                                           ANN MARIE MINIHAN, PETITIONER, AND JOHN J. MINIHAN,
                                               JR., INTERVENOR v. COMMISSIONER OF INTERNAL
                                                           REVENUE, RESPONDENT
                                                        Docket No. 26595–09.                   Filed January 11, 2012.

                                                   P petitioned for review of R’s denial of innocent spouse
                                                relief under I.R.C. sec. 6015(f), and R created a separate
                                                account for each spouse in order to pursue collection from I
                                                (P’s former husband) while collection against P was suspended
                                                pursuant to I.R.C. sec. 6015(e)(1)(B). While P’s petition was
                                                pending, R collected the entire tax liability at issue by levying
                                                on a bank account owned jointly by P and I. As a result, P
                                                now seeks a refund pursuant to I.R.C. sec. 6015(g)(1), in the
                                                amount of 50% of the funds levied from the joint account. R
                                                contends that P is not entitled to a refund of funds owned
                                                jointly by P and I and applied to I’s liability. Held: Under
                                                State law P owned a 50% share of the funds held in the joint
                                                bank account, and she is not precluded from a refund under
                                                I.R.C. sec. 6015(g)(1) of her share of levied funds.

                                           Roger M. Ritt, for petitioner.
                                           John J. Minihan, Jr., for himself.
                                           Erika B. Cormier, for respondent.
                                        GUSTAFSON, Judge: This case arises from petitioner Ann
                                      Minihan’s timely request under section 6015(f) 1 for ‘‘innocent
                                      spouse’’ relief from joint liability for tax years 2001, 2002,
                                        1 Unless otherwise indicated, all citations of sections refer to the Internal Revenue Code of

                                      1986 (26 U.S.C.), as amended, and all citations of Rules refer to the Tax Court Rules of Practice
                                      and Procedure.


                                                                                                                                       1




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                                      2                   138 UNITED STATES TAX COURT REPORTS                                          (1)


                                      2003, 2004, 2005, and 2006. The Internal Revenue Service
                                      (IRS) denied Ms. Minihan’s request for relief because (it con-
                                      cluded) she had not shown that it would be inequitable to
                                      hold her responsible for the tax liability. On November 9,
                                      2009, Ms. Minihan filed with this Court a timely petition
                                      appealing the IRS’s denial of innocent spouse relief and
                                      asking this Court to determine the appropriate relief avail-
                                      able to her under section 6015—in particular, a refund of her
                                      share of the funds taken by the IRS from a joint bank account
                                      to satisfy the separate liability of her former husband, inter-
                                      venor John Minihan, for the joint income tax debt.
                                         The IRS contends (1) that Ms. Minihan is not entitled to
                                      any relief from joint liability under section 6015 and (2) that,
                                      even if she is entitled to such relief, she is not entitled to any
                                      refund of the money levied from the joint account. On Feb-
                                      ruary 1, 2011, the IRS moved for summary judgment pursu-
                                      ant to Rule 121 on the second issue only, i.e., Ms. Minihan’s
                                      non-entitlement to a refund of the levied funds. On March
                                      21, 2011, the Court held a hearing on the IRS’s motion, took
                                      that motion under advisement, and held a partial trial of the
                                      facts pertinent to the refund issue. 2 The IRS’s motion for
                                      summary judgment will be denied as moot (in view of the
                                      partial trial), and the refund issue will be decided in favor
                                      of Ms. Minihan.

                                                                          FINDINGS OF FACT

                                        At the time Ms. Minihan filed her petition, she resided in
                                      Massachusetts. On March 2, 2010, Mr. Minihan intervened
                                      in this action pursuant to Rule 325(b). At the time Mr.
                                      Minihan filed his notice of intervention, he also resided in
                                      Massachusetts.


                                        2 The question whether a section 6015(f) petitioner is eligible for any relief is logically prior

                                      to the question whether she is entitled to a particular form of relief (i.e., a refund); and in a
                                      sense the Court’s holding a partial trial on the latter question first puts the cart before the
                                      horse. However, because here the entire joint liability has been satisfied, petitioner’s request for
                                      relief is moot (since the IRS will engage in no more collection activity) unless a refund is pos-
                                      sible. The IRS sensibly moved for partial summary judgment on this issue, since if the motion
                                      succeeded, the parties and the Court could avoid a trial on the fact-intensive and sometimes
                                      vexing question of entitlement to equitable relief under section 6015(f). We follow the IRS’s lead
                                      in addressing the refund question first; but we decide here that petitioner’s eligibility for section
                                      6015(f) relief cannot be avoided in this case.




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                                      (1)                            MINIHAN v. COMMISSIONER                                           3


                                      The Minihans’ family and finances
                                        Mr. and Ms. Minihan were married in 1989. They have
                                      three daughters, born in 1990, 1992, and 1994. Throughout
                                      their marriage Mr. Minihan worked outside the home in var-
                                      ious business ventures, while Ms. Minihan worked as a
                                      homemaker raising their daughters. Before their divorce, the
                                      Minihans enjoyed (in Ms. Minihan’s words) an ‘‘upper-middle
                                      class lifestyle’’ that included living in a $1.5 million home in
                                      Hingham, Massachusetts, owning a summer home on Cape
                                      Cod, and sending their daughters to private school.
                                      Tax filings
                                         Mr. Minihan handled the family finances. Ms. Minihan
                                      alleges that it was not until after the Minihans’ financial
                                      situation deteriorated in 2007 that Ms. Minihan became
                                      aware of and involved in their finances. During the tax years
                                      in question, Mr. Minihan prepared joint Federal income tax
                                      returns for Mr. and Ms. Minihan. Both Mr. and Ms. Minihan
                                      signed the returns for these years. However, allegedly unbe-
                                      knownst to Ms. Minihan, when Mr. Minihan filed the joint
                                      returns he did not remit payment of the Federal income tax
                                      balances (or additions to tax) due for 2002, 2003, 2004, 2005,
                                      or 2006. 3 This resulted in the IRS’s assessing the amounts
                                      due, plus additions to tax. The IRS has never determined an
                                      understatement or deficiency against Mr. or Ms. Minihan.
                                         In 2004 the IRS started collection activity with regard to
                                      the Minihans’ unpaid taxes, additions to tax, and interest for
                                      tax years 2001 and 2002. Over the course of 2004 and 2005,
                                      the IRS by levy collected $6,704.50, which the IRS applied
                                      against the Minihans’ 2001 and 2002 tax liabilities. The IRS
                                      did not make any additional levies until 2010.
                                         Ms. Minihan says she first learned about the Federal
                                      income tax delinquencies when she saw IRS correspondence
                                      in July 2007 regarding their unpaid taxes. After learning
                                      this information, Ms. Minihan resubmitted their joint
                                      returns at her accountant’s suggestion (for reasons not clear
                                      in our record), but she did not remit payments for the tax or
                                      additions to tax due on those returns.
                                        3 For 2001 the Minihans filed their joint return and paid their tax due on time but incurred

                                      an estimated tax penalty, which remained unpaid until the IRS’s 2004 and 2010 levies collected
                                      the entire amount due.




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                                      4                   138 UNITED STATES TAX COURT REPORTS                                         (1)


                                      Divorce, sale of house, and innocent spouse petition
                                         The Minihans’ marriage rapidly deteriorated in the
                                      summer of 2007, and Ms. Minihan filed for divorce in the
                                      Probate and Family Court of Massachusetts on September
                                      21, 2007. The divorce, which was not finalized until January
                                      2011, was contentious and difficult for the Minihans. In 2008
                                      the Minihans sold their family house in Hingham, Massachu-
                                      setts—which the two of them had owned jointly—and depos-
                                      ited the net proceeds from the sale into a joint Bank of
                                      America certificate of deposit account, which likewise the two
                                      of them owned jointly. 4 It was their mutual intention that
                                      Mr. and Ms. Minihan would be co-owners of the Bank of
                                      America account, that they would each be entitled to an
                                      equal amount of the account, and that they would ‘‘keep the
                                      money [in the account] so neither one could run off with it’’,
                                      since the money in the account was to be used to fund their
                                      children’s education. When the divorce was finalized in
                                      January 2011, the final divorce decree provided that all of
                                      the funds remaining in the Bank of America account—about
                                      $26,000 after the IRS levies discussed below—would be used
                                      to pay their children’s education expenses. Since the
                                      remainder of the funds would be consumed with the chil-
                                      dren’s education expenses, the divorce decree did not address
                                      any further asset division with respect to this account.
                                         On June 23, 2008, the IRS received Ms. Minihan’s Form
                                      8857, Request for Innocent Spouse Relief, requesting relief
                                      from joint and several liability for the tax due for tax years
                                      2001 through 2006. In accordance with IRS procedure, upon
                                      the filing of Ms. Minihan’s request for section 6015 relief, the
                                      IRS moved Mr. and Ms. Minihan’s joint assessment accounts
                                      to separate mirrored accounts for each of the tax years. 5
                                         4 Although there are irregularities in the paperwork for the account, we find that it was a

                                      joint account that Mr. and Ms. Minihan co-owned. In her objection to the IRS’s motion for sum-
                                      mary judgment, Ms. Minihan included several exhibits that refer to her as ‘‘co owner of a CD
                                      at Bank of America with an account # [ending 0682]’’ or refer to the Bank of America account
                                      as ‘‘a joint bank account’’. In addition, Ms. Minihan testified, regarding the Bank of America
                                      account, that ‘‘we both had to go to the bank and we both had to be there to sign for * * *
                                      the withdrawal’’. Ms. Minihan’s post-trial submissions repeatedly refer to the account as a ‘‘joint
                                      account’’. Finally, the Bank of America account’s ‘‘CD Deposit Receipt’’ and ‘‘Modification Agree-
                                      ment’’ show that the account title included both Mr. and Ms. Minihan.
                                         5 After Ms. Minihan filed her petition for innocent spouse relief, the IRS created separate mir-

                                      rored accounts for the joint tax liability, pursuant to Internal Revenue Manual (IRM) pt.
                                      25.15.12.17.3 (Nov. 9, 2007) (‘‘Mirror[ed] accounts are currently created for * * * Innocent
                                      spouse [cases]’’). This allowed the IRS to pursue Mr. Minihan for collection on the entire joint
                                      liability amount, while collection against Ms. Minihan was suspended. See id. pt. 25.15.15.1




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                                      (1)                            MINIHAN v. COMMISSIONER                                           5


                                      Thereafter, the IRS had a separate account for each spouse,
                                      reflecting for each the same liabilities derived from their
                                      joint filings.
                                         In August 2009, in the midst of the divorce proceedings,
                                      Mr. Minihan sent a letter to the IRS informing it about the
                                      joint Bank of America account that held the proceeds from
                                      the sale of their Hingham house. The bank account balance
                                      at the time of the letter was about $230,000. Shortly after
                                      receiving Mr. Minihan’s letter, the IRS issued to Ms. Minihan
                                      a Final Appeals Determination denying her claim for
                                      innocent spouse relief. In response, Ms. Minihan filed a
                                      timely petition with this Court on November 9, 2009.
                                      Collection of Mr. Minihan’s separate liability
                                        By February 2010 the balance in the joint account was
                                      about $170,000, since money in the account had been used
                                      to pay for their children’s education expenses, legal fees asso-
                                      ciated with the Minihans’ divorce, and unspecified State
                                      taxes. In February 2010 the IRS issued two notices of levy to
                                      Bank of America, attaching Mr. Minihan’s interest in the
                                      Bank of America account. One levy was to satisfy his income
                                      tax liabilities for the taxable years 2001 and 2002, and the
                                      other was to satisfy his liabilities for the taxable years 2000,
                                      2003, 2004, 2005, and 2006.
                                        On March 2, 2010, the IRS received a levy payment of
                                      $20,584.93 from Bank of America, which was applied to Mr.
                                      Minihan’s income tax liabilities for the taxable years 2001
                                      and 2002 in the amounts of $226.87 and $20,358.06 and
                                      which satisfied the remaining liability for those years. On
                                      March 11, 2010, the IRS received a levy payment of
                                      $63,257.42 from Bank of America, which was applied to Mr.
                                      Minihan’s income tax liabilities for the taxable years 2000,
                                      2003, 2004, 2005, and 2006 in the amounts of $10,496.28,
                                      $13,353.26, $11,949.34, $11,336.89, and $16,121.65 and
                                      which satisfied the remaining liability for those years.
                                      The IRS’s motion for summary judgment and trial
                                       On February 1, 2011, the IRS moved for summary judg-
                                      ment with regard to Ms. Minihan’s petition for relief under
                                      (Mar. 21, 2008) (‘‘Mirroring will also allow collection activity to continue for the nonrequesting
                                      spouse’’). Any payment collected from Mr. Minihan was credited to both mirrored accounts. See
                                      id. pt. 25.15.12.17.3.




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                                      6                   138 UNITED STATES TAX COURT REPORTS                                            (1)


                                      section 6015(f). The IRS argued that, since the entire joint
                                      and several liability had been fully paid (by application of the
                                      levied funds to Mr. Minihan’s tax account), collection activity
                                      would cease, and the only relief that Ms. Minihan might
                                      thereafter seek would be a refund. The IRS contends that, as
                                      a matter of law, Ms. Minihan is not entitled to a refund
                                      because the liability was paid not with Ms. Minihan’s sepa-
                                      rate funds, but with joint funds.
                                        After hearing the parties’ arguments on the motion, the
                                      Court took under advisement the IRS’s motion for summary
                                      judgment and proceeded with a partial trial on the issue in
                                      the IRS’s motion. Pro bono counsel entered an appearance on
                                      Ms. Minihan’s behalf for trial. At trial Ms. Minihan con-
                                      tended that the IRS had levied upon property that Mr.
                                      Minihan could not acquire unilaterally and that a share of
                                      the money levied constituted separate payments by Ms.
                                      Minihan, of which she could be entitled to a refund.
                                        After trial Ms. Minihan moved to reopen the record in
                                      order to submit additional documentary evidence from Bank
                                      of America regarding the ownership and nature of the joint
                                      account. The proffered evidence included a ‘‘Certificate of
                                      Deposit Receipt’’ and a ‘‘Modification Agreement’’ from Bank
                                      of America. Although Mr. Minihan and the IRS object to Ms.
                                      Minihan’s motion to reopen the record, we will overrule those
                                      objections, reopen the record, and receive into evidence Ms.
                                      Minihan’s documents submitted after trial. 6
                                        Presently before the Court is the question whether Ms.
                                      Minihan is precluded from obtaining a refund of the levied
                                         6 Reopening the record to receive additional evidence is a matter within the discretion of the

                                      trial court. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 331 (1971); Butler v.
                                      Commissioner, 114 T.C. 276, 286–287 (2000). We exercise our discretion and grant Ms.
                                      Minihan’s motion. However, she evidently offers the documents in an attempt to show that she
                                      owned the account unilaterally, or that by the terms of the account Mr. Minihan could not (and
                                      therefore his creditors could not) access the funds without her express consent. If we were decid-
                                      ing only the IRS’s motion for summary judgment, the documents might be sufficient to raise
                                      a genuine issue of material fact as to joint ownership; but having conducted a trial, we are actu-
                                      ally deciding the issue and we do not (as under Rule 121) make every inference in Ms. Minihan’s
                                      favor and impose on her only the burden to raise genuine issues of fact. Rather, we weigh evi-
                                      dence and find facts; and in so doing, we find—in part on the basis of Ms. Minihan’s admissions
                                      (see supra note 4)—that the account was a joint account. Therefore, reopening the trial record
                                      for this evidence has little practical effect (and could even be criticized for that reason, see Butler
                                      v. Commissioner, 114 T.C. at 287 (the Court ‘‘will not grant a motion to reopen the record unless
                                      * * * the evidence probably would change the outcome of the case’’)); but we allow Ms.
                                      Minihan’s late-produced documents into evidence lest there be any doubt that she has had her
                                      day in court on this point.




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                                      (1)                            MINIHAN v. COMMISSIONER                                           7


                                      funds because they were funds from a joint account applied
                                      to Mr. Minihan’s tax account.
                                                                                   OPINION

                                      I. Standard and scope of review
                                        In determining whether a taxpayer is entitled to equitable
                                      relief under section 6015(f), we may consider evidence intro-
                                      duced at trial which was not included in the administrative
                                      record, Porter v. Commissioner, 130 T.C. 115, 117 (2008), and
                                      we apply a de novo standard of review, Porter v. Commis-
                                      sioner, 132 T.C. 203 (2009). Except as otherwise provided in
                                      section 6015, the taxpayer bears the burden of proof. See
                                      Rule 142(a); Alt v. Commissioner, 119 T.C. 306, 311 (2002),
                                      aff ’d, 101 Fed. Appx. 34 (6th Cir. 2004).
                                      II. Joint and several liability and section 6015(f) relief
                                            A. General principles
                                         Section 6013(d)(3) provides that if married taxpayers file a
                                      joint return, the tax is computed on the taxpayers’ aggregate
                                      income, and liability for the resulting tax is joint and several.
                                      See also 26 C.F.R. sec. 1.6013–4(b), Income Tax Regs. That
                                      is, each spouse is responsible for the entire joint tax liability.
                                      However, section 6015(f) provides as follows:
                                        SEC. 6015(f). EQUITABLE RELIEF.—Under procedures prescribed by the
                                      Secretary, if—
                                          (1) taking into account all the facts and circumstances, it is inequi-
                                        table 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.

                                      Thus, a taxpayer may be relieved from joint and several
                                      liability under section 6015(f) if, taking into account all the
                                      facts and circumstances, it is inequitable to hold the tax-
                                      payer liable.
                                         In accord with the statutory provision that section 6015(f)
                                      relief is to be granted ‘‘[u]nder procedures prescribed by the
                                      Secretary’’, the Commissioner has issued revenue procedures
                                      to guide IRS employees in determining whether a requesting
                                      spouse is entitled to relief from joint and several liability. See
                                      Rev. Proc. 2003–61, 2003–2 C.B. 296, modifying and super-




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                                      8                   138 UNITED STATES TAX COURT REPORTS                                         (1)


                                      seding Rev. Proc. 2000–15, 2000–1 C.B. 447. 7 Revenue Proce-
                                      dure 2003–61, supra, lists the factors that IRS employees
                                      should consider, and the Court may consult those same fac-
                                      tors, among other factors, when reviewing the IRS’s denial of
                                      relief under section 6015(f). See Washington v. Commissioner,
                                      120 T.C. 137, 147–152 (2003). For purposes of this Opinion,
                                      we assume (without deciding) that Ms. Minihan is entitled to
                                      relief under section 6015(f), and we do not further address
                                      that issue.
                                           B. Section 6015(g)(1) refund relief
                                         When a taxpayer seeks relief under section 6015(f), the
                                      relief comes in the form of being excused from joint and sev-
                                      eral liability for the joint tax due, and the taxpayers’s
                                      liability is recalculated as if a married-filing-separately
                                      return had been properly filed. Pullins v. Commissioner, 136
                                      T.C. 432 (2011). If the IRS has not collected the joint tax due,
                                      the taxpayer would then be required to pay only the portion
                                      attributable to her, as calculated on a married-filing-sepa-
                                      rately basis. Id. If the IRS has already collected the tax (the
                                      situation that now exists in this case), the taxpayer may be
                                      allowed a refund under section 6015(g)(1), which provides as
                                      follows:
                                           SEC. 6015(g). CREDITS AND REFUNDS.—
                                             (1) IN GENERAL.—Except as provided in paragraphs (2) and (3), not-
                                           withstanding any other law or rule of law (other than section 6511,
                                           6512(b), 7121, or 7122), credit or refund shall be allowed or made to the
                                           extent attributable to the application of this section.

                                        However, before any taxpayer may be allowed a refund or
                                      credit, there must be a determination that the taxpayer has
                                      made an overpayment. Ordlock v. Commissioner, 126 T.C.
                                      47, 69 (2006) (Thornton, J., concurring), aff ’d, 533 F.3d 1136
                                      (9th Cir. 2008). Section 6402 makes this expressly clear,
                                      stating:
                                         SEC. 6402(a). GENERAL RULE.—In the case of any overpayment, the Sec-
                                      retary, within the applicable period of limitations, may credit the amount
                                      of such overpayment, including any interest allowed thereon, against any
                                      liability in respect to an internal revenue tax on the part of the person who

                                        7 On January 5, 2012, the IRS released a proposed revenue procedure to supersede Revenue

                                      Procedure 2003–61. See Notice 2012–8, 2012–4 I.R.B. 1. No changes are proposed there that
                                      would affect the issues we discuss here.




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                                      (1)                            MINIHAN v. COMMISSIONER                                           9


                                      made the overpayment and shall * * * refund any balance to such person.
                                      [Emphasis added.]

                                      A taxpayer makes an overpayment if she remits funds to the
                                      Secretary in excess of the tax for which she is liable. Jones
                                      v. Liberty Glass Co., 332 U.S. 524, 531 (1947) (defining an
                                      overpayment as ‘‘any payment in excess of that which is
                                      properly due’’); see also Estate of Smith v. Commissioner, 123
                                      T.C. 15, 21 (2004).
                                         Therefore, even if a taxpayer is relieved from joint and sev-
                                      eral liability for the tax due on a joint return by application
                                      of section 6015(f), the taxpayer is not entitled to a refund
                                      under section 6015(g)(1) unless the taxpayer made an over-
                                      payment—i.e., ‘‘[paid] more than is owed, for whatever rea-
                                      son or no reason at all.’’ United States v. Dalm, 494 U.S. 596,
                                      610 n.6 (1990); see Ordlock v. Commissioner, 126 T.C. at 61
                                      (holding that a taxpayer entitled to innocent spouse relief
                                      was not entitled to a refund of joint tax liabilities paid using
                                      community property assets of the marital estate); Kaufman
                                      v. Commissioner, T.C. Memo. 2010–89 (declining section 6015
                                      refund when funds were paid by deceased husband’s estate);
                                      Rosenthal v. Commissioner, T.C. Memo. 2004–89 (‘‘It also
                                      must be shown that the payments were not made with the
                                      joint return and were not joint payments or payments that
                                      the nonrequesting spouse made’’). This conclusion is con-
                                      sistent with Revenue Procedure 2003–61, sec. 4.04(2), 2003–
                                      2 C.B. at 299, in which the IRS stated:
                                      In a case involving an underpayment of income tax, a requesting spouse
                                      is eligible for a refund of separate payments that he or she made after July
                                      22, 1998, if the requesting spouse establishes that he or she provided the
                                      funds used to make the payment for which he or she seeks a refund. * * *
                                      [Emphasis added.]

                                         Accordingly, if we assume, arguendo, that Ms. Minihan is
                                      eligible for relief under section 6015(f), the issue for decision
                                      is whether the IRS’s levy on the joint Bank of America
                                      account to satisfy Mr. Minihan’s tax liability can constitute
                                      an overpayment by Ms. Minihan, entitling her to a refund.
                                      If so, then relief might be available to Ms. Minihan, and we
                                      would therefore need to determine whether she is entitled to
                                      equitable relief under section 6015(f).




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                                      10                  138 UNITED STATES TAX COURT REPORTS                                         (1)


                                      III. The parties’ contentions
                                         The IRS contends that the account it levied upon was a
                                      joint account and that the proceeds from the levy satisfied
                                      the entire liability at issue. Since Massachusetts law gives
                                      either owner of a joint account the right to withdraw the
                                      entire account balance, the IRS asserts that the levy was
                                      proper and, as a result, Ms. Minihan is not entitled to a
                                      refund. The IRS argues that Ms. Minihan is not entitled to
                                      a refund because ‘‘the Bank of America levy payments came
                                      from intervenor’s assets or joint assets, but not petitioner’s
                                      separate assets’’.
                                         In response, Ms. Minihan contends that the account was a
                                      special account established during her and Mr. Minihan’s
                                      divorce to fund their children’s education. She claims that
                                      neither Mr. Minihan nor she could withdraw any amount
                                      without the other’s consent. Accordingly, Ms. Minihan argues
                                      that the IRS’s levy ‘‘acquired property which the intervenor
                                      could not acquire unilaterally and, consequently, the
                                      amounts levied cannot constitute solely payments of the
                                      intervenor’’. Additionally, Ms. Minihan argues that the levy
                                      was not a ‘‘joint payment’’ because the IRS levy was non-
                                      consensual. Instead Ms. Minihan argues that, given the
                                      nature of the account, a portion of the levy amounts to a
                                      ‘‘separate payment’’ by Ms. Minihan giving rise to an over-
                                      payment by Ms. Minihan and entitling her to a refund. For
                                      the reasons explained below, we hold that a portion of the
                                      account did indeed constitute separate funds of Ms. Minihan
                                      that might be refunded to her if she proves that she is enti-
                                      tled to relief under section 6015(f).
                                      IV. Analysis
                                           A. Identifying a ‘‘separate payment’’
                                        The requirement of Revenue Procedure 2003–61, supra,
                                      that a petitioning spouse make a ‘‘separate payment’’ or ‘‘pro-
                                      vide the funds’’ used to pay the joint tax liability in order to
                                      be entitled to a refund under section 6015(g)(1), is in accord
                                      with section 6402, which requires, inter alia, that in order to
                                      obtain a refund, a person must make an overpayment. The
                                      analysis of whether a payment is a ‘‘separate payment’’ is
                                      straightforward when payments are voluntary or, if involun-




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                                      (1)                            MINIHAN v. COMMISSIONER                                           11


                                      tary (e.g., by levy), when the payments are from property
                                      owned by only one spouse. See Leissner v. Commissioner,
                                      T.C. Memo. 2003–191 (allowing a refund when a payment
                                      resulted from a levy on the taxpayer’s solely owned IRA
                                      account). The analysis gets considerably murkier when, as is
                                      the case here, the payment arises from a levy on jointly
                                      owned property.
                                         The IRS attempts to simplify the analysis by arguing that
                                      Ms. Minihan could not make a ‘‘separate payment’’ of the
                                      levied property if the IRS properly levied against Mr. Minihan
                                      and the money taken was not separately owned but jointly
                                      owned. The IRS was barred from making involuntary collec-
                                      tions from Ms. Minihan by section 6015(e)(1)(B)(i), which pro-
                                      vides that ‘‘no levy * * * shall be made * * * against the
                                      individual * * * requesting equitable relief under subsection
                                      (f) * * * until the decision of the Tax Court has become
                                      final.’’ The IRS therefore set up a separate account for Mr.
                                      Minihan and effected the levy at issue in order to collect
                                      from him. That being the case, the IRS argues, in effect, that
                                      if the levy was proper under section 6331 and was not barred
                                      by section 6015(e)(1)(B)(i) because the property seized was
                                      co-owned by a taxpayer from whom the IRS was allowed to
                                      collect (here, Mr. Minihan), then by definition the levied
                                      property was not the separate property of the other co-owner
                                      (Ms. Minihan).
                                         We disagree with the IRS’s contention and conclude that
                                      the relevant inquiry is whether under State law Ms. Minihan
                                      has a surviving separate legal interest in the levied assets.
                                      This conclusion is based on the following.
                                            B. Provisional nature of section 6331
                                        Congress has granted the Secretary of the Treasury (and
                                      consequently the IRS) powerful tax collection tools, not the
                                      least of which is the power granted in section 6331(a) to levy
                                      on a delinquent taxpayer’s property. Section 6331(a) provides
                                      that ‘‘[i]f any person liable to pay any tax neglects or refuses
                                      to pay * * *, it shall be lawful for the Secretary to collect
                                      such tax * * * by levy upon all property and rights to prop-
                                      erty * * * belonging to such person’’.
                                        Applying section 6331, the Supreme Court held in United
                                      States v. Nat’l Bank of Commerce, 472 U.S. 713, 722 (1985),




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                                      that the IRS can lawfully levy on a joint bank account to sat-
                                      isfy one account holder’s individual tax liability. Under State
                                      law the taxpayer had an unconditional right to withdraw the
                                      entire joint account, even though the taxpayer was only one
                                      of three owners. The Supreme Court held that since the tax-
                                      payer had a State law right to withdraw the entire account,
                                      the IRS as a creditor could withdraw the entire account under
                                      Federal law (i.e., section 6331) notwithstanding State collec-
                                      tion law that may exist. 8 Id. at 724.
                                         However, the Supreme Court’s holding that the levy was
                                      lawful did not end its discussion of the nondelinquent co-
                                      owner’s subsequent claims on the levied funds. The Supreme
                                      Court discussed as follows the provisional nature of a section
                                      6331 levy:
                                      ‘‘The final judgment in [a levy] action settles no rights in the property sub-
                                      ject to seizure.’’ United States v. New England Merchants National Bank,
                                      465 F.Supp. 83, 87 (Mass. 1979). Other claimants, if they have rights, may
                                      assert them. Congress recognized this when the Code’s summary-collection
                                      procedures were enacted, S. Rep. No. 1708, 89th Cong., 2d Sess., 29 (1966),
                                      U.S. Code Cong. & Admin. News 1966, p. 3722, and when it provided in
                                      § 7426 of the Code, 26 U.S.C. § 7426, that one claiming an interest in prop-
                                      erty seized for another’s taxes may bring a civil action against the United
                                      States to have the property or the proceeds of its sale returned.

                                                              *   *   *    *    *   *    *
                                      The Court [in United States v. Rodgers, 461 U.S. 677 (1983)] * * * recog-
                                      nized what we now make explicit: that § 6331 is a provisional remedy,
                                      which does not determine the rights of third parties until after the levy
                                      is made, in postseizure administrative or judicial hearings.
                                         [Nat’l Bank of Commerce, 472 U.S. at 728, 731; fn. ref. omitted.]

                                      Thus the Supreme Court made a distinction between the
                                      question whether the IRS could properly proceed with a levy
                                      (in answer to which it allowed the IRS to proceed) and the
                                      question whether claimants (i.e., joint owners other than the
                                      debtor) thereafter could nonetheless try to get money back
                                      (in answer to which it held that they could make claims—for
                                      instance, in District Court under section 7426 or administra-
                                      tively under section 6343(b)).
                                         Although the instant case arises in a section 6015 claim for
                                      relief—not the context of Nat’l Bank of Commerce—the rea-
                                        8 In United States v. Nat’l Bank of Commerce, 472 U.S. 713, 718 (1985), the Arkansas State

                                      collection law at issue did not allow a creditor to subrogate to the position of the debtor with
                                      regard to the debtor’s power to withdraw the entire joint account balance.




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                                      soning of that case would still appear to be applicable: A law-
                                      ful levy under section 6331 does not extinguish a third
                                      party’s rights in levied property. 9
                                            C. Refund of levied property under section 6015(g)(1)
                                        First, however, we must determine whether the rights of
                                      an ‘‘innocent spouse’’ who claims a refund under section
                                      6015(g)(1) survive post-levy in the same way that the rights
                                      of a section 7426 or section 6343(b) wrongful levy claimant
                                      survive. In EC Term of Years Trust v. United States, 550
                                      U.S. 429, 436 (2007), the Supreme Court held that a trust
                                      which claimed an interest in money the IRS levied to satisfy
                                      beneficiaries’ tax liabilities cannot maintain a refund suit
                                      under 28 U.S.C. section 1346(a)(1) when the trust missed the
                                      deadline to bring a section 7426 wrongful levy action. Id. The
                                      Supreme Court concluded that section 7426 was the trust’s
                                      exclusive remedy. Id. Accordingly, we consider whether the
                                      holding of EC Term of Years Trust—that an available wrong-
                                      ful levy claim under section 7426 precludes a subsequent
                                      refund claim—might apply to preempt an innocent spouse’s
                                      refund claim under section 6015(g)(1). (Since we conclude
                                      that it does not, we do not need to address whether Ms.
                                      Minihan could have pursued a wrongful levy action under
                                      section 7426.)
                                        The Supreme Court in EC Term of Years Trust, 550 U.S.
                                      at 433, 435, followed the axiom that ‘‘ ‘a precisely drawn,
                                      detailed statute pre-empts more general remedies’ ’’ to hold
                                      that a refund claim under 28 U.S.C. section 1346(a)(1) (the
                                      general remedy) is precluded by section 7426 (the precisely
                                      drawn remedy) in the context of a third party’s claim for
                                      refund of property ‘‘wrongfully levied upon’’.
                                        However, Ms. Minihan’s claim for a refund—an ‘‘innocent
                                      spouse’’ remedy under section 6015(g)(1)—is distinguishable
                                      from the tax refund claims under 28 U.S.C. section 1346(a)(1)
                                        9 This present case is distinguishable from Ordlock v. Commissioner, 126 T.C. 47 (2006), aff ’d,

                                      533 F.3d 1136 (9th Cir. 2008), which held that a taxpayer entitled to innocent spouse relief is
                                      not entitled to a refund after joint tax liabilities were collected from community property assets.
                                      The present case deals with a section 6331 levy on a jointly owned bank account rather than
                                      a section 6321 lien on community property, as was the case in Ordlock. The presence of a section
                                      6331 levy in this case directly implicates the Supreme Court’s holding in Nat’l Bank of Com-
                                      merce. Furthermore, the distinction between joint assets and community property is significant
                                      because, for the purpose of creditors, the marital community estate is akin to a separate entity,
                                      whereas a jointly owned asset is simply an asset in which a debtor has an interest. See Cal.
                                      Fam. Code sec. 910 (West 2004).




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                                      that were at issue in EC Term of Years Trust. Unlike the
                                      statutes conferring tax refund jurisdiction (28 U.S.C. secs.
                                      1346(a)(1) and 1491(a)(1)), the statute that confers ‘‘in-
                                      nocent spouse’’ jurisdiction on the Tax Court—section
                                      6015(e)(1)(A)—provides:
                                      In addition to any other remedy provided by law, the individual may peti-
                                      tion the Tax Court (and the Tax Court shall have jurisdiction) to deter-
                                      mine the appropriate relief available to the individual under this section
                                      * * * [Emphasis added.]

                                      Moreover, section 6015(g)(1) provides that ‘‘notwithstanding
                                      any other law or rule of law (other than section 6511,
                                      6512(b), 7121, or 7122), credit or refund shall be allowed or
                                      made to the extent attributable to the application of this sec-
                                      tion.’’ (Emphasis added.) 10 Congress, by creating innocent
                                      spouse remedies ‘‘in addition to any other remedy’’ 11 and by
                                      allowing refunds ‘‘notwithstanding any other law or rule of
                                      law’’, expressly foreclosed the proposition that section 7426 or
                                      6343(b) could be the exclusive remedy for an innocent spouse
                                      seeking a refund of levied property in which she had an
                                      interest.
                                         Whether or not wrongful levy claims under section 7426
                                      (judicial claims) or section 6343(b) (administrative claims)
                                      were available to her, Ms. Minihan is permitted to claim a
                                      refund under section 6015(g)(1) to recover her share of levied
                                      property, as she has done here.
                                           D. Ms. Minihan’s rights in the levied property
                                        We now apply the foregoing principles to the facts of this
                                      case to decide whether Ms. Minihan could be entitled to a
                                      refund under section 6015(g)(1) assuming, arguendo, that she
                                      is entitled to innocent spouse relief under section 6015(f).
                                      The parties contend that the answer depends on whether the
                                         10 Cf. Ordlock v. Commissioner, 126 T.C. at 56 (concluding that the ‘‘notwithstanding’’ provi-

                                      sion of section 6015(g)(1) does not take precedence over State community property laws which
                                      are necessary to define ownership in payments).
                                         11 Congress enacted section 6015 as a means of expanding relief to innocent spouses. See H.R.

                                      Conf. Rept. No. 105–599, at 249–255 (1998), 1998–3 C.B. 747, 1003–1009; S. Rept. No. 105–174,
                                      at 55–60 (1998), 1998–3 C.B. 537, 591–596; H.R. Rept. No. 105–364 (Part 1), at 60–62 (1997),
                                      1998–3 C.B. 373, 432–434. With regard to section 6015(e)(3)(A) (the predecessor to section
                                      6015(g)(1)), the House report stated: ‘‘The Tax Court may order refunds as appropriate where
                                      it determines that the spouse qualifies for relief and an overpayment exists as a result of the
                                      innocent spouse qualifying for such relief.’’ H.R. Rept. No. 105–364 (Part 1), supra at 61, 1998–
                                      3 C.B. at 433.




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                                      levy on the Bank of America account amounted to a ‘‘sepa-
                                      rate payment’’ 12 by Ms. Minihan. Ultimately, Ms. Minihan’s
                                      section 6015(g)(1) refund claim is a post-levy assertion of her
                                      rights in the levied property and an avenue for her to recover
                                      what may belong to her. See Nat’l Bank of Commerce, 472
                                      U.S. at 728. Whether we use the terminology from Revenue
                                      Procedure 2003–61, supra (i.e., identifying ‘‘separate pay-
                                      ments’’), or the more general terminology used in Nat’l Bank
                                      of Commerce, 472 U.S. at 731 (i.e., ‘‘determin[ing] the rights
                                      of third parties * * * after the levy is made’’), the inquiry is
                                      the same. We must determine (1) whether Ms. Minihan in
                                      fact had a separate interest in the Bank of America account
                                      and, if so, (2) whether that interest, as against the IRS, sur-
                                      vived the levy. We turn to Massachusetts State law to
                                      answer these questions.
                                            1. Her separate interest in the joint bank account
                                         A party to a Massachusetts joint bank account has the
                                      power to withdraw, assign, or transfer part or all of the
                                      funds in a joint account. Mass. Ann. Laws ch. 167D, sec. 5
                                      (LexisNexis 2009). ‘‘Unlike a joint tenant of property held in
                                      a traditional joint tenancy, therefore, * * * [a title holder of
                                      a joint bank account] may effectively exercise control over the
                                      entire interest, or any part of it, and divest, totally or par-
                                      tially, the interest of the other.’’ Heffernan v. Wollaston
                                      Credit Union, 567 N.E.2d 933, 937 (Mass. App. Ct. 1991); see
                                      also United States v. U.S. Currency, $81,000, 189 F.3d 28, 34
                                      (1st Cir. 1999) (holding that the rights conferred to a joint
                                      account holder by Massachusetts statutes and case law in
                                      fact give a joint account holder legal title in a joint account).
                                      While a joint bank account establishes the rights of the co-
                                      depositors as between them and the bank, it is not conclusive
                                      between the parties as to the account’s ownership (i.e., the
                                      issue of who has equitable title or real interest). Heffernan,
                                      567 N.E.2d at 937 n.7. The real interest of each joint
                                        12 The IRS casts the issue in terms of ‘‘separate assets’’ rather than ‘‘separate payment’’, but

                                      for our purposes there is no meaningful distinction, because the analysis of whether Ms.
                                      Minihan made a ‘‘separate payment’’ turns on whether Ms. Minihan had a distinct legal interest
                                      in the bank account as determined under State law. We presume that such an interest would
                                      also be a ‘‘separate asset’’. To the extent our conclusion regarding the IRS’s terminology is incor-
                                      rect, then the IRS’s use of the term ‘‘separate assets’’ is misplaced, because the only relevant
                                      inquiry is whether Ms. Minihan made a ‘‘separate payment’’ that resulted in an overpayment.
                                      See Rosenthal v. Commissioner, T.C. Memo. 2004–89.




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                                      depositor may be determined in an action in equity. Id.
                                      (citing Blanchette v. Blanchette, 287 N.E.2d 459, 462–463
                                      (Mass. 1972)). ‘‘The determination of the interest * * * in
                                      the deposits in the joint accounts is dependent primarily on
                                      what * * * [the] intention [of the parties] was, and this is a
                                      question of fact.’’ Buckley v. Buckley, 17 N.E.2d 887, 888
                                      (Mass. 1938) (emphasis added); see also Campagna v.
                                      Campagna, 150 N.E.2d 699, 702 (Mass. 1958); Milan v.
                                      Boucher, 189 N.E. 576, 578 (Mass. 1934); Rafuse v. Stryker,
                                      No. 090107, 2010 WL 2431921, at *6 (Mass. Super. Apr. 21,
                                      2010).
                                         Accordingly, we turn to Mr. and Ms. Minihan’s intention
                                      regarding the account. The money in the joint account came
                                      from the sale of the couple’s long-time marital house, in
                                      which they had made a home together during almost two
                                      decades of marriage. Although the money to pay the mort-
                                      gage had come from the earnings of Mr. Minihan, his earning
                                      potential depended on Ms. Minihan’s making her contribu-
                                      tion to the household by keeping house, raising the children,
                                      and fulfilling the other responsibilities of the stay-at-home
                                      spouse.
                                         Most telling, however, is Mr. Minihan’s testimony at trial:
                                      When asked why, on one occasion when he unilaterally with-
                                      drew from the account $5,000 for himself, he also withdrew
                                      $5,000 for Ms. Minihan, Mr. Minihan testified: ‘‘I did so
                                      because it was equitable. That was—if one was going to take
                                      out $10,000, the other one would take out $10,000’’. Mr.
                                      Minihan had every incentive in this case to minimize Ms.
                                      Minihan’s claim on the funds in the joint account, but even
                                      his testimony suggests that the parties intended that Mr.
                                      and Ms. Minihan each had a 50-percent interest in the
                                      account, notwithstanding that the initial source of the funds
                                      might be traced to Mr. Minihan’s paycheck.
                                         Accordingly, we conclude that under Massachusetts law
                                      Ms. Minihan had a 50-percent ownership interest in the joint
                                      account.
                                           2. Her interest’s survival of the levy
                                        Under Nat’l Bank of Commerce, the IRS clearly has the
                                      right to levy on a delinquent taxpayer’s joint bank accounts.
                                      Similarly, under Massachusetts law other creditors can




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                                      pursue collection of an individual debtor’s debts by levying on
                                      joint bank accounts held by the debtor and a third party.
                                      Prudential-Bache Sec., Inc. v. Comm’r of Revenue, 588 N.E.2d
                                      639, 641 (Mass. 1992); R.H. White Co. v. Lees, 166 N.E. 705,
                                      706 (Mass. 1929) (‘‘the deposit may be attached in a suit
                                      against either depositor’’). However, whether the creditor is
                                      the IRS or someone else, the inquiry does not end with the
                                      creditor’s right to attach a joint bank account, because under
                                      Massachusetts law nondebtor co-depositors have the right to
                                      intervene and assert their ownership interests against those
                                      creditors. See R.H. White Co., 166 N.E. at 706; Laubinger v.
                                      Dep’t of Revenue, 672 N.E.2d 554, 557 (Mass. App. Ct. 1996).
                                      The propriety of the creditor’s levy is one thing; the right of
                                      a third party to assert a claim against the creditor for the
                                      property it seized is another thing.
                                         In particular, a co-depositor may bring a post-seizure
                                      action to establish his rights in seized property and seek a
                                      judgment against the seizing creditor for the amount of the
                                      joint account that the nondebtor co-depositor owned. See
                                      Colella v. N. Easton Sav. Bank, No. 95–00362, 1995 WL
                                      670140 (Mass. Super. Sept. 11, 1995); see also Mass. Ann.
                                      Law ch. 223, sec. 102. In Colella the North Easton Savings
                                      Bank exercised its right of setoff against a debtor’s joint bank
                                      account, of which the plaintiffs were co-depositors. After the
                                      North Easton Savings Bank took the entire balance of the
                                      account by setoff, the nondebtor co-depositor plaintiffs
                                      brought an action against the bank alleging, inter alia, the
                                      tort of conversion. The Massachusetts Superior Court, in
                                      denying North Easton Savings Bank’s motion for summary
                                      judgment, stated: ‘‘In sum, a bank, without the consent of co-
                                      depositors, may not unilaterally seize and retain funds that
                                      may not be actually owned by the individual debtor.’’ Colella,
                                      1995 WL 670140 at *5 (emphasis added). Since, under
                                      Massachusetts law, North Easton Savings Bank could not
                                      retain the funds, the plaintiffs’ interest in the account sur-
                                      vived the seizure.
                                         We have concluded that Ms. Minihan was the owner of 50
                                      percent of the Bank of America account. After the IRS levied
                                      money from the account in order to satisfy Mr. Minihan’s tax
                                      debt, any interest Ms. Minihan had in the seized money sur-
                                      vived under Massachusetts law. See id. An available remedy
                                      for Ms. Minihan to establish and retrieve her share of the




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                                      levied funds is a refund claim under section 6015(g)(1). Ms.
                                      Minihan has established her 50-percent interest in the
                                      account, and she is therefore entitled under section
                                      6015(g)(1) to a refund of any of her share of the money the
                                      IRS seized from the joint account, if and to the extent she is
                                      granted relief under section 6015(f).
                                      V. Conclusion
                                        The IRS is not entitled to judgment as a matter of law with
                                      regard to Ms. Minihan’s potential claim for a refund under
                                      section 6015(g)(1). As result, there remains for trial the issue
                                      of whether Ms. Minihan is entitled to relief under section
                                      6015(f).
                                        To reflect the foregoing,
                                                                                 An appropriate order will be issued.

                                                                               f




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