                    T.C. Summary Opinion 2005-161



                       UNITED STATES TAX COURT



              RHEA IONE SUPPLEE NEGOESCU, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11500-03S.            Filed November 8, 2005.


     Rhea Ione Supplee Negoescu, pro se.

     Julie L. Payne, for respondent.



     HOLMES, Judge: Rhea Negoescu and her ex-husband had constant

problems with the IRS while they were married.      Although they

filed joint tax returns each year, they usually did not have

enough money to pay the tax due.    Negoescu now asks for relief

from the still unpaid tax liabilities for two of those years,

1991 and 1992.1


     1
         The case was tried as a small case under Internal Revenue
                                                     (continued...)
                                - 2 -

                              Background

     Rhea Negoescu married William Supplee in 1982, and they had

two children.   For much of their marriage--including 1991 and

1992, the years at issue here--he owned Red Hawk Express, a small

trucking company in Alaska.    Supplee drove the truck and kept it

in good repair, and Negoescu kept the books.   She collected,

categorized, and recorded all the business receipts to provide to

their accountant.   The two shared the joint checking account used

for Red Hawk Express; Negoescu had signature authority for the

account, kept the check register, and regularly balanced it.

     Negoescu also had her own part-time business, Du-Rite

Cleaning, and worked as an admissions clerk at a hospital in

Fairbanks.   She deposited her paychecks, her business receipts,

and the checks she received for her children from the Alaska

Permanent Fund (a unique state institution that provides annual

dividends to Alaskans from oil and gas royalties paid to the

State) into an individual checking account.    Only she had access

to the check register for this account; only she knew its balance

at any time.

     The couple filed joint tax returns for both 1991 and 1992,

which showed taxes due of about $4,000 for both years.    When


     1
      (...continued)
Code sections 6330 and 7463(f). (All section citations are to
the Code as currently in effect.) Trial as a small case means
that this decision is not reviewable by any other court, and this
opinion should not be cited as precedent.
                                - 3 -

Negoescu signed the return, she knew that it showed taxes due;

she also knew that she and her husband did not have enough money

to pay.

     The Supplees had many problems with the IRS all during their

marriage, and these problems frequently caused fights between

them.   Negoescu was aware since 1984 that her husband was not

filing their returns on time.    She was also aware that he was not

paying their tax bills as he should.    The cause of this problem

was that he kept underpaying the estimated taxes from the

trucking business--which then led the couple to owe money when

their taxes came due each April.    The accumulated interest and

additions to tax for underpayment and late payment quickly added

up to a considerable burden.    We believe Negoescu when she

testified that he got angry when she asked him about what was

happening with the IRS.   We also believe her testimony that the

tension this caused contributed to their divorce in April 1997.

     By the time of that divorce, their total joint tax debt

(including their 1991 and 1992 taxes) was about $45,000, and in

their divorce decree Supplee promised to pay it all.    And he did

pay quite a bit but, for whatever reason, never managed to pay it

off completely.   In July 2001, the Commissioner sent Negoescu a

notice of intent to levy--a form to tell her that the IRS was

about to start seizing her property to pay the approximately

$23,000 in unpaid 1991 and 1992 taxes.    This alarmed her, and so
                               - 4 -

on August 29, 2001 she mailed in a request for a collection due

process (or CDP) hearing--and mailed it to the correct IRS

service center.   At nearly the same time, though, she also sent

the IRS a Form 8857, used to request innocent spouse relief.      It

seems that she was being cautious--a taxpayer in her position can

ask for innocent spouse relief at the CDP hearing, and doesn’t

need to ask for innocent spouse relief separately.

     And here her troubles began, because she seems to have

mailed her Form 8857 to the same IRS service center to which she

had mailed her request for a CDP hearing--instead of handing it

to the Appeals officer at the hearing or mailing it to the

special address for innocent spouse relief requests, as the

instructions for the Form 8857 say she should have done.    She

also didn’t mention her wish for innocent spouse relief on the

form that she used to ask for a CDP hearing.   Her Form 8857 got

lost in the IRS bureaucracy, with an incorrect entry in a

computer database showing that the request was being considered

by the IRS’s Compliance Division when it really wasn’t.    Not

until October 2002--more than a year after she sent it in--did

the IRS Appeals officer in Alaska who was looking at Negoescu’s

request for a CDP hearing discover the mistake.   That Appeals

officer then quickly sent the Form 8857 to the section of the IRS

that reviews and decides innocent spouse requests--the Cincinnati

Centralized Innocent Spouse Operation (which despite its name is
                               - 5 -

actually in Kentucky).   So at the end of 2002, a year-and-a-half

after sending in her request for a CDP hearing and her Form 8857,

Negoescu had received decisions on neither.

     The Appeals officer who discovered this snafu quickly tried

to set things right, sending a letter to Negoescu in January 2003

asking her to complete a more detailed Innocent Spouse

Questionnaire and also asking her to call to set up a CDP

hearing.   Negoescu did not respond.    An IRS employee in Kentucky

was also trying to reach her that month, making phone calls to

her in Alaska to ask for more information, but was never able to

reach her.   Negoescu claimed that the problem was her decision to

drop her P.O. Box address (the one she had used as her return

address on the requests for a CDP hearing and innocent spouse

relief), followed by a period when her mail wasn’t being

forwarded to her residential address.

     Getting no response, the Appeals officer never held a CDP

hearing.   In April 2003, she finally denied Negoescu’s request

for innocent spouse relief, and on the same day mailed out a

letter sustaining the Commissioner’s decision to levy on

Negoescu’s property.   She noted that

           The taxpayer was asked to answer questions
           and provide information to support her
           innocent spouse claim; she failed to respond.
           The taxpayer failed to respond to letters
           sent to her regarding the innocent spouse
           claim or to a letter offering her a
           collection due process hearing in Appeals.
                                 - 6 -

            The taxpayer presented no other relevant
            information and did not provide any
            collection alternative. No financial
            information was provided.

       Negoescu filed her petition seeking review in July 2003, and

did not fill out the IRS questionnaire until October.    She also

provided other evidence at the trial, which was held in Alaska,

where she resided when she filed her petition.

                              Discussion

       Married couples may choose to file their Federal tax returns

jointly.    Sec. 6013(a).   If they do, both are responsible for the

accuracy of the return and both are liable for the entire tax

due.    Sec. 6013(d)(3); Butler v. Commissioner, 114 T.C. 276, 282

(2000).

       In some cases, however, section 6015 can provide relief from

that liability.    Under section 6015(b), a spouse may seek either

full or partial relief; under section 6015(c), the tax liability

can be split between two former or separated spouses.    Both these

provisions, however, require that the liability in question arise

from a “deficiency,” which means that a couple underreported

their taxes.    In this case, the Commissioner agrees that the

Supplees correctly filled out their tax returns for both 1991 and

1992, so there is no deficiency.

       That means that Negoescu is in what’s called an

“underpayment situation”--there’s no dispute over how much tax

she and her ex-husband owe, only about who has to pay it.    When
                               - 7 -

there’s an underpayment, the Court has to look at a different

part of the tax law, section 6015(f).   This section lets one

spouse out of having to pay taxes if “it is inequitable to hold

the individual liable for any unpaid tax.”    Sec. 6015(f).   The

Commissioner writes a guide, called a “revenue procedure,” that

tells IRS employees what to look for in deciding questions of

“inequitability”.   Washington v. Commissioner, 120 T.C. 137, 147-

152 (2003); Jonson v. Commissioner, 118 T.C. 106, 125-126 (2002),

affd. 353 F.3d 118 (10th Cir. 2003). Revenue Procedure 2000-15

was the procedure in effect when the Commissioner issued his

final notice of determination to Negoescu, and that’s the revenue

procedure that we look at in reviewing what he did.    Rev. Proc.

2000-15, 2000-1 C.B. 447.

     We begin by noting that Negoescu has the burden of proof,

Alt v. Commissioner, 119 T.C. 306, 311 (2002), affd. 101 Fed.

Appx. 34 (6th Cir. 2004).   This means that she must show that the

Commissioner abused his discretion--in other words, that he was

arbitrary, capricious, or acting without sound basis in fact when

he denied her relief.   Jonson, 118 T.C. at 125; Butler v.

Commissioner, 114 T.C. 276, 291-292 (2000).

     The revenue procedure begins with a list of conditions that

a person trying to win innocent spouse relief must show.      These

include proof that she filed a joint return, did not qualify for

relief under section 6015(b) or (c), and did not fraudulently
                                 - 8 -

transfer property to anyone to avoid paying taxes.    Rev. Proc.

2000-15, sec. 4.01, 2000-1 C.B. at 448.    The Commissioner admits

that Negoescu meets all these conditions.

     The revenue procedure then provides for a safe harbor; if

Negoescu met these conditions, she would ordinarily get relief.

Rev. Proc. 2000-15, sec. 4.02.    To qualify, Negoescu must show

that (a) she is either separated or divorced, (b) she did not

know when she signed the returns that the tax liabilities would

not be paid, and (c) she would suffer economic hardship if she

doesn’t get relief.   Id.   Negoescu did show that she and Supplee

are divorced; however, we find that she knew that the taxes would

not be paid.   Since she was keeping the books of both Red Hawk

Express and her own checking account, she knew that she and

Supplee did not have the money to pay the taxes due.    Negoescu’s

knowledge of the delinquent tax payments means she fails to meet

the safe harbor.

     This leaves a balancing test--eight factors to consider

before deciding if relief would be “equitable.”    Rev. Proc. 2000-

15, sec. 4.03.   These factors are not the only ones which the

Commissioner and we can look at, but they are where we start.

Id.; Ewing v. Commissioner, 122 T.C. 32, 47-48 (2004).

     We can summarize those factors in a table:
                                - 9 -

  Weighs for Relief            Neutral          Weighs against
                                                    Relief
Separated or             Still married                N/A
divorced
Abuse present            No abuse present             N/A
         N/A             No significant      Significant benefit
                         benefit from the
                         deficiency or
                         underpayment
         N/A             Later compliance    Lack of later
                         with Federal tax    compliance with
                         laws                Federal tax laws
No knowledge of                  N/A         Knowledge
deficiency or
underpayment
Economic hardship if             N/A         No economic hardship
taxes had to be paid
Tax liability                    N/A         Liability
attributable to non-                         attributable to
requesting spouse                            petitioner
Non-requesting           No divorce decree   Petitioner
spouse responsible                           responsible for
for paying tax under                         paying tax under
divorce decree                               divorce decree


     The parties agree on two of the factors (those in italics),

and we now turn to the rest:

     Abuse:    Negoescu maintains that Supplee emotionally abused

her throughout the course of their marriage; however, she did not

offer any evidence in support of her argument other than her own

testimony.    And we find that the Commissioner was not clearly

wrong in finding that her marital situation--though full of

heated arguments over money--did not sink to the level of abuse.
                                 - 10 -

This factor is neutral.

       Later compliance:    Negoescu and Supplee did not make full

and timely payment for their 1993 tax bill.       Though Negoescu did

have money withheld from her job at the hospital, and though she

also paid an additional $833 with the return, she was still short

$747.    The full amount, including interest and penalties, was not

paid until 1995, when her expected refund for 1994 was credited

to the balance due.    This means that she has not consistently

complied with the Federal tax laws by making timely payments.

This factor weighs against her.

       Knowledge:   As we mentioned above, Negoescu knew when she

signed the 1991 and 1992 tax returns that the liabilities shown

on those returns would not be paid.       This factor also weighs

against her.    Furthermore, the revenue procedure states, “This is

an extremely strong factor weighing against relief,” making this

factor more important than the others.       Rev. Proc. 2000-15, sec.

4.03(2)(b), 2000-1 C.B. 447.

       Economic Hardship:    The factor forces us to ask whether

Negoescu would be able to pay her reasonable basic living

expenses if she does not receive relief.       Alt, 119 T.C. at 314-

315.    While she claims that her monthly expenses are more than

her monthly income, she did not show any documentary evidence

that this is true.    She testified that her monthly wages from her

job at the hospital were about $2400 a month.       She also received
                              - 11 -

$400 a month in rent from some real property she owned, about

$100 a month from the Alaska Permanent Fund, and about $300 a

month in child support from her husband.

     She testified that her monthly expenses include rent and

utilities of about $960 for her current residence, health

insurance of $200, clothing for her and her daughter of about

$200, and college tuition of $100.     She contributes about $230

per month toward her pension and union dues.     Her current pension

balance is about $1500 and she has another $100 in a savings

account.   While she does own some real property, we do not know

whether it is worth enough to pay the outstanding tax liability

if sold or refinanced.

     Based on her testimony, her total monthly income is about

$3200 a month, while her expenses are about $1700 a month.

Although these numbers are a bit different from those in the

Innocent Spouse Questionnaire that she finally filled out in

October 2003, we cannot say she’s proven that she would suffer

economic hardship if she were not relieved of liability, and we

have to conclude that this factor weighs against relief.

     Liability attribution:   While Negoescu insists that more

than enough money was withheld from her paychecks to pay the tax

on her wages from the hospital and her earnings from Du-Rite

Cleaning, she did also play an active role in Red Hawk Express.

The unpaid tax liabilities for 1991 and 1992 came from that
                               - 12 -

business, and so liability for those taxes is attributable to her

as well as to Supplee.    This factor also weighs against relief.

     Payment Responsibility:    According to the divorce agreement,

Supplee is responsible for the payment of the disputed

liabilities.    This is a factor weighing in her favor.   The table

of conditions now looks like this:

  Weighs for Relief            Neutral          Weighs against
                                                    Relief
Separated or
divorced
                         No abuse present
                         No significant
                         benefit
                                             Lack of later
                                             compliance with
                                             Federal tax laws
                                             Knowledge
                                             No economic hardship
                                             Liability
                                             attributable to
                                             petitioner
Non-requesting
spouse responsible
for paying tax under
divorce decree


     Thus, Negoescu has only two factors weighing toward relief,

four weighing against relief, and two that are either neutral or

inconclusive.   These factors are not all equally weighty--

Negoescu’s knowledge that the tax liabilities would not be paid,
                              - 13 -

is an “extremely strong factor weighing against relief.”

     The revenue procedure does go on to say: “[n]onetheless,

when the factors in favor of equitable relief are unusually

strong, it may be appropriate to grant relief under section

6015(f) in limited situations where a requesting spouse knew or

had reason to know that the liability would not be paid.”   Rev.

Proc. 2000-15, sec. 4.03(2)(b), 2000-1 C.B. 447.   The two factors

weighing toward relief--that Negoescu divorced Supplee and that

he agreed to be responsible for the tax liabilities--are not

strong enough.   Negoescu's reliance on these two factors boils

down to saying that her ex-husband broke his promise to pay the

taxes they both owed.   While that is true, the Commissioner was

not a party to that agreement, and so it’s usually fair for him

to try to collect unpaid taxes from both spouses who signed a

return.   Pesch v. Commissioner, 78 T.C. 100, 128-129 (1982).     We

think this is especially true where the income triggering the

unpaid tax was produced--at least in part--by both spouses, as in

Negoescu’s case.

     Our opinion is based on the evidence presented at trial,

evidence that the Commissioner did not have when he made his

determination.   In a recent case, Robinette v. Commissioner, 123

T.C. 85, 112, 115, 119 (2004) (Wells, Thornton, and Wherry, JJ.,

concurring), many of the Tax Court’s judges warned that if the

Commissioner did not have evidence because a taxpayer withheld

evidence during the appeals process, we should limit our review
                              - 14 -

to only the evidence the Commissioner did have.   Negoescu is just

that sort of taxpayer.   After asking the IRS for relief, she gave

the Commissioner no information to help him decide her case.

Once she filed her petition with us, however, she was forthcoming

with exhibits and testimony so that we could make an informed

decision.   But our decision would be the same even if we limited

our review to the record that the Commissioner had.


                                    Decision will be entered for

                               the respondent.
