepared.   In years before 2003, petitioner and

Viveros customarily signed the return at the preparer’s office,

and Viveros wrote a check and mailed the Federal income tax

return and any payment due to the Internal Revenue Service (IRS).

Petitioner and Viveros separated sometime after February 2006.

Viveros remained in the marital home with the children, and

petitioner lived with various family members.

     During the summer of 2006 Viveros informed petitioner that

she had not paid the Federal income tax liabilities for 2003 or

2004 and that she had not been paying other personal and business

expenses since the separation.3   At some point, petitioner and

Viveros agreed to sell their house to pay debts.   On August 28,

2006, they received $39,059 from the sale of the house.   On the

following day they deposited $41,228.55 into their joint checking


     3
      On May 29, 2006, the IRS began collection action against
petitioner by issuing a Final Notice - Notice of Intent to Levy
and Notice of Your Right to a Hearing for the 2003 and 2004 joint
liability.
                               - 4 -

account at Workers’ Credit Union.   Between August 29 and November

19, 2006, Viveros withdrew approximately $17,000 of the proceeds

to pay various expenses, including clothing, food, entertainment,

travel, and lodging.   On November 20, 2006, Viveros withdrew

$21,700 from the couple’s joint checking account and moved to

Mexico with the three children.

     After Viveros left with the children, petitioner learned

that a joint 2005 Federal income tax return had not been filed.

Soon after learning this, petitioner took steps to have a 2005

return prepared and filed.4   Petitioner did not communicate with

Viveros about the preparation or filing of this return as a joint

return, and Viveros did not sign the 2005 Federal income tax

return.   Viveros’ 2005 income was not reported on the return.5




     4
      Petitioner testified that a 2005 Form 1040 was prepared and
executed by both himself and Viveros in February 2006. The
record is unclear regarding whether the 2005 return was actually
prepared and executed as petitioner suggested. Petitioner
testified that after Viveros left for Mexico he gathered some of
the documents previously used to prepare the 2005 return and took
them to the same individual who had prepared the couple’s returns
in prior years. There is no independent or documentary evidence
to support the assertion that a 2005 return had been previously
prepared and executed. If the 2005 return had been prepared in
February 2006, it would seem likely that the preparer would have
had a copy of the return or some data related to its preparation.
     5
      Although Viveros worked at Norman’s Cleaning, there is no
independent evidence such as a Form W-2, Wage and Tax Statement,
or Form 1099-MISC, Miscellaneous Income, in the record which
reflect that Viveros had income for the years in issue.
Petitioner’s counsel asserts that Viveros was paid a salary in
2005.
                               - 5 -

On or about March 26, 2007, petitioner filed the 2005 Federal

income tax return, reporting a balance due.6

     Petitioner filed for divorce from Viveros in October 2008.

The divorce was finalized in 2009.     The court in that proceeding

found that Viveros withdrew $21,700 without petitioner’s

knowledge and ordered Viveros to repay petitioner $10,950.75.

The judgment of divorce nisi stated that petitioner and Viveros

share the tax debt equally.7   Petitioner claims in his amended

petition that he is entitled to a refund of the $11,679.29 he has

paid toward the 2004 liability.8

     On June 9, 2009, petitioner filed Form 8857, Request for

Innocent Spouse Relief, requesting relief from joint and several

liability for taxable years 2003,9 2004, and 2005.    Attached to

the Form 8857 was the complaint for divorce dated October 17,

2008, in which petitioner filed suit for divorce against Viveros

in Massachusetts.




     6
      Petitioner paid this amount in installments beginning on
June 9, 2007. Although petitioner acknowledged that Viveros did
not sign the return, the IRS accepted and filed the return as a
joint return. Executed returns for 2004 and 2005 are not a part
of the record.
     7
      The judgment of divorce nisi listed the Federal and State
tax debt at the time of divorce as $17,388.04.
     8
      The parties have agreed that if petitioner is entitled to
sec. 6015(f) relief, he is entitled to a refund of $11,679.29.
     9
      As previously indicated, the parties have agreed that
taxable year 2003 is not at issue.
                                 - 6 -

                               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).       In certain

circumstances, however, 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),10 the taxpayer may seek equitable relief

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

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

unpaid tax liability or a deficiency.       Sec. 6015(f)(1); 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


     10
      Petitioner requested relief under sec. 6015(f). We are
satisfied that he is ineligible for relief under sec. 6015(b) or
(c). Petitioner does not qualify for relief under sec. 6015(b)
because there is no understatement of tax for the years in issue.
See sec. 6015(b)(1)(B). Petitioner does not qualify for relief
under sec. 6015(c) for 2004 because he requested relief more than
2 years from the beginning of IRS collection activities. See
sec. 6015(c)(3)(B). Petitioner is also ineligible for relief for
2005 for the reasons discussed more fully below.
                                - 7 -

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).

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

prescribed procedures for determining whether a spouse qualifies

for relief under subsection (f).   The applicable provisions are

found in Rev. Proc. 2003-61, 2003-2 C.B. 296.

     The revenue procedure sets forth seven threshold

requirements before the Commissioner will consider a request for

relief under section 6015(f):   (i) The requesting spouse filed a

joint return for the taxable year for which he or she seeks

relief; (ii) relief is not available to the requesting spouse

under section 6015(b) or (c); (iii) the requesting spouse applies

for relief no later than 2 years after the date of the IRS’ first

collection activity after July 22, 1998, with respect to the

requesting spouse; (iv) no assets were transferred between the

spouses as part of a fraudulent scheme by the spouses; (v) the

nonrequesting spouse did not transfer disqualified assets to the

requesting spouse; (vi) the requesting spouse did not file or

fail to file the return with fraudulent intent; and (vii) absent

enumerated exceptions, the income tax liability from which the
                                 - 8 -

requesting spouse seeks relief is attributable to an item of the

individual with whom the requesting spouse filed the joint

return.   Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. at 297.      We

employ these factors when reviewing the Commissioner’s denial.

Washington v. Commissioner, 120 T.C. 137, 147-152 (2003); see

also Schultz v. Commissioner, T.C. Memo. 2010-233.      Respondent

asserts that petitioner fails requirements (iii) and (vii),

above, for taxable year 2004 and that petitioner fails

requirements (i), (iii), and (vii), above, for taxable year 2005.

Two-Year Period of Limitations

     Respondent initially asserted that the claim for relief

under section 6015(f) was untimely.      After trial but before

release of this opinion, respondent conceded that the 2-year

period of limitations under section 6015(f) does not apply.       See

Notice 2011-70, 2011-32 I.R.B. 135.      In Notice 2011-70, supra,

the IRS stated that effective July 25, 2011, it would consider

requests for equitable relief under section 6015(f) if the period

of limitations on collection provided by section 6502 remained

open.   See Notice 2011-70, supra; see also sec. 6015(f).     Because

respondent conceded that the 2-year limitation no longer applies,

we need not consider respondent’s argument concerning that

threshold requirement.
                               - 9 -

Income Attributable to Requesting Spouse

     Respondent asserts that petitioner fails threshold

requirement (vii) for taxable years 2004 and 2005.   See Rev.

Proc. 2003-61, sec. 4.01.   Generally, a requesting spouse cannot

satisfy this requirement where the income tax liability from

which the requesting spouse seeks relief is attributable to

income earned by the requesting spouse.    There are exceptions to

this general rule, and petitioner asserts that he qualifies for

one of the exceptions.

     Rev. Proc. 2003-61, sec. 4.01(7)(c), 2003-2 C.B. at 297,

provides an exception to the seventh requirement:

       If the requesting spouse did not know, and had no
       reason to know, that funds intended for the
       payment of tax were misappropriated by the
       nonrequesting spouse for the nonrequesting
       spouse’s benefit, the Service will consider
       granting equitable relief although the
       underpayment may be attributable in part or in
       full to an item of the requesting spouse. * * *

Furthermore, the IRS will consider relief “only to the extent

that the funds intended for the payment of tax were taken by the

nonrequesting spouse.”   Id.

Taxable Year 2004

     Petitioner alleges that Viveros misappropriated the funds

from the sale of their house and that those funds were intended

to pay the tax liabilities for 2003 and 2004 and to pay various

unpaid personal and business expenses.
                              - 10 -

     Petitioner and Viveros shared a joint checking account at

Workers’ Credit Union.   A bank account consists of a promise to

pay by the bank to the depositors.     Citizens Bank of Md. v.

Strumpf, 516 U.S. 16, 21 (1995).    Under Massachusetts law,

“shares and deposits may be received and held in the name of a

member [of the credit union] with one or more persons as joint

tenants * * * and any part or all of the shares or deposits and

dividends or interest represented by joint accounts may be

withdrawn, assigned or transferred by any of the individual

parties.”   Mass. Ann. Laws ch. 171, sec. 39 (LexisNexis 2009).

Misappropriation is the “application of another’s property or

money dishonestly to one’s own use.”    Black’s Law Dictionary 1013

(7th ed. 1999).   Since each joint account holder may withdraw any

or all of the funds held in the account, we do not conclude that

Viveros’ withdrawal of the funds from this account constituted a

misappropriation.

     The funds from the sale of the house were deposited by

petitioner and Viveros in their joint account and remained in the

account from August to November 2006.    Petitioner had access to

the funds in the joint account.    The record reflects that

petitioner did not pay or attempt to pay the tax liabilities for

2003 or 2004, even after the funds from the sale of the house
                              - 11 -

were deposited into the joint account.11    Petitioner has also

failed to establish that the proceeds from the sale of the house

were specifically earmarked for the payment of the 2003 and 2004

tax liabilities and not to pay marital debts generally.    Also, it

is not at all clear that any funds withdrawn by Viveros were for

her benefit rather than the benefit of the three children.

     Petitioner has failed to meet the exception for the seventh

threshold requirement and is not eligible for innocent spouse

relief with respect to taxable year 2004.    Since petitioner has

failed to satisfy the threshold requirements, we need not

consider the terms of the divorce decree as a factor weighing for

or against relief.

Taxable Year 2005

     Respondent asserts that petitioner fails to satisfy the

threshold requirements for taxable year 2005 in that Viveros did

not file a joint return.   Petitioner asserts that because he and

Viveros had initially prepared and signed a joint Federal income

tax return for 2005, it was their intent to file jointly although

the initially prepared joint Federal income tax return was not

actually filed.   Petitioner has not satisfied the Court that the

parties intended to file a joint income tax return for 2005.




     11
      As previously indicated, petitioner did not learn that the
2005 tax liability had not been paid until after Viveros moved to
Mexico in November 2006.
                                - 12 -

      In general, a joint return must be signed by both spouses.

Sec. 1.6013-1(a)(2), Income Tax Regs.    In circumstances where

both spouses intend to file a joint return, the failure of one

spouse to sign the return will not preclude its treatment as a

joint return.   Estate of Campbell v. Commissioner, 56 T.C. 1, 12

(1971).   Whether the nonsigning spouse intended to file a joint

return is a question of fact.    Id.; Federbush v. Commissioner, 34

T.C. 740, 755-758 (1960), affd. 325 F.2d 1 (2d Cir. 1963); Heim

v. Commissioner, 27 T.C. 270, 273-274 (1956), affd. 251 F.2d 44

(8th Cir. 1958).

      The Court may look to whether the taxpayers customarily

filed joint returns to determine whether a return was intended to

be a joint return.   Estate of Campbell v. Commissioner, supra at

12.   Although not conclusive, the inclusion of a spouse’s income

on a return is regarded as a factor supporting a conclusion that

the return was intended as a joint return.    Federbush v.

Commissioner, supra at 756.

      Petitioner conceded that Viveros did not sign the 2005

Federal income tax return.    Petitioner and Viveros customarily

filed joint Federal income tax returns.    The record reflects that

Viveros was generally responsible for the family and business

finances.   Assuming that a 2005 return was prepared and executed

by Viveros in February 2006, she apparently chose not to file a

joint return.   When petitioner had the 2005 return prepared, he
                               - 13 -

was aware that Viveros was living in Mexico; and he could have

contacted her via telephone or mail to ask her about filing the

return jointly.12   Petitioner, however, did not contact Viveros,

nor is there anything in the record indicating she agreed or

consented to file a joint return for taxable year 2005, and

Viveros’ income for 2005 was not included on the filed return.

     We conclude that petitioner and Viveros did not file a joint

Federal income tax return for 2005; and thus petitioner is not

entitled to relief under section 6015.    See Raymond v.

Commissioner, 119 T.C. 191, 197 (2002).

     Even if we were to conclude that the 2005 return was a joint

return, petitioner would in any event be unsuccessful in his

request for innocent spouse relief for taxable year 2005 because

the tax he requests relief from is attributable to his income and

he does not qualify for an exception (as previously discussed

with respect to 2004).    See Rev. Proc. 2003-61, sec. 4.01(a)(7).

Additionally, petitioner does not assert, and we do not find,

that Viveros misappropriated funds intended for the payment of

the 2005 tax liability.




     12
      Petitioner had Viveros’ address and a family member’s
telephone number in Mexico that he could have used to communicate
with her.
                                - 14 -

                           Conclusion

     Petitioner is not entitled to relief from joint and several

liability for 2004 because he has not shown Viveros

misappropriated funds intended for the payment of the 2004

Federal income tax liability.    Additionally, petitioner is not

entitled to relief from joint and several liability for 2005

because petitioner did not file a joint Federal income tax return

with Viveros.

     To reflect the foregoing,


                                      Decision will be entered

                                 for respondent.
