                           T.C. Memo. 2008-156



                        UNITED STATES TAX COURT



                 ROXANNE M. TOPPI, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent*



     Docket No. 6808-05.                 Filed June 19, 2008.



     Roxanne M. Toppi, pro se.

     Jason M. Kuratnick, for respondent.



                 SUPPLEMENTAL MEMORANDUM OPINION


     WELLS, Judge:     Petitioner seeks review of respondent’s

determination denying her request for relief pursuant to section



____________________

     *This Memorandum Opinion supplements Toppi v. Commissioner,
T.C. Memo. 2006-182.
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6015(f)1 regarding taxable years 1995 through 2001.    Petitioner

commenced the case after receiving a final notice denying her

request for relief under section 6015(f).     The case was tried on

April 3, 2006, and the parties filed their briefs on June 19 and

July 26, 2006.    On July 25, 2006, this Court issued its Opinion

in Billings v. Commissioner, 127 T.C. 7 (2006), holding that the

Court does not have jurisdiction to review the Commissioner’s

denial of relief under section 6015(f) in a case where no

deficiency has been asserted.   Our holding in Billings was in

accordance with the opinions of the Courts of Appeals for the

Eighth and Ninth Circuits in Bartman v. Commissioner, 446 F.3d

785 (8th Cir. 2006), affg. in part and vacating in part T.C.

Memo. 2004-93, and Commissioner v. Ewing, 439 F.3d 1009 (9th Cir.

2006), revg. 118 T.C. 494 (2002), vacating 122 T.C. 32 (2004),

respectively.    On the basis of Billings, we filed on August 29,

2006, our initial opinion, Toppi v. Commissioner, T.C. Memo.

2006-182 (Toppi I).   In Toppi I we held that we lacked

jurisdiction to consider petitioner’s case.    However, we did not

enter the decision.

     The Tax Relief and Health Care Act of 2006, Pub. L. 109-432,

div. C, sec. 408, 120 Stat. 3061, amended section 6015(e)(1) to

provide that this Court may review the Commissioner’s denial of



     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended.
                                - 3 -

relief under section 6015(f) in cases where no deficiency has

been asserted.    The legislative 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 was December 20, 2006.   See

120 Stat. 2922.    Petitioner’s liabilities for each of 1997, 1998,

and 1999 remained unpaid as of December 20, 2006.   Accordingly,

we now have jurisdiction to consider those taxable years and will

decide the case on the basis of the record laid before us at the

April 3, 2006, trial.

     Petitioner’s liabilities for each of 1995, 1996, 2000, and

2001 did not remain unpaid as of December 20, 2006.   We do not

have jurisdiction to consider those taxable years as they are

subject to the earlier version of section 6015 and our holding in

Billings.   See Bock v. Commissioner, T.C. Memo. 2007-41.

Accordingly, the petition, insofar as it seeks relief from

liabilities for taxable years 1995, 1996, 2000, and 2001, will be

dismissed for lack of jurisdiction.

                             Background

     We adopt the findings of fact in Toppi I.   For convenience

and clarity, we repeat here the facts necessary to understand the

discussion that follows and find additional facts as necessary to

decide the case.   At the time of filing the petition, petitioner

resided in Franklinville, New Jersey.
                              - 4 -

     Petitioner and David J. Toppi (Mr. Toppi) were married on

May 24, 1986, and divorced on June 11, 2002.   Except for 5 years

following the birth of their son, petitioner worked as a

receptionist for several different employers while Mr. Toppi

tried to establish a practice as a chiropractor.   Petitioner was

not involved with Mr. Toppi’s chiropractic practice.   During

1994 or 1995 when petitioner’s son was 5 years old, Mr. Toppi

approached petitioner and asked her to return to work because

his “business was in trouble.”

     Petitioner and Mr. Toppi received mail at their home

address in Franklinville, New Jersey.   Petitioner regularly, but

not always, opened and read the mail.   At approximately the same

time that Mr. Toppi asked petitioner to return to work,

petitioner discovered that Mr. Toppi had failed to pay numerous

household bills.   Petitioner and Mr. Toppi opened a joint

checking account from which petitioner began to pay household

bills.   Petitioner continued to pay household bills from the

joint checking account until she and Mr. Toppi divorced on

June 11, 2002.

     On several occasions Mr. Toppi told petitioner that they

should request an extension to file their joint tax return

because he did not have enough money to pay the taxes.

Petitioner and Mr. Toppi requested an extension from April 15
                              - 5 -

until August 15, 1995, to file their 1994 tax return.    On

August 21, 1995, respondent received petitioner’s and Mr.

Toppi’s joint 1994 income tax return reporting a tax liability

of $8,515 and a withholding credit of $598.   To satisfy their

1994 tax liability, petitioner and Mr. Toppi made monthly

payments from June 5, 1996, through March 6, 1998.    The final

payment on March 6, 1998, satisfied petitioner’s and Mr. Toppi’s

tax liability for 1994 including additions to tax and statutory

interest.

     On April 15, 1996, respondent received petitioner’s and

Mr. Toppi’s joint 1995 tax return reporting a tax liability of

$17,117 and a withholding credit of $1,332.   To satisfy their

1995 tax liability, petitioner and Mr. Toppi made monthly

payments from March 6, 1998, through July 14, 2003.    The final

payment on July 14, 2003, satisfied petitioner’s and Mr. Toppi’s

tax liability for 1995 including additions to tax and statutory

interest.

     Petitioner and Mr. Toppi requested an extension from April

15 until August 15, 1997, to file their joint 1996 tax return

and subsequently requested another extension to file until

October 15, 1997.   On October 20, 1997, respondent received

petitioner’s and Mr. Toppi’s joint 1996 tax return reporting a

tax liability of $15,813 and a withholding credit of $1,253.
                              - 6 -

The withholding credit was attributable to petitioner.     On

June 28, 1999, respondent sent petitioner and Mr. Toppi a notice

of intent to levy because they had defaulted on their

installment agreement for taxable year 1996.   By February 14,

2006, petitioner and Mr. Toppi satisfied their 1996 tax

liability including additions to tax and statutory interest.

     Petitioner and Mr. Toppi requested an extension from

April 15 until August 15, 1998, to file their joint 1997 tax

return.   Despite receiving an extension, petitioner and

Mr. Toppi filed their return untimely on July 30, 1999,

reporting a tax liability of $10,200 and a withholding credit of

$1,045.   The withholding credit was attributable to petitioner.

Petitioner and Mr. Toppi have made no other payments on their

1997 tax liability except Mr. Toppi’s single payment of $600.

     On August 2, 1999, petitioner and Mr. Toppi untimely filed

their joint 1998 tax return reporting a tax liability of

$8,513.29 and a withholding credit of $2,050.03, of which $389

was attributable to petitioner.   Petitioner and Mr. Toppi have

not made any further payments on their 1998 tax liability.

     On October 22, 2000, petitioner and Mr. Toppi untimely

filed their joint 1999 tax return reporting a tax liability of

$7,437.52 and a withholding credit of $4,904.49, of which $1,884

was attributable to petitioner.   Petitioner and Mr. Toppi have

not made any further payments on their 1999 tax liability.
                               - 7 -

     On August 3, 2001, petitioner and Mr. Toppi signed a Form

900, Tax Collection Waiver, extending the period of limitations

for collection of their 1996, 1997, 1998, and 1999 tax

liabilities.   On June 25, 2004, respondent received petitioner’s

Form 8857, Request for Innocent Spouse Relief, and Form 12510,

Questionnaire for Requesting Spouse, for tax years 1995 through

2001.2   On December 8, 2004, respondent’s Appeals Office sent

petitioner a letter requesting any additional information that

petitioner would have respondent consider in determining whether

petitioner was entitled to section 6015(f) relief for the years

in issue.   On January 27, 2005, respondent’s Appeals Office sent

petitioner a notice of determination denying petitioner’s

request for relief pursuant to section 6015(f) for taxable years

1995 through 2001.   Petitioner timely petitioned this Court.

                            Discussion

     The Commissioner has discretion, pursuant to section

6015(f), to grant relief from joint and several liability where

relief is not available under section 6015(b) or (c) if the

facts and circumstances indicate that it would be inequitable to

hold the requesting spouse liable for the deficiency.




     2
      The record does not demonstrate that petitioner and Mr.
Toppi have any tax liabilities for 2000 and 2001. Additionally,
petitioner and Mr. Toppi satisfied their 1995 tax liability on
July 14, 2003, and their 1996 tax liability by Feb. 14, 2006.
                                  - 8 -

     Rev. Proc. 2003-61, sec. 4.02, 2003-2 C.B. 296, 298,3

provides a set of circumstances under which relief normally will

be granted.    They pertain to:    (1) Marital status; (2) knowledge

or reason to know; and (3) economic hardship.      Respondent

concedes the first requirement; petitioner was not married to

Mr. Toppi when she requested relief.      However, respondent argues

that petitioner fails to meet the other two requirements of Rev.

Proc. 2003-61, sec. 4.02.

     In an underpayment case the knowledge element depends upon

whether, at the time the return was signed, the requesting

spouse knew or had reason to know that the nonrequesting spouse

would not pay the income tax liability.      Merendino v.

Commissioner, T.C. Memo. 2006-2; Rev. Proc. 2003-61, sec.

4.02(1)(b).    During the administrative proceedings petitioner

claimed that she did not know the Federal income tax returns for

the taxable years 1996 through 1999 reported balances due and,

therefore, at the time she signed the returns she did not know

or have reason to know that the tax liabilities would not be

paid.    Petitioner signed the returns for taxable years 1996




     3
      Rev. Proc. 2003-61, 2003-2 C.B. 296, which superseded Rev.
Proc. 2000-15, 2000-1 C.B. 447, is effective for requests for
relief filed on or after Nov. 1, 2003. Rev. Proc. 2003-61, sec.
7, 2003-2 C.B. at 299. Petitioner’s request for relief was filed
on June 25, 2004. Therefore, we consider the denial of relief on
the basis of the factors of Rev. Proc. 2003-61, supra.
                               - 9 -

through 1999.    Accordingly, petitioner is charged with

constructive knowledge of the amounts shown on the returns as

tax due.    See George v. Commissioner, T.C. Memo. 2004-261;

Castle v. Commissioner, T.C. Memo. 2002-142.

     Petitioner’s and Mr. Toppi’s 1994 Federal income tax return

reported an unpaid tax liability.      At the time of filing,

petitioner and Mr. Toppi did not remit full payment.      Likewise,

when petitioner and Mr. Toppi filed their 1995 Federal income

tax return, they did not remit full payment.      On June 5, 1996,

petitioner and Mr. Toppi entered into an installment agreement

to satisfy the outstanding tax liability for 1994.

     Petitioner and Mr. Toppi requested two extensions to file

their 1996 Federal income tax return.      Additionally, petitioner

and Mr. Toppi requested an extension to file their 1997 tax

return.    Mr. Toppi told petitioner that they were requesting

extensions for these years, as well as others, because they did

not have sufficient funds to pay the taxes due.

     Petitioner and Mr. Toppi received statements from

respondent and notices of intent to levy regarding the

outstanding liabilities.    On June 28, 1999, respondent sent Mr.

Toppi and petitioner a notice of intent to levy because they

defaulted on an installment agreement concerning their

outstanding tax liability for taxable year 1996.
                              - 10 -

     When Mr. Toppi asked petitioner to return to work, he told

petitioner that his “business was in trouble.”    At approximately

the same time, petitioner discovered that Mr. Toppi had failed

to pay numerous household bills.    Additionally, Mr. Toppi told

petitioner on several occasions that they should request an

extension to file their joint tax return because he did not have

enough money to pay the taxes.   Accordingly, we hold that

petitioner knew or should have known that the tax returns for

1997 through 1999 reported unpaid liabilities and that Mr. Toppi

would not pay those liabilities.

     In determining whether a requesting spouse will suffer

economic hardship if not granted equitable relief, Rev. Proc.

2003-61, sec 4.02(1)(c), refers to section 301.6343-1(b)(4),

Proced. & Admin. Regs.   Generally, a taxpayer would experience

economic hardship if he or she were unable to pay reasonable

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

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

taxpayer’s expenses qualify as basic living expenses and that

those expenses are reasonable.     Monsour v. Commissioner, T.C.

Memo. 2004-190.

     Petitioner failed to present any information regarding her

economic situation.   Petitioner did not disclose her average

monthly income and expenses on the Form 12510 respondent
                               - 11 -

received on June 25, 2004.    Respondent provided opportunities

for petitioner to supplement the record.    Petitioner did not

avail herself of those opportunities, nor did she do so at

trial.    Accordingly, we hold that petitioner has failed to

demonstrate that she would suffer economic hardship if not

granted relief from joint and several liability.

     Rev. Proc. 2003-61, sec. 4.03(2), 2003-2 C.B. 298, provides

a nonexclusive list of factors that the Internal Revenue Service

will consider when determining whether to grant relief.     The

factors are:    (1) Marital status; (2) economic hardship; (3)

knowledge or reason to know that the nonrequesting spouse would

not pay the liability; (4) nonrequesting spouse’s legal

obligation; (5) significant benefit; and (6) compliance with

income tax laws.    Id.

     The first factor is whether the couple is still married.

See Rev. Proc. 2003-61, sec. 4.03(2)(a)(i).    As stated above

petitioner and Mr. Toppi were divorced at the time of

respondent’s determination, which weighs in favor of granting

relief.

     The second factor is whether the requesting spouse will

suffer economic hardship if relief from joint and several

liability is not granted.    See Rev. Proc. 2003-61, sec.

4.03(2)(a)(ii).    The test under this section is the same as the
                                - 12 -

test under Rev. Proc. 2003-61, sec. 4.02(1)(c).       As discussed

above petitioner has failed to demonstrate that she would suffer

economic hardship if required to pay the outstanding liability,

which weighs against relief.

     The third factor is whether petitioner had knowledge or

reason to know, at the time she signed the returns, that the

income tax liabilities on the returns would not be paid.       See

Rev. Proc. 2003-61, sec. 4.03(2)(a)(iii).       The test under this

section is the same as under Rev. Proc. 2003-61, sec.

4.02(1)(b).   As discussed above petitioner knew or had reason to

know that the tax liabilities would not be paid, which weighs

against relief.

     The fourth factor is the legal obligation to pay.       See Rev.

Proc. 2003-61, sec. 4.03(2)(a)(iv).       Neither petitioner nor Mr.

Toppi has an obligation to pay the outstanding liability

pursuant to a divorce decree.    The factor under this section is

neutral as to whether to grant or deny relief.

     The fifth factor is whether the requesting spouse has

significantly benefited from the unpaid liability.       See Rev.

Proc. 2003-61, sec. 4.03(2)(a)(v).       Petitioner did not benefit

significantly from the couple’s failure to pay the income tax

liabilities for the years in issue, which weighs in favor of

relief.
                               - 13 -

     The sixth factor is whether the requesting spouse has made

a good faith effort to comply with Federal income tax laws in

the tax years after the years in issue.   See Rev. Proc. 2003-61,

sec. 4.03(2)(a)(vi).   Respondent conceded that petitioner is in

compliance with Federal income tax laws for tax years after

1999, which weighs in favor of granting relief.

     Additionally, Rev. Proc. 2003-61, sec. 4.03(2)(b), 2003-2

C.B. at 299, sets forth two factors which favor equitable relief

if present but have no effect if not present.   They are:   (1)

Whether the nonrequesting spouse abused the requesting spouse;

and (2) whether the requesting spouse was in poor mental or

physical health when signing the return or requesting relief.

     As to the first factor of Rev. Proc. 2003-61, sec.

4.03(2)(b), Mr. Toppi did not abuse petitioner.   As to the

second factor, petitioner neither argued nor showed that she was

in poor health when she signed the returns or requested relief.

Neither factor weighs in favor of granting or denying relief;

i.e., the factor is neutral.

     In sum, the record does not demonstrate that it would be

inequitable to deny petitioner relief.    Petitioner had knowledge

or reason to know that Mr. Toppi would not pay the liabilities

reported on the returns.
                              - 14 -

     Petitioner has also failed to prove that she will suffer

economic hardship if relief is not granted.   See sec. 301.6343-

1(b)(4), Proced. & Admin. Regs. (defining economic hardship as

causing the taxpayer to be unable to pay his or her basic living

expenses).   Accordingly, we conclude that respondent properly

denied petitioner relief under section 6015(f).

     We have considered all of petitioner’s contentions.   To the

extent not addressed herein, those contentions are without merit

or unnecessary to reach.

     To reflect the foregoing,


                                         An appropriate order and

                                    decision will be entered.
