                       T.C. Memo. 2010-165



                      UNITED STATES TAX COURT



                 PATRICIA DOWNS, Petitioner, AND
               MICHAEL R. ALDRIDGE, Intervenor v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 20833-06.             Filed July 28, 2010.



     Paul M. Kohlhoff, for petitioner.

     Michael R. Aldridge, pro se.

     Timothy S. Sinnott, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     GOEKE, Judge:   Petitioner seeks review of respondent’s

determination denying her relief from joint and several liability
                                - 2 -

under section 6015(f)1 for taxable years 1992, 1993, 1994, 1995,

1996, and 1997.    At trial respondent abandoned the determination

denying relief, but intervenor opposes relief.     For the reasons

stated herein, we find petitioner is entitled to relief under

section 6015(f).

                          FINDINGS OF FACT

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

The stipulated facts are incorporated herein by this reference.

Petitioner resided in Indiana when her petition was filed, and

intervenor resided in Tennessee at the time his notice of

intervention was filed.   The couple, divorced in 2003, share

joint custody of two children born of their marriage.     Petitioner

also has a child from another marriage.

     Petitioner studied music education at Tennessee State

University (TSU) but never studied business or accounting.       She

left TSU after 1 year to work as a salesclerk and mail sorter.

Petitioner was employed by LensCrafters when she married

intervenor in April 1992 but quit before the birth of the

couple’s first child in November 1992.     Petitioner remained

unemployed from 1993 through 1996.      In 1997 she began working in

real estate.




     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
                               - 3 -

     Intervenor owned and operated a carwash business, Glo Pro,

before and during his marriage to petitioner.   Although

petitioner assisted with Glo Pro occasionally, she had no formal

role or financial interest in the company’s operations.

Intervenor participated in a second business, Pro Oil Corp. (Pro

Oil), which began operating around 1996 and performed express oil

changes.   Intervenor managed Pro Oil’s finances.   Petitioner was

a 50-percent shareholder in Pro Oil, as was intervenor, and she

assisted with the company’s daily operations.   She never received

a paycheck or a Form W-2, Wage and Tax Statement, from Pro Oil.

Intervenor stated that her interest in the company was conveyed

to another party during a corporate meeting.    The details of this

conveyance are both unknown and unnecessary for our

determination.   In 2004 intervenor sold Pro Oil for approximately

$400,000 and did not share the profits with petitioner despite

her efforts to recover a share of the proceeds.

     It was the practice of petitioner and intervenor to have

their joint returns prepared by a professional tax preparer.

Petitioner also relied on a paid tax preparer before her marriage

with intervenor.   Petitioner was frightened of intervenor, who
                                 - 4 -

angered easily.2    Intervenor verbally abused their children and

physically abused petitioner on at least one occasion.      On August

6, 2003, the couple divorced.

     On March 28, 1997, intervenor entered a guilty plea to one

count of willful failure to file an income tax return for the

year 1992 and began serving a 10-month prison sentence in

November 1997.     As a condition of his sentence he was required to

file delinquent tax returns for years including 1992 to 1997.

Petitioner and intervenor filed joint Forms 1040, U.S. Individual

Income Tax Return, for tax years 1992, 1996, and 1997.

Signatures for these returns are not in dispute.       A joint Form

1040X, Amended U.S. Individual Income Tax Return, for tax year

1993 and joint Forms 1040 for tax years 1994 and 1995 in the

names of petitioner and intervenor were also filed with

respondent.   Whether petitioner signed her name to the returns

for these years remains in dispute.      Intervenor and petitioner

submitted offers-in-compromise in 1998 and 1999 for years 1990 to

1997 and 1992 to 1997, respectively.3     Intervenor and petitioner

gave a power of attorney to a third party who prepared the first




     2
      Intervenor was convicted of and served time for
manslaughter before their marriage.
     3
      The reason for denial of these offers is not disclosed by
the record.
                                 - 5 -

offer-in-compromise for years 1990 through 1997.    Intervenor

prepared the second offer for years 1992 to 1997, which

petitioner signed.4    Both offers were declined.

     On March 25, 2002, petitioner received correspondence from

the Internal Revenue Service (IRS) indicating that her overpaid

tax on her 2001 return had been applied to an unpaid amount of

Federal tax for tax year 1993.    On September 8 and 29, 2003,

petitioner received more correspondence indicating that her

overpaid tax on her 2002 return had been applied to an unpaid

amount of Federal tax for tax year 1993.

     On November 3, 2003, petitioner filed a Form 8857, Request

for Innocent Spouse Relief, for years 1992 to 1997 on the basis

that she did not participate in a tax fraud carried out by

intervenor.   Petitioner’s request was denied in a preliminary

determination on June 8, 2004.    Respondent specified that

petitioner had failed to establish her claims of abuse and

economic hardship.    Petitioner timely filed an appeal requesting

innocent spouse relief.    Petitioner provided information

concerning economic hardship and the nature of intervenor’s

aggressive behavior.

     On July 14, 2006, respondent issued a Notice of

Determination Concerning Your Request for Relief from Joint and



     4
      Petitioner submitted both offers jointly and notably did
not identify years for which she denied joint filings.
                                - 6 -

Several Liability under Section 6015 (notice of determination)

for tax years 1992 through 1997.    The accompanying Appeals Office

memorandum stated that the Appeals officer believed petitioner

had submitted joint returns for all years.   The notice of

determination denied petitioner’s appeal for relief under section

6015 and listed the joint liabilities as follows:

                          Amount of          Amount of Tax
   Tax Period         Relief Requested         Remaining

     1992                 $93,232               $93,232
     1993                  17,894                17,894
     1994                  26,541                26,541
     1995                  33,163                33,163
     1996                  22,104                22,104
     1997                  24,674                24,674

These amounts do not include deficiencies.   Therefore, section

6015(b) and (c) does not apply.

     Petitioner timely filed a petition with this Court, and

intervenor timely filed a notice of intervention.    A trial was

held on February 13, 2008, and a further trial was held on July

8, 2009.    On March 13, 2009, between those two dates, a jury in

the U.S. District Court, Western District of Tennessee, returned

a guilty verdict against intervenor on one count of evasion of

payment of income tax for each of the tax years 1991 through

1997.   Thus, on July 8, 2009, respondent reversed his earlier

position by conceding that petitioner qualifies for relief under
                               - 7 -

section 6015(f) for years 1992 through 1997, including 1993 to

1995, if she satisfies the threshold requirement of having filed

joint returns.

                              OPINION

      Except as otherwise provided in section 6015, petitioner

bears the burden of proof with respect to her entitlement of

relief under section 6015.   See Rule 142(a); Alt v. Commissioner,

119 T.C. 306, 311 (2002), affd. 101 Fed. Appx. 34 (6th Cir.

2004).

      Petitioner does not dispute the tax liabilities assessed by

respondent for the years in issue.     Rather, she argues she is

entitled to relief under 6015(f).    Respondent agrees that

petitioner is entitled to relief from the entire joint tax

liability under section 6015(f).    However, as previously

mentioned, intervenor objects to granting petitioner section 6015

relief from liability.

A.   Joint Return

      A joint return must be filed in order for a taxpayer to be

granted equitable relief under section 6015(f).     Raymond v.

Commissioner, 119 T.C. 191 (2002).     Where a taxpayer has

consented to the filing of a joint return, that return may be

considered joint even if only one taxpayer signed the return.

Estate of Campbell v. Commissioner, 56 T.C. 1, 12-13 (1971).

Whether a husband and a wife intended to file a joint return is
                                 - 8 -

highly probative of whether the return qualifies as a joint

return.   Stone v. Commissioner, 22 T.C. 893, 900-901 (1954).     A

spouse’s intent is a question of fact.   Estate of Campbell v.

Commissioner, supra at 12.

      As a preliminary matter, we must determine whether

petitioner and intervenor intended to file jointly for tax years

1993, 1994, and 1995.

      Petitioner testified that she signed returns with intervenor

only for years 1992, 1996, and 1997, but not for years 1993,

1994, or 1995.   Intervenor testified petitioner signed joint

returns for all years, including 1993 to 1995.    Although the

signatures appear identical, petitioner testified that intervenor

placed her signature on the returns for years 1993 to 1995.      The

record does not establish that petitioner intended to file

jointly only for some years and not for others.    We construe the

testimony of both parties, and the other evidence in the record,

as affirming that petitioner and intervenor intended to file

joint returns for all years at issue, including 1993, 1994, and

1995.

B.   Relief Under Section 6015

     In general, taxpayers filing a joint Federal income tax

return are each responsible for the accuracy of their return and

are jointly and severally liable for the entire tax liability due

for the year of the return.   Sec. 6013(d)(3).   In certain
                                - 9 -

circumstances, however, a spouse may obtain relief from joint and

several liability by satisfying the requirements of section 6015.

     Section 6015(e)(4) grants the nonelecting spouse

(intervenor) some participatory entitlement in an action to

determine the electing spouse’s (petitioner’s) right to relief

from joint and several liability pursuant to section 6015.    Rule

325; Corson v. Commissioner, 114 T.C. 354, 364-365 (2000).    By

exercising that right, intervenor became a party to this case.

Tipton v. Commissioner, 127 T.C. 214, 217 (2006).   Therefore, in

the light of intervenor’s opposition to respondent’s grant of

innocent spouse relief to petitioner, we shall examine the

requirements of section 6015(f) to decide whether petitioner is

entitled to relief under subsection (f).   See Wilson v.

Commissioner, T.C. Memo. 2007-127.

     Section 6015(f) provides an individual relief from joint and

several liability if after taking into account all the facts and

circumstances it is inequitable to hold the individual liable for

any unpaid tax or deficiency.   See Washington v. Commissioner,

120 T.C. 137, 147-152 (2003).   Rev. Proc. 2003-61, 2003-2 C.B.

296, prescribes guidelines for determining whether an individual

qualifies for relief under section 6015(f).   Rev. Proc. 2003-61,

sec. 4.01, 2003-2 C.B. at 297-298, sets forth seven threshold

conditions that the requesting spouse must satisfy in order to be

eligible to submit a request for equitable relief under section
                               - 10 -

6015(f).   If a requesting spouse satisfies the threshold

requirements of Rev. Proc. 2003-61, sec. 4.01, a taxpayer may be

entitled to a safe harbor whereby equitable relief under section

6015(f) will ordinarily be granted.     Id. sec. 4.02, 2003-2 C.B.

at 298.    Petitioner, however, does not meet the safe-harbor

requirement, and instead we shall apply the eight nonexclusive

factors set forth in Rev. Proc. 2003-61, sec. 4.03(2), 2003-2

C.B. at 298-299, that the Commissioner will consider in

determining whether, taking into account all the facts and

circumstances, relief under section 6015(f) should be granted.

These nonexclusive factors include whether:    (1) The requesting

spouse is separated or divorced from the nonrequesting spouse;

(2) the requesting spouse will suffer economic hardship without

relief; (3) the requesting spouse did not know or have reason to

know that the nonrequesting spouse would not pay the liability;

(4) the nonrequesting spouse had a legal obligation to pay the

outstanding liability; (5) the requesting spouse received a

significant benefit from the item giving rise to the deficiency;

(6) the requesting spouse has made a good faith effort to comply

with income tax laws in subsequent years; (7) the requesting

spouse was abused by the nonrequesting spouse; and (8) the

requesting spouse was in poor mental or physical health when

signing the return or requesting relief.     Id.   Rev. Proc. 2003-

61, sec. 4.03(2), further provides that no single factor will be
                                - 11 -

determinative, but that all relevant factors will be considered.

We will now consider these factors.

     1.   Marital Status

     Petitioner and intervenor’s divorce was finalized August 6,

2003, before petitioner filed her Form 8857 on November 3, 2003.

This factor favors granting relief.

     2.   Knowledge or Reason To Know

     Petitioner did not know nor did she have reason to know that

the tax would not be paid for the years at issue.     Intervenor

consistently denied petitioner access to the details of his

business affairs and controlled the cashflow for the household

expenses.   Petitioner relied on intervenor’s apparent success in

managing both Pro Oil’s business accounts and the family’s

finances when she believed his assurances that he would take care

of the financial matters.     Consequently, petitioner’s lack of

knowledge as to intervenor’s failure to pay outstanding tax

liabilities was reasonable under the circumstances.     Intervenor’s

testimony demonstrates he consistently made financial decisions

without petitioner’s knowledge and thus does not suggest that

petitioner should have known of his inability to pay.     This

factor weighs in favor of granting relief.

     3.   Economic Hardship

     Petitioner would suffer economic hardship if she were denied

equitable relief.   Petitioner’s monthly income is within $1 of
                                 - 12 -

her monthly expenses.   She earns $2,946 per month.      She pays $446

per month for child support, $978 per month for rent, $600 per

month for food, $120 per month for her children’s lunch money,

and approximately $800 per month for miscellaneous expenses

relating to medical, automobile, and utility bills.       Intervenor

has not addressed petitioner’s economic hardship, and we are

satisfied that, as respondent concedes, this factor weighs in

favor of granting relief.

     4.    Nonrequesting Spouse’s Legal Obligation

     Petitioner and intervenor’s marital dissolution agreement

included language addressing prior income tax liabilities, but

the parties agreed to cross it out.       Accordingly, this factor is

neutral.

     5.    Significant Benefit

     There is no evidence that petitioner benefited beyond normal

support from the unpaid tax liabilities.       This Court has stated

that “we consider the lack of significant benefit by the taxpayer

seeking relief from joint and several liability as a factor that

favors granting relief under section 6015(f).”        Butner v.

Commissioner, T.C. Memo. 2007-136.        Thus, we find this factor

weighs in favor of relief.

     6.    Good-Faith Effort To Comply With Federal Income Tax Laws

     Petitioner asserts that she believed intervenor’s assurances

that he would take care of his tax troubles even during his
                                - 13 -

incarceration in 1997.    She submitted two offers-in-compromise

with intervenor and signed other delinquent joint returns in

compliance with conditions of his plea bargain in 1997.

Intervenor does not assert that petitioner was allowed any role

in managing the family’s finances or that she was complicit in

the failure to file or pay taxes for all years at issue.     We find

this factor weighs in favor of relief.

     7.   Spousal Abuse

     Petitioner alleged that intervenor was verbally abusive to

their children and that he had been violent with her on at least

one occasion.     Petitioner presented records in support of her

claims of abuse, harassment, and stalking, but the reported

incidents occurred after the couple divorced.     We find this

factor neutral.

     8.   Mental or Physical Health

     There is no evidence in the record that petitioner suffered

any ailment such that she was in poor mental or physical health

at the time she signed the joint returns for the years at issue

or at the time she requested section 6015 relief.     We find this

factor neutral.

C.   Conclusion

     On the basis of the above, we find that petitioner intended

to file joint returns with intervenor and thus satisfies the

threshold requirements.     We also find that the factors weigh in
                             - 14 -

favor of granting petitioner relief from joint liability under

section 6015(f) despite intervenor’s opposition.    Accordingly, we

agree with respondent’s concession that petitioner is entitled to

equitable relief under section 6015(f) for the tax years at

issue.

     To reflect the foregoing,


                                      Decision will be entered for

                                 petitioner.
