                     T.C. Summary Opinion 2010-64



                        UNITED STATES TAX COURT



                     DANA L. ACOBA, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 4002-05S.             Filed May 19, 2010.


        Dana L. Acoba, pro se.

        Robert V. Boeshaar, for respondent.



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

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.    Pursuant to section 7463(b),

the decision to be entered is not reviewable by any other court,

and this opinion shall not be treated as precedent for any other

case.     Unless otherwise indicated, subsequent section references

are to the Internal Revenue Code as amended, and Rule references

are to the Tax Court Rules of Practice and Procedure.
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     The issue for decision is whether petitioner is entitled to

relief from joint and several liability under section 6015(f) for

1999, 2000, and 2001.1

                             Background

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

The stipulation of facts and the exhibits received into evidence

are incorporated herein by reference.     When the petition was

filed, petitioner resided in the State of Washington.

     Petitioner jointly filed Federal income tax returns with her

then spouse, Eugene A. Acoba (Mr. Acoba), for 1999, 2000, and

2001.    Both petitioner and Mr. Acoba earned wages from which

Federal income taxes were withheld in 1999 and 2000.     Both

petitioner and Mr. Acoba earned wages and received retirement

distributions from which Federal income tax was withheld in 2001.

Petitioner and Mr. Acoba underpaid their Federal income tax

liabilities for each of the years 1999, 2000, and 2001.

Considering their respective wages, retirement distributions, and

prepayment credits, the underpayments of taxes are not

attributable solely to Mr. Acoba.    Of the total $1,569

underpayment of tax for 1999, $723 was attributable to

petitioner.    Of the total $4,262 underpayment of tax for 2000,



     1
      Petitioner’s former husband, Eugene A. Acoba, was notified
that petitioner was seeking relief from joint and several
liability and that he had a right to intervene in the matter. He
has not exercised his right to intervene.
                                 - 3 -

$3,077 was attributable to petitioner.     Of the total $4,153

underpayment of tax for 2001, $1,653 was attributable to

petitioner.

     On June 9, 2003, petitioner filed a Form 8857, Request for

Innocent Spouse Relief.     The preliminary determination letter was

issued to petitioner on January 5, 2004, in response to her

request for relief from liability under section 6015.2

     Petitioner is a graduate of the University of Washington and

has 23 years of experience in healthcare administration.    Mr.

Acoba has some technical college training.

     Petitioner and Mr. Acoba divorced on June 13, 2002.    As part

of the judgment of divorce, petitioner and Mr. Acoba each agreed

to pay “50% of Internal Revenue Service debt for back taxes,

interest, and penalties”.    The judgment of divorce also contained

an order restraining and enjoining Mr. Acoba from “assaulting,

harassing, molesting or disturbing the peace of” petitioner or

their minor child.

     During the years at issue petitioner and Mr. Acoba shared a

joint checking account to which petitioner had full access.      They

each deposited their incomes to the joint account.    They each

paid all of their bills from the joint account.    Petitioner

occasionally balanced the checkbook and picked up and opened the

household mail.


     2
      See infra note 4.
                               - 4 -

     Petitioner compiled all of the pertinent information for the

preparation of their Federal income tax returns for the years at

issue.   Petitioner reviewed the joint Federal income tax returns

before signing them.   At the time the returns were signed

petitioner knew that she and Mr. Acoba could not pay the taxes

due because of the dire financial straits in which they found

themselves.

     Petitioner failed to file Federal income tax returns for

2002 and 2003.

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

subsequently denied by respondent’s Appeals Office.   The case was

called at a trial session of the Court in Seattle and was

remanded to Appeals for further consideration.   After further

consideration, a final Appeals determination was issued,

determining again that petitioner was not entitled to relief

under section 6015(f).

                             Discussion

     Except as otherwise provided in section 6015, petitioner

bears the burden of proof with respect to her entitlement to

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).
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I.    Joint and Several Liability and Section 6015 Relief

       Section 6013(d)(3) provides that if a joint return is filed,

the tax is computed on the taxpayers’ aggregate income and

liability for the resulting tax is joint and several.       See also

sec. 1.6013-4(b), Income Tax Regs.      But the Internal Revenue

Service (IRS) may relieve a taxpayer from joint and several

liability under section 6015 in    certain circumstances.

       To obtain relief from joint and several liability, a spouse

must qualify under section 6015(b), or, if eligible, may allocate

liability under section 6015(c).      In addition, if relief is not

available under section 6015(b) or (c), a spouse may seek

equitable relief under section 6015(f).      Fernandez v.

Commissioner, 114 T.C. 324, 329-331 (2000); Butler v.

Commissioner, 114 T.C. 276, 287-292 (2000).

       Relief under section 6015(b) or (c) is premised on the

existence of a deficiency or an understatement of tax.      Sec.

6015(b)(1)(B) and (c)(1); Washington v. Commissioner, 120 T.C.

137, 145 (2003); Block v. Commissioner, 120 T.C. 62, 65-66

(2003).    This case does not involve a deficiency or an

understatement of tax and, therefore, relief under section

6015(b) and (c) is not available to petitioner.

II.    Relief Under Section 6015(f)

       Where a spouse does not qualify for relief under section

6015(b) or (c), the IRS may relieve an individual from joint and
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several liability under section 6015(f) if, taking into account

all the facts and circumstances, it is inequitable to hold the

taxpayer liable for any unpaid tax or deficiency.    In the case of

an individual who requests equitable relief under section

6015(f),3 section 6015(e) gives jurisdiction to the Court “to

determine the appropriate relief available to the individual

under this section”.   The Court will apply a de novo scope and

standard of review.    Porter v. Commissioner, 132 T.C. 203 (2009).

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

prescribed guidelines in Rev. Proc. 2003-61, 2003-2 C.B. 296, to

be used in determining whether an individual qualifies for relief

under that section.4   The Court also uses the guidelines in

analyzing cases under section 6015.     See Washington v.

Commissioner, supra.   Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B.

at 297, sets forth seven threshold conditions that must be




     3
      The Tax Relief and Health Care Act of 2006 (TRHCA), Pub. L.
109-432, div. C., sec. 408(a), 120 Stat. 3061, amended sec.
6015(e)(1) to provide that this Court may review the
Commissioner’s denial of relief under sec. 6015 in any case where
an individual requested relief under sec. 6015(f). The amendment
applies “with respect to liability for taxes arising or remaining
unpaid on or after the date of the enactment of this Act.” Id.
sec. 408(c), 120 Stat. 3062. The date of enactment of the TRHCA
was Dec. 20, 2006.
     4
      Rev. Proc. 2003-61, 2003-2 C.B. 296, supersedes Rev. Proc.
2000-15, 2000-1 C.B. 447. The guidelines set forth in Rev. Proc.
2003-61, supra, are effective for requests for relief filed on or
after Nov. 1, 2003, and for requests for relief pending as of
Nov. 1, 2003, for which no preliminary determination letter had
been issued as of Nov. 1, 2003. Id. sec. 7, 2003-2 C.B. at 299.
                                 - 7 -

satisfied before the Commissioner will consider a request for

equitable relief under section 6015(f).

     A.   Threshold Conditions

     Petitioner argues that she should be liable for only 50

percent of the liabilities for the years at issue as provided in

the divorce decree.   The seventh of the seven threshold

conditions for relief, however, requires that the liability from

which the requesting spouse seeks relief be attributable to the

nonrequesting spouse unless one of four exceptions apply, none of

which is pertinent here.5   Petitioner is eligible for relief only

from the part of the liability attributable to Mr. Acoba.   With

respect to that part of the liability, the threshold conditions

have been met.

     B.   “Tier 1”

     Where the threshold conditions have been met, Rev. Proc.

2003-61, sec. 4.02, 2003-2 C.B. at 298, states that relief will

ordinarily be granted with respect to underpayments of tax if all

of the three so-called tier 1 factors are satisfied.   Respondent

determined that petitioner satisfied only one of the tier 1

factors, that the requesting spouse was no longer married to the




     5
      There is an exception for “abuse” before the return was
signed as a result of which the requesting spouse did not
challenge the treatment of items on the return. There is an
allegation of abuse here that does not meet these requirements.
See infra pp. 12-13.
                                - 8 -

nonrequesting spouse when relief was requested.    Id. sec.

4.02(1)(a), 2003-2 C.B. at 298.

     The other two requirements are that:    The requesting spouse,

on the date of signing the joint return, had no knowledge or

reason to know that the nonrequesting spouse would not pay the

income tax liability; and the requesting spouse will suffer

economic hardship if the IRS does not grant relief.    Petitioner

admitted at trial that at the time she signed the returns at

issue she knew that her husband would not pay the liabilities

reported on them.    Petitioner does not satisfy all the tier 1

requirements of Rev. Proc. 2003-61, sec. 4.02.

     C.   “Tier 2”

     Where the requesting spouse has satisfied the threshold

conditions of Rev. Proc. 2003-61, sec. 4.01, but does not qualify

for relief under Rev. Proc. 2003-61, sec. 4.02, a determination

may nevertheless be made under Rev. Proc. 2003-61, sec. 4.03,

2003-2 C.B. at 298, to grant relief.    Rev. Proc. 2003-61, sec.

4.03, contains a nonexhaustive list of factors, so-called tier 2

factors, that the IRS will consider and weigh when determining

whether to grant equitable relief under section 6015(f):      (1)

Marital status, (2) economic hardship, (3) whether the requesting

spouse did not know and had no reason to know that the

nonrequesting spouse would not pay the income tax liability, (4)

the nonrequesting spouse’s legal obligation, (5) significant
                               - 9 -

benefit, (6) compliance with income tax laws, (7) abuse, and (8)

mental or physical health.   Respondent, after considering the

tier 2 factors, found that those not favoring relief outweighed

those favoring relief.   The Court, after examining the same

factors, agrees with respondent.

     Petitioner was divorced from Mr. Acoba when she requested

relief.   This factor weighs in favor of relief.   See Banderas v.

Commissioner, T.C. Memo. 2007-129.

     Economic hardship applies if satisfaction of the tax

liability in whole or in part “will cause an individual taxpayer

to be unable to pay his or her reasonable basic living expenses.”

Sec. 301.6343-1(b)(4)(i), Proced. & Admin. Regs.   The

determination of a reasonable amount for basic living expenses

will be made by the IRS and will vary according to the unique

circumstances of the individual taxpayer.   See Rev. Proc. 2003-

61, sec. 4.03(2)(a)(ii), 2003-2 C.B. at 298 (referring to Rev.

Proc. 2003-61, sec. 4.02(1)(c) (citing section 301.6343-1(b)(4),

Proced. & Admin. Regs.)).

     In the Form 12510, Questionnaire for Requesting Spouse, that

petitioner submitted with her Form 8857, petitioner showed that

her income exceeded her reasonable basic living expenses by $200

per month.   Petitioner testified that she owed $32,500 because of

a civil suit but had approximately $50,000 of equity in her home.

She testified at trial that her financial situation had changed
                               - 10 -

for the worse since she filed for relief, but she offered no

other evidence on the issue.   On the basis of the evidence that

was presented, the Court finds that petitioner would not suffer

economic hardship, as that term is defined in section 301.6343-

1(b)(4)(i), Proced. & Admin. Regs., if she were required to pay

the joint tax liability.   The Court finds that this factor weighs

against relief.

     Another tier 2 factor to be considered is whether the

requesting spouse did not know or had no reason to know that the

nonrequesting spouse would not pay the liability.   Rev. Proc.

2003-61, sec. 4.03(2)(a)(iii)(A), 2003-2 C.B. at 298.   In the

case of a properly reported but unpaid liability, the relevant

knowledge is whether the taxpayer knew or had reason to know when

the return was signed that the tax would not be paid.   See

Washington v. Commissioner, 120 T.C. at 151; see also Feldman v.

Commissioner, T.C. Memo. 2003-201, affd. 152 Fed. Appx. 622 (9th

Cir. 2005).   The Court has stated that “a reasonable belief that

taxes would be paid must at minimum incorporate a belief that

funds would be on hand within a reasonably prompt period of

time.”   See Banderas v. Commissioner, supra.   But see id. n.6.

      The Court has found against petitioner on this factor.

Therefore, this factor weighs against relief.   See Beatty v.

Commissioner, T.C. Memo. 2007-167 (applying Rev. Proc. 2003-61,

supra, and finding that knowledge or reason to know weighs
                               - 11 -

against relief); Fox v. Commissioner, T.C. Memo. 2006-22 (same);

cf. Levy v. Commissioner, T.C. Memo. 2005-92 (applying Rev. Proc.

2000-15, 2000-1 C.B. 447, and stating that lack of knowledge

weighs in favor of relief while knowledge or reason to know

weighs against relief).

       Where the nonrequesting spouse has a legal obligation to pay

the outstanding income tax liability pursuant to a divorce decree

or an agreement, this factor weighs in favor of the requesting

spouse.    Rev. Proc. 2003-61, sec. 4.03(2)(a)(iv), 2003 C.B. at

298.    There was no agreement which imposed a legal obligation on

Mr. Acoba to pay all the outstanding income tax liabilities. This

is a neutral factor.

       Where the requesting spouse significantly benefited (beyond

normal support) from the unpaid income tax liability, this is a

factor against granting equitable relief.    Rev. Proc. 2003-61,

sec. 4.03(a)(v), 2003-2 C.B. at 299.    The facts and circumstances

here show and the parties agree that petitioner did not receive

any significant benefits, beyond normal support, from the failure

to pay the taxes.    This factor weighs in favor of relief.     See

Ewing v. Commissioner, 122 T.C. 32, 46 (2004), vacated 439 F.3d

1009 (9th Cir. 2006).

       If petitioner made a good faith effort to comply with income

tax laws following the years to which the request relates, this

factor may favor relief.    Petitioner failed to file Federal
                                - 12 -

income tax returns for 2002 and 2003.    She testified at one point

that upon the advice of unnamed IRS employees she did not file

her returns.   Her Form 12510 and earlier testimony, however, were

to the effect that with respect to the 2002 return she had a

refund due of $3,800 “that I was withholding until the liability

was separated.”   She testified that “if that was wrong, I should

have been told way before Appeals”.

     The Court concludes that petitioner did not make a good

faith effort to comply with the income tax laws, and this factor

weighs against relief.

     Another tier 2 factor to be considered is whether the

requesting spouse was abused by the nonrequesting spouse.    A

history of abuse may, according to Rev. Proc. 2003-61, sec.

4.03(2)(b)(i), 2003-2 C.B. at 299, mitigate a requesting spouse’s

knowledge or reason to know.6    The judgment of divorce contained

an order restraining and enjoining Mr. Acoba from “assaulting,

harassing, molesting or disturbing the peace of” petitioner or

their minor child.   But there is no evidence to indicate whether

the restraining order was the result of historical abuse or was a

prophylactic measure taken by the court as an outcome of the

divorce.




     6
      Under Rev. Proc. 2000-15, supra, abuse was a separate
factor to be considered by itself, not merely a mitigating
factor. Id. sec. 4.03(1)(c), 2000-1 C.B. at 449; see Nihiser v.
Commissioner, T.C. Memo. 2008-135.
                              - 13 -

     In part 1, question 11, of Form 12510, the inquiry about

abuse during the years at issue, petitioner stated that the

nature and extent of the abuse was “verbal, threats”.   Petitioner

testified at trial that “there was physical abuse and there was

mental abuse during those last” 2 years of her marriage.

Petitioner provided, however, no further evidence on the issue.

     Because petitioner had, by her own admission, actual

knowledge that the taxes would not be paid, whether she had

“reason to know” is not at issue.   The record does not reveal any

nexus between her actual knowledge and any verbal or physical

abuse that may have been inflicted upon her.   The Court finds the

abuse factor will not weigh for or against equitable relief.

     There is no evidence that petitioner has any mental or

physical health problems, and this factor will not weigh against

equitable relief.   See Rev. Proc. 2003-61, sec. 4.03(2)(b)(ii),

2003-2 C.B. at 299.

                            Conclusion

     There are three factors against and two factors in favor of

relief.   The Court’s analysis of these factors, however, is not

mechanical.   Nevertheless, after weighing all the factors, the

Court concludes that petitioner’s intimate involvement in the

financial matters of the marriage and her knowledge of the

protracted financial decline of the marriage should have put her

on notice that filing a joint Federal income tax return was, for

her, a poor choice.   The Court sustains respondent’s
                             - 14 -

determination that petitioner is not entitled to relief from

liability under section 6015(f).

     To reflect the foregoing,




                                        Decision will be entered

                                   for respondent.
