                  T.C. Summary Opinion 2007-145



                     UNITED STATES TAX COURT



               ELSA ESTELLE HOPKINS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7196-06S.               Filed August 21, 2007.



     Elsa Estelle Hopkins, pro se.

     Margaret Burow and Michael A. Skeen, for respondent.



     PANUTHOS, Chief Special Trial Judge:   This case was heard

pursuant to the provisions of section 7463 of the Internal

Revenue Code in effect when the petition was filed.   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,
                                - 2 -

and all Rule references are to the Tax Court Rules of Practice

and Procedure.

     This proceeding arises from a petition for judicial review

filed in response to a Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330 (notice of

determination) for unpaid Federal income tax for tax years 1994,

1995, and 1996, issued to petitioner on March 16, 2006.1     After a

concession,2 the issues for decision are:    (1) Whether petitioner

is entitled to relief under section 6015(f) for tax years 1995

and 1996, and (2) whether respondent abused his discretion in

sustaining the filing of a notice of Federal tax lien against

petitioner for those years.

                              Background

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.     At the time the petition

was filed, petitioner resided in San Jose, California.

     Petitioner married Jack Hopkins on March 15, 1980.      While

they were together, petitioner and Mr. Hopkins had two children,

who were 18 and 25 years old at the time of trial.      During the


     1
       At trial, respondent moved to dismiss for mootness and to
strike as to tax year 1994 because payment in full before the
filing of the petition rendered the proposed lien unnecessary as
to that year. Respondent’s motion was granted, and tax year 1994
is not in issue.
     2
         Petitioner concedes the amounts of tax owed.
                               - 3 -

years in issue, petitioner worked as an engineer technician.

Petitioner separated from Mr. Hopkins in December 1996, and they

remained separated at the time of trial.

     In March 1997, petitioner and Mr. Hopkins’s home was

foreclosed upon as the result of a late mortgage payment.     Mr.

Hopkins withdrew money from his section 401(k) account early in

1997.

     Petitioner and Mr. Hopkins filed joint Federal income tax

returns for tax years 1995 and 1996 but did not pay all the tax

reported thereon.   The unpaid tax liabilities resulted from

underwithholding from wages attributable to both petitioner and

Mr. Hopkins.   Respondent accepted the returns as filed and

assessed tax as reported by petitioner and Mr. Hopkins.

     Respondent issued to petitioner a Final Notice of Intent to

Levy and Notice of Your Right to a Hearing Under IRC 6330 (notice

of intent to levy) dated February 7, 2004, for tax years 1994 and

1995.   Respondent filed a notice of Federal tax lien against

petitioner and Mr. Hopkins on April 19, 2004, for tax years 1994,

1995, and 1996 and issued them a Notice of Federal Tax Lien

Filing and Your Right to a Hearing Under IRC 6320 on April 22,

2004.

     On May 10, 2004, petitioner submitted a Form 12153, Request

for a Collection Due Process Hearing, and attached a Form 8857,
                               - 4 -

Request for Innocent Spouse Relief, with attachments.3

Petitioner included a letter with her Forms 12153 and 8857,

stating that she was “willing to take responsibility” for her

share of the amount of tax due.

     Petitioner’s request for a collection due process hearing

and request for section 6015 relief were assigned to an Appeals

officer.   In his initial letter to petitioner, the Appeals

officer requested that she provide him with all information she

wanted him to consider in making his determination.   The Appeals

officer also requested that if petitioner wanted him to consider

an alternative collection method, she complete a Form 433-A,

Collection Information Statement for Wage Earners and Self-

Employed Individuals.   Petitioner requested additional time to

gather the requested information, and she was given a deadline of

January 4, 2006, to respond.   Despite being granted additional

time, petitioner did not provide any additional information to

respondent during the administrative hearing.   Petitioner did not

propose any collection alternatives, nor did she challenge the


     3
       Petitioner’s Form 12153, Request for a Collection Due
Process Hearing, was filed timely as to the notice of Federal tax
lien but not as to the notice of intent to levy. Petitioner had
an equivalent hearing under sec. 301.6330-1(i), Proced. & Admin.
Regs., for the proposed levy action for tax years 1994 and 1995,
but respondent did not issue a notice of determination. At
trial, respondent moved to dismiss petitioner’s request for
judicial review of the levy action for lack of jurisdiction since
petitioner received an equivalent hearing, which is not subject
to judicial review. Because we granted respondent’s motion, the
levy action for tax years 1994 and 1995 is not at issue.
                                  - 5 -

underlying tax liabilities.     After the hearing was concluded,

respondent issued the notice of determination sustaining the lien

filing and denying petitioner’s request for section 6015 relief.

                              Discussion

I.   Notice of Federal Tax Lien

      Section 6321 imposes a lien in favor of the United States on

all property and rights to property of a person when a demand for

the payment of the person’s liability for taxes has been made and

the person fails to pay those taxes.       Such a lien arises at the

time an assessment is made.     Sec. 6322.   Section 6323(a) requires

the Secretary to file a notice of Federal tax lien if the lien is

to be valid against any purchaser, holder of a security interest,

mechanic’s lienor, or judgment lien creditor.       Lindsay v.

Commissioner, T.C. Memo. 2001-285, affd. 56 Fed. Appx. 800 (9th

Cir. 2003).

      Section 6320 provides that a taxpayer shall be notified in

writing by the Secretary of the filing of a notice of Federal tax

lien and provided with an opportunity for an administrative

hearing.   An administrative hearing under section 6320 is

conducted in accordance with the procedural requirements of

section 6330.   Sec. 6320(c).    At the administrative hearing, a

taxpayer is entitled to raise any relevant issue relating to the

unpaid tax, including a spousal defense or collection

alternatives such as an offer-in-compromise or an installment
                                - 6 -

agreement.    Sec. 6330(b) and (c)(2)(A); sec. 301.6320-1(e)(1),

Proced. & Admin. Regs.    A taxpayer also may challenge the

existence or amount of the underlying tax liability, including a

liability reported on the taxpayer’s original return, if the

taxpayer “did not receive any statutory notice of deficiency for

such tax liability or did not otherwise have an opportunity to

dispute such tax liability.”    Sec. 6330(c)(2)(B); see also Urbano

v. Commissioner, 122 T.C. 384, 389-390 (2004); Montgomery v.

Commissioner, 122 T.C. 1, 9-10 (2004).

     Section 6330(d) provides for judicial review of the

administrative determination in the Tax Court or a Federal

District Court, as may be appropriate.    Where the underlying tax

liability is properly at issue, the Court will review the

Commissioner’s administrative determination de novo.    Where the

validity of the underlying tax liability is not properly at

issue, however, the Court will review the determination for abuse

of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000);

Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).

     Because petitioner does not seek to challenge the underlying

tax liability, we review respondent’s determination for abuse of

discretion.    See Lunsford v. Commissioner, 117 T.C. 183, 185

(2001); Sego v. Commissioner, supra at 610; Goza v. Commissioner,

supra at 181-182.   This standard requires the Court to decide

whether respondent’s determination was arbitrary, capricious, or
                               - 7 -

without sound basis in fact or law.    Woodral v. Commissioner, 112

T.C. 19, 23 (1999); Keller v. Commissioner, T.C. Memo. 2006-166;

Fowler v. Commissioner, T.C. Memo. 2004-163.

      Petitioner did not propose any collection alternatives to

the Appeals officer, did not provide requested documentation to

him, and failed to state in her Form 12153 why she did not agree

with the notice of Federal tax lien.   The sole issue that

petitioner raised was her entitlement to relief under section

6015(f).

II.   Petitioner’s Request for Relief Under Section 6015(f)

      Generally, married taxpayers may elect to file a joint

Federal income tax return.   Sec. 6013(a).   Each spouse filing a

joint return is jointly and severally liable for the accuracy of

the return and the entire tax due for that year.   Sec.

6013(d)(3).   A spouse who has made a joint return may, however,

seek relief from joint and several liability by following

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

      In cases of underpayment, section 6015(f) applies.4    Section

6015(f) provides, in part, that a taxpayer may be relieved from

joint and several liability if it is determined that, taking into

account all the facts and circumstances, it is inequitable to


      4
       Sec. 6015(b) and (c) applies only when there is an
understatement of tax or a deficiency in tax. See Hopkins v.
Commissioner, 121 T.C. 73, 88 (2003). Because there is no
understatement of tax or deficiency here, these subsections do
not apply.
                                  - 8 -

hold the taxpayer liable for the unpaid tax and relief is not

available under section 6015(b) or (c).

     A taxpayer generally may petition this Court for review of

the Commissioner’s determination denying relief under section

6015(f).    Sec. 6015(e)(1)(A).   To prevail, the taxpayer must

prove that the Commissioner’s denial of relief under section

6015(f) was an abuse of discretion.       Fernandez v. Commissioner,

114 T.C. 324, 332 (2000); Butler v. Commissioner, 114 T.C. 276,

287-292 (2000).    Petitioner bears the burden of proving that

respondent’s denial of equitable relief under section 6015(f) was

an abuse of discretion.    See Rule 142(a); Alt v. Commissioner,

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

2004).    Petitioner must demonstrate that respondent exercised his

discretion arbitrarily, capriciously, or without sound basis in

fact.    See Jonson v. Commissioner, 118 T.C. 106, 125 (2002),

affd. 353 F.3d 1181 (10th Cir. 2003).

        Respondent argues that in determining whether petitioner is

entitled to relief under section 6015(f), the Court should

consider only respondent’s administrative record with respect to

petitioner’s taxable years at issue.5      We generally consider only


     5
       After trial, the parties submitted a supplemental
stipulation of facts, with attached exhibits, including copies of
police reports. Respondent reserved objections to the additional
exhibits, on the grounds that the information was not presented
to respondent’s Appeals officer and was not part of the
administrative record. We conclude that petitioner raised the
                                                   (continued...)
                                 - 9 -

arguments, issues, and other matters that were raised at the

administrative hearing or otherwise brought to the attention of

the Office of Appeals.     Magana v. Commissioner, 118 T.C. 488,

493-494 (2002); sec. 301.6320-1(f)(2), Q&A-F5, Proced. & Admin.

Regs.     As stated supra note 5, petitioner raised at the

administrative hearing the same issues and arguments supported by

the exhibits submitted after trial.      We do not further address

respondent’s argument that our review is limited to the

administrative record.

     A.     Eligibility for Equitable Relief

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

prescribed guidelines for determining whether a spouse qualifies

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

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

Proc. 2000-15, 2000-1 C.B. 447.     The requesting spouse must

satisfy seven conditions (threshold conditions) before the

Commissioner will consider a request for relief under section

6015(f).     Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. at 297.      The



     5
      (...continued)
issue of relief under sec. 6015 at the administrative hearing,
and more specifically, she discussed the police reports with
regard to her sec. 6015 claim for relief with the Appeals officer
and informed him of the reasons she did not pay the tax
liabilities for the years in issue. See Magana v. Commissioner,
118 T.C. 488, 493-494 (2002). On the basis of the issues
petitioner raised in her administrative hearing, respondent’s
objections are overruled, and we consider the additional exhibits
in our review of respondent’s determination.
                                - 10 -

threshold conditions of this section are stated in the

conjunctive, and each condition must be satisfied for a taxpayer

to be eligible to submit a request for equitable relief under

section 6015(f).    Id.

     Respondent does not dispute that petitioner satisfies the

first six threshold conditions.     The seventh threshold condition

requires that the tax liability from which the requesting spouse

seeks relief must be attributable to an item of income of the

nonrequesting spouse, unless one of four stated exceptions

applies.    Rev. Proc. 2003-61, sec. 4.01(7).   A portion of the

liability for each of the years at issue is attributable to

petitioner.    Because none of the exceptions applies, petitioner

is not entitled to relief with respect to the portion of each

liability that is attributable to her income.

     Respondent agrees that, to the extent that petitioner is

seeking innocent spouse relief only for the portions of the

liabilities attributable to Mr. Hopkins, she meets the seven

threshold conditions.     We accept respondent’s concession that

petitioner has met the seven threshold requirements and therefore

consider whether she is entitled to relief as to Mr. Hopkins’s

portion of each liability.

     B.    Circumstances Under Which the Commissioner Ordinarily
           Will Grant Relief

     Rev. Proc. 2003-61, sec. 4.02(1), 2003-2 C.B. at 298,

provides that equitable relief will ordinarily be granted as to
                             - 11 -

unpaid liabilities if, in addition to the seven threshold

conditions, each of the following conditions is met:   (1) The

requesting spouse is no longer married to, is legally separated

from, or has not been a member of the same household as the

nonrequesting spouse at any time during the 12-month period

ending on the date of the request for relief; (2) it was

reasonable for the requesting spouse to believe that the

nonrequesting spouse would pay the tax liability; and (3) the

requesting spouse will suffer economic hardship if relief is not

granted.

     Although petitioner has been physically separated from Mr.

Hopkins for more than 1 year, at the time the returns were filed

petitioner knew that the liabilities were not paid.    Petitioner

acknowledged at trial that she did not ask Mr. Hopkins whether he

had made any payments on the amounts reported as due and owing.

She assumed that if Mr. Hopkins had not paid some or all of the

tax liabilities, then any amounts owed would be paid from either

the balance of the proceeds from foreclosure on their home or

from a disbursement from Mr. Hopkins’s section 401(k) account.

Petitioner did not offer any evidence demonstrating that it would

have been reasonable for her to believe that Mr. Hopkins paid the

reported tax liabilities for the years at issue.

     Moreover, petitioner has failed to prove she would be unable

to pay her reasonable basic living expenses if relief were
                              - 12 -

denied.   See sec. 301.6343-1(b)(4)(i), Proced. & Admin. Regs.

Petitioner did not provide the requested Form 433-A to the

Appeals officer, but at trial she provided a monthly financial

statement that she had prepared herself.   Her financial statement

reflects that after paying all of her expenses, she would have

money left over at the end of the month.   We therefore conclude

that petitioner does not qualify for relief under Rev. Proc.

2003-61, sec. 4.02.

     C.   Factors for Determining Whether To Grant Equitable
          Relief

     Where the requesting spouse satisfies the seven threshold

conditions set forth in Rev. Proc. 2003-61, sec. 4.01, but does

not qualify for relief under Rev. Proc. 2003-61, sec. 4.02, he or

she may still be granted relief if, upon taking into account all

the facts and circumstances, it would be inequitable to hold the

requesting spouse liable for all or part of the unpaid

deficiency.   Rev. Proc. 2003-61, sec. 4.03, 2003-2 C.B. at 298.

Rev. Proc. 2003-61, sec. 4.03(2) sets forth a nonexclusive list

of factors that the Commissioner will consider in determining

whether, taking into account all the facts and circumstances, it

is inequitable to hold the requesting spouse liable for all or

part of the liability.   No single factor will determine whether

equitable relief will be granted in any particular case, and the

Commissioner will consider and weigh all relevant factors,
                                  - 13 -

regardless of whether the factor is listed in Rev. Proc. 2003-61,

sec. 4.03.

     1.      Marital status.   This factor weighs in favor of relief

if the requesting spouse and the nonrequesting spouse are

divorced, legally separated, or living apart.        Petitioner and Mr.

Hopkins are married but have lived separately since December

1996.     This factor weighs in favor of granting relief.

     2.      Economic hardship.   A taxpayer might experience

economic hardship if he or she is unable to pay basic reasonable

living expenses.      Sec. 301.6343-1(b)(4)(i), Proced. & Admin.

Regs.     It is the taxpayer’s burden to show both that the expenses

qualify and that the expenses are reasonable.         Monsour v.

Commissioner, T.C. Memo. 2004-190.         Petitioner has provided no

evidence that she will be unable to pay basic living expenses if

she is held liable for the deficiency.        This factor weighs

against granting petitioner relief.

        3.   Knowledge or reason to know.    In a situation where a

liability has not been paid and the requesting spouse did not

know or have reason to know that the nonrequesting spouse would

not pay the liability, this factor would weigh in favor of

granting relief.      Rev. Proc. 2003-61, sec. 4.03(2)(a)(iii).     The

liabilities reported on the returns for tax years 1995 and 1996

resulted from both petitioner’s and Mr. Hopkins’s incomes.         At

the time the returns were filed, petitioner knew that they could
                                 - 14 -

not pay the amounts due.    Thus, we find that petitioner knew or

had reason to know that the reported liabilities would be unpaid

at the time the returns were filed.       This factor weighs against

granting petitioner relief.

     4.   Nonrequesting spouse’s legal obligation.     Mr. Hopkins

did not have a legal obligation pursuant to a divorce decree or

agreement.    This factor is neutral.

     5.   Significant benefit.    A significant benefit is a

benefit in excess of normal support.      Sec. 1.6015-2(d), Income

Tax Regs.    It is unclear how much petitioner benefited from the

unpaid liabilities, but the facts and circumstances suggest that

petitioner did not receive any significant benefit.      This factor

is neutral.

     6.   Compliance with income tax laws.     The question is

whether the taxpayer has made a good faith effort to comply with

tax laws in tax years after the years for which relief is

requested.    Respondent reviewed petitioner’s account and

determined that petitioner was in compliance for tax years 1997

through 2005.    This factor weighs in favor of granting relief.

     7.   Abuse or poor mental or physical health.     In addition

to the foregoing factors, Rev. Proc. 2003-61, sec. 4.03(2)(b)

lists factors that, if present, will weigh in favor of equitable

relief, but, if not present, will not weigh against relief.      The

factors are:    (1) Whether the nonrequesting spouse abused the
                               - 15 -

requesting spouse, and (2) whether the requesting spouse was in

poor mental or physical health.   A history of abuse by the

nonrequesting spouse may mitigate the negative effect of a

requesting spouse’s knowledge or reason to know.   Rev. Proc.

2003-61, sec. 4.03(2)(b)(i).

      Petitioner alleges that Mr. Hopkins was verbally and

mentally abusive.   Petitioner submitted copies of two police

reports, dated April 25 and November 14, 1995, which document

domestic disputes between petitioner and Mr. Hopkins.    The

reports describe domestic arguments and a mutual altercation.

The Court is sympathetic to petitioner’s situation, but on the

record, we cannot conclude that respondent acted arbitrarily,

capriciously, or without sound basis in fact or law when

respondent determined that the alleged abuse did not mitigate the

negative effect of petitioner’s knowledge or reason to know.        See

id.   Additionally, petitioner did not allege any mental or

physical health problems.   The absence of these factors will not

weigh against equitable relief.   See id. sec. 4.03(2)(b).     We

therefore agree with respondent’s determination that these

factors are neutral.

      On the basis of our examination of the facts and

circumstances, including the factors set forth in Rev. Proc.

2003-61, sec. 4.03, we conclude that respondent did not abuse his

discretion in denying petitioner’s request for equitable relief
                              - 16 -

under section 6015(f).   Because petitioner has raised no other

issues, we conclude that respondent did not abuse his discretion

in sustaining the filing of the notice of Federal tax lien.


                                         Decision will be entered

                                    for respondent.
