                  T.C. Summary Opinion 2005-131



                     UNITED STATES TAX COURT



                ESTHER RUTH FERRIS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2257-04S.              Filed August 31, 2005.



     Esther Ruth Ferris, pro se.

     John W. Strate, for respondent.



     COUVILLION, Special Trial Judge:    This case was heard

pursuant to section 7463 of the Internal Revenue Code in effect

at the time the petition was filed.1    The decision to be entered

is not reviewable by any other court, and this opinion should not

be cited as authority.   Petitioner seeks a review under section


     1
      Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code as amended, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
                               - 2 -

6015 (relief from joint liability) with respect to her 1997

Federal income tax.   More specifically, the issue is whether

petitioner’s claim for section 6015 relief is barred based on

respondent’s determination that petitioner’s claim for relief was

filed more than 2 years after the first collection activity was

undertaken toward collection of petitioner’s 1997 unpaid tax.

     Some of the facts were stipulated.   Those facts, with the

annexed exhibits, are so found and are made a part hereof.

Petitioner’s legal residence at the time the petition was filed

was Modesto, California.

     For the year 1997, petitioner filed a joint Federal income

tax return with her spouse, George A. Ferris.   She and Mr. Ferris

were divorced in March 2003.   On the 1997 income tax return,

petitioner and Mr. Ferris reported gross income of $46,223,

consisting of wage and salary income of $7,770 and other income

from two trade or business activities she and Mr. Ferris

independently conducted.   The return showed a tax of $9,074 and

Federal income tax withholdings of $43.   The return also included

a computation of $333 as an estimated tax penalty.   Except for

the $43 in tax withholding, no other payments were made with the

return.   No adjustments were made to the return, the tax was

assessed, and no notice of deficiency was issued with respect to

the return.
                               - 3 -

     Petitioner overpaid her 1999 taxes in the amount of $2,141.

That overpayment was applied to the unpaid 1997 tax liability.

For the year 2000, petitioner also overpaid her tax, and the

$2,016 overpayment for that year was applied to the 1997 tax

liability.   Additional payments were thereafter made; however,

the dates and amounts of such payments are not material to the

issue in this case.

     On October 10, 2003, petitioner filed Form 8857, Request for

Innocent Spouse Relief.   That form was received by the innocent

spouse division of the IRS on October 17, 2003.   On November 13,

2003, respondent mailed to petitioner a final notice denying her

request for relief from joint liability under section 6015.

Petitioner then filed her petition for relief in this Court.2

     Respondent’s position is that petitioner’s request for

relief from joint liability under section 6015 was not filed

timely because the Form 8857 she filed was filed more than 2

years from the date of the first collection activity that

occurred in the collection of her 1997 tax, which bars petitioner

from relief.   Sec. 1.6015-5(b)(1), Income Tax Regs.3   The



     2
      Pursuant to Rule 325, Mr. Ferris was served with notice of
the filing of the petition in this case and his right to
intervene. Mr. Ferris has not filed a notice of intervention,
nor did he appear at trial.
     3
      Sec. 1.6015-5(b)(1), Income Tax Regs., is applicable for
all elections under sec. 6015 filed on or after July 18, 2002.
Sec. 1.6015-9, Income Tax Regs.
                               - 4 -

collection activity respondent relies on is the offset by

respondent of petitioner’s overpayment of tax for the year 1999

in the amount of $2,141, which was applied to petitioner’s 1997

taxes, the year for which petitioner is claiming relief under

section 6015.   The offset by respondent of a tax overpayment of

another year toward payment of a tax liability for a year to

which section 6015 relief is sought has been held to be a

collection activity for purposes of section 6015.    Campbell v.

Commissioner, 121 T.C. 290, 292 (2003); Hall v. Commissioner,

T.C. Memo. 2004-170.   In this case, on March 22, 2001, respondent

applied or offset $2,141 of an overpayment of petitioner’s 1999

tax toward payment of her unpaid 1997 tax.   Petitioner’s Form

8857 for relief from joint liability was filed on October 17,

2003, which is more than 2 years from the date of the offset.

That offset, as noted above, constituted a collection activity.

There is nothing in the record showing that petitioner was ever

advised or notified by respondent of the offset.    It is fair to

conclude that no notice of the offset was issued to petitioner

because respondent argues in a trial memorandum that notice of

the offset was not necessary under Rev. Proc. 2000-15, 2000-1

C.B. 447.   This Court held to the contrary in McGee v.

Commissioner, 123 T.C. 314, 317 (2004):


     We have not previously been faced with the Commissioner’s
     reliance on the 2-year limitation period when the
     Commissioner took an inconsistent position in failing to
                               - 5 -

     provide the collection-related notice required by RRA 1998
     sec. 3501(a). In this case, respondent’s treatment of the
     offset as a collection action, coupled with his failure to
     send petitioner notice of her section 6015 rights as
     required by RRA 1998 sec. 3501, resulted in petitioner’s
     failure to seek section 6015(f) relief within 2 years after
     the first collection action because she did not know of her
     rights. The problem here is not with the language of the
     revenue procedure per se, but that the revenue procedure has
     been interpreted in this case in a fashion inconsistent with
     respondent’s application of the public law, and that
     interpretation causes a result that is inconsistent with the
     statutory scheme.

          It would be inequitable if respondent could prevent
     review of a request for relief under section 6015(f) by
     failing to inform petitioner of her right to relief in
     defiance of a congressional mandate. Such a result would be
     contrary to the very purpose of section 6015(f), which is to
     relieve inequitable situations involving joint liabilities.
     Respondent’s administrative interpretations are given little
     weight when inconsistent with a statutory scheme. United
     States v. Vogel Fertilizer Co., 455 U.S. 16, 26 (1982); FEC
     v. Democratic Senatorial Campaign Comm., 454 U.S. 27, 30
     (1981). Rev. Proc. 2000-15, sec. 5, should not be applied
     in a manner which frustrates the legislative intent of
     section 6015 and the related public law.


     It follows, therefore, that there was an abuse of discretion

by respondent in denying petitioner’s request for relief under

section 6015 on the ground that the 2-year limitation period

applied.   Since there was no analysis or evaluation by respondent

of petitioner’s claim for section 6015 relief, there was an abuse

of discretion by respondent.   Petitioner, therefore, is entitled

to consideration of her claim for such relief.   The procedure for

that process was recently addressed by this Court in Friday v.

Commissioner, 124 T.C. 220 (2005), as follows:
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          In certain specific cases where statutory provisions
     reserve jurisdiction to the Commissioner, a case can also be
     remanded to the Commissioner’s Appeals Office. Under
     sections 6320(c) and 6330(d)(1), this Court may consider
     certain collection actions taken or proposed by the
     Commissioner’s Appeals Office. Under paragraph (2) of
     section 6330(d), the Commissioner’s Appeals Office retains
     jurisdiction with respect to the determination made under
     section 6330. As part of the process, a case may be
     remanded to the Appeals Office for further consideration.
     See, e.g., Parker v. Commissioner T.C. Memo. 2004-226.

          The situation is different, however, in a section 6015
     proceeding, which is sometimes referred to as a “stand
     alone” case. Although entitled “Petition for Review by Tax
     Court”, section 6015(e) gives jurisdiction to the Court “to
     determine the appropriate relief available to the individual
     under this section”. The right to petition is “In addition
     to any other remedy provided by law” and is conditioned upon
     meeting the time constraints prescribed in section
     6015(e)(1)(A)(i) and (ii). Even if the Commissioner fails
     to do anything for 6 months following the filing of an
     election for relief (where there is nothing to “review”),
     the individual may bring an action in this Court. See sec.
     6015(b), (e)(1)(A)(i)(II). A petition for a decision as to
     whether relief is appropriate under section 6015 is
     generally not a “review” of the Commissioner’s determination
     in a hearing but is instead an action begun in this Court.
     There is in section 6015 no analog to section 6330 granting
     the Court jurisdiction after a hearing at the Commissioner’s
     Appeals Office. [Fn. refs. omitted.]


     Pursuant to Friday v. Commissioner, supra at 221-222, this

case will be returned to the Court’s general docket for trial in

due course.   If, however, the parties desire to consider the case

at the administrative level, the Court will consider any motion

to that effect.
                                - 7 -

    Reviewed and adopted as the report of the Small Tax Case

Division.

    To reflect the foregoing,



                                             An appropriate order

                                        will be issued.
