                        T.C. Memo. 2004-181



                      UNITED STATES TAX COURT



                ANNETTE L. MORELLO, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2790-03.               Filed August 5, 2004.



     Annette L. Morello, pro se.

     Robert F. Saal, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COHEN, Judge:   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 for 1992,

1993, 1994, and 1995 with respect to joint income tax returns

that she filed with her former husband.   The issue for decision

is whether respondent abused respondent’s discretion in denying
                               - 2 -

petitioner’s request for relief from joint and several liability

under section 6015(f) for those years.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue.    All

amounts have been rounded to the nearest dollar.

                          FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.   At the

time that the petition in this case was filed, petitioner resided

in Keyport, New Jersey.

Background

     Petitioner and Frank Mazzilli (Mazzilli) were married in

1970.   They had two children during their marriage.   Between the

time that petitioner married Mazzilli and September 1992,

petitioner was a homemaker.   Mazzilli became unemployed for a

period of approximately 17 weeks during 1992.   As a result of

Mazzilli’s unemployment, petitioner and Mazzilli exhausted their

savings and could not make the monthly mortgage payments on their

home.

     In order to help alleviate her family’s financial

difficulties, petitioner began to work as a receptionist at

Monmouth Associates in Internal Medicine, P.A., in September

1992.   At the time that petitioner began working as a

receptionist, she completed Form W-4, Employee’s Withholding
                               - 3 -

Allowance Certificate.   Because of the financial difficulties

that petitioner and Mazzilli were having at that time, Mazzilli

advised petitioner to claim 10 withholding allowances on the

Form W-4, and petitioner agreed to do so.   Petitioner was aware

that this practice would increase her take-home pay but would

result in a lesser amount of Federal income tax being withheld

from her wages than that which would become due on her portion of

Mazzilli’s and her joint income.

     Mazzilli began working for Pfister Chemical, Inc. (Pfister),

during 1992.   Mazzilli also claimed 10 withholding allowances on

the Form W-4 that he completed when he began his employment at

Pfister.

     During 1993, 1994, and 1995, petitioner worked as a

receptionist for Lawrence Katz, M.D., and Mazzilli maintained his

employment at Pfister.   Petitioner and Mazzilli each claimed

between 5 and 10 withholding allowances during those years.     For

1992 through 1995, petitioner had the following amounts of wage

income and Federal income tax withheld from that income:

       Year     Wage Income    Federal Income Tax Withheld

       1992        $3,314                 $156
       1993        16,565                1,144
       1994        16,705                   66
       1995        17,440                    0

     Even though petitioner and Mazzilli both were employed by

the end of 1992, they remained behind in their monthly mortgage

payments.   After several foreclosure proceedings had been
                               - 4 -

commenced against petitioner and Mazzilli during the years in

issue, Mazzilli filed for bankruptcy.    As a result of Mazzilli’s

filing for bankruptcy, the mortgage on petitioner’s and

Mazzilli’s home was foreclosed.    Petitioner was aware of the

foreclosure proceedings that had been commenced against Mazzilli

and her as well as of Mazzilli’s bankruptcy proceedings.

     Petitioner and Mazzilli were divorced on October 28, 1999.

Petitioner held one or more jobs during 1997, 1998, and 1999.     As

of April 29, 2004, petitioner had not filed Federal income tax

returns for either 1997 or 1999.

Petitioner’s and Mazzilli’s Joint Income Tax Returns for 1992
Through 1995

     For 1992 through 1995, petitioner filed joint Forms 1040,

U.S. Individual Income Tax Return, with Mazzilli.    Petitioner and

Mazzilli signed and filed their joint returns for 1993 and 1995

in February 1996 and their joint returns for 1992 and 1994 in

April 1996.   These returns showed the following balances due:

$724 for 1992; $2,523 for 1993; $9,884 for 1994; and $695 for

1995.   No portion of the amounts shown as due on these returns

was paid at the times that these returns were filed.

     Mazzilli handled the preparation and filing of petitioner’s

and his joint returns for 1992 through 1995.    Petitioner was not

aware that these returns showed balances due at the times that

she signed them because she neither reviewed these returns nor

asked Mazzilli whether these returns showed balances due.
                                 - 5 -

     During their divorce proceedings, petitioner and Mazzilli

agreed that Mazzilli should be responsible for the payment of the

Federal income tax liabilities for 1992 through 1995.     As of the

time of trial on May 3, 2004, Mazzilli had not paid these

liabilities.

Petitioner’s Request for Relief From Joint and Several Liability

     On February 2, 2001, petitioner requested relief from joint

and several liability under section 6015(f) for 1992 through

1995.     On November 21, 2002, the Internal Revenue Service sent to

petitioner a Notice of Determination Concerning Your Request for

Relief under the Equitable Relief Provision of Section 6015(f)

(notice of determination) with respect to those years.     Attached

to the notice of determination was a Form 886-A, Explanation of

Adjustments, that set forth the following reasons for the denial

of petitioner’s request for relief:

     1.      Attributatable [sic] to the Non-Requesting
             Spouse--Portions of the unpaid liability are
             attributable to under withholding on your wages.

     2.      No Knowledge of [sic] Reason to Know--You had
             reason to know that the liabilities would not be
             paid when you signed the returns because
             outstanding tax liabilities existed from prior
             year returns that had not been paid, mortgage
             payments were in * * * arrears and your ex-spouse
             was contemplating filing for bankruptcy.

     3.      Noncompliance with Federal Income Tax Laws--You
             have not filed tax returns for tax years 1997 and
             1999 and have an outstanding tax liability for tax
             year 2000.
                               - 6 -

                              OPINION

     Generally, married taxpayers may elect to file a joint

Federal income tax return.   Sec. 6013(a).   After making the

election, each spouse is fully responsible for the accuracy of

the return and 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).   A spouse (requesting spouse) may, however,

seek relief from joint and several liability by following

procedures established in section 6015.   Sec. 6015(a).

     Under section 6015(a), a requesting spouse may seek relief

from liability under section 6015(b) or, if eligible, may

allocate liability according to the provisions under section

6015(c).   Relief from joint and several liability under section

6015(b) or (c) is premised on the existence of a deficiency for

the year for which relief is sought.    Sec. 6015(b)(1)(D), (c)(1);

see H. Conf. Rept. 105-599, at 252-254 (1998), 1998-3 C.B. 747,

1006-1008.   Consequently, if there is no deficiency for the year

for which relief is sought, relief from joint and several

liability is not available under either subsection.    See

Washington v. Commissioner, 120 T.C. 137, 146-147 (2003); see

also Hopkins v. Commissioner, 121 T.C. 73, 88 (2003); Block v.

Commissioner, 120 T.C. 62, 65-66 (2003); Ewing v. Commissioner,

118 T.C. 494, 497, 498 n.4 (2002); cf. sec. 6015(e)(1).      In this

case, petitioner seeks relief from liabilities attributable to
                                 - 7 -

amounts shown as due on the joint returns that she filed with

Mazzilli for 1992 through 1995 rather than from deficiencies for

those years.    Accordingly, no relief is available to petitioner

under section 6015(b) or (c).

     If relief is not available under either section 6015(b) or

(c), an individual may seek equitable relief under section

6015(f).    Sec. 6015(f)(2).   Section 6015(f) permits relief from

joint and several liability where “it is inequitable to hold the

individual liable for any unpaid tax or any deficiency (or any

portion of either)”.    Sec. 6015(f)(1).   Equitable relief under

section 6015(f) is granted at the Commissioner’s discretion.

     We review the Commissioner’s determination to deny equitable

relief under section 6015(f) using an abuse of discretion

standard.    Butler v. Commissioner, supra at 287-292.   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) (citing

Butler v. Commissioner, supra at 292; Pac. First Fed. Sav. Bank

v. Commissioner, 101 T.C. 117, 121 (1993)), affd. 353 F.3d 1181

(10th Cir. 2003).    The question of whether the Commissioner’s

determination was arbitrary, capricious, or without sound basis

in fact is a question of fact.     Cheshire v. Commissioner, 115

T.C. 183, 198 (2000), affd. 282 F.3d 326 (5th Cir. 2002).     We are

not limited to the matters contained in the Commissioner’s
                                - 8 -

administrative record when deciding this question.     Ewing v.

Commissioner, 122 T.C. 32, 35–44 (2004).    Petitioner bears the

burden of proving that respondent abused respondent’s discretion

in denying her relief under section 6015(f).     Washington v.

Commissioner, supra at 146; Jonson v. Commissioner, supra at 125.

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

prescribed procedures to use in determining whether a relief-

seeking spouse qualifies for relief under that subsection.       At

the time that petitioner requested relief under section 6015(f),

those procedures were found in Rev. Proc. 2000-15, 2000-1 C.B.

447.    This Court has upheld the use of these procedures in

reviewing a negative determination.     See, e.g., Washington v.

Commissioner, supra at 147-152; Jonson v. Commissioner, supra at

125-126.    (Subsequent modification of these procedures by Rev.

Proc. 2003-61, 2003-32 I.R.B. 296, does not affect our analysis

of this case.)

       Rev. Proc. 2000-15, sec. 4.01, 2000-1 C.B. at 448, lists

seven threshold conditions that must be satisfied before the

Commissioner will consider a request for relief under section

6015(f).    Respondent has not argued that petitioner failed to

meet those seven threshold conditions.    If the threshold

conditions are satisfied, Rev. Proc. 2000-15, sec. 4.02, 2000-1

C.B. at 448, lists the circumstances, which we refer to as

elements, under which the Commissioner will generally grant
                                - 9 -

equitable relief in cases where a 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. 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. * * *

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

Commissioner will grant equitable relief to the extent that the

unpaid liability is allocable to the nonrequesting spouse only if

all three elements of Rev. Proc. 2000-15, sec. 4.02, 2000-1 C.B.

at 448, are satisfied.    Rev. Proc. 2000-15, sec. 4.02(1), (2)(b),

2000-1 C.B. at 448.

       Respondent concedes that petitioner satisfies the first and

third elements of Rev. Proc. 2000-15, sec. 4.02, 2000-1 C.B. at

448.    With respect to the second element of Rev. Proc. 2000-15,

sec. 4.02, 2000-1 C.B. at 448, however, respondent contends that

petitioner knew or had reason to know that the liabilities

reported on the joint returns for 1992 through 1995 would not be

paid at the times that she signed those returns.    As discussed

below, we agree with respondent’s contention.
                              - 10 -

     In order to satisfy the knowledge or reason to know element

of Rev. Proc. 2000-15, sec. 4.02, 2000-1 C.B. at 448, petitioner

must establish that it was reasonable for her to believe that

Mazzilli would pay the amounts shown as due on the joint returns

for 1992 through 1995 at the times that she signed them.

Petitioner cannot rely on her lack of awareness of the amounts

shown as due on these returns to establish that it was reasonable

for her to believe that Mazzilli would pay these amounts.   By

signing the joint returns for 1992 through 1995, petitioner is

charged with constructive knowledge of, inter alia, the amounts

shown as due on those returns.   Hayman v. Commissioner, 992 F.2d

1256, 1262 (2d Cir. 1993), affg. T.C. Memo. 1992-228; see also

Park v. Commissioner, 25 F.3d 1289, 1299 (5th Cir. 1994), affg.

T.C. Memo. 1993-252.   Furthermore, petitioner’s unquestioning

reliance on Mazzilli to handle the preparation and filing of the

joint returns for 1992 through 1995 does not establish that it

was reasonable for her to believe that Mazzilli would pay the

amounts shown as due on these returns at the times that she

signed them.   Taxpayers have a duty to file timely and accurate

returns and to pay the amounts shown as due on those returns.

See generally secs. 6001, 6011(a), 6012(a)(1), 6072(a), 6151(a).

We have consistently applied the principle that the provisions

providing relief from joint and several liability are “designed

to protect the innocent, not the intentionally ignorant”.     Dickey
                             - 11 -

v. Commissioner, T.C. Memo. 1985-478; see, e.g., Demirjian v.

Commissioner, T.C. Memo. 2004-22; Feldman v. Commissioner, T.C.

Memo. 2003-201; Taylor v. Commissioner, T.C. Memo. 1997-513;

Barnhill v. Commissioner, T.C. Memo. 1996-97; Shannon v.

Commissioner, T.C. Memo. 1991-207; Berry v. Commissioner, T.C.

Memo. 1990-396, affd. without published opinion 935 F.2d 1280

(3d Cir. 1991); Cohen v. Commissioner, T.C. Memo. 1987-537.

     At the times in 1996 that petitioner signed the joint

returns for 1992 through 1995, petitioner was well aware of the

financial difficulties that had plagued her family since 1992.

In order to ease these difficulties, petitioner had entered the

workforce after being a homemaker for more than 20 years and had

accepted the risks of allowing a lesser amount of Federal income

tax to be withheld from her wages than that which would become

due on her portion of Mazzilli’s and her joint income and of not

filing Federal income tax returns during the years in issue.

Petitioner was also aware that foreclosure proceedings had been

commenced against Mazzilli and her and that they would lose their

home if they did not become current on their mortgage payments.

Under these facts and circumstances, petitioner has not

established that it was reasonable for her to believe that

Mazzilli would pay the amounts shown as due on the joint returns

for 1992 through 1995 at the times that she signed them.

Consequently, petitioner does not satisfy the knowledge or reason
                              - 12 -

to know element of Rev. Proc. 2000-15, sec. 4.02, 2000-1 C.B. at

448, and does not qualify for equitable relief under that section

of the revenue procedure.

     If the requesting spouse satisfies the threshold conditions

of Rev. Proc. 2000-15, sec. 4.01, 2000-1 C.B. at 448, but does

not qualify for relief under Rev. Proc. 2000-15, sec. 4.02,

2000-1 C.B. at 448, the Commissioner looks to Rev. Proc. 2000-15,

sec. 4.03, 2000-1 C.B. at 448, to determine whether the taxpayer

should be granted equitable relief.    Rev. Proc. 2000-15, sec.

4.03, 2000-1 C.B. at 448, provides a partial list of positive and

negative factors that the Commissioner is to take into account

when considering whether to grant an individual full or partial

equitable relief under section 6015(f).    As Rev. Proc. 2000-15,

sec. 4.03, 2000-1 C.B. at 448, makes clear, no single factor is

to be determinative in any particular case, all factors are to be

considered and weighed appropriately, and the list of factors is

not intended to be exhaustive.

     Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B. at 448, lists the

following two factors that, if true, the Commissioner weighs in

favor of granting relief and that, if not true, are neutral:

(1) The taxpayer is separated or divorced from the nonrequesting

spouse and (2) the taxpayer was abused by his or her spouse.

Respondent concedes that the marital status factor weighs in

petitioner’s favor.   The abuse factor is neutral in this case
                               - 13 -

because petitioner failed to provide any evidence establishing

abuse.

     In addition, Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B. at

448, lists the following two factors that, if true, the

Commissioner weighs against granting relief and that, if not

true, are neutral:    (1) The taxpayer received a significant

benefit from the unpaid liability and (2) the taxpayer has not

made a good faith effort to comply with the Federal income tax

laws in the tax years following the tax year to which the request

for relief relates.   The significant benefit factor is neutral in

this case because neither evidence nor argument has been

presented as to whether this factor weighs against petitioner.

The noncompliance factor weighs against petitioner because, as of

April 29, 2004, she had not filed Federal income tax returns for

either 1997 or 1999, and the explanations that petitioner gave

during her testimony as to why she had not filed those returns

were uncorroborated and unconvincing.

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

lists the following four factors that, if true, the Commissioner

weighs in favor of granting relief and that, if not true, the

Commissioner weighs against granting relief:    (1) The taxpayer

would suffer economic hardship if relief were denied; (2) 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
                                - 14 -

liability would not be paid at the time that the return was

signed; (3) the liability for which relief is sought is

attributable to the nonrequesting spouse; and (4) the

nonrequesting spouse has a legal obligation pursuant to a divorce

decree or agreement to pay the outstanding liability (this factor

weighs against relief only if the requesting spouse has the

obligation).   Respondent concedes that the economic hardship

factor weighs in petitioner’s favor.     The knowledge or reason to

know factor weighs against petitioner for the reasons discussed

above.    The attribution factor weighs against petitioner because

a portion of the income tax liabilities for 1992 through 1995 is

attributable to her (i.e., she allowed a lesser amount of Federal

income tax to be withheld from her wages than that which became

due on her portion of Mazzilli’s and her joint income for those

years).   Respondent concedes that the legal obligation factor

weighs in petitioner’s favor.

     Based on our examination of the facts and circumstances in

this case, some of the factors in Rev. Proc. 2000-15, sec. 4.03,

2000-1 C.B. at 448, are neutral.    With respect to the factors

that are not neutral, those weighing against granting petitioner

relief outweigh those weighing in favor of granting her relief.

Petitioner’s situation is unfortunate, but we cannot conclude

that respondent abused respondent’s discretion by acting

arbitrarily, capriciously, or without sound basis in fact in
                             - 15 -

denying petitioner’s request for equitable relief under section

6015(f).

     To reflect the foregoing,


                                        Decision will be entered

                                   for respondent.
