                   T.C. Summary Opinion 2006-104



                      UNITED STATES TAX COURT



                 SHIRLEY H. STARTZMAN, Petitioner,
                 AND LARRY G. EASLER, Intervenor v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2084-05S.             Filed July 13, 2006.



     Shirley H. Startzman, pro se.

     Larry G. Easler, pro se.

     James R. Rich, for respondent.



     WELLS, Judge:   This case was heard pursuant to the

provisions of section 7463 in effect at the time the petition was

filed.   The decision to be entered is not reviewable by any other

court, and this opinion should not be cited as authority.    All

section references are to the Internal Revenue Code, as amended,
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and all Rule references are to the Tax Court Rules of Practice

and Procedure.

     Respondent denied petitioner’s request for section 6015

relief with respect to a $6,445 deficiency in income tax and a

$929 section 6662 accuracy-related penalty assessed for

petitioner and intervenor’s taxable year 1997.     The issue we must

decide is whether petitioner is entitled to relief pursuant to

section 6015(b), (c), or (f).

                              Background

     Some of the facts and certain exhibits have been stipulated.

The parties’ stipulations of fact are incorporated in this

Summary Opinion by reference and are found as facts in the

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

resided in Greenwood, South Carolina.      Petitioner and intervenor

(collectively referred to as the Easlers) were married on August

18, 1979.   Petitioner has a general education development diploma

and a certified nursing assistant’s diploma.     During taxable year

1997, petitioner worked as a retail manager at C.B. Mart, Inc.

and Wal-Mart, Inc.    Intervenor has taken a few college courses,

including courses in government and economics.     During taxable

year 1997, Intervenor was employed as a sales clerk at Greenwood

Mills, Inc.   On their 1997 tax return, the Easlers reported

$12,030.78 in wages earned by petitioner but omitted $29,506 in

wages earned by intervenor.    The $29,506 in omitted wages enabled
                                - 3 -

the Easlers to qualify for the earned income credit and receive a

$4,080 tax refund.    Petitioner and intervenor separated on June

16, 2000, and divorced on October 2, 2001.

     On June 16, 2000, respondent sent the Easlers a notice of

deficiency determining a $6,445 income tax deficiency and a $929

section 6662 accuracy-related penalty.    Neither petitioner nor

intervenor petitioned this Court in response to the notice of

deficiency.   Accordingly, the tax and penalty determined in the

notice of deficiency, and an additional $1,291.89 of interest,

were assessed against the Easlers.

     On February 12, 2001, respondent applied petitioner’s $2,730

overpayment from taxable year 2000 against the Easlers’ 1997 tax

liability.    On March 4, 2002, respondent applied petitioner’s

$2,230 overpayment from taxable year 2001 against the Easlers’

1997 tax liability.    Because respondent had previously applied

two overpayments made by intervenor against the Easlers’ 1997 tax

liability, petitioner received a refund of $105.22.1

     On February 12, 2003, petitioner filed her 2002 Federal

income tax return along with Form 12507, Innocent Spouse

Statement, on which she stated that her former spouse

(intervenor) prepared their 1997 tax return, as he always had


     1
      On Apr. 15, 2001, respondent applied intervenor’s $1,944
overpayment from taxable year 2001 against the Easler’s 1997 tax
liability. On Sept. 10, 2001, respondent applied an additional
$500 due to intervenor with respect to his taxable year 2001
against the Easlers’ 1997 tax liability.
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throughout their marriage, and that she was told where to sign

and never looked at the return.    On April 10, 2003, petitioner

filed a questionnaire for taxpayers requesting section 6015

relief.   In that questionnaire petitioner detailed her claim and

requested a refund of her overpayments which were used to offset

the Easlers’ 1997 tax liability.

     In a letter dated March 17, 2003, respondent’s innocent

spouse unit at the Cincinnati, Ohio, Service Center (innocent

spouse unit) notified intervenor that petitioner had requested

section 6015 relief with respect to taxable year 1997 and

requested that intervenor complete and submit Form 12507,

Innocent Spouse Statement, and Form 12508, Innocent Spouse

Information Request.   Intervenor submitted the completed

requested forms by May 2, 2003.    On Form 12508 he stated:   That

he and petitioner filled out their 1997 tax return together; that

petitioner was fully aware of everything stated on, and omitted

from, the return; that petitioner wanted to omit intervenor’s

wages from the return in order to obtain a larger refund; and

that the divorce decree requires petitioner and intervenor to

share equally their marital debt.2

     In a letter dated October 21, 2003, respondent’s innocent

spouse unit notified petitioner that her claim for section 6015


     2
      We do not address intervenor’s contentions because we
conclude, for reasons stated below, that petitioner is ineligible
for relief regardless of intervenor’s contentions and testimony.
                               - 5 -

relief was being disallowed because petitioner filed her claim

more than 2 years after the first collection activity.

Similarly, respondent’s Appeals Office determined that

petitioner’s claim was untimely and, in a letter dated November

4, 2004, disallowed petitioner’s request for section 6015 relief

regarding taxable year 1997.

     On January 31, 2005, petitioner timely filed a petition with

this Court seeking a review of respondent’s determination denying

her request for section 6015 relief.     Respondent’s counsel

determined that petitioner’s request for section 6015 relief was

timely and asked the innocent spouse unit to determine whether

petitioner was entitled to relief.     On August 12, 2005,

respondent’s innocent spouse unit determined that petitioner was

not entitled to relief under section 6015(b), (c), or (f) because

petitioner had actual knowledge of the omitted income giving rise

to the deficiency and, by not reviewing the return, she did not

satisfy her duty to inquire.

                            Discussion

     In general, spouses filing a joint return are jointly and

severally liable for the accuracy of the return and for the full

tax liability.   Sec. 6013(d)(3).   Section 6015(b), (c), and (f)

provide exceptions to the general rule in certain circumstances.

Section 6015 applies to liabilities arising after July 22, 1998,

and to liabilities arising on or before July 22, 1998, that
                               - 6 -

remain unpaid as of July 22, 1998.     The tax liability in the

instant case arose during 1997 but remained unpaid as of July 22,

1998.   Accordingly, section 6015 applies to the instant case.

Washington v. Commissioner, 120 T.C. 137, 145 (2003).

     Section 6015(b)(1) requires the Commissioner to grant relief

from joint liability if the taxpayer satisfies the following

requirements:   (a) The requesting spouse filed a joint return;

(b) on the joint return there is an understatement of tax

attributable to the erroneous items of one individual filing the

joint return; (c) the requesting spouse establishes that, in

signing the joint return, he or she did not know and had no

reason to know that there was such understatement; (d)

considering all the facts and circumstances, it is inequitable to

hold the requesting spouse liable for the deficiency in tax

attributable to such understatement; and (e) the requesting

spouse files her request for relief no later than 2 years from

the date the Secretary began collection activities against the

requesting spouse.   A requesting spouse must satisfy all of these

requirements to qualify for section 6015 relief.     Alt v.

Commissioner, 119 T.C. 306, 313 (2002), affd. 101 Fed. Appx. 34

(6th Cir. 2004).   Except as otherwise provided in section 6015,

the requesting spouse bears the burden of proving she satisfies

each requirement of section 6015(b)(1).     See Rule 142(a); Alt v.

Commissioner, supra at 311.
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     In the instant case, petitioner knew or had reason to know

of the omitted item giving rise to the deficiency.    A requesting

spouse has a duty of inquiry.    Butler v. Commissioner, 114 T.C.

276, 284 (2000).   A requesting spouse has reason to know of an

understatement if a “reasonably prudent person with knowledge of

the facts possessed by the person claiming * * * [relief] should

have been alerted to the possibility of a substantial

understatement.”   Flynn v. Commissioner, 93 T.C. 355, 365 (1989).

There is no question that petitioner was aware intervenor was

employed by Greenwood Mills throughout 1997.    The top line of

page two of the Easlers’ 1997 tax return shows an adjusted gross

income of $12,030.78.    A few inches above where petitioner signed

her name on page two, line 29a shows total tax withholdings from

Forms W-2 of just $444.24.   Such circumstances should have

alerted a reasonably prudent person that there was an

understatement of tax.   Section 6015 relief was not intended for

spouses who simply did not look at the amount of income reported

on the return, unless it is clearly established that the spouse

was forced under duress to sign the return without looking at it.

Frederick v. Commissioner, T.C. Memo. 1981-602.    The record in

the instant case does not support a conclusion that petitioner

was forced to sign the return under duress.    Even though

petitioner did not have a college degree or any business
                                 - 8 -

background, we do not think her failure to inquire was

reasonable.   Cohen v. Commissioner, T.C. Memo. 1987-537.

Accordingly, petitioner is not entitled to relief under section

6015(b).

     We do not need to engage in a lengthy discussion of whether

petitioner qualifies for relief under section 6015(c) because the

only relief she seeks is a refund.       Section 6015(g)(3) prohibits

refunds under section 6015(c).    Accordingly, petitioner does not

qualify for relief under section 6015(c).

     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.      This Court

reviews the Commissioner’s denial of relief pursuant to section

6015(f) under an abuse of discretion standard.       Butler v.

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

respondent’s determination unless it is arbitrary, capricious, or

without sound basis in fact.     Jonson v. Commissioner, 118 T.C.

106, 125 (2002), affd. 353 F.3d 1181 (10th Cir. 2003).

Petitioner bears the burden of proving that there was an abuse of

discretion.   Abelein v. Commissioner, T.C. Memo. 2004-274.
                                 - 9 -

     Rev. Proc. 2000-15, 2000-1 C.B. 447,3 provides factors that

weigh in favor of, and against, granting relief.    Factors that

favor granting relief include:     (1) Marital status; (2) economic

hardship; (3) abuse; (4) no knowledge or reason to know of the

item giving rise to the deficiency; (5) whether the nonrequesting

spouse had a legal obligation to pay the deficiency; and (6)

whether the item giving rise to the deficiency is attributable

to the nonrequesting spouse.     Id. sec. 4.03, 2000-1 C.B. at

448-449.   Factors that weigh against granting relief include:

(1) The item giving rise to the deficiency is attributable to the

requesting spouse; (2) the requesting spouse knew or had reason

to know of the item giving rise to the deficiency (an extremely

strong factor); (3) the requesting spouse has benefited, beyond

normal support, from the item giving rise to the deficiency; (4)

the requesting spouse will not experience economic hardship if

relief is not granted; (5) the requesting spouse has not made a

good faith attempt to comply with the tax laws in subsequent

years; and (6) the requesting spouse has a legal obligation to

pay the liability.   Id. at 449.




     3
      Rev. Proc. 2000-15, 2000-1 C.B. 447, applies to the instant
case because the preliminary determination letter was issued on
Oct. 21, 2003. Rev. Proc. 2003-61, 2003-2 C.B. 296, which
superseded Rev. Proc. 2000-15, supra, is effective for pending
requests for sec. 6015 relief for which no preliminary
determination letter was issued as of Nov. 1, 2003.
                              - 10 -

     The record in the instant case does not demonstrate that it

would be inequitable to deny petitioner relief.     Petitioner had

knowledge of the item giving rise to the deficiency and failed to

fulfill her duty of inquiry when she signed the return without

any review.   Butler v. Commissioner, supra.    We do not believe

petitioner’s actions were reasonable under the circumstances.

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 it was not an abuse of discretion

for respondent to deny 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,


                                            Decision will be entered

                                       for respondent.
