                          T.C. Memo. 2004-84



                     UNITED STATES TAX COURT



                 ANDREA J. VUXTA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 102-03.                 Filed March 23, 2004.


     Albert N. Peterlin, for petitioner.

     Richard A. Stone, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     PANUTHOS, Chief Special Trial Judge:      This proceeding was

commenced under section 6015 for review of respondent’s

determination that petitioner is not entitled to relief from

joint and several liability with respect to unpaid tax
                               - 2 -

liabilities on certain joint returns filed with James S. Vuxta.1

After concessions,2 the issue for decision is whether respondent

abused his discretion in denying petitioner’s request for relief

under section 6015(f) for taxable years 1989, 1990, and 1991.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue, and

Rule references are to the Tax Court Rules of Practice and

Procedure.

                         FINDINGS OF FACT

     This case was submitted fully stipulated pursuant to Rule

122(a).   All stipulated facts are found accordingly.   The

attached exhibits are incorporated by reference.   Petitioner




     1
        Petitioner contends that for the taxable years 1989
through 1992, the unpaid tax liabilities total $42,329.35,
including interest and penalties. Respondent contends that for
the same taxable years the unpaid tax liabilities total
$18,617.38, which amount does not include interest, penalties,
and payments after Mar. 14, 2003.
     2
        Petitioner requested relief from joint and several
liability for the taxable years 1988 through 1997. After
respondent denied her request, petitioner commenced an action for
determination of relief only with respect to taxable years 1989,
1990, 1991, and 1992 and only under sec. 6015(f). Consequently,
we conclude that petitioner has abandoned any contention with
respect to the other taxable years and to relief under sec.
6015(b) and (c). See Butler v. Commissioner, 114 T.C. 276, 278
n.2 (2000). Respondent concedes that the issue of relief with
respect to the unpaid tax liability for 1992 is moot, because the
period of limitations on collection has expired under sec. 6502
and was not tolled during the pendency of the bankruptcy
proceeding described infra.
                                - 3 -

resided in Middletown, Pennsylvania, when she filed the petition

herein.

     During the years in issue, petitioner was married to James

S. Vuxta.   Mr. Vuxta was a self-employed carpenter who operated

his business as a sole proprietorship.    Petitioner was not

involved in such business.    Mr. Vuxta was the primary wage earner

of their household.

     Petitioner and Mr. Vuxta filed joint Federal income tax

returns for taxable years 1989 through 1992.    The tax returns

were prepared by Mr. Vuxta.    Petitioner did not review the tax

returns before signing them, relying upon Mr. Vuxta’s preparation

of such returns.   The 1989 tax return was filed on September 17,

1990; the 1990 tax return was filed on September 23, 1991; the

1991 tax return was filed on May 30, 1996; and the 1992 tax

return was filed on September 20, 1993.    The liabilities relevant

to these tax returns remain unpaid.     The unpaid liabilities are

solely and fully allocable to Mr. Vuxta.

     As indicated on the tax returns, petitioner was a

“waitress”.   She is a high school graduate.

     On May 1, 1992, petitioner and Mr. Vuxta filed a bankruptcy

petition in the United States Bankruptcy Court for the Middle

District of Pennsylvania.    The date of bankruptcy discharge is

May 23, 1997.
                                 - 4 -

     Mr. Vuxta died on May 4, 2001.       After his death, petitioner

received the proceeds of Mr. Vuxta’s 401(k) plan.

     On May 13, 2002, respondent received petitioner’s Form 8857,

Request for Innocent Spouse Relief, for taxable years 1988

through 1997.   On July 11, 2002, respondent received from

petitioner a completed Questionnaire for Requesting Spouse, which

contained the following question and petitioner’s answer:

     4. After the return(s) was filed, what efforts were
     made by you and your (ex)spouse to pay the tax?

     Upon information and belief, my husband entered into
     payment plans.

     Respondent issued petitioner a Final Notice of Determination

(notice) dated December 23, 2002.    Respondent determined that

petitioner was not entitled to relief from joint and several

liability under section 6015(b), (c), or (f) for taxable years

1989 through 1995 and 1997.    The notice provided:    “We did not

grant relief because you did not establish a reasonable belief

that tax would be paid at the time you signed the tax returns.”

                                OPINION

     Generally, married taxpayers may elect to file a joint

Federal income tax return.    Sec. 6013(a).    After making the

election, each spouse generally is fully responsible for the

accuracy of the return and jointly and severally liable for the

entire tax due for that year.    Sec. 6013(d)(3); Butler v.

Commissioner, 114 T.C. 276, 282 (2000).       A spouse (requesting
                                - 5 -

spouse) may, however, seek relief from joint and several

liability by following procedures established in section 6015.

Sec. 6015(a).

     Under section 6015(a), a requesting spouse may seek relief

from liability under section 6015(b) or, if eligible, may

allocate liability according to the provisions under section

6015(c).    If relief is not available under either section 6015(b)

or (c), then an individual may seek equitable relief under

section 6015(f).   Section 6015(f) permits relief from joint and

several liability where “it is inequitable to hold the individual

liable for any unpaid tax or any deficiency (or any portion of

either)”.

     Petitioner contends that she is entitled to equitable relief

under section 6015(f) for taxable years 1989 through 1992 and

that respondent erred in denying her request for such relief.3

We have jurisdiction to review a denial of a request for

equitable relief under section 6015(f).    Fernandez v.

Commissioner, 114 T.C. 324, 332 (2000).   Our review is not

limited to respondent’s administrative record.    Ewing v.

Commissioner, 122 T.C. 32 (2004).




     3
        As indicated earlier, respondent conceded that the issue
of relief with respect to 1992 is moot.
                                - 6 -

     Except as otherwise provided in section 6015, petitioner

bears the burden of proof.    Rule 142(a); Alt v. Commissioner, 119

T.C. 306, 311 (2002).

     To prevail, petitioner must show that respondent’s denial of

equitable relief from joint and several liability under section

6015(f) was an abuse of discretion.     Jonson v. Commissioner, 118

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

Cheshire v. Commissioner, 115 T.C. 183, 198 (2000), affd. 282

F.3d 326 (5th Cir. 2002).    Petitioner must demonstrate that

respondent exercised his discretion arbitrarily, capriciously, or

without sound basis in fact or law.     Jonson v. Commissioner,

supra; Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

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

prescribed procedures in determining whether a spouse qualifies

for relief under that subsection.    The applicable provision is

found in Rev. Proc. 2000-15, 2000-1 C.B. 447.4    We have upheld

the procedures in reviewing a determination.     Washington v.

Commissioner, 120 T.C. 137, 147-152 (2003).

     Rev. Proc. 2000-15, sec. 4.01, 2000-1 C.B. at 448, provides

seven threshold conditions that must be satisfied before the


     4
        This revenue procedure was superseded by Rev. Proc. 2003-
61, which is effective either for requests for relief filed on or
after Nov. 1, 2003, or for requests for relief pending on Nov. 1,
2003, for which no preliminary determination letter has been
issued as of Nov. 1, 2003. Rev. Proc. 2003-61, sec. 7, 2003-32
I.R.B. 296, 299.
                               - 7 -

Commissioner will consider a request for equitable relief under

section 6015(f).   Respondent concedes that these seven threshold

conditions are satisfied in the present case.

     Rev. Proc. 2000-15, sec. 4.02, provides circumstances under

which equitable relief under section 6015(f) will ordinarily be

granted.   This section of the revenue procedure only applies to

cases where a liability reported on a joint return is unpaid and

where all three elements of Rev. Proc. 2000-15, sec. 4.02(1),

need to be satisfied.   It appears from the record that at least

one of these three elements is not satisfied.   Specifically,

petitioner has not shown that she will suffer economic hardship

if relief is not granted.   Her debts were discharged in

bankruptcy on May 23, 1997, and petitioner received the proceeds

of Mr. Vuxta’s 401(k) plan after his death on May 4, 2001.

     We, therefore, next consider the positive and negative

factors set forth in Rev. Proc. 2000-15, sec. 4.03, in

determining whether to grant relief.   Section 4.03 of this

revenue procedure makes clear that no single factor is to be

determinative in any particular case, that all factors are to be

considered and weighed appropriately, and that the list of

factors is not intended to be exhaustive.
                                 - 8 -

     We first review each of the following six factors weighing

against relief, as listed under section 4.03(2), 2000-1 C.B. at

449, of the revenue procedure:

     a.    Attributable to Nonrequesting Spouse

     The unpaid liabilities are solely and fully allocable to Mr.

Vuxta.    This factor is squarely in favor of petitioner.

     b.    Knowledge, or Reason To Know

     If a requesting spouse knew or had reason to know that the

reported liability would be unpaid at the time the return was

signed, this is an “extremely” strong factor weighing against

relief.    Rev. Proc. 2000-15, 4.03(2)(b).   With respect to the

unpaid liabilities for the 1990 and 1991 taxable years,

petitioner knew or had reason to know that such liabilities would

be unpaid at the time the respective returns were signed.    The

bankruptcy case was still pending when petitioner and Mr. Vuxta

filed their joint Federal income tax return for the 1991 taxable

year on May 30, 1996.    The filing of the return for the 1990

taxable year on September 23, 1991, preceded the filing of their

bankruptcy petition on May 1, 1992, only by a little over 7

months.    Petitioner indicated that she believed her husband had

entered into payment plans for the unpaid tax liabilities,

although it is unclear as to which taxable years.

     The situation, however, is different with respect to the

unpaid liability for the 1989 taxable year.    More than 19 months
                                - 9 -

passed before the bankruptcy petition was filed.   The 1989 return

was prepared by Mr. Vuxta.   Petitioner was not the primary wage

earner and was not involved in Mr. Vuxta’s business.   It does not

appear from the record that petitioner knew or had reason to know

that such liability would be unpaid at the time the 1989 return

was filed on September 17, 1990.

     c.   Significant Benefit

     The record is not clear as to whether petitioner has

significantly benefited (beyond normal support) from the unpaid

tax liabilities.

     d.   Lack of Economic Hardship

     As we indicated earlier, petitioner has not shown that she

will suffer economic hardship if relief is not granted.    Her

debts were discharged in bankruptcy on May 23, 1997, and

petitioner received the proceeds of Mr. Vuxta’s 401(k) plan after

his death on May 4, 2001.

     e.   Noncompliance With Federal Income Tax Laws

     The record is devoid of any information regarding whether

petitioner has not made a good faith effort to comply with

Federal income tax laws in the tax years following the tax years

to which the request for relief relates.
                              - 10 -

     f.   Requesting Spouse’s Legal Obligation

     The record is also devoid of any information regarding

whether petitioner has a legal obligation pursuant to a divorce

decree or agreement to pay the liability.

     Counterbalancing the factors weighing against relief are the

factors weighing in favor of relief.   We next review each of the

following six factors, as listed under Rev. Proc. 2000-1, sec.

4.03(1), to evaluate whether they serve as a makeweight for

equitable relief under section 6015(f):

     a.   Marital Status

     Petitioner is separated or divorced from Mr. Vuxta.    He died

on May 4, 2001, a year before petitioner made her request for

relief from joint and several liability.    This factor is squarely

in favor of petitioner.

     b.   Economic Hardship

     As we indicated earlier, petitioner has not shown that she

will suffer economic hardship if relief is not granted.

     c.   Abuse

     There is nothing in the record indicating that petitioner

was subject to abuse.

     d.   No Knowledge or Reason To Know

     As we indicated earlier, petitioner knew or had reason to

know that the reported liabilities for 1990 and 1991 would be

unpaid at the time the corresponding returns were signed.
                              - 11 -

However, it does not appear from the record that petitioner knew

or had reason to know that the reported liability for 1989 would

be unpaid at the time the return was signed.

     e.   Nonrequesting Spouse’s Legal Obligation

     As we indicated earlier, the record is devoid of any

information regarding whether petitioner has a legal obligation

pursuant to a divorce decree or agreement to pay the liability.

     f.   Attributable to Requesting Spouse

     As we indicated earlier, the unpaid liabilities are solely

and fully allocable to Mr. Vuxta, and this factor is squarely in

favor of petitioner.

     Upon consideration of the entire record, especially in light

of the factors in Rev. Proc. 2000-15, sec. 4.03, we cannot

conclude that there was an abuse of discretion in denying

petitioner relief under section 6015(f) for the 1990 and 1991

taxable years.   However, we conclude that there was an abuse of

discretion in denying such relief for the 1989 taxable year and

hold that petitioner should be relieved from liability for such

taxable year under section 6015(f).

                                           An appropriate order and

                                      decision will be entered.
