Section 6015 innocent spouse relief. In the Neal case, the Tax Court did not err by examining a trial record de novo and determining that the IRS's decision to deny an individual's request for equitable innocent spouse relief under Code Sec. 6015(f) was not proper. The Tax Court was not barred from considering evidence introduced at trial that was not included in the administrative record. Further, the Tax Court properly determined that the IRS abused its discretion by denying equitable relief to the ex-wife, who was not aware of her spouse's underpayment of taxes. The couple maintained separate personal finances, and the husband refused to share information about his business finances with the individual. Further, it was reasonable for the individual to believe her spouse's assertions that the tax deficiencies resulted from denial of tax shelter deductions. Given the spouse's general level of deceit, the individual had no reason to know at the time of signing the tax returns that her husband would not pay the tax balances shown on them. Additionally, an incomplete picture of the individual's basic living expenses did not establish the degree to which she would suffer economic hardship if denied relief. Therefore, the individual was entitled to relief pursuant to Code Sec. 6015(f) because she satisfied a majority of the requirements in section 4.03 of Rev. Proc. 2000-15, 2000-1 CB 447.



Commissioner of Internal Revenue, Petitioner-Appellant v. Ruth E. Neal, Respondent-Appellee.

U.S. Court of Appeals, 11th Circuit; 06-14357, February 10, 2009.

Affirming the Tax Court, 90 TCM 161, Dec. 56,124(M), TC Memo. 2005-201.

[ Code Sec. 6015]





Before: Tjoflat, Hull and Wilson, Circuit Judges.

WILSON, Circuit Judge: The Commissioner of the Internal Revenue Service (the "IRS") appeals the decision of the Tax Court granting Ruth E. Neal equitable relief pursuant to the innocent spouse provision of Internal Revenue Code, 26 U.S.C. § 6015(f), for the portion of unpaid federal income taxes attributable to the income of Neal's ex-husband for tax years 1993, 1994, and 1995. The total amount in controversy, exclusive of interest and penalties, is $278,996.

In this case, the Tax Court conducted a trial and granted Neal equitable relief. Both parties agree that the Tax Court appropriately used an abuse of discretion standard of review and that Neal at trial had to establish the Commissioner abused its discretion in denying her relief. They disagree about whether the Tax Court at trial may consider evidence not included in the administrative record or is limited to consideration of the administrative record.

Neal submits that the Tax Court properly followed its precedent in Ewing v. Commissioner, 122 T.C. 32 (2004), rev'd on other grounds, 439 F.3d 1009, 1014 (9th Cir. 2006), and Porter v. Commissioner, 130 T.C. No. 10, 2008 WL 2065189 (Tax Ct. May 15, 2008), wherein the Tax Court held that in § 6015(f) cases it may conduct a "trial de novo" and consider evidence not included in the administrative record before the Commissioner. The Tax Court uses the term "trial de novo" to describe the form of its proceeding and applies an abuse of discretion standard of review in that trial de novo proceeding. However, the Commissioner contends that the Administrative Procedure Act ("APA") governs all agency proceedings and thus, the scope of the Tax Court's inquiry is confined strictly to the administrative record.

This issue has divided the fourteen members of the Tax Court: the twelve judges in the Ewing/Porter majority concluded the Tax Court's determination of equitable relief in § 6015 cases is made in a trial de novo and is not confined to the administrative record. Eleven of these twelve believe that (1) a trial de novo gives effect to the congressional mandate in § 6015(e) that the Tax Court "determine the appropriate relief available to [an] individual" in § 6015 equitable relief cases, (2) the Tax Court's 75-year history of conducting trials de novo under other statutes authorizing the Tax Court to make "determinations" of relief was well established when Congress enacted § 6015(e) using the "determine" language, and (3) the APA's record rule, limiting review to the administrative record, does not apply to the Tax Court's § 6015(e) determinations. Two members dissented and prefer a scope of Tax Court review limited to the administrative record.

We summarize § 6015, the statute at issue, the facts, and the procedural history in Part I. In Part II, we hold that the Tax Court did not err in refusing to limit its consideration to the administrative record and in conducting a trial de novo in this § 6015 case. In Parts III and IV, respectively, we hold that the Tax Court did not abuse its discretion in determining that Neal is entitled to equitable relief and we affirm the Tax Court's judgment.


I.



A.


Section 6015, through which Neal seeks relief, was added to the Internal Revenue Code in 1998 to broaden existing innocent spouse relief from joint and several liability. Congress first imposed joint and several liability on joint filers of tax returns in 1938. Revenue Act of 1938, Pub. L. No. 75-289, § 51(b), 52 Stat. 447, 476 (1938). Until the 1960s, the fairness of this concept was rarely questioned. In 1961, the Supreme Court held that embezzled funds were taxable. James v. United States, 366 U.S. 213, 221, 241, 81 S. Ct. 1052, 1056, 1067 (1961). Because many embezzlers were insolvent, the IRS began assessing underpayment of taxes to the joint filers of embezzlers, even if the spouses knew nothing of the embezzlement and had received none of the embezzled funds. See, e.g., Huelsman v. Comm'r, 416 F.2d 477, 478 (6th Cir. 1969); Horn v. Comm'r, 387 F.2d 621, 622-23 (5th Cir. 1967); Moore v. United States, 360 F.2d 353, 357 (4th Cir. 1966). Congress responded by adding to the I.R.C. § 6013(e), which allowed relief from joint liability in certain cases if (1) the underpayment was due to fraud on the part of the taxpayer's spouse; (2) the taxpayer did not know and had no reason to know of the underpayment; and (3) after considering the facts and circumstances, including whether the taxpayer benefitted from the underpayment, it was inequitable to hold the innocent spouse liable for the underpayment. Innocent Spouse Act of 1971, Pub. L. No. 91-679, 84 Stat. 2063, 2063-64 (1971). In 1984, Congress amended § 6013(e) and slightly broadened the grant of relief. Pub. L. No. 98-369, § 424(a), 98 Stat. 494, 801 (1984).

Congress repealed § 6013(e) and enacted § 6015 in the Internal Revenue Service Restructuring and Reform Act of 1998 to make "innocent spouse status easier to obtain." H.R. REP. NO. 105-599, at 249-51 (1998) (Conf. Rep.), reprinted in 1998 U.S.C.C.A.N. 288. Because this case involves § 6015(e) and (f), we quote those two subparts, which provide in pertinent part:
(e) Petition for review by Tax Court. --

(1) In general. --In the case of an individual against whom a deficiency has been asserted and who elects to have subsection (b) or (c) apply, or in the case of an individual who requests equitable relief under subsection (f) --

(A) In general. --In addition to any other remedy provided by law, the individual may petition the Tax Court (and the Tax Court shall have jurisdiction) to determine the appropriate relief available to the individual under this section ... . (f) Equitable relief. --Under procedures prescribed by the Secretary, if-

(1) taking into account all the facts and circumstances, it is inequitable to hold the individual liable for any unpaid tax or any deficiency (or any portion of either); and

(2) relief is not available to such individual under subsection (b) or (c), the Secretary may relieve such individual of such liability.

26 U.S.C. § 6015(e) and (f).

We start with subpart (f) of § 6015, which authorizes the Commissioner to grant equitable relief. Specifically, the Commissioner may grant relief to a taxpayer if, under procedures prescribed by the Commissioner, it would be "inequitable to hold the individual liable for any unpaid tax or any deficiency (or any portion of either)" and relief would not be available under subsection (b) or (c). 26 U.S.C. § 6015(f). The parties agree that relief is not available to Neal under § 6015(b) and (c), and that Neal may properly seek equitable relief under § 6015(f) as an alleged innocent spouse. 1

In addition, subpart (e) of § 6015 authorizes a taxpayer who has been denied relief pursuant to subparts (b), (c), or (f) to petition the Tax Court for relief. Section 6015(e) expressly grants jurisdiction to the Tax Court to "determine the appropriate relief available to the individual." 26 U.S.C. § 6015(e). Section 6015(e) does not say the taxpayer "may appeal" the Commissioner's § 6015(f) decision to the Tax Court or that the Tax Court may hear an appeal. Rather, § 6015(e) authorizes the taxpayer to seek § 6015(f) relief from the Tax Court. 2 Id. Section 6015(e) also states that a petition for relief from the Tax Court is "[i]n addition to any other remedy provided by law." Id.


B.


Neal and her ex-husband Alimam Neal ("Alimam") married in 1976, resided together until 1996, and divorced in 1998. During the marriage, the couple kept largely separate finances, maintained separate checking accounts, and rarely discussed their financial arrangements. 3 Neal, a radiologist employed by the Medical College of Georgia, paid most of the family expenses, including half of the monthly mortgage payment, groceries, and schooling and activities for the couple's three children. Alimam, a self-employed anesthesiologist, paid the other half of the mortgage, the housekeeper, and the utilities and car payments. Despite Neal's requests to Alimam, she was not privy to the financial aspects of Alimam's business.

Neal relied upon Alimam and his accountant to prepare and file the couple's joint federal income tax returns. She merely gave Alimam her W-2 forms and then signed the returns once Alimam received them from the accountant. 4 Neal never spoke to the accountant nor did she examine the completed tax returns. Neal "imagined" that Alimam properly submitted their financial information to the accountant and filed the returns.

In fact, Alimam mailed the completed returns but, unbeknownst to Neal, assiduously failed to include payment of taxes relating to his income. Thus, while Neal's employer appropriately withheld taxes from Neal's salary, the portion of the taxes attributable to Alimam's business went unpaid.

Neal first learned that the couple owed money to the IRS when they sought bankruptcy protection in 1989. Alimam falsely told Neal that the IRS was a creditor because it disallowed certain tax shelters. The bankruptcy hearings revealed that Alimam had purchased in his name, without informing Neal, a boat, a Colorado villa, six or seven cars, and expensive fine art. After the bankruptcy, their home was foreclosed and their cars were repossessed. Over the next several years, Neal's wages were garnished, and she pawned a diamond ring to pay back taxes and a Rolex watch to pay utility bills.

In 1993, the IRS audited the couples' 1990, 1991, and 1992 returns. Though the couple signed the audit report, they did not make any payments toward the back taxes assessed. The couple again filed for bankruptcy in 1995 and the IRS sought underpaid taxes from 1990 to 1993. Alimam falsely claimed to Neal that the IRS had not permitted certain business expenses resulting in the delinquencies.

The second garnishment of Neal's wages in 1996 finally prompted Neal to investigate the reasons underlying the couple's financial turmoil. When questioned, the accountant and bankruptcy attorney disclosed that Alimam had never paid his income taxes. The Commissioner had not contested any of the couple's joint returns, nor had it asserted any deficiencies. Rather, the Commissioner sought to collect $278,996 in unpaid taxes, including interest and penalties. The back taxes due to the IRS (without interest and penalties) are as follows: for 1993, $52,689; for 1994, $31,191; and, for 1995, $20,039. 5

In July 1996, Neal left the marital home with their children and sued for divorce because of Alimam's adulterous relationships and financial mismanagement. Unknown to Neal, Alimam was supporting another woman who bore his child and his share of the tax liability was channeled to his secret life and support of his second family. At the conclusion of the 1998 divorce proceeding, Alimam was ordered to pay all past and future tax liabilities incurred by the couple during their marriage. Alimam made minimal payments to the IRS and the majority of the unpaid taxes are outstanding. Alimam made sporadic child support payments of $3,000 per month until he lost his job in 2001. After the divorce, Neal financially supported herself, one child who lived at home, and two adult children.


C.


On February 8, 2000, Neal petitioned the Commissioner, under § 6015(f), for equitable relief from joint and several liability for the portion of the unpaid taxes attributable to Alimam's income. See 26 U.S.C. § 6015(f). Neal did not contest payment of approximately $5,400, the portion of the underpayment attributable to her income. Neal requested relief because she signed the tax returns "believing that my then-husband was paying any amounts indicated as owed by the tax return."

Neal responded to a written questionnaire sent by the IRS in which she represented that she was not involved with the preparation of tax returns, did not discuss the tax returns with Alimam, and did not review the tax returns. Neal then met with an IRS examining agent and related some of the foregoing facts. Neither a court reporter nor an attorney were present, and no recording was made of this interview. On August 9, 2001, the examining agent denied relief because the agent determined, "[Neal] knew that an underpayment existed when the tax returns were signed; that no economic hardship would exist [if Neal were required to pay the back taxes] and a portion of the tax is attributable to [Neal]."

Neal protested the determination to the IRS Office of Appeals ("Appeals"). Appeals echoed the examining agent's conclusions and issued a notice of determination on April 22, 2003, denying Neal's request for equitable relief. Appeals found that Neal was aware of the underpayment of taxes because the IRS had been a creditor in the 1989 and 1995 bankruptcy actions, the IRS had garnished her salary twice, and Neal had signed the 1994 audit report which indicated the underpaid amounts. Appeals also found that Neal would not suffer economic hardship if relief was withheld because Neal "enjoy[ed] an upper middle income standard of living" based on her salary of $129,000 per year and child support payments of $36,000 per year.

Neal sued in the Tax Court to contest the Commissioner's denial of equitable innocent spouse relief. At a pre-hearing conference with the Tax Court, the Commissioner took the position that the Tax Court's review was limited to the administrative record. The Tax Court disagreed based on its previous decision in Ewing, 122 T.C. at 44, and stated that the Tax Court's review and determination was not limited to the administrative record but was de novo. See also Porter, 130 T.C. No. 10, 2008 WL 2065189, at *2 (upholding the Ewing analysis). Accordingly, the Tax Court agreed to entertain testimony and other evidence the parties wished to introduce. See § 6015 (e)(1)(A) (authorizing the Tax Court "to determine the appropriate relief available to [an] individual" under § 6015(f)). As provided in Ewing, the Tax Court's longstanding rule and practice has been to hold trials de novo in situations where it makes determination and redeterminations, including § 6015(f) cases. Ewing, 122 T.C. at 40-41. To prevail in the trial de novo, the taxpayer petitioner must show that the Commissioner's denial of equitable relief was an abuse of discretion. Id. at 36-37, 39-40; see Mitchell v. Comm'r, 292 F.3d 800, 807 (D.C. Cir. 2002).

The Tax Court heard the testimony of two witnesses: Ruth Neal and Gloria Spann. 6 Neal recited the facts summarized above. In addition, to support her position that payment of back taxes would result in an economic hardship, Neal testified that she earned $174,940 in 2003 and had expenses of $158,570.81 for household necessities in that same year. In response, the Commissioner called Spann, a revenue officer (but not the one who initially reviewed Neal's petition for relief). The Commissioner asked Spann to explain the meaning of "economic hardship" according to the Internal Revenue Manual. The Revenue Guidelines specified that individuals with a salary exceeding $5,834 per month were expected to subsist on $2,821 per month. Because Neal spent more than $2,821 per month, Spann testified that requiring Neal to pay the delinquencies would not result in an economic hardship.

After hearing the evidence, the Tax Court issued a Memorandum finding that Neal did not have knowledge of the unpaid taxes because "among other things, the filed tax returns accurately reflected the correct tax liabilities, nonpayment of the balances of the taxes shown to be due on the returns was concealed by Alimam, and [Neal] was not otherwise put on notice of the nonpayment." The Tax Court also found that the facts before it were "inconclusive as to the degree to which [Neal] would suffer economic hardship if she were denied relief from joint liability." Taking into account "all the facts and circumstances," the Tax Court also found that it would be inequitable to hold Neal liable for the tax balances due for 1993, 1994, and 1995 and noted particularly the following:
Alimam's legal obligation relating to the unpaid taxes, the fact that the taxes in issue are attributable to Alimam's income, Alimam's deception with regard to his investments and nonpayment of the taxes due, the absence of any significant benefit to petitioner from Alimam's failure to pay the taxes, Alimam's exclusion of petitioner from the tax return preparation process and from his financial affairs, petitioner's payment of the majority of the family's expenses and her continued support of the children, and petitioner's payment every year of the Federal income taxes attributable to her income.

The Commissioner timely appealed.


II.


"[W]e review Tax Court decisions 'in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury.'" L.V. Castle Inv. Group, Inc. v. Comm'r, 465 F.3d 1243, 1245 (11th Cir. 2006) (quoting 26 U.S.C. § 7482(a)(1)). Accordingly, we review interpretations of the Internal Revenue Code de novo, and "we review the [tax] court's decision to grant or deny equitable relief for abuse of discretion, reviewing underlying questions of law de novo and findings of fact upon which the decision to grant equitable relief was made under the clearly erroneous standard." Atlanta J. & Constitution v. City of Atlanta Dep't of Aviation, 442 F.3d 1283, 1287 (11th Cir. 2006) (citations omitted); see Cheshire v. Comm'r, 282 F.3d 326, 332, 338 (5th Cir. 2002). Whether the Tax Court in a § 6015(e) case may conduct a trial de novo or is confined to considering only the administrative record presents a question of law which this Court reviews de novo. 7

Joint taxpayers are normally jointly and severally liable for the full amount of federal income taxes due, but may be relieved of joint and several liability under the limited circumstances described in § 6015(b), (c), and (f). As noted earlier, § 6015(f) permits the Commissioner to grant equitable relief to an innocent spouse "for any unpaid tax or any deficiency" if "taking into account all the facts and circumstances, it is inequitable to hold the individual liable" and if "relief is not available to such individual under subsection (b) or (c)." 26 U.S.C. § 6015(f). And as also noted above, § 6015(e), at issue here, expressly grants jurisdiction to the Tax Court "to determine the appropriate relief available to the individual" under § 6015(f).

Although the parties agree that the Commissioner's denial of equitable relief to Neal under § 6015(f) is subject to judicial review by the Tax Court, they disagree as to what the Tax Court may consider in its review. In Ewing, the Tax Court held that in reviewing a denial of § 6015(f) equitable relief, it is not confined to considering only the facts presented in the administrative record below. 122 T.C. at 35-36. The Tax Court reaffirmed that holding in Porter, 2008 WL 2065189, at *2, and applied that holding here to conduct a trial de novo in Neal's case, which resulted in a reversal of the Commissioner's decision to deny her equitable relief. The Commissioner urges us to disapprove the Tax Court's Ewing/Porter reasoning and to restrict the Tax Court's § 6015(e) review in § 6015(f) equitable relief cases to the administrative record.

We first outline the Tax Court's reasoning in Ewing and Porter for its conclusion that it may conduct a trial de novo in § 6015(f) cases. The Ewing/Porter majority focused on the statutory language in § 6015(e) and (f). The majority reasoned that, in the Internal Revenue Code, the Tax Court's role in § 6015(f) cases is prescribed by the operative terms of § 6015(e). The Ewing majority concluded that a de novo trial gave effect to § 6015(e)'s statutory mandate that the Tax Court "determine the appropriate relief available to the individual," reasoning as follows:
Part of our interpretative responsibility here is to give proper effect to both section 6015(e) and (f). Courts attempt to read statutory provisions harmoniously, so as to give proper effect to all of the words of the statute... . Our de novo review of the Commissioner's determinations under section 6015(f) gives effect to the congressional mandate [in section 6015(e)] that we determine whether a taxpayer is entitled to relief under section 6015. The measure of deference provided by the abuse of discretion standard is a proper response to the fact that section 6015(f) authorizes the Secretary to provide procedures under which, based on all the facts and circumstances, the Secretary may relieve a taxpayer from joint liability. That approach (de novo review, applying an abuse of discretion standard) properly implements the statutory provisions at issue here, and has a long history in numerous other areas of Tax Court jurisprudence.

We conclude that our determination whether petitioner is entitled to equitable relief under section 6015(f) is made in a trial de novo and is not limited to matter contained in respondent's administrative record, and that the APA record rule does not apply to section 6015(f) determinations in this Court.

122 T.C. at 43-44 (citations omitted).

As support for its construction of § 6015(e) and (f), the Ewing/Porter majority pointed to the Tax Court's seventy-five year history of conducting trials de novo in other areas where Congress by statute has authorized the Tax Court to make "determinations" or "redeterminations" and reasoned that Congress was well aware of the Tax Court's well-established interpretation of "determine" when it enacted § 6015 in 1998. Ewing, 122 T.C. at 37-39; Porter, 2008 WL 2065189, at *3. The Ewing majority explained, as follows:
Since 1924, the Tax Court (and the predecessor Board of Tax Appeals, see Consol. Cos. v. Commissioner, 15 B.T.A. 645, 652 (1929)) has had jurisdiction to "redetermine" deficiencies and additions to tax, secs. 6213 and 6214(a); and, since 1926, to determine overpayments, sec. 6512(b). Under section 6213(a) and its predecessors, we (and earlier, the Board of Tax Appeals) have "redetermined" deficiencies de novo, not limited to the Commissioner's administrative record, for more than 75 years.

We can presume that Congress was aware of this long history in 1998 when Congress used the word "determine" in section 6015. If Congress includes language from a prior statute in a new statute, courts can presume that Congress intended the longstanding legal interpretation of that language to be applied to the new statute. Commissioner v. Noel's Estate, 380 U.S. 678, 680-681, 85 S. Ct. 1238, 14 L.Ed.2d 159, (1965); United States v. 101.80 Acres, 716 F.2d 714, 721 (9th Cir. 1983).

There are other situations in which this Court makes determinations de novo. For example, section 7436(a) provides that the Tax Court may "determine" whether the Commissioner's determination regarding an individual's employment status is correct. Congress intended that we conduct a trial de novo with respect to our determinations regarding employment status. See H. Rept. 105-148, at 639 (1997), 1997-4 C.B. (Vol.1) 319, 961; S. Rept. 105-33, at 304 (1997), 1997-4 C.B. (Vol. 2) 1067, 1384; H. Conf. Rept. 105-220, at 734 (1997), 1997-4 C.B. (Vol. 2) 1457, 2204. As another example, section 6404 authorizes this Court to "determine" whether the Secretary's refusal to abate interest was an abuse of discretion. Our practice has been to make our determination after providing an opportunity for a trial de novo. See, e.g., Goettee v. Commissioner, T.C. Memo 2003-43; Jean v. Commissioner, T.C. Memo. 2002-256; Jacobs v. Commissioner, T.C. Memo. 2000-123.

Our long tradition of providing trials de novo in making our determinations, and Congress's use of the word "determine" in our jurisdictional grant in section 6015(e)(1)(A), suggest that Congress intended that we provide an opportunity for a trial de novo in making our determinations under section 6015(f).

Ewing, 122 T.C. at 38-39. 8

The Tax Court in Porter emphasized that the jurisdiction granted in § 6015(e) "is couched in language similar to that" in §§ 6213, 6214, and 6512(b), where the Tax Court has long conducted trials de novo, and that § 6015 "is part and parcel of the same statutory framework":
The Code has long provided a specific statutory framework for reviewing deficiency determinations of the Internal Revenue Service. Secs. 6213 and 6214; Ewing v. Commissioner, 122 T.C. at 52 (Thornton, J., concurring). Section 6015 is part and parcel of the same statutory framework. Our de novo review procedures emanate from that statutory framework.

Our jurisdiction under section 6015 is couched in language similar to that of our deficiency jurisdiction under section 6213 and 6214. Section 6015(e)(1)(A) authorizes this Court to "determine" the appropriate relief available under section 6015. Section 6213(a) provides that taxpayers who receive a notice of deficiency may petition this Court for a "redetermination" of the deficiency. Section 6214(a) provides this Court jurisdiction to "redetermine" the amount of the deficiency.

Congress first granted the Board of Tax Appeals (the predecessor to the Tax Court) jurisdiction to "redetermine" deficiencies and additions to tax in 1924. Ewing v. Commissioner, 122 T.C. at 38. Since 1926 we have also had jurisdiction to "determine" overpayments. Id. These determinations and redeterminations have always been made de novo. O'Dwyer v. Commissioner, supra at 580; Greenberg's Express, Inc. v. Commissioner, 62 T.C. 324, 327-328, 1974 WL 2624 (1974); see Clapp v. Commissioner, 875 F.2d 1396, 1403 (9th Cir. 1989); Raheja v. Commissioner, 725 F.2d 64, 66 (7th Cir. 1984), affg. T.C. Memo. 1981-690; Jones v. Commissioner, 97 T.C. 7, 18, 1991 WL 119659 (1991). Congress has defined the jurisdiction of this Court using the words 'determine" and "redetermination." Ewing v. Commissioner, 122 T.C. at 38. We see no material difference between "determine" in section 6512(b), and "redetermination" in section 6213(a) for purposes of this discussion. Id.

Porter, 2008 WL 2065189, at *3. The Tax Court reasoned that "[w]e can presume that in 1998 when Congress chose to use the word 'determine' in section 6015, it did so in full awareness of our long history of de novo review," and that "[t]he use of the word 'determine' in section 6015(e)(1)(A) suggests that Congress intended that we conduct trials de novo in making our determinations under section 6015(f)." Id. 9

In both Ewing and Porter, the Tax Court identified procedural anomalies that further justified its conclusion that trials de novo are appropriate in § 6015 equitable relief cases. Ewing, 122 T.C. at 42-44; Porter, 2008 WL 2065189, at *6. If the Tax Court were confined to the administrative record in reviewing stand-alone § 6015(e) petitions (such as Neal's petition), inconsistent procedures would be adopted in equitable spouse relief cases. The Tax Court gave several examples. First, by statute, when a taxpayer files an election for § 6015(f) relief with the Commissioner and the Commissioner fails to render a determination within six months, the Tax Court has jurisdiction under § 6015(e) to make a determination as to the viability of the taxpayer's petition in the absence of an administrative record. 26 U.S.C. § 6015(e)(1)(A)(i)(II). 10 As such, confining the Tax Court to consideration of the administrative record in only those § 6015(f) cases in which the Commissioner has issued a determination would result in inconsistent procedural treatment of essentially identical § 6015(e) petitions. Ewing, 122 T.C. at 42; Porter, 2008 WL 2065189, at *6.

Second, in deficiency cases, the Tax Court holds a trial de novo even when a taxpayer raises equitable spouse relief under § 6015(f) as an affirmative defense to the deficiency case. Ewing, 122 T.C. at 42 (citing Butler v. Comm'r, 114 T.C. 287, 292 (2000)); Porter, 2008 WL 2065189, at *6. Again, without trials de novo under § 6015(e), substantially identical § 6015(f) claims would be treated differently. 11

Third, under § 6015(e)(4), the non-requesting spouse can intervene "to become a party" when a requesting spouse's petition for equitable relief under § 6015(e) reaches the Tax Court. 26 U.S.C. § 6015(e)(4); Ewing, 122 T.C. at 42-43; Porter, 2008 WL 2065189, at *6. The Tax Court in Ewing and Porter concluded that the fact that Congress in § 6015 provided for intervention by a non-requesting spouse as a party directly in the Tax Court also suggests that Congress intended that the Tax Court conduct trials de novo in § 6015 cases in order to permit intervening spouses to offer evidence to challenge the requesting spouse's entitlement to equitable relief. Ewing, 122 T.C. at 43; Porter, 130 T.C. at *6.

In summary, the Tax Court in Ewing and Porter concluded that Congress intended that taxpayers have the same opportunity for a trial de novo relating to § 6015(f) equitable relief (1) when that relief is raised as an affirmative defense in a deficiency proceeding, (2) in a stand-alone § 6015(e) proceeding where the Commissioner has denied § 6015(f) relief (as in this case), (3) in a stand-alone § 6015(e) proceeding where the Commissioner has failed to rule within six months, and (4) when a non-requesting spouse intervenes in the Tax Court to challenge a requesting spouse's claim to § 6015(f) relief. 12 Ewing, 122 T.C. at 42-43; Porter, 2008 WL 2065189, at *6. "Identical issues before a single tribunal should receive similar treatment." Ewing, 122 T.C. at 43 (quoting Corson v. Comm'r, 114 T.C. 354, 364 (2000)).

Finally, and of particular import here, the Tax Court explained why the APA's record rule-limiting a reviewing court to the administrative record-does not supplant the Tax Court's own longstanding trial de novo procedures and precedent. APA § 559 "provides that the APA does 'not limit or repeal additional requirements imposed by statute or otherwise recognized by law.'" Porter, 130 T.C. No. 10, 2008 WL 2065189, at *4 (quoting 5 U.S.C. § 559). In both Ewing and Porter the Tax Court specifically discussed how its trial de novo procedures for reviewing IRS decisions were "well-established" and "recognized by law" before the enactment of the APA in 1946. Id.; Ewing, 122 T.C. at 52 (Thornton, J., concurring). 13 According to the Tax Court, its trial de novo procedures have remained virtually unchanged since the APA's enactment, supporting its conclusion that the APA did not limit or repeal the Tax Court's de novo review procedures. Ewing, 122 T.C. at 38-40.

The fact that the APA (enacted in 1946) predates § 6015 (enacted in 1998) does not change the result because § 6015 is "part and parcel" of the statutory framework for Tax Court review of IRS deficiency determinations. Ewing, 122 T.C. at 52-53 (Thornton, J., concurring); Porter, 2008 WL 2065189, at **3-4. It is from this framework that the "[Tax Court's] de novo review procedures emanate." Ewing, 122 T.C. at 52 (Thornton, J., concurring); Porter, 2008 WL 2065189, at *3. Accordingly, when Congress chose to use the same statutory language in § 6015 as it used in establishing the longstanding trial de novo procedure for deficiency actions, "it did so in full awareness of [the Tax Court's] long history of de novo review," Porter, 2008 WL 2065189, at *3, and did not intend to impose a different procedure. Thus, per § 559, "the APA does not disturb or supersede [the Tax] Court's longstanding de novo judicial review procedures for cases involving spousal relief under section 6015." Ewing, 122 T. C. at 54 (Thornton, J., concurring).

The Tax Court also explained that "[a]s a statute of general application, the APA does not supersede specific statutory provisions for judicial review" such as Congress has granted to the Tax Court. Porter, 2008 WL 2065189, at *2. The Tax Court pointed out that "nothing in section 6015 or its legislative history indicates that the APA is to apply to section 6015 cases or that we are to restrict our review to the administrative record." Id. at *4. 14 Moreover, the Tax Court emphasized that the legislative history of the APA confirms it does not supersede the Tax Court's adjudication procedures, stating:
The legislative history of the APA confirms this understanding. See S. Comm. on the Judiciary, 79th Cong., 1st Sess., Administrative Procedure Act (Comm. Print 1945), reprinted in Administrative Procedure Act Legislative History, 1944-46, at 22 (1946) (stating that there are exempted from APA formal adjudication requirements matters that are subject to de novo review of facts and law such "as the tax functions of the Bureau of Internal Revenue (which are triable de novo in The Tax Court)"); S. Rept. 752, 79th Cong., 1st Sess. (1945), reprinted in Administrative Procedure Act Legislative History, 1944-46, at 214 (1946) (explaining that pursuant to APA provisions governing the scope of judicial review, courts establish facts de novo where the agency adjudication is not subject to APA formal adjudication provisions "such as tax assessments * * * not made upon an administrative hearing and record, [where] contests may involve a trial of the facts in the Tax Court"); H. Rept.1980, 79th Cong., 2d Sess. (1946), reprinted in Administrative Procedure Act Legislative History, 1944-46, at 279 (1946) (same).

Ewing, 122 T.C. at 53 (Thornton, J., concurring) (alterations in original). 15 That the APA effectively exempted the Tax Court does not mean it exempted the Tax Court only as to tax matters extant in 1946.

We are persuaded by the Tax Court's reasoning. Congress's use of the word "determine" and not "appeal" in § 6015(e)'s jurisdictional grant is significant. And, most importantly, § 6015(e) must be read and considered with the other § 6015 provisions, such as § 6015(e)(4) outlining intervention by the non-requesting spouse and § 6015(e)(1)(A)(i)(II) authorizing a petition to the Tax Court if the Commissioner has not acted in six months. Congress also enacted § 6015 with knowledge of the Tax Court's precedent and history of conducting trials de novo in making its determinations. As the Tax Court noted, § 6015 was enacted "as part and parcel of," and with similar language to, the statutory framework for the Tax Court's review of deficiency determinations, which determinations had been made using trials de novo long before the passage of the APA. 16 The legislative history of the APA contains a clear intent to exempt the Tax Court. At a minimum, the Commissioner has not shown the Tax Court erred in its Ewing and Porter rulings that it followed in this case. 17

We recognize that the Commissioner does cite the Eighth Circuit's decision in Robinette v. Commissioner, 439 F.3d 455, 461 (8th Cir. 2006), rev'g 123 T.C. 85 (2004), but that decision, if anything, helps Neal. Robinette involved a claim under § 6330 --not § 6015(e) and (f). Section 6330 affords taxpayers notice and a right to a hearing before the IRS can levy on and sell a taxpayer's property for unpaid taxes. 26 U.S.C. § 6330. If the taxpayer requests a hearing, an employee or officer in the IRS Office of Appeals who had no prior involvement with the unpaid tax hears the matter and determines whether the requirements of the applicable law or administrative procedure were met as to the unpaid tax. Id. § 6330(b)(1), (3), § 6330(c)(1), (3). This is known as a collection-due-process hearing. Section 6330(c)(3) provides that the "determination by [the] appeals officer" shall take certain listed factors into consideration. Id. § 6330(c)(3). Then § 6330(d)(1) provides that the taxpayer, within 30 days of the appeal officer's "determination," may "appeal such determination" to the Tax Court. Id. § 6330(d)(1). 18

This "appeal" language in § 6330 is materially different from § 6015(e), which does not use the word "appeal" but instead authorizes the Tax Court to "determine" the appropriate relief. This shows that Congress knows how to use the term "appeal" and that Congress meant something different when it authorized the Tax Court in § 6015(e) "to determine the appropriate relief available" to a taxpayer. Id. § 6015(e). In § 6330(d), Congress chose not to use the word "determine" or some derivation thereof and instead chose to vest the Tax Court with jurisdiction over a taxpayer's "appeal." For that reason, Robinette's interpretation of § 6330 does not undercut, and in fact is consistent with, our reading of § 6015. See Porter, 2008 WL 2065189, at *3.

For all of these reasons, we agree with Neal that the Commissioner has not shown that the Tax Court erred by refusing to limit its consideration to the administrative record and by conducting a trial de novo in this § 6015(f) case.


III.


The Commissioner alternatively contends that even under trial de novo review, the Tax Court erred in concluding that the Commissioner abused his discretion in denying equitable relief to Neal. We disagree.

Section 6015(f) expressly authorizes the Commissioner to prescribe procedures for determining qualification for equitable relief. Under Revenue Procedure 2000-15, 2000-1 C.B. 447, equitable relief will be granted where (i) the couple has divorced or has not lived together for a year prior to the request for relief; (ii) "[a]t the time the return was signed, the requesting spouse had no knowledge or reason to know that the tax would not be paid"; and (iii) the requesting spouse will suffer economic hardship if the relief is not granted. Rev. Proc. 2000-15, § 4.02, 2000-1 C.B. at 448. If a requesting spouse does not qualify for relief under § 4.02, she may still qualify for relief under § 4.03, which sets forth a partial, non-exhaustive list of factors, no one of which is determinative. 19 Some factors weigh in favor of relief and some weigh against; the Commissioner must take into account all the facts and circumstances, considering and weighing all factors appropriately. Id. at 449. The taxpayer has the burden of demonstrating that relief should be granted. Cheshire v. Comm'r, 282 F.3d 326, 332 (5th Cir. 2002); Ewing, 122 T.C. at 36-37.

Here, the Commissioner reasoned that Neal was not entitled to relief because (1) when she signed the return, she should have known that the tax was unpaid based on the couple's prior bankruptcy filings, and (2) that no economic hardship would befall her if she had to pay the remaining tax liability. After hearing the evidence at trial, including Neal's testimony, the Tax Court found that the record was "inconclusive" as to the existence of economic hardship. But the Tax Court also found that most of the § 4.03 factors weighed in favor of granting Neal relief. First, Alimam has a legal obligation to pay the unpaid taxes. Next, the couple is divorced. Almost all of the underpayments were attributable only to Alimam. Further, Neal received no significant benefit from the unpaid taxes and has made a good faith effort to comply with federal tax laws with regard to her income throughout her marriage and in subsequent years. 20 Even now, the only two contested factors are whether Neal knew or should have known about Alimam's underpayment, and whether Neal would suffer economic hardship if not granted relief.

In considering "knowledge or reason to know of underpayment," relevant factors include: "(1) the alleged innocent spouse's level of education; (2) the spouse's involvement in the family's business and financial affairs; (3) the presence of expenditures that appear lavish or unusual when compared to the family's past levels of income, standard of income, and spending patterns; and (4) the culpable spouse's evasiveness and deceit concerning the couple's finances." Kistner v. Comm'r, 18 F.3d 1521, 1525 (11th Cir. 1994). The Commissioner points to Neal's knowledge that Alimam filed for bankruptcy in 1989 and 1995 (and the levying of Neal's salary) as evidence that Neal should have known about Alimam's lack of trustworthiness as to tax matters. As the Tax Court noted, however, the couple's filed tax returns accurately reflected their tax liabilities. The couple also maintained separate personal finances, and, although Neal asked, Alimam refused to share information about his business finances. Further, Alimam lied to Neal about the reason the IRS was a creditor in the 1989 bankruptcy, falsely telling her that the IRS had disallowed certain tax shelters, resulting in a tax deficiency. Because Neal knew others who ended up owing large amounts of taxes after investing in tax shelters, she believed Alimam's explanation. 21 Although Neal became aware during the 1989 bankruptcy of some of Alimam's lavish expenses, Neal did not know how much Alimam made in his anesthesiology practice and real estate investments and thus whether his income might support those purchases. Furthermore, Alimam contributed much less than Neal to the family expenses, making it reasonable to assume he had more discretionary income. Given Alimam's general level of deceit, we cannot say that the Tax Court abused its discretion in finding that Neal did not know, nor should she have known, when she signed the 1990-93 tax returns that Alimam would not pay the tax balances shown on them.

With regard to the economic hardship factor, economic hardship is generally defined as the inability to meet "reasonable basic living expenses." See Treas. Reg. § 301.6343-1(b)(4). The Tax Court held that the facts were inconclusive as to the degree to which Neal would suffer economic hardship if she were denied relief. According to the Commissioner, sufficient evidence exists to sketch some picture of Neal's net worth --specifically, the Commissioner points to Neal's substantial salary, which in 1996 was $127,103 and had risen to $174,940 in 2003. Yet Neal testified that she has spent all of her income over time (including supporting her adult children), "just breaks even," and has a poor credit rating. Although an incomplete picture of Neal's "basic living expenses" cuts against relief, economic hardship is only one factor in a non-exhaustive list, and no single factor is determinative of whether equitable relief is appropriate. Rev. Proc. 2000-15, § 4.03. Thus, taking into account all of the facts and circumstances and the factors listed in Revenue Procedure 2000-15, § 4.03, we cannot say that the Tax Court abused its discretion in finding that the factors, taken as a whole, weighed in favor of granting relief.


IV.


The Tax Court did not err in conducting a trial de novo in reviewing the Commissioner's decision whether Neal was entitled to equitable relief under § 6015(f). The Tax Court also did not abuse its discretion in granting Neal equitable relief. The judgment of the Tax Court is therefore

AFFIRMED.

TJOFLAT, Circuit Judge, dissenting:

I dissent from the opinion of the court because a careful review of applicable law reveals that neither the plain language nor the legislative history nor the historical practices of the Tax Court in relation to the innocent spousal relief provision, I.R.C. § 6015(f), indicate Congress's intent to supplant the scope and standard of review set forth in the Administrative Procedure Act ("APA"). Without citation to any cases other than Ewing/Porter, the court has succumbed to the charms of circular reasoning and abdicated its reviewing function --that is, the court holds that the Tax Court's reasoning is correct because the Tax Court provided such reasoning regarding its own scope of review. By condoning the Tax Court's use of a de novo scope of review, the court undermines the Commissioner's incentive to decide taxpayer contests fairly and adequately. Thus, I would vacate the Tax Court's judgment and remand with the instruction that the Tax Court limit its review to the scope of the administrative record.


I.



A.


I begin by stating the obvious: the IRS is an "agency" as defined by the APA, the IRS has made findings of fact in this case, and such findings constitute "agency action." 5 U.S.C. § 701 (2008) (defining "agency" as an "authority of the Government of the United States"); id. § 706 (providing scope of review of agency actions). As the court recognizes, it is a fundamental tenet of administrative law that a court is "ordinarily limited to consideration of the decision of the agency ... and of the evidence on which it was based." United States v. Carlo Bianchi, 373 U.S. 709, 714-15, 83 S. Ct. 1409, 1413, 10 L. Ed. 2d 652 (1963). Pursuant to the APA, in the absence of an exception, a reviewing court must set aside only those agency adjudications that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A); Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S. Ct. 814, 823, 28 L. Ed. 2d 136 (1971), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99, 105, 97 S. Ct. 980, 984, 51 L. Ed. 2d 192 (1977). The court's review must be "searching and careful," but "narrow," because "the court is not empowered to substitute its judgment for that of the agency." Overton Park, 401 U.S. at 416, 91 S. Ct. at 823.

Further, the scope of this review must extend to, and be limited by, the "whole record" compiled by the agency, id. at 419, 91 S. Ct. at 825, "not some new record made initially in the reviewing court." Camp v. Pitts, 411 U.S. 138, 142, 93 S. Ct. 1241, 1244, 36 L. Ed. 2d 106 (1973). The reviewing court may obtain additional explanation of the agency decision through affidavits or testimony of the agency officials, but it may not substitute its own facts for those of the agency. Camp, 411 U.S. at 143, 93 S. Ct. at 1244.

Under the APA, in limited circumstances, a reviewing court may conduct a de novo hearing and consider whether an agency's decisions are "unwarranted by the facts to the extent that the facts are subject to trial de novo." 5 U.S.C. § 706(2)(F). In 1973, the Supreme Court confined this exception and allowed de novo review of adjudicative decisions in only those situations where the agency used "inadequate ... factfinding procedures." Overton Park, 401 U.S. at 416, 91 S. Ct. at 823.

Informal agency adjudication --that is, a decision made without a hearing, findings of facts, and other requirements specified in the APA --does not constitute inadequate factfinding sufficient to justify de novo review. See Camp, 411 U.S. at 141-42, 93 S. Ct. at 1243-44 (holding factfinding procedures adequate where agency adjudication was based on review of the administrative record without conducting a formal oral hearing or issuing findings of fact); Pacific Architect & Eng'rs Inc. v. U.S. Dep't of State, 906 F.2d 1345, 1348 (9th Cir. 1990) (holding factfinding procedures adequate where agency provided notice, company stated objections, and agency rejected objections in a statement of decision); Acumenics Research & Tech. v. U.S. Dep't of Justice, 843 F.2d 800, 804-05 (4th Cir. 1988) (same). But cf. Porter v. Califano, 592 F.2d 770, 782-84 (5th Cir. 1979) (holding agency factfinding procedures were inadequate where the officials accused of corruption by the plaintiff played a "pervasive role" in the factfinding). The informal factfinding procedures undertaken here were adequate and not subject to this de novo exception because Neal had the opportunity to provide information to the examining agent, discuss her claim with that agent, and respond to the agent's determination.


B.


In this case, the Tax Court combined a standard and scope of review not contemplated by the APA: an abuse of discretion standard and a de novo scope. Because the innocent spousal relief provision, I.R.C. § 6015, was enacted after the APA, the judicial review provisions of APA § 706 may be modified or superseded only if section 6015 does so "expressly." 5 U.S.C. § 559. The Supreme Court has explained that exemptions from the APA are not to be lightly presumed and must be clear. Dickinson v. Zurko, 527 U.S. 150, 155, 119 S. Ct. 1816, 1819, 144 L. Ed. 2d 143 (1999); Marcello v. Bonds, 349 U.S. 302, 310, 75 S. Ct. 757, 762, 99 L. Ed. 1107 (1955). There are no "magical passwords" that signify an exemption, and even the presence of terms like "clearly erroneous" and "substantial evidence" do not conclusively indicate departure from the abuse of discretion standard. Dickinson, 527 U.S. at 156, 119 S. Ct. at 1819 (explaining that the "relevant linguistic conventions were less firmly established before the APA's adoption than they are today"); Marcello, 349 U.S. at 310, 75 S. Ct. at 762.

We consider the express terms of the statute and then the legislative history in prescribing the appropriate standard and scope of review. See Marcello, 349 U.S. at 310, 75 S. Ct. at 762 (holding that the "laborious adaptation" of the APA procedures to deportation proceedings and related legislative history supported exemption from APA); Carlo Bianchi, 373 U.S. at 714, 83 S. Ct. at 1413 (concluding, based on a review of the statute and its legislative history, that review of Wunderlich Act decisions must be made on the administrative record). Neither the plain language of section 6015(e) or (f) nor its legislative history explicitly address the standard or scope of review.

The court, relying on the Ewing/Porter majority, argues that, in the Internal Revenue Code, the scope of review is identified on the face of the statute by the operative term "determine," ante at 26. Ewing v. Comm'r, 122 T.C. 32, 37 (2004), rev'd on other grounds, 439 F.3d 1009, 1014 (9th Cir. 2006); Porter v. Comm'r, 130 T.C. No. 10, 2008 WL 2065189, at *2-3 (Tax Ct. May 15, 2008). I do not dispute the fact that the Tax Court has on numerous occasions conducted de novo hearings to "determine" certain issues. However, I am unconvinced by this argument.

First, we must remain cognizant of the fundamental canon of statutory construction that, "unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning." Perrin v. United States, 444 U.S. 37, 42, 100 S. Ct. 311, 314, 62 L. Ed. 2d 199 (1979). The Supreme Court has consistently rejected "narrow common-law definition[s]" of statutory terms in favor of "generic definition[s]." See id. at 49, 100 S. Ct. at 317 (rejecting early common law definition of "bribery" and using the "accepted contemporary meaning" in its interpretation of the Travel Act); Taylor v. United States, 495 U.S. 575, 593, 110 S. Ct. 2143, 2155, 109 L. Ed. 2d 607 (1990) (favoring generic meaning of "burglary"); see also Anderson v. Cagle's, Inc., 488 F.3d 945, 955 (11th Cir. 2007) (using broad dictionary definition of "clothes" to interpret Fair Labor Standards Act provision); Walton v. Jamko, Inc., 240 F.3d 1312, 1315 (11th Cir. 2001) (using dictionary definition of "disbursements" to interpret bankruptcy provision). The dictionary definition of "determination" is "the settling and ending of a controversy esp. by judicial decision" or "the resolving of a question by argument of reasoning" or, in the legal context, "a final decision by a court or administrative agency." Webster's Third New International Dictionary 616 (1993); Black's Law Dictionary 460 (7th ed. 1999). These definitions make no mention of scope or standard of review.

Second, even in the Internal Revenue Code, "determination" and "determine" do not exclusively reference de novo review. Congress has defined "determination" in sections relating to personal holding company taxes, deficiency dividends, and mitigation of errors in tax returns as a "decision by the Tax Court ... which has become final" without reference to the use of a certain scope of review. I.R.C. §§ 547, 860, 1311. Further, though Congress explicitly limited the Tax Court's review to the administrative record when declaring retirement benefits, the legislative history of that section is nonetheless replete with the word "determination." See Tamko Asphalt Prods., Inc. v. Comm'r, 71 T.C. 824, 837 (1979), aff'd, 658 F.2d 735 (10th Cir. 1981) (holding that the Tax Court is limited to the administrative record when declaring retirement benefits); H.R. Rep. No. 94-658, at 244 (1975), reprinted in 1976 U.S.C.C.A.N. 2897, 3139 ("The court is to base its determination upon the reasons provided by the Internal Revenue Service in its notice to the party making the request for a determination ... .").

The court, citing the Ewing majority, ignores these provisions, stating instead that the Tax Court's long tradition of conducting de novo trials with the term "determine" in section 6015(e)(1)(A) "suggest[s]" the use of a de novo trial here, ante at 18. Ewing, 122 T.C. at 39. A mere suggestion is not sufficient to override the requirements of the APA. See Marcello, 349 U.S. at 310, 75 S. Ct. at 762 (stating that exemptions from the APA are not to be "presumed lightly"). Congress could have provided the standard and scope of review either in the express terms of section 6015(f) or in the legislative history, but it did not do so. Cf. H.R. Rep. No. 105-599, at 266 (1998) (Conf. Rep.) (specifying use of de novo review when validity of tax liability is at issue in deciding levies); I.R.C. § 6404(h) (providing the Tax Court with jurisdiction to "determine whether the Secretary's failure to abate interest ... was an abuse of discretion"). Thus, pursuant to the APA, the Tax Court must revert to the default: an abuse of discretion standard of review limited to the scope of the administrative record. See Ninilchik Traditional Council v. United States, 227 F.3d 1186, 1193 (9th Cir. 2000) (rejecting de novo review where such review was not clearly dictated in statute because "§ 706 of the APA functions as a default judicial review standard"); cf. Moon v. American Home Assurance Co., 888 F.2d 86, 89 (11th Cir. 1989) (finding, in ERISA action, that limiting de novo review to the record available to the plan administrator is contrary to the concept of de novo review).


II.


The court posits that we should look beyond the text and legislative history of section 6015 and apply the standard and scope of review historically used by the Tax Court, ante at 23-26. The court's argument in support of this proposition is obscure at best and unsupported at worst. It appears that the court is contending that: (1) prior to the enactment of the APA, statutory and case law required the Tax Court to review decisions of the Commissioner with an abuse of discretion standard and de novo scope of review; (2) this "additional requirement" of procedure continued via the application of APA § 559; and (3) this combination of standard and scope of review applies to the Tax Court's review of all Commissioner's decisions, including those under section 6015(f).

It is true that the enactment of the APA did not "limit or repeal additional requirements" of administrative procedure authorized by statute or by common law, but the prior existence of these additional requirements must be "clear." 5 U.S.C. § 559; Dickinson, 527 U.S. at 155, 119 S. Ct. at 1819. I begin by summarizing the relevant history of the Tax Court and then explain that, because section 6015 was enacted after the APA, the "additional requirements" exception from the APA does not apply.


A.


Tax law was simple in 1913, the year the Constitution was amended to authorize Congress to "lay and collect taxes on income": the Internal Revenue Code was contained in a mere sixteen pages and authorized a flat one-percent income tax on all corporations and a graduated tax from 1% to 7% on all persons with a net income above $3,000. U.S. Const. Amend. XVI; Pub. L. 63-16, § II, 38 Stat. 166, 168 (1913). If a taxpayer sought to challenge the government's imposition of taxes, the taxpayer's only recourse was to pay the disputed amount and then file a refund suit in the Court of Claims or in a federal district court. 22 Harold Dubroff, The United States Tax Court: An Historical Analysis 28 (1979).

Over the next decade, the tax code became a creature of complexity --the Form 1040 and joint returns were introduced, tax rates were raised, and new types of taxes, like the excise tax and excess profits taxes, were added. Recognizing that increasing complication of the tax code correlated with a rise in tax disputes, in 1924, Congress established the Board of Tax Appeals to allow taxpayers to challenge deficiency determinations prior to paying the contested amount. Pub. L. No. 68-176, § 900, 43 Stat. 253, 336-338 (1924); S. Rep. No. 68-398, at 8 (1924) ("The right of appeal after payment of the tax is an incomplete remedy, and does little to remove the hardship occasioned by an incorrect assessment.").

The Board was an independent agency in the executive branch of government and limited to hearing appeals of "deficiency determinations." Id. Congress defined a deficiency as occurring when the amount imposed by the Internal Revenue Code exceeded the amount shown on the individual or corporation's tax return. Pub. L. No. 68-176, § 273, 43 Stat. 253, 297 (1924). Though not a judicial body, the Board, on appeals of such determinations, was authorized to hear cases, administer oaths, and examine and subpoena witnesses. Id. At the same time, Congress intended that an appeal before the Board would be a "flexible and informal procedure" so that cases would be determined expeditiously. S. Rep. No. 68-398, at 9 (1924).

In appeals to the Board, the Commissioner's deficiency determinations were deemed presumptively correct, and the taxpayer had the burden of proving that the ruling was erroneous or arbitrary. Helvering v. Taylor, 293 U.S. 507, 515, 44 S. Ct. 287, 291, 79 L. Ed. 623 (1935); Welch v. Helvering, 290 U.S. 111, 115, 54 S. Ct. 8, 9, 78 L. Ed. 212 (1933). If the Board's decision was appealed to a trial court, the findings of the Board were to be considered prima facie evidence in favor of the Board's conclusion. Pub. L. No. 68-176, § 273, 43 Stat. 253, 297 (1924).

Congress expanded the Board's jurisdiction in 1926 to determine overpayment of taxes and again in 1942 to determine refunds of processing taxes. Revenue Act of 1926, Pub. L. No. 69-20, § 284(a), 44 Stat. 9 (1926); Revenue Act of 1942, Pub. L. No. 77-753, § 510, 56 Stat. 798, 967 (1942). Congress changed the name of the Board of Tax Appeals to the "Tax Court of the United States" in 1942, but it retained the Board's status as an executive agency. Revenue Act of 1942, Pub. L. No. 77-753, § 504, 56 Stat. 798, 957 (1942).

Four years later, Congress enacted the APA to govern procedure relating to administrative agencies. Administrative Procedure Act, Pub. L. No. 79-324, § 1, 60 Stat. 237 (1946) (currently codified at 5 U.S.C. § 551). It was, as the Supreme Court has noted, a "legislative enactment which settled 'long-continued and hardfought contentions, and enacts a formula upon which opposing social and political forces have come to rest.'" Vermont Yankee Nuclear Power Corp. v. Nat'l Resources Defense Council, Inc., 435 U.S. 519, 523, 98 S. Ct. 1197, 1201, 55 L. Ed. 2d 460 (1978). In the legislative history, Congress specifically exempted the "tax functions of the Internal Revenue Service" from formal adjudications that require notice, a hearing, and creation of a record because they are "matter[s] subject to a subsequent trial of the law and the facts de novo in any court." S. Rep. No. 79-752, at 221 (1945), reprinted in Administrative Procedure Act Legislative History at 22l (1944-1946); Administrative Procedure Act, 5 U.S.C. § 1005(1) (1946) (currently codified at 5 U.S.C. § 554(a)(1) (2008)). This exemption from formal adjudication was deemed appropriate because the agency's judgment would be effective "only in a prima facie sense at most," as the aggrieved party would be entitled to judicial retrial in the Tax Court. S. Rep. No. 79-752, at 202, reprinted in Administrative Procedure Act Legislative History at 202.

Relatedly, a reviewing court could go beyond arbitrary and capricious review, and reverse an agency decision if it was "unwarranted by the facts so far as the [facts] are subject to trial de novo." APA § 10 (currently codified at 5 U.S.C. § 706(2)(F)); see also part I.A., supra, (discussing current interpretation of de novo review). In the 1946 APA legislative history, Congress explained that facts would be subject to trial de novo if formal adjudication or rule-making were not required in the organic act or if there had been no administrative hearing that was adequate and exclusive for purposes of factual review. Congress explained that IRS decisions met this latter reason: "[W]here adjudications such as tax assessments are not made upon an administrative hearing and record, contests may involve a trial of the facts in the Tax Court or the United States district courts." S. Rep. No. 79-752, at 214 (1945), reprinted in Administrative Procedure Act Legislative History at 214.

The Fourth Circuit Court of Appeals amplified this legislative history by holding that the Tax Court was generally not subject to the requirements of the APA. O'Dwyer v. Comm'r, 266 F.2d 575, 580 (4th Cir. 1959). The O'Dwyer taxpayer sought to compel the Commissioner to produce the entire administrative record based upon the language in the APA directing the reviewing court to consider the "whole record." Id. at 579. The court concluded that, because the formal adjudication provisions did not apply to IRS proceedings, the Commissioner was not required to compile a record, and, therefore, the Tax Court was not a "reviewing court" that must consider the "whole record." Id. at 580. Though removing the Tax Court from the ambit of the APA, the Fourth Circuit confirmed that, upon appeal to the Tax Court, the Commissioner's assessment was presumed to be correct and the burden was upon the taxpayer to show that the Commissioner's determination was erroneous. Id. at 577.

In 1969, the Tax Court took its present form when Congress established an Article I court of record named the "United States Tax Court" to replace the Tax Court of the United States. Pub. L. 91-172, § 951, 83 Stat. 487, 730 (1969). Congress indicated that it made this change to quell questions regarding the propriety of one agency sitting in judgment of another agency and because the Tax Court only had judicial duties. S. Rep. No. 91-552 (1969), reprinted in 1969 U.S.C.C.A.N. 2027, 2343. The United States Tax Court was a "continuation of the Tax Court of the United States as it existed prior to the date of enactment of the [1969 Revenue Act]" and the change would have "no effect upon ... jurisdiction." Id. at 2344.


B.


I do not decide, as the court does, ante at 24, whether this history reveals that Congress clearly imposed an "additional requirement" on the Tax Court to review deficiency determinations, overpayments, and refunds of processing taxes, using an abuse of discretion standard and de novo scope. I do not decide this issue because it is not before this court. See Access Now, Inc. v. Southwest Airlines Co., 385 F.3d 1324, 1330 (11th Cir. 2004) ("[E]valuating an issue on the merits that has not been raised in the initial brief would undermine the very adversarial nature of our appellate system."). However, assuming that such an additional requirement existed and continues via the application of APA § 559, it is impermissible to extend this exception from the APA to the review of innocent spouse relief.

The Supreme Court's holding in Dickinson v. Zurko is instructive. The issue before the Court was whether the Federal Circuit Court of Appeals appropriately reviewed findings of fact made by the Patent and Trademark Office under a clearly erroneous standard, rather than the APA's abuse of discretion standard. Dickinson, 527 U.S. at 152, 119 S. Ct. at 1818. The respondents contended that, prior to the enactment of the APA, patent determinations had been reviewed using the clearly erroneous standard and this additional requirement continued pursuant to APA § 559. In re Zurko, 142 F.3d 1447, 1459 (Fed. Cir. 1998). The Supreme Court stated that the respondents
must show more than a possibility of a heightened standard [prior to the enactment of the APA], and indeed more than even a bare preponderance of evidence in their favor. Existence of the additional requirement must be clear.

Dickinson, 527 U.S. at 154-55, 119 S. Ct. at 1819. Permitting departure from the APA based on an ambiguous historical requirement in previous case law would frustrate the purpose of the APA to bring "uniformity to a field full of variation and diversity." Id. After analyzing 89 pre-APA decisions reviewing findings of fact of the Patent Office, the Court found ambiguity because most of them used a "manifest error" or "clearly wrong" standard rather than a "clearly erroneous" standard. Id. at 156, 119 S. Ct. at 1820. Thus, the Court reversed the Federal Circuit and held that the APA's abuse of discretion standard should be applied.

In Dickinson, unlike the case at hand, no new statute had been introduced that led to the Supreme Court's review; the Federal Circuit sought to review findings of fact of patent and trademark applications in 1998 and the courts had authority to review such findings of fact in 1946. Id. at 154, 119 S. Ct. at 1819; see also United Transp. Union v. Interstate Commerce Comm'n, 52 F.3d 1074, 1080 n.10 (D.C. Cir. 1995) (finding declaratory orders relating to Interstate Commerce Act to be an "additional requirement" where the Commission had been using such orders prior to the APA and the Supreme Court had assumed the practice to be proper). On the other hand, here, the Tax Court was granted jurisdiction over a new type of relief in 1998. As discussed in part I, because the innocent spousal relief provision was enacted subsequent to the APA, an exemption from the requirements of the APA must be shown clearly via the text of the statute and the legislative history. In other words, we should not even reach the point of analysis reached by the Dickinson Court, because the statute at issue was not part of the Internal Revenue Code when the APA was enacted.

The court argues that the steps of review presented in Dickinson are irrelevant because "§ 6015 was enacted 'as part and parcel of' and with similar language to, the statutory framework of deficiency determinations." Ante at 27 n.17. The court gives no guidance to determine whether a statute or part of a statute is "part and parcel of" another. Nor has the court addressed why the innocent spousal relief provision is part and parcel of the deficiency framework. Indeed, in this case, the innocent spousal relief provision is being used in a collection case --proving that the innocent spousal relief provision is not necessarily tied to the deficiency procedures. Even if the "part and parcel" criterion could provide a rational or administrable test for discerning exceptions to APA § 559, the most I can concede here is that § 6015 is "part and parcel" of the Internal Revenue Code as a whole. Surely, the court could not have intended to exempt any amendment to the tax code from APA § 559; yet that is the logical conclusion of the court's tortured and unsupported analysis. At worst, the analysis presented by the court seems to authorize use of the APA § 559 exception in all statutes, without regard to whether the provision at issue was enacted before or after the APA.

Even if I blind myself to the inapplicability of the "additional requirements" exemption, I find no clear indication that a de novo scope of review should be used in innocent spousal relief determinations. There is no pre-APA indication as to the standard or scope of review to be used in conjunction with decisions not involving deficiency determinations, overpayments, or refunds of processing taxes because such decisions would have been moot or not ripe for adjudication. I also find unpersuasive the Ewing/Porter majority's and Neal's reliance on O'Dwyer, 266 F.2d at 580, because the Fourth Circuit's decision was premised on the nowdefunct notion that informal agency action need not be reviewed on the administrative record. See part I.A, supra; Camp, 411 U.S. at 142, 93 S. Ct. at 1244.

Confronted with the same combination of standard and scope of review argued here, our sister circuit held that review of collection due process cases should be limited to the administrative record. Robinette v. Comm'r, 439 F.3d 455, 461 (8th Cir. 2006). The Robinette court explained that, when Congress authorized judicial review of collection determinations to the Tax Court in 1998, the "nature and purpose" of those proceedings were different from deficiency determinations and it was "just as likely" that Congress intended traditional principles of administrative law be used. Id. The Tax Court's own decisions in collection due process cases belie the Ewing/Porter majority's contention that the record rule does not apply to the Tax Court. Giamelli v. Comm'r, 129 T.C. 107, 115 (2007) (holding that collection proceedings reviewed under an abuse of discretion standard must be limited to the issues raised before Appeals); Magana v. Comm'r, 118 T.C. 488, 493 (2002) (same). The court avoids the reasoning of the Robinette court upon the basis that the statutes at issue are different, ante at 28. However, the court fails to recognize that here, as in Robinette, the Commissioner seeks to collect unpaid taxes from Neal, not assess a deficiency. These collection due process cases bolster the case for limiting the scope of review to the administrative record. To argue, as the court does, that a collection due process case under I.R.C. § 6330 should be treated differently than a collection case under I.R.C. § 6015(f) exalts form over substance.

Indeed, that is the same deficiency found in the court's argument that limiting review to the administrative record will result in anomalous decisions involving the same statute. For example, the court posits that, if Taxpayer X seeks equitable relief via section 6015(f) and the IRS fails to issue a final determination within six months, X may directly petition the Tax Court for relief. I.R.C. § 6015(e)(1)(A). In that case, unlike Neal's situation, the Tax Court will be required to conduct de novo review because the IRS will not have compiled an administrative record.

I disagree that allowing a de novo scope in X's case but limiting the scope of review to the administrative record in Neal's case is problematic. The court and Porter/Ewing majority focus erroneously on the status of the court reviewing the decision of the administrative body, rather than the status of the administrative body itself. 23 APA § 706 applies to a court's review of an "agency action"; where there is no "agency action," the APA does not apply. 5 U.S.C. § 706. In Neal's case, there has been agency action; in X's case, there has been no agency action. To permit the Tax Court to override the agency's findings of fact undermines the very purpose of the APA:
This sound and clearly expressed purpose [of expediting review of agency decisions] would be frustrated if either side were free to withhold evidence at the administrative level and then to introduce it in a judicial proceeding. Moreover, the consequence of such a procedure would in many instances be a needless duplication of evidentiary hearings and a heavy additional burden in the time and expense required to bring litigation to an end.

Carlo Bianchi, 373 U.S. at 717, 83 S.Ct. at 1415. While both Taxpayer X's request for relief and Neal's are premised on section 6015(f), they arise under wholly different procedural circumstances and, accordingly, are reviewed differently. 24

I do not deny the possibility that Congress may have intended that the Tax Court continue reviewing all matters in which it is granted jurisdiction using an abuse of discretion standard and de novo scope of review. But, a mere possibility is not sufficient to overwhelm Congressional interest in preserving uniformity and fairness in administrative procedure.


III.


All of this leads to a singular conclusion: allowing the Tax Court carte-blanche authority to override the Commissioner using the vehicle of a de novo trial reveals distrust in the Commissioner's decisions and decimates the Commissioner's incentive to be impartial and thorough in those determinations. Congress, in enacting the judicial review provisions of the Administrative Procedure Act, protected this incentive by giving deference to agencies:
In the first instance ... it will be the function of the agency to determine the sufficiency of the evidence upon which it acts-and the proper performance of its public duties will require it to undertake this inquiry in a careful and dispassionate manner ... . Judicial review is of utmost importance, but it can be operative in relatively few cases because of the cost and general hazards of litigation... . For that reason the agencies must make the first, primary, and most far-reaching effort to comply with the terms and the spirit of this bill.

S. Rep. No. 79-752, at 216-17 (1945), reprinted in Administrative Procedure Act Legislative History at 217 (1944-1946); see also Overton Park, 401 U.S. at 416, 91 S. Ct. at 823 ("The court is not empowered to substitute its judgment for that of the agency.").

Today, the court has given the Tax Court the authority to second-guess the Commissioner at its whim, superimposed upon the farce that the Commissioner's determination is given discretionary weight. Under such a scheme, why should the Commissioner conduct his hearings in a careful and diligent manner? Why bother when the Commissioner knows that his review of the facts and law will be ignored? For that matter, why should taxpayers be required to fund and use the IRS appeals process since any conclusions made by those federal officials will dissipate in the Tax Court like whispers in the wind? I have found no satisfactory answers to these questions. Therefore, I respectfully dissent from the court's judgment.

1 Section 6015 provides three distinct types of relief for taxpayers who file joint returns. Subpart (b) of § 6015 provides relief to those taxpayers who can meet certain requirements, such as: (1) an understatement of income attributable to erroneous items; (2) that the taxpayer "did not know, and had no reason to know" of the understatement; and (3) that it would be inequitable to hold the taxpayer liable for the deficiency. 26 U.S.C. § 6015(b). Subpart (c) of § 6015 permits a taxpayer who is no longer married to or is legally separated from his/her spouse to elect to limit liability for any deficiency attributable to the spouse to the taxpayer's separate liability amount in certain situations. 26 U.S.C. § 6015(c).

Subpart (f) applies when relief is not available under § 6015(b) or (c). 26 U.S.C. § 6015(f). Subpart (f) applies to Neal's case because she seeks equitable relief from an unpaid tax, i.e., an underpayment of taxes shown on the return but not paid with the return.

2 In its Brief to this Court, the Commissioner argued that § 6015(e) did not grant the Tax Court subject matter jurisdiction over § 6015(f) requests. During the briefing stage of this case, Congress amended § 6015(e) to explicitly grant the Tax Court jurisdiction over § 6015(f) cases. Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, Div. C, § 408, 120 Stat. 2922, 3061-62 (2006). More specifically, in § 6015(e), Congress added, "or in the case of an individual who requests equitable relief under subsection (f)" after "who elects to have subsection (b) or (c) apply." Id. The Commissioner subsequently withdrew this jurisdiction challenge. The Commissioner's remaining claims are: (1) that under § 6015(e) the Tax Court has jurisdiction in innocent spouse cases but its review is confined to consideration of the administrative record, and (2) alternatively, even if the Tax Court appropriately considered evidence outside the administrative record, it nevertheless erred in concluding that the Commissioner's denial of equitable relief was an abuse of discretion.

3 The majority of the facts recited here are from the Tax Court's findings. It is unclear from the administrative record whether Neal disclosed her financial history and these facts to the IRS in her initial interview because no transcript of the interview exists.

4 At the Tax Court trial, Neal presented evidence, not previously presented to the Commissioner, that Alimam forged Neal's signature on the 1993 and 1995 returns.

5 Neal's employer withheld adequate taxes from Neal's salary, and thus almost all of the underpayments are due to Alimam's salary and his failure to withhold or pay taxes thereon.
Taxpayer Alimam
_______________________________________________________
Joint
Est. Tax Est. Tax Tax
Year Earned sep. Withheld Earned sep. Withheld Liability
_____________________________________________________________________
1993 $110,163 $21,987 $20,302$154,316 $51,004 0 $72,991
1994 116,759 23,459 21,711106,180 29,443 0 52,902
1995 122,693 25,194 23,22178,310 18,066 0 43,260


Neal paid federal income taxes of $173,453 in the years 1999 through 2003. The total amount of state and federal taxes, social security withholding and medicare withholding paid by Neal during the same period totaled $249,752, or 32.83% of her gross income.

6 At trial, the parties also submitted the administrative record to the Tax Court.

7 By way of background, we review the development of the Tax Court. In 1924, Congress established the Board of Tax Appeals to allow taxpayers to challenge deficiency determinations prior to paying the contested amount. Pub. L. No. 68-176, § 900, 43 Stat. 253, 308, 336-338 (1924); S. Rep. No. 68-398, at 8 (1924). The Board was an independent agency in the executive branch of government. Id. Though not a judicial body, on appeals of such determinations, the Board was authorized to hear cases, administer oaths, and examine and subpoena witnesses. Id.

The Board's jurisdiction was expanded in 1926 to determine overpayment of taxes and again in 1942 to determine refunds of processing taxes. Revenue Act of 1926, Pub. L. No. 69-20, § 284(a), 44 Stat. 9, 66-67 (1926); Revenue Act of 1942, Pub. L. No. 77-753, § 510, 56 Stat. 798, 967 (1942). Congress changed the name of the Board of Tax Appeals to the "Tax Court of the United States" in 1942, but retained the Board's status as an executive agency. Revenue Act of 1942, Pub. L. No. 77-753, § 504, 56 Stat. 798, 957 (1942).

In 1969, the Tax Court took its present form when Congress established an Article I court of record named the "United States Tax Court" to replace the Tax Court of the United States. Pub. L. 91-172, § 951, 83 Stat. 487, 730 (1969). Congress indicated that the change was made to quell questions of propriety of one agency sitting in judgment of another agency and because the Tax Court only had judicial duties. S. Rep. No. 91-552 (1969), reprinted in 1969 U.S.C.C.A.N. 2027, 2341.

8 The Ewing/Porter majority also cites a longstanding practice of holding trials de novo in many situations where the abuse of discretion standard applies to the Commissioner's conduct. Ewing, 122 T.C. at 39; Porter, 2008 WL 2065189, at *5. As aptly stated by the Tax Court, "[t]he traditional effect of applying an abuse of discretion standard in this [Tax] Court is to alter the standard of review, not to restrict what evidence we consider in making our determination." Ewing, 122 T.C. at 39. Thus, a trial de novo under § 6015 is not incompatible with abuse of discretion review.

9 It is also noteworthy that 26 U.S.C. § 7453 provides that, with limited exceptions not relevant here, Tax Court proceedings shall be conducted in accordance with rules prescribed by the Tax Court and rules of evidence in trials without a jury. Further, Congress has mandated in 26 U.S.C. § 7459 that the Tax Court make findings of fact in each report upon "any proceeding instituted before the Tax Court." Id. (quotation marks omitted). Judge Thornton, in a concurring opinion joined by five other members of the Porter majority, emphasized that these "[s]tatutorily mandated standards and procedures contemplate that the Tax Court will generally conduct trials de novo in its proceedings, including actions involving claims for relief from joint and several liability." Porter, 2008 WL 2065189, at *12 (Thornton, J., concurring).

10 Section 6015(e)(1)(A) provides:

In addition to any other remedy provided by law, the individual may petition the Tax Court (and the Tax Court shall have jurisdiction) to determine the appropriate relief available to the individual under this section if such petition is filed --
(i) at any time after the earlier of-

(I) the date the Secretary mails, by certified or registered mail to the taxpayer's last known address, notice of the Secretary's final determination of relief available to the individual, or

(II) the date which is 6 months after the date such election is filed or request is made with the Secretary, and

(ii) not later than the close of the 90th day after the date described in clause (i)(I).

26 U.S.C. § 6015(e)(1)(A).

11 In addition, § 6015(e)(1) itself refers to both deficiency cases where the taxpayer elects to have § 6015(b) or (c) apply and other cases where the taxpayer elects to have § 6015(f) apply. The same judicial review should be applicable in § 6015 cases, whether the innocent spouse claim is made in a stand-alone deficiency case or stand-alone unpaid tax case.

12 The Tax Court noted that intervention by the nonrequesting spouse is available both in deficiency cases in which § 6015(f) relief is requested and in stand-alone § 6015 cases such as this case. Ewing, 115 T.C. at 122-23; Porter, 130 T.C. at *6 (both citing Rule 325); King v. Commissioner, 115 T.C. 118, 122-23 (2000); and Corson v. Commissioner, 114 T.C. 354, 364-65 (2000).

13 Eleven members of the Tax Court joined Judge Thornton's concurrence in Ewing. 122 T.C. at 56.

14 In Porter, the Tax Court also contrasted its statutory § 6015 jurisdiction, which has no limitations written into the statute, with its jurisdiction to issue declaratory judgments relating to the status, qualification, valuation, or classification of certain § 501(c)(3) organizations, retirement plans, gifts, and governmental obligations. Porter, 133 T.C. at *4. The Tax Court pointed out (1) that it has adopted rules regarding declaratory judgments that generally require such actions to be disposed of on the basis of the administrative record, and (2) that "[t]he reason for this limited review lies in Congress's legislative directive," discussed in Porter, but (3) that Congress did not impose a similar restrictive standard in § 6015. Id.

15 We quote what the Tax Court said but note that the pertinent legislative history of the APA being referenced states more fully: "[W]here adjudications such as tax assessments are not made upon an administrative hearing and record, contests may involve a trial of the facts in the Tax Court or the United States district courts." S. Rep. No. 79-752, at 214 (1945), reprinted in Administrative Procedure Act Legislative History at 214.

16 For this reason, the dissent is incorrect that our analysis "seems to authorize use of [the] APA § 559 exception in all statutes, without regard to whether the provision at issue was enacted before or after the APA."

The Supreme Court's opinion in Dickinson v. Zurko, 527 U.S. 150, 119 S. Ct. 1816 (1999), discussed by the dissent, does not undercut our reasoning. See Dickinson, 527 U.S. at 152, 119 S. Ct. at 1818 (concluding that APA § 706 applies to the Federal Circuit's review of findings of fact made by the Patent and Trademark Office). Dickinson, as the dissent correctly notes, did not concern a statute enacted after the APA. Instead, it concerned a heightened scope of review standard that the Federal Circuit's predecessor court supposedly applied at the time the APA was enacted. Id. at 154-55, 119 S. Ct. at 1819. The Supreme Court concluded that the purported standard was not "recognized" by the Federal Circuit's predecessor at that time and therefore could not qualify as an "additional requirement[] ... recognized by law" for purposes of the APA § 559 exception. Id. at 161, 119 S. Ct. at 1822. Because the Supreme Court in Dickinson was not faced with a post-APA statute, the case offers no hindrance to our conclusion that Congress intended the Tax Court to have authority to conduct trials de novo in § 6015(f) cases, notwithstanding the statute's enactment after the APA, because it was part and parcel of, and similar in language to, a statutory framework under which trials de novo were recognized in the pre-APA era.

17 We are unpersuaded by our dissenting colleague's concern that recognizing Congress's intent to permit the Tax Court to conduct trials de novo in § 6015(f) cases will "decimate[] the Commissioner's incentive to be impartial and thorough" in making his § 6015(f) determinations. First, we disagree with the dissent's contentions that (1) trials de novo render a "farce" the requirement that the Tax Court give discretionary weight to the Commissioner's findings, and (2) under a trial de novo evidentiary scheme the Commissioner will "know[] that his review of the facts and law will be ignored." The Tax Court is quite capable of combining a trial de novo scope of evidentiary consideration with an abuse of discretion standard of review; in fact, it has an extensive history of doing so. See Ewing, 122 T.C. at 39 (stating that the Tax Court's "longstanding practice has been to hold trials de novo in many situations where an abuse of discretion standard applies" and listing examples); Porter, 2008 WL 2065189, at *5 (same). Moreover, we reject the dissent's speculation that the Tax Court's ability to hear evidence not contained in the administrative record can or will result in the Commissioner's abdication of his duty to "conduct his [ § 6015(f)] hearings in a careful and diligent manner."

18 I.R.C. § 6330(d) provides, in relevant part:

(d) Proceeding after hearing. --
(1) Judicial review of determination. --The person may, within 30 days of a determination under this section, appeal such determination to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).

(2) Jurisdiction retained at IRS Office of Appeals. --The Internal Revenue Service Office of Appeals shall retain jurisdiction with respect to any determination made under this section, including subsequent hearings requested by the person who requested the original hearing on issues regarding --

(A) collection actions taken or proposed with respect to such determination; and

(B) after the person has exhausted all administrative remedies, a change in circumstances with respect to such person which affects such determination.

19 Under Revenue Procedure 2000-15, § 4.03, factors weighing in favor of relief include (1) if the requesting spouse is separated or divorced from the non-requesting spouse; (2) if the requesting spouse would suffer economic hardship in the absence of relief; (3) if the requesting spouse suffered abuse at the hands of the non-requesting spouse; (4) if the requesting spouse had no knowledge or reason to know that the liability would not be paid; (5) if the non-requesting spouse has a legal obligation to pay the outstanding liability; and (6) if the liability for which relief is sought is attributable solely to the non-requesting spouse.

Further, if the spouse has significantly benefitted, beyond normal support, from the unpaid liability, or the requesting spouse has failed to comply with federal income tax laws, those factors would weigh against granting relief. Rev. Proc. 2000-15, § 4.03, 2000-1 C.B. 447, 448-49.

20 See footnote 5 supra.

21 During the 1995 bankruptcy, Alimam again lied to Neal, falsely explaining that the IRS was a creditor because it had not permitted the deduction of certain business expenses. In any event, the 1995 bankruptcy sheds little light on what Neal should have known between 1990 and 1993 about Alimam's trustworthiness in paying taxes.

22 A taxpayer could also seek relief from the Committee on Appeals and Review. But, the Committee was part of the Bureau of Internal Revenue, and the proceedings in the Committee were not public or adversarial and did not permit the introduction of new evidence. Dubroff, supra, at 39.

23 This same defect infects Nappi v. Comm'r, 58 T.C. 282, 284 (1972), in which the Tax Court held that the APA categorically did not apply to the Tax Court because it was an Article I court. The Nappi court conflated the APA provisions for an agency, which were not applicable to the Tax Court after 1969, with the APA requirements for a court reviewing an agency action. See 35 Fed. Reg. 12462 (Aug. 5, 1970) (deleting the Tax Court's public notices, orders, and rules from the Federal Register because the court was "no longer within the purview of the APA"). The appropriate focus should not have been the status of the Tax Court but whether the administrative body seeking review was an agency subject to standards that a reviewing court must use. See 5 U.S.C. § 706.

24 I am equally unpersuaded by the citation to § 6015(e)(4), under which the non-requesting spouse may intervene in the Tax Court hearing. There is nothing to suggest that, by allowing intervenors, Congress intended that trials be conducted de novo or that third parties may introduce matters outside the scope of the administrative record. Cf. Vermont Yankee, 435 U.S. at 554-55, 98 S. Ct. at 1217 (upholding Atomic Energy Commission's refusal to consider conservation alternatives introduced by intervenor after the initial decision).

Equitable relief. --Innocent Spouse Relief: Equitable relief

The IRS has provided guidance for individuals seeking equitable relief from tax liabilities under the innocent spouse provisions of Code Secs. 66(c) or 6015(f). The guidance enumerates the threshold conditions that must be satisfied for any request for equitable relief to be considered, sets forth the criteria under which relief will ordinarily be granted, and includes a nonexclusive list of factors that are to be considered in determining whether it would be inequitable to hold a requesting spouse jointly and severally liable for a deficiency or for an unpaid liability. Those factors also apply in determining whether to relieve a spouse of tax liability resulting from the operation of the community property laws. Rev. Proc. 2000-15, 2000-1 CB 447, is superseded.
[Full Text --Rev. Proc. 2003-61]




SECTION 1. PURPOSE AND SCOPE

01. Purpose. This revenue procedure provides guidance for a taxpayer seeking equitable relief from income tax liability under section 66(c) or section 6015(f) of the Internal Revenue Code (a "requesting spouse"). Section 4.01 of this revenue procedure provides the threshold requirements for any request for equitable relief. Section 4.02 of this revenue procedure sets forth the conditions under which the Internal Revenue Service ordinarily will grant equitable relief under section 6015(f) from an underpayment of income tax reported on a joint return. Section 4.03 of this revenue procedure provides a nonexclusive list of factors for consideration in determining whether relief should be granted under section 6015(f) because it would be inequitable to hold a requesting spouse jointly and severally liable for an underpayment of income tax on a joint return where the conditions of section 4.02 are not met, or for a deficiency. The factors in section 4.03 also will apply in determining whether to relieve a spouse from income tax liability resulting from the operation of community property law under the equitable relief provision of section 66(c).

.02 Scope. This revenue procedure applies to spouses who request either equitable relief from joint and several liability under section 6015(f), or equitable relief under section 66(c) from income tax liability resulting from the operation of community property law.



SECTION 2. BACKGROUND

.01 Section 6013(d)(3) provides that married taxpayers who file a joint return under section 6013 will be jointly and severally liable for the income tax arising from that joint return. For purposes of section 6013(d)(3) and this revenue procedure, the term "tax" includes penalties, additions to tax, and interest. See sections 6601(e)(1) and 6665(a)(2).

.02 Section 3201(a) of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105-206, 112 Stat. 685, 734 (RRA), enacted section 6015, which provides relief in certain circumstances from the joint and several liability imposed by section 6013(d)(3). Section 6015(b) and (c) specifies two sets of circumstances under which relief from joint and several liability is available. If relief is not available under section 6015(b) or (c), section 6015(f) authorizes the Secretary to grant equitable relief if, taking into account all the facts and circumstances, the Secretary determines that it is inequitable to hold a requesting spouse liable for any unpaid tax or any deficiency (or any portion of either). Section 66(c) provides relief from income tax liability resulting from the operation of community property law to taxpayers domiciled in a community property state who do not file a joint return. Section 3201(b) of RRA amended section 66(c) to add an equitable relief provision similar to section 6015(f).

.03 Section 6015 provides relief only from joint and several liability arising from a joint return. If an individual signs a joint return under duress, the election to file jointly is not valid and there is no valid joint return. The individual is not jointly and severally liable for any income tax liabilities arising from that return. Therefore, section 6015 does not apply.

.04 Under section 6015(b) and (c), relief is available only from a proposed or assessed deficiency. Section 6015(b) and (c) does not authorize relief from an underpayment of income tax reported on a joint return. Section 66(c) and section 6015(f) permit equitable relief for an underpayment of income tax. The legislative history of section 6015 provides that Congress intended for the Secretary to exercise discretion in granting equitable relief if a requesting spouse "does not know, and had no reason to know, that funds intended for the payment of tax were instead taken by the other spouse for such other spouse's benefit." H.R. Conf. Rep. No. 105-599, at 254 (1998). Congress also intended for the Secretary to exercise the equitable relief authority under section 6015(f) in other situations if, "taking into account all the facts and circumstances, it is inequitable to hold an individual liable for all or part of any unpaid tax or deficiency arising from a joint return." Id.



SECTION 3. CHANGES

This revenue procedure supersedes Rev. Proc. 2000-15, changing the following:

.01 Section 4.01 of this revenue procedure adds a new threshold requirement under section 4.01(7).

.02 Section 4.03(2)(a)(iii) of this revenue procedure revises the weight given to the knowledge or reason to know factor.

.03 Section 4.04 of this revenue procedure broadens the availability of refunds if equitable relief is granted under section 66(c) or section 6015(f).



SECTION 4. GENERAL CONDITIONS FOR RELIEF

.01 Eligibility for equitable relief. A requesting spouse must satisfy all of the following threshold conditions to be eligible to submit a request for equitable relief under section 6015(f). With the exception of conditions (1) and (2), a requesting spouse must satisfy all of the following threshold conditions to be eligible to submit a request for equitable relief under section 66(c). The Service may relieve a requesting spouse who satisfies all the applicable threshold conditions set forth below of all or part of the income tax liability under section 66(c) or section 6015(f), if, taking into account all the facts and circumstances, the Service determines that it would be inequitable to hold the requesting spouse liable for the income tax liability. The threshold conditions are as follows:

(1) The requesting spouse filed a joint return for the taxable year for which he or she seeks relief.

(2) Relief is not available to the requesting spouse under section 6015(b) or (c).

(3) The requesting spouse applies for relief no later than two years after the date of the Service's first collection activity after July 22, 1998, with respect to the requesting spouse. See Treas. Reg. §1.6015-5(b)(2)(i) for the definition of collection activity.

(4) No assets were transferred between the spouses as part of a fraudulent scheme by the spouses.

(5) The nonrequesting spouse did not transfer disqualified assets to the requesting spouse. If the nonrequesting spouse transferred disqualified assets to the requesting spouse, relief will be available only to the extent that the income tax liability exceeds the value of the disqualified assets. For this purpose, the term "disqualified asset" has the meaning given the term by section 6015(c)(4)(B).

(6) The requesting spouse did not file or fail to file the return with fraudulent intent.

(7) The income tax liability from which the requesting spouse seeks relief is attributable to an item of the individual with whom the requesting spouse filed the joint return (the "nonrequesting spouse"), unless one of the following exceptions applies:

(a) Attribution solely due to the operation of community property law. If an item is attributable or partially attributable to the requesting spouse solely due to the operation of community property law, then for purposes of this revenue procedure, that item (or portion thereof) will be considered to be attributable to the nonrequesting spouse.

(b) Nominal ownership. If the item is titled in the name of the requesting spouse, the item is presumptively attributable to the requesting spouse. This presumption is rebuttable. For example, H opens an individual retirement account (IRA) in W's name and forges W's signature on the IRA in 1998. Thereafter, H makes contributions to the IRA and in 2002 takes a taxable distribution from the IRA. H and W file a joint return for the 2002 taxable year, but do not report the taxable distribution on their joint return. The Service later proposes a deficiency relating to the taxable IRA distribution and assesses the deficiency against H and W. W requests relief from joint and several liability under section 6015. W establishes that W did not contribute to the IRA, sign paperwork relating to the IRA, or otherwise act as if W were the owner of the IRA. W thereby rebutted the presumption that the IRA is attributable to W.

(c) Misappropriation of funds. If the requesting spouse did not know, and had no reason to know, that funds intended for the payment of tax were misappropriated by the nonrequesting spouse for the nonrequesting spouse's benefit, the Service will consider granting equitable relief although the underpayment may be attributable in part or in full to an item of the requesting spouse. The Service will consider relief in this case only to the extent that the funds intended for the payment of tax were taken by the nonrequesting spouse.

(d) Abuse not amounting to duress. If the requesting spouse establishes that he or she was the victim of abuse prior to the time the return was signed, and that, as a result of the prior abuse, the requesting spouse did not challenge the treatment of any items on the return for fear of the nonrequesting spouse's retaliation, the Service will consider granting equitable relief although the deficiency or underpayment may be attributable in part or in full to an item of the requesting spouse.

.02 Circumstances under which the Service ordinarily will grant equitable relief under section 6015(f) with respect to underpayments on joint returns.

(1) If an income tax liability reported on a joint return is unpaid, the Service ordinarily will grant equitable relief under section 6015(f) (subject to the limitations of paragraph (2) below) in cases in which all of the following elements are satisfied:

(a) On the date of the request for relief, the requesting spouse is no longer married to, or is legally separated from, the nonrequesting spouse, or has not been a member of the same household as the nonrequesting spouse at any time during the 12-month period ending on the date of the request for relief.

(b) On the date the requesting spouse signed the joint return, the requesting spouse had no knowledge or reason to know that the nonrequesting spouse would not pay the income tax liability. The requesting spouse must establish that it was reasonable for the requesting spouse to believe that the nonrequesting spouse would pay the reported income tax liability. If a requesting spouse would otherwise qualify for relief under this section, except for the fact that the requesting spouse's lack of knowledge or reason to know relates only to a portion of the unpaid income tax liability, then the requesting spouse may receive relief to the extent that the income tax liability is attributable to that portion.

(c) The requesting spouse will suffer economic hardship if the Service does not grant relief. For purposes of this revenue procedure, the Service will base its determination of whether the requesting spouse will suffer economic hardship on rules similar to those provided in Treas. Reg. §301.6343-1(b)(4). After the requesting spouse is deceased, there can be no economic hardship. See Jonson v. Commissioner, 118 T.C. 106, 126 (2002), appeal docketed, No. 02-9009 (10th Cir. May 24, 2002) (taxpayer appeal filed on other grounds).

(2) Relief under this section 4.02 is subject to the following limitation: If the Service adjusts the joint return to reflect an understatement of income tax, relief will be available only to the extent of the income tax liability shown on the joint return prior to the Service's adjustment.

.03 Factors for determining whether to grant equitable relief.

(1) Applicability. This section 4.03 applies to requesting spouses who did not file a joint return in a community property state, who request relief under section 66(c), and satisfy the applicable threshold conditions of section 4.01. This section 4.03 also applies to requesting spouses who filed a joint return, request relief under section 6015, and satisfy the threshold conditions of section 4.01, but do not qualify for relief under section 4.02.

(2) Factors. The following is a nonexclusive list of factors that the Service will consider in determining whether, taking into account all the facts and circumstances, it is inequitable to hold the requesting spouse liable for all or part of the unpaid income tax liability or deficiency, and full or partial equitable relief under section 66(c) or section 6015(f) should be granted. No single factor will be determinative of whether to grant equitable relief in any particular case. Rather, the Service will consider and weigh all relevant factors, regardless of whether the factor is listed in this section 4.03.

(a) Factors that may be relevant to whether the Service will grant equitable relief include, but are not limited to, the following:

(i) Marital status. Whether the requesting spouse is separated (whether legally separated or living apart) or divorced from the nonrequesting spouse. A temporary absence, such as an absence due to incarceration, illness, business, vacation, military service, or education, shall not be considered separation for purposes of this revenue procedure if it can be reasonably expected that the absent spouse will return to a household maintained in anticipation of his or her return. See Treas. Reg. §1.6015-3(b)(3)(i) for the definition of a temporary absence.

(ii) Economic hardship. Whether the requesting spouse would suffer economic hardship (within the meaning of section 4.02(1)(c) of this revenue procedure) if the Service does not grant relief from the income tax liability.

(iii) Knowledge or reason to know.

(A) Underpayment cases. In the case of an income tax liability that was properly reported but not paid, whether the requesting spouse did not know and had no reason to know that the nonrequesting spouse would not pay the income tax liability.

(B) Deficiency cases. In the case of an income tax liability that arose from a deficiency, whether the requesting spouse did not know and had no reason to know of the item giving rise to the deficiency. Reason to know of the item giving rise to the deficiency will not be weighed more heavily than other factors. Actual knowledge of the item giving rise to the deficiency, however, is a strong factor weighing against relief. This strong factor may be overcome if the factors in favor of equitable relief are particularly compelling. In those limited situations, it may be appropriate to grant relief under section 66(c) or section 6015(f) even though the requesting spouse had actual knowledge of the item giving rise to the deficiency.

(C) Reason to know. For purposes of (A) and (B) above, in determining whether the requesting spouse had reason to know, the Service will consider the requesting spouse's level of education, any deceit or evasiveness of the nonrequesting spouse, the requesting spouse's degree of involvement in the activity generating the income tax liability, the requesting spouse's involvement in business and household financial matters, the requesting spouse's business or financial expertise, and any lavish or unusual expenditures compared with past spending levels.

(iv) Nonrequesting spouse's legal obligation. Whether the nonrequesting spouse has a legal obligation to pay the outstanding income tax liability pursuant to a divorce decree or agreement. This factor will not weigh in favor of relief if the requesting spouse knew or had reason to know, when entering into the divorce decree or agreement, that the nonrequesting spouse would not pay the income tax liability.

(v) Significant benefit. Whether the requesting spouse received significant benefit (beyond normal support) from the unpaid income tax liability or item giving rise to the deficiency. See Treas. Reg. §1.6015-2(d).

(vi) Compliance with income tax laws. Whether the requesting spouse has made a good faith effort to comply with income tax laws in the taxable years following the taxable year or years to which the request for relief relates. (b) Factors that, if present in a case, will weigh in favor of equitable relief, but will not weigh against equitable relief if not present in a case, include, but are not limited to, the following:

(i) Abuse. Whether the nonrequesting spouse abused the requesting spouse. The presence of abuse is a factor favoring relief. A history of abuse by the nonrequesting spouse may mitigate a requesting spouse's knowledge or reason to know.

(ii) Mental or physical health. Whether the requesting spouse was in poor mental or physical health on the date the requesting spouse signed the return or at the time the requesting spouse requested relief. The Service will consider the nature, extent, and duration of illness when weighing this factor.

.04 Refunds.

(1) Deficiency cases. In a case involving a deficiency, a requesting spouse is eligible for a refund of certain payments made pursuant to an installment agreement that the requesting spouse entered into with the Service, if the requesting spouse has not defaulted on the installment agreement. Only installment payments made after the date the requesting spouse filed the request for relief are eligible for refund. Additionally, the requesting spouse must establish that he or she provided the funds for which he or she seeks a refund. For purposes of this revenue procedure, a requesting spouse is not in default if the Service did not issue a notice of default to the requesting spouse or take any action to terminate the installment agreement.

(2) Underpayment cases. In a case involving an underpayment of income tax, a requesting spouse is eligible for a refund of separate payments that he or she made after July 22, 1998, if the requesting spouse establishes that he or she provided the funds used to make the payment for which he or she seeks a refund. A requesting spouse is not eligible for refunds of payments made with the joint return, joint payments, or payments that the nonrequesting spouse made.

(3) Other limitations. The availability of refunds is subject to the refund limitations of section 6511.



SECTION 5. PROCEDURE

A requesting spouse seeking equitable relief under section 66(c) or section 6015(f) must file Form 8857, Request for Innocent Spouse Relief (and Separation of Liability, and Equitable Relief), or other similar statement signed under penalties of perjury, within two years of the first collection activity against the requesting spouse. See Treas. Reg. §1.6015-5(b)(2)(i) for the definition of collection activity.



SECTION 6. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2000-15, 2000-1 C.B. 447, is superseded.



SECTION 7. EFFECTIVE DATE

This revenue procedure is effective for requests for relief filed on or after November 1, 2003. In addition, this revenue procedure is effective for requests for relief pending on November 1, 2003, for which no preliminary determination letter has been issued as of November 1, 2003.



DRAFTING INFORMATION

The principal author of this revenue procedure is Robin M. Tuczak of the Office of Associate Chief Counsel, Procedure and Administration (Administrative Provisions and Judicial Practice Division). For further information regarding this revenue procedure, contact Ms. Tuczak at (202) 622-4940 (not a toll-free call).

Rev. Proc. 2003-61, 2003-2 CB 296.

A widow was not entitled to innocent spouse relief from tax liens that attached to community property that had belonged to her and her late husband. Their deficiencies arose from joint returns on which the husband claimed false deductions. Thus, he was jointly and severally liable for the entire amount of the deficiencies, and state (California) law permitted a creditor to reach the entire community property in order to satisfy a debt owed by one spouse. Moreover, the government was not attempting to collect against the widow personally; it was merely pursuing liens that arose against her husband. Innocent spouse relief did not prevent the government from collecting against community property in accordance with state law.

H. Stolle, DC Calif., 2000-1 USTC ¶50,329.

An individual was eligible for equitable innocent spouse relief under Code Sec. 6015(f) in connection with her joint income tax liability that arose from her former husband's illegal drug income. The income was reported on the return for the year in question, which was prior to the enactment of Code Sec. 6015(f), but was only partially paid. In a case of first impression, the court ruled that the new innocent spouse provisions of Code Sec. 6015(f) applied retroactively to the entire liability basis, rather than to just the liability for the unpaid portion.

M. Flores, FedCl, 2002-1 USTC ¶50,108, 51 FedCl 49.

An individual who successfully sought equitable innocent spouse relief from joint liability for tax was entitled to a refund of her garnished wages and a tax overpayment that the IRS had applied to her unpaid tax liability for an earlier tax year. The IRS unsuccessfully contended that the benefits of Code Sec. 6015(g) were limited to the portion of the tax liability that remained uncollected as of July 22, 1998, the date of enactment of Code Sec. 6015 pursuant to the IRS Restructuring and Reform Act of 1998 ( P.L. 105-206). Code Sec. 6015 applies to the full amount of any preexisting tax liability for a particular tax year if any of such liability remains unpaid as of the date of enactment. It is not limited to portions of tax liability that remain unpaid after July 22, 1998. M. Flores, FedCl, 2002-1 USTC ¶50,108, followed.

C.A. Washington, 120 TC 137, Dec. 55,120.

A bankrupt widow was not entitled to summary judgment with respect to her claim for innocent spouse relief from tax liabilities arising from joint returns that she had filed with her late husband. She failed to show that she satisfied the threshold elements for equitable relief that were listed in Notice 98-61, 1998-2 CB 758. Moreover, the parties disputed the extent to which she had been involved in her late husband's business affairs.

D.S. French, BC-DC Ohio, 2000-1 USTC ¶50,122, 242 BR 369.

The Tax Court had jurisdiction to determine whether a wife was entitled to equitable relief under Code Sec. 6015(f) even though no deficiency had been asserted. Although the amount of taxes owing was correctly indicated on the couple's joint return, the full amount owed was not paid. Relief was available under Code Sec. 6015(f), which applies where it is inequitable to hold a taxpayer liable for "any unpaid tax." The 2001 amendment (P.L. 106-554) to Code Sec. 6015(e) did not preclude Tax Court jurisdiction to review the denial of equitable relief under Code Sec. 6015(f) where no deficiency had been asserted.

G.A. Ewing, 118 TC 494, Dec. 54,766.

The estate of a wife who died while still married to, and living with, her husband was denied innocent spouse relief under Code Sec. 6015(f) from the deficiencies that arose when the IRS disallowed losses claimed on the couple's joint returns with respect to the husband's tax shelter investment. Applying the guidelines set forth in Rev. Proc. 2000-15, 2000-1 CB 447, the wife had reason to know of the items giving rise to the deficiencies and benefited from those items. In light of the fact that she was deceased, there could be no economic hardship to her personally upon the denial of equitable relief.

D.C. Jonson, 118 TC 106, Dec. 54,641. Aff'd on another issue, CA-10, 2004-1 USTC ¶50,122, 353 F3d 1181.

The Tax Court had jurisdiction to hear an argument, raised as an affirmative defense, regarding whether the wife of a deceased individual was entitled to relief from joint liability pursuant to Code Sec. 6015 when her deceased husband's estate petitioned to appeal the IRS's determination not to abate interest based upon an increase in taxes for three tax years. Although jurisdiction over the estate's suit was limited to determining whether the IRS's failure to abate interest was an abuse of discretion, the court followed its line of reasoning in U.R. Neely, Dec. 54,062 (dealing with the court's jurisdiction over issues raised as an affirmative defense), and held that no additional jurisdiction was required to address the issue of relief from joint liability.

E. Wenner Est., 116 TC 284, Dec. 54,335.

The IRS properly denied an individual's request for equitable innocent spouse relief with respect to retirement distributions and interest income that were omitted from her joint return, and the substantial understatement penalty imposed as the result of the omitted interest income. The taxpayer failed to show reasonable cause for the omissions. However, the IRS's denial of equitable relief in connection with the substantial understatement penalty imposed in connection with the retirement distributions was an abuse of discretion. The taxpayer reasonably relied on statements by her ex-husband that he consulted an accountant concerning the tax implication of the distributions.

K. Cheshire, CA-5, 2002-1 USTC ¶50,222, 282 F3d 326.

The Tax Court had jurisdiction to review the IRS's decision to deny a surgeon's wife equitable innocent spouse relief from deficiencies arising in connection with the couple's joint return. Her request for relief was not a decision that was committed to IRS discretion as a matter of law; instead, it constituted an affirmative defense that became part of the couple's deficiency proceeding. The wife was not, however, entitled to reopen the record in order to present additional evidence regarding her right to proportional relief under Code Sec. 6015(b)(2). The parties conceded that the issues under both statutes were largely identical, and she did not identify the evidence that she intended to offer or explain how it would support her claim for partial relief.

M.B. Butler, 114 TC 276, Dec. 53,869.

Followed.

D. Fernandez, 114 TC 324, Dec. 53,875 (Acq.).

F.L. Charlton, 114 TC 333, Dec. 53,879.

To the extent that an ex-wife failed to qualify for innocent spouse relief under Code Sec. 6015(b) or Code Sec. 6015(c), she was entitled to equitable relief pursuant to Code Sec. 6015(f). Not only did she not have actual knowledge of the items giving rise to the deficiencies but the record indicated that she would suffer economic hardship if relief was not grante. Further, it was clear that she did not significantly benefit, either during or after her marriage, from the items giving rise to the deficiencies.

J.A. Rowe, 82 TCM 1020, Dec. 54,582(M), TC Memo. 2001-325.

The IRS's concession under Code Sec. 6015(c) that the wife of an individual who had been convicted of tax evasion and drug trafficking was entitled to innocent spouse relief for one tax year relieved her of all liability for that year and resolved the controversy between her and the IRS. However, she sought an additional ruling regarding her entitlement to relief under Code Sec. 6015(b) because it might enhance her future efforts to recover attorneys' fees. The court refused to make that determination on the ground of mootness; such a decision would amount to an advisory opinion and would contravene the principle that courts are not to gratuitously decide complex issues that would not affect the disposition of the case.

T.R. Livingston, Sr., 79 TCM 1828, Dec. 53,837(M), TC Memo. 2000-121.

The Tax Court had jurisdiction over a married taxpayer's timely "stand alone"petition for spousal relief under Code Sec. 6015. The IRS treated the request for relief as an election under Code Secs. 6015(b), 6015(c) and 6015(f).

R.E. Alt, 119 TC 306, Dec. 54,961. Aff'd, CA-6 (unpublished opinion), 2004-1 USTC ¶50,279.

The IRS abused its discretion in denying equitable innocent spouse relief under Code Sec. 6015(f) to an individual who suffered from mental illness during the tax years at issue. The taxpayer had a limited education, was completely dependent upon her husband in regard to the filing of their tax returns and the payment of their taxes, and had no knowledge or reason to know that the income taxes would not be paid at the time she signed her return. Moreover, the taxpayer would have suffered economic hardship if equitable relief were not granted.

T.J. August 84 TCM 183, Dec. 54,841(M), TC Memo. 2002-201.

A divorced individual was not entitled to equitable innocent spouse relief under Code Sec. 6015(f) in connection with his wife's unreported pension income. The taxpayer did not establish that he would suffer economic hardship if he were held liable for all or part of the unpaid deficiency. Additionally, he received significant benefit from his wife's pension distributions. Therefore, the IRS had not abused its discretion in denying such relief or in asserting the substantial understatement component of the accuracy-related penalty.

C.A. Penfield, 84 TCM 424, Dec. 54,900(M), TC Memo. 2002-254.

A taxpayer was not entitled to relief under Code Secs. 6015(b), (c) or (f) because she failed to file a joint return for the year at issue. Code Secs. 6015(b) and (c) explicitly require that a joint return for relief to be granted. Moreover, while on its face, Code Sec. 6015(f) does not require the a joint return be filed in order for equitable relief to be granted, a threshold condition of Rev. Proc. 2000-15, 2000-1 C.B. 447, which the IRS uses to determine the availability of equitable relief, dictates that a joint return must be filed.

R.M. Raymond, 119 TC 191, Dec. 54,915.

A taxpayer failed to establish that the IRS abused its discretion in denying innocent spouse relief under Code Sec. 6015(f) by acting arbitrarily, capriciously or without sound basis in fact. Applying the guidelines set forth in Rev. Proc. 2000-15, 2000-1 CB 447, the Tax Court concluded that the taxpayer failed to carry her burden of establishing that if she were to pay the unpaid liability, she would not have a reasonable amount remaining for her basic living expenses. Moreover, the taxpayer failed to carry her burden of establishing that, other than the attribution factor, the positive factors set forth in the revenue procedure that must be considered were present in her situation or that, other than the noncompliance negative factor, the negative factors that must be considered were not present.

E.C. Mellen, 84 TCM 530, Dec. 54,931(M), TC Memo. 2002-280.

An individual was not barred by the doctrine of res judicata under Code Sec. 6015(g)(2) from litigating her entitlement to equitable relief from joint and several liability under the innocent spouse provisions of Code Sec. 6015(f)(2). In a prior Tax Court proceeding that resulted in a final determination regarding the tax year at issue, the taxpayer was precluded from raising her claim for relief from joint and several liability based on uncertainty of law. Her meeting with the Appeals officer occurred around the same time that Congress finalized Code Sec. 6015 and at least 10 days prior to its effective date. Although the Tax Court decision was entered several months later, neither the taxpayer nor the Appeals officer with whom she negotiated a settlement were aware of the new relief provisions, and the effect of res judicata on a final Tax Court decision regarding her deficiency was not discussed.

J.M. Trent, 84 TCM 554, Dec. 54,938(M), TC Memo. 2002-285.

The IRS properly denied an individual's request for innocent spouse relief with respect to delinquent taxes on her former husband's unreported earnings. The taxpayer was aware that her ex-husband had received compensation for his work driving rental trucks, but she did not report any income from that employer on the joint return that she prepared. The taxpayer was not entitled to equitable innocent spouse relief with respect to the deficiency because she knew of the omitted income, failed to establish economic hardship and failed to establish that she had not benefited from the additional income.

L.L. Brooks, 85 TCM 1465, Dec. 55,181(M), TC Memo. 2003-166.

A lawyer was not entitled to equitable innocent spouse relief from joint and several liability for tax deficiencies with respect to joint returns he filed with his former wife because he had constructive knowledge of the deficiencies. Further, because he made out a check for only a small portion of the tax shown due on the return for the subsequent year, he had actual knowledge that the liability was not paid. Moreover, the taxpayer did not show that he would suffer economic hardship if relief was denied.

M.S. Feldman, 86 TCM 50, Dec. 55,220(M), TC Memo. 2003-201.

A divorced individual was not entitled to innocent spouse relief under Code Sec. 6015(f) from her joint tax liability that was reported on separate returns. The taxpayer was aware of the joint tax liability, which resulted from her former husband's retirement plan distributions that were deposited into her daughter's bank account.

C.E. Weight, 86 TCM 98, Dec. 55,234(M), TC Memo. 2003-214.

An individual was not entitled to spousal relief under Code Sec. 6015(f) for an understatement of income resulting from deductions claimed in connection with the repair of her home. Additionally, the taxpayer was not entitled to spousal relief in connection with two additional tax years under Code Sec. 6015(b), (c) or (f) because such relief does not apply to underpayments of tax reported on joint tax returns.

M. Hopkins, 121 TC 73, Dec. 55,243.

A divorced individual was not entitled to innocent spouse relief for deficiencies resulting from an understatement of gross receipts for three restaurants owned by her husband. Relief was not available under Code Sec. 6015(f) because the taxpayer knew of the unreported gross receipts, failed to establish that she would suffer economic hardship if relief were denied, benefitted significantly from the unreported income and had a legal obligation under her divorce decree to pay half of the couple's tax liability.

F. Entezam, 86 TCM 320, Dec. 55,276(M), TC Memo. 2003-253.

A lending officer was not entitled to innocent spouse relief under to protect her from a tax understatement resulting from the couple's failure to include her husband's early pension withdrawals in income on their joint return. Because the couple's legal separation was motivated by tax-avoidance reasons, the assets transferred as part of the separation agreement were deemed "disqualified assets." As such, the taxpayer did not qualify for equitable relief from her joint and several liability because she failed to meet the seven threshold conditions of Rev. Proc. 2000-15, 2000-1 CB 447.

R.G. Ohrman, 86 TCM 499, Dec. 55,332(M), TC Memo. 2003-301. Aff'd, CA-9 (unpublished opinion), 2006-1 USTC ¶50,128, 157 FedAppx 997.

A widow was not entitled to innocent spouse relief under Code Secs. 6015(b), 6015(c) and 6015(f) from joint and several tax liability. The tax liability at issue was generated solely from the taxpayer's income. Moreover, there was no understatement nor any erroneous items from her deceased spouse. The taxpayer's deceased husband, who initially filed a separate return during the tax year at issue, filed an amended joint return to report the income of the taxpayer. The Tax Court rejected the taxpayer's argument that she was entitled to equitable relief because she was unemployed at the time the amended return was filed.

B. Wallace, 86 TCM 667, Dec. 55,364(M), TC Memo. 2003-330.

The Tax Court had jurisdiction to address an argument regarding whether an individual was entitled to relief from joint liability pursuant to Code Sec. 6015. The taxpayer originally petitioned the court for review of the IRS's determination not to abate interest under Code Sec. 6404. She then amended her pleading to include a claim for relief from joint and several liability. Because the taxpayer's appeal had been pending for more than six months without a final determination by the IRS, which satisfied Code Sec. 6015(e)(1)(a)(II), she was entitled to separately petition the court under that section.

L. Sirianni, 86 TCM 690, Dec. 55,371(M), TC Memo. 2003-336.

The Tax Court did not have jurisdiction to review an individual's equitable innocent spouse claim because the IRS had not asserted a deficiency against her. The plain language of Code Sec. 6015(e) permits Tax Court jurisdiction only if a deficiency has been asserted against the individual claiming relief.

G.A. Ewing, CA-9, 2006-1 USTC ¶50,191, 439 F3d 1009, rev'g and vac'g 122 TC 32, Dec. 55,519.

An individual taxpayer was not entitled to relief from joint and several liability from understatements reported on joint returns filed with her ex-husband. Because the tax reported on her amended returns was treated as the amount of tax reported on her original return, no deficiency was outstanding in the years for which the taxpayer sought relief. Moreover, even if the taxpayer claimed relief for the correct year, the court noted that she failed to satisfy the requirements of Code Secs. 6015(b) and 6015(c). Finally, the IRS did not abuse its discretion in denying the taxpayer relief from liability under Code Sec. 6015(f). Upon filing her first amended return, the taxpayer failed to ask her ex-husband how her income was reported. As such, she failed to fulfill her duty of inquiry, and was thus charged with constructive knowledge of her income on the first amended return.

L. Demirjian, 87 TCM 841, Dec. 55,524(M), TC Memo. 2004-22.

An individual was not entitled to innocent spouse relief under Code Sec. 6015(f) because the taxpayer knew of the understatement on her joint return and failed to establish that she would suffer economic hardship if relief were denied.

V. Doyel, 87 TCM 960, Dec. 55,540(M), TC Memo. 2004-35.

The IRS did not abuse its discretion in denying equitable innocent spouse relief to a wife who knew that her husband had a pattern of not paying the tax liabilities reported on their joint returns. By signing the returns, the wife assumed the risk that she would be called upon to pay the remaining joint liabilities, which were attributable to the husband's business activities, if the IRS sought to collect the funds from her. She failed to comply with the tax laws by continuing to help prepare, sign, and file tax returns without paying the reported liabilities on those returns.

A.C. Ogonoski, 87 TCM 1038, Dec. 55,561(M), TC Memo. 2004-52.

An individual was entitled to innocent spouse relief under Code Sec. 6015(f), relieving her of joint and several liability for delinquent taxes owed by her and her former spouse in six tax years. The revenue agent abused his discretion in denying the taxpayer relief because the taxpayer satisfied most of the factors set forth in Rev. Proc. 2004-15, 2004-1 CB 490. The overdue taxes resulted from the former spouse's failure to withhold an adequate amount of taxes. Had the taxpayer filed as single, her withholding would have exceeded her tax liability. The IRS conceded that the taxpayer would suffer undue hardship if relief was not granted and that the taxpayer did not significantly benefit from the unpaid taxes. Moreover, the taxpayer made a good faith effort to comply with the income tax laws following the years in issue.

J.T. Foor, 87 TCM 1046, Dec. 55,563(M), TC Memo. 2004-54.

A married individual was not entitled to innocent spouse relief under Code Secs. 6015(b) or (f). The taxpayer was not entitled to equitable relief because she failed to satisfy any of the six factors set forth in Rev. Proc. 2000-15, 2000-1 CB 447. The taxpayer knew of the items giving rise to the understatements, which were attributable to both her and her husband. In addition, the taxpayer failed to establish that she would suffer economic hardship if held liable for the delinquent tax.

P.J. Ellison, 87 TCM 1062, Dec. 55,567(M), TC Memo. 2004-57.

The IRS abused its discretion in denying equitable innocent spouse relief to a taxpayer who was unaware that her husband had failed to pay their taxes for one year. The wife did not significantly benefit from the tax underpayment; the deficiency was solely attributable to the husband; the wife complied with the tax laws for all of the years following the one at issue; and she lacked knowledge of the underpayment.

D.M. Keitz, 87 TCM 1118, Dec. 55,585(M), TC Memo. 2004-74.

A taxpayer was not entitled to equitable relief because she failed to satisfy any of the six factors set forth in Rev. Proc. 2000-15, 2000-1 CB 447. The taxpayer knew of the items giving rise to the understatements, which were attributable to both her and her husband. Finally, the taxpayer failed to establish that she would suffer economic hardship if held liable for the delinquent tax.

A.E. Bartak, 87 TCM 1152, Dec. 55,596(M), TC Memo. 2004-83. Aff'd, CA-9 (unpublished opinion), 2006-1 USTC ¶50,111, 158 FedAppx 43.

A widower was entitled to innocent spouse relief pursuant to Code Sec. 6015(f), allowing for a refund of taxes. Because the taxpayer satisfied a majority of the requirements in Rev. Proc., 2000-1 CB 447, she was eligible for relief despite the fact that she paid the tax attributable to her deceased husband. Moreover, the taxpayer established that she did not have knowledge of, or benefit from, the unreported income.

C. Rosenthal, 87 TCM 1183, Dec. 55,603(M), TC Memo. 2004-89.

A teacher was not entitled to innocent spouse relief. Her request for equitable relief from underpayments from two tax years was evaluated using the factors in Rev. Proc. 2000-15, 2000-1 CB 447. Only two factors weighed in favor of relief: the taxpayer was divorced and her divorce settlement allocated the liabilities to her former husband. For three additional tax years, the IRS had already granted her request for separate liability relief, which relieved her of tax liabilities attributable to her ex-husband's tax items. She was not entitled to additional relief because she failed to show that she did not know or have reason to know of the understatements on the returns, especially in light of her advanced education and her representation by an attorney and an accountant when she filed her delinquent returns. For the last tax year at issue, relief was denied because she and her husband had filed separate returns, and their subsequent attempt to file an amended joint return was untimely.

A. Barriga, 87 TCM 1236, Dec. 55,617(M), TC Memo. 2004-102.

The IRS did not abuse its discretion in denying equitable innocent spouse relief to a taxpayer who had reason to know that her former husband would not pay the tax liabilities reported on their joint returns when she signed those returns. At the times she signed the returns, she and her former husband were plagued by financial difficulties and were in danger of losing their home in foreclosure. Furthermore, the taxpayer had lesser amounts of tax withheld from her wages than the amount that would become due on her portion of the joint income. The Tax Court applied the guidelines set forth in Rev. Proc. 2000-15, 2000-1 CB 447, and concluded that the factors weighing against granting relief outweighed those factors weighing in favor of relief.

A.L. Morello, 88 TCM 112, Dec. 55,713(M), TC Memo. 2004-181.

The IRS's decision to deny a wife Code Sec. 6015(f) relief from joint and several liability was not an abuse of discretion. She knew when the joint return was filed that she had an obligation to pay the joint liability and that some of her assets would be used to pay it. The fact that the IRS applied her subsequent year's refund to the tax liability instead of waiting for the bankruptcy court to satisfy the liability with her individual retirement account was not sufficient to qualify her for relief.

N.M. O'Neill, 88 TCM 118, Dec. 55,717(M), TC Memo. 2004-183.

The IRS's decision to deny a former spouse relief from joint and several liability was not an abuse of discretion. The taxpayer failed to present any evidence with regard to the Rev. Proc. 2000-15, sec. 4.03, threshold factors that are weighed in determining whether equitable relief should be granted.

M.A. Durham, 88 TCM 120, Dec. 55,718(M), TC Memo. 2004-184.

Applying the guidelines contained in Rev. Proc. 2000-15, 2000-1 CB 447, the court held that the taxpayer failed to carry her burden of proof in a number of areas, including the showing of economic hardship and that she did not know, and had no reason to know that the tax liability would not be paid.

M. Monsour, 88 TCM 144, Dec. 55,726(M), TC Memo. 2004-190.

The IRS did not abuse its discretion by denying innocent spouse relief under Code Sec. 6015(f) to a divorced taxpayer who sought relief from additions to tax and interest with respect to the tax liabilities reported on the joint income tax returns for the tax years at issue. The Tax Court applied the guidelines set forth in Rev. Proc. 2000-15, 2000-1 CB 447, and determined that the factors weighing against granting relief outweighed those in favor of relief.

D.H. Knorr, 88 TCM 1288, Dec. 55,752(M), TC Memo. 2004-212.

The IRS abused its discretion in denying a taxpayer's request for equitable relief as an innocent spouse under Code Sec. 6015(f). The IRS argued that under section 5 of Rev. Proc. 2000-15 the taxpayer had to make her request for equitable relief within two years of the first collection activity. Yet in notifying the taxpayer of the first collection activity --withholding a refund to offset the unpaid joint liability --the IRS failed to notify the taxpayer of her innocent spouse rights, contrary to section 3501 of the Internal Revenue Service Restructuring and Reform Act of 1998 ( P.L. 105-206). The IRS asserted that for purposes of the limitations period in the revenue procedure, the offset was a collection activity; but for purposes of its obligation to inform the taxpayer of her rights, the notice of offset was not a collection-related notice. The court, however, viewed the IRS's position as incongruous and ruled that notice of the offset was a collection-related notice and that the IRS should have informed the taxpayer of her rights under Code Sec. 6015. Because the IRS failed to do so, the offset did not commence the two-year period, and the IRS's contrary interpretation of Rev. Proc. 2000-15, 2000-1 CB 447, was an abuse of discretion.

N.W. McGee, 123 TC 314, Dec. 55,781.

The IRS did not abuse its discretion by denying innocent spouse relief under Code Sec. 6015(f) to a widowed taxpayer who sought relief from joint and several liability. While the taxpayer satisfied the seven threshold conditions of Rev. Proc. 2000-15, 2000-1 CB 447 for the IRS to consider equitable relief, she knew or had reason to know that the liabilities would not be paid because her husband was deceased at the time she signed the tax returns.

M.A. George, 88 TCM 456, Dec. 55,804(M), TC Memo. 2004-261.

A divorced taxpayer was not entitled to relief under Code Sec. 6015(f) because, given the taxpayer's status as an investor, it would not be inequitable to hold her liable for the deficiency.

D.J. Barnes, 88 TCM 479, Dec. 55,809(M), TC Memo. 2004-266.

A widow was not entitled to Code Sec. 6015(f) equitable relief from joint and several liability for liabilities incurred with respect to a tax shelter. The erroneous items that gave rise to the understatement of tax were attributable both to her and to her husband because she played a substantial role in managing the family's investments. Although she claimed to be concerned about the large deductions on the couple's tax returns, she made no inquiry to verify the accuracy of those items. Further, the individual's husband did not abuse or mislead her and she received a significant benefit from the understatement in the form of erroneous tax refunds. There was no evidence that she would suffer economic hardship if she were held liable for the deficiencies.

I. Capehart, 88 TCM 492, Dec. 55,811(M), TC Memo. 2004-268. Aff'd, CA-9 (unpublished opinion), 2007-1 USTC ¶50,149, 204 FedAppx 618.

An individual was denied equitable innocent spouse relief for deficiencies resulting from the failure to report five items of income, three of which were his spouse's compensation from different employers. The individual did not qualify for innocent spouse relief under Code Sec. 6015(b), (c) or (f) because he had actual knowledge of his spouse's work for the three employers, and there was no concealment creating an inequity against the individual.

T.R. Becherer, 88 TCM 617, Dec. 55,827(M), TC Memo. 2004-282.

The IRS abused its discretion in denying an individual equitable innocent spouse relief. The request for relief was filed more than two years after the IRS began to apply the taxpayer's overpayments spanning seven years to tax underpayments that arose during her marriage. The IRS notified the taxpayer of the offsets, but failed to inform the taxpayer that she might be eligible for relief under Code Sec. 6015 until more than three years after the first offset, contrary to section 3501(b) of the Internal Revenue Service Restructuring and Reform Act of 1998 ( P.L. 105-206). Following N.W. McGee, (123 TC 314, Dec. 55,781), the notice of offset was a collection-related activity that triggered the IRS's obligation to notify the taxpayer of her rights. The IRS, therefore, could not summarily reject the taxpayer's request based solely on its timeliness. Relief could not be granted under Code Secs. 6015(b) or (c) because no deficiency existed.

K. Nelson, 89 TCM 685, Dec. 55,910(M), TC Memo. 2005-9.

An individual who had knowledge of her husband's gambling activities, which gave rise to tax deficiencies, was entitled to innocent spouse relief on equitable grounds. The factors weighing in favor of the relief included: (1) the taxpayer's divorce, (2) the fact that she would face economic hardship if relief were not granted, (2) the divorce decree stated that her former husband was responsible for the income tax liability, (3) the entire deficiency was attributable to him, (4) the taxpayer was current with all of her Federal tax obligations and (5) the existence of abuse.

S.K. Baumann, 89 TCM 790, Dec. 55,935(M), TC Memo. 2005-31.

A divorced individual failed to establish that the IRS abused its discretion in denying innocent spouse relief under Code Sec. 6015(f) by acting arbitrarily, capriciously or without sound basis in fact. The individual filed joint returns with her husband for a period of four years, knew that each return showed tax due resulting from underwithholding attributable to both of them, and at all times had access to the joint bank account from which the taxes were to be paid. She failed to carry her burden of proving that she had no knowledge of or reason to know that the taxes would not be paid by her husband, as he had stated. In fact, the individual filed the last joint return with her husband after the IRS had levied on their joint bank account for unpaid tax liabilities. Therefore, she clearly had actual knowledge that taxes remained unpaid when the fourth return was jointly filed. By applying the guidelines set forth in Rev. Proc. 2000-15, 2000-1 CB 447, the Tax Court concluded that the individual failed to establish economic hardship and the knowledge or reason to know factor weighed heavily against granting relief.

Y.C. Lopez, 89 TCM 810, Dec. 55,941(M).

An individual who received over $1 million in constructive dividends that she failed to report on her tax return was not entitled to relief from joint and several liability under Code Sec. 6015. The taxpayer did not qualify for full or apportioned relief because (1) the understatement was attributable to her, and (2) she knew of the understatement when she filed the return. Moreover, the taxpayer was not entitled to equitable relief because the taxpayer filed the joint tax return for the year at issue with fraudulent intent. Therefore, the taxpayer failed to qualify for equitable relief under Rev. Proc. 2003-61, 2003-2 CB 296.

L. Bussell, 89 TCM 1032, Dec. 55,987(M), TC Memo. 2005-77. Aff'd on another issue, CA-9 (unpublished opinion), 2008-1 USTC ¶50,107, 262 FedAppx 770.

The IRS abused its discretion when it denied a divorced individual equitable innocent spouse relief for several tax years. The taxpayer did not know or have reason to know, at the time she signed the tax returns, that her ex-husband would not pay the tax liabilities. In fact, her ex-husband concealed his nonpayment of the tax liabilities and his serious gambling problem from her for many years. Moreover, those liabilities were solely attributable to the ex-husband and the couple were separated at the time she filed her request for innocent spouse relief. Further, the ex-husband had the legal obligation to pay the liabilities according to the couple's marital settlement agreement.

J.P. Levy, 89 TCM 1101, Dec. 56,004(M), TC Memo. 2005-92.

An individual was entitled to innocent spouse relief pursuant to Code Sec. 6015(f) because she satisfied a majority of the requirements in Rev. Proc. 2000-15, 2000-1 CB 447. The individual's spouse failed to have any taxes withheld on his earnings, made no estimated tax payments, did not pay the balance due on the returns at issue and concealed the nonpayment. The individual had no reason to know that her spouse failed to pay the balance due on the returns. The Tax Court held that it was reasonable and credible for the individual to believe her spouse's assertions that the tax deficiencies resulted from denial of tax shelter deductions.

R.E. Neal, 90 TCM 161, Dec. 56,124(M), TC Memo. 2005-201.

The IRS did not abuse its discretion in denying a taxpayer equitable innocent spouse relief. She failed to carry her burden of establishing any factors to weigh in favor of granting relief under Code Sec. 6015(f) and Rev. Proc. 2000-15, 2000-1 CB 447. Although she claimed that she was "hurried" when she signed the return, because she signed the return, she was held to have had constructive knowledge of the tax shown due on the return, and she should have inquired about whether the tax shown was paid. The amount of the tax shown due was large enough to put her on notice that further inquiry should have been made.

E. Simon, 90 TCM 302, Dec. 56,146(M), TC Memo. 2005-220.

An IRS Appeals officer's rejection of a spouse's request for equitable relief under Code Sec. 6015(f) did not constitute an abuse of discretion because all of the seven threshold conditions set forth in Rev. Proc. 2000-15, 2000-1 CB 447, were not satisfied. The nonrequesting husband added his wife's name on the deed of his house and transferred a boat and a car to her shortly after their tax liabilities arose and the IRS's notice of levy was received. Because the couple did not provide any logical or substantial reason for the transfer, the Appeals officer correctly concluded that the transfer had a tax-avoidance purpose and constituted a transfer of disqualified assets. In addition, the evidence showed that, at the time the requesting spouse signed the returns, she should have known that the tax for the years in question would not be paid.

D. Etkin, 90 TCM 417, Dec. 56,174(M), TC Memo. 2005-245.

Although her ex-husband may have forged her signature on a joint return, the taxpayer was not entitled to equitable innocent spouse relief. A joint return can be valid, even if signed only by one spouse, as long as both spouses intended to file jointly and the taxpayer knew or should have known about the unpaid tax liability as she had earned income for the year at issue, but failed to make estimated payments.

D.A. Magee, 90 TCM 489, Dec. 56,193(M), TC Memo. 2005-263.

The IRS did not abuse its discretion in determining that a woman was not an innocent spouse entitled to equitable relief from joint and several liability for taxes reported on a joint return but not paid. The Tax Court found that the woman met the threshold conditions for equitable relief under Section 4.02 of Rev. Proc. 2000-15, 2000-1 CB 447, but relief was not available under that section because the couple had lived together for part of the 12-month period preceding the request for relief, the woman had reason to know that the reported liability would not be paid, and she provided no evidence regarding her financial status to support her claim of economic hardship. Consideration of the factors weighing for or against equitable relief under section 4.03 of Rev. Proc. 2000-15, 2000-1 CB 447, uncovered no reason to suggest that the IRS's finding was an abuse of discretion.

P.J. Merendino, 91 TCM 646, Dec. 56,403(M), TC Memo. 2006-2.

Similarly.

J.A. Madden, 91 TCM 652, Dec. 56,405(M), TC Memo. 2006-4.

The ex-wife of a convicted drug trafficker was not entitled to innocent spouse relief in excess of the abatement of fraud penalties and related interest granted by the IRS in a notice of determination; Tax Court affirmed. The notice stated that relief was granted under "§ 6015(b)." The IRS had no authority under Code Sec. 6015(b) to grant partial relief that did not include the tax understatement, but did have authority under Code Sec. 6015(f) to grant equitable relief limited to the fraud penalty and interest. The reference to "§ 6015(b)" in the notice was not dispositive and did not prejudice the taxpayer.

N. Aranda, CA-10, 2006-1 USTC ¶50,136, 432 F3d 1140.

The IRS did not abuse its discretion when it denied a taxpayer innocent spouse relief under Code Sec. 6015(f). The taxpayer failed the safe harbor and the balancing tests set forth in Rev. Proc. 2000-15, 2000-1 CB 447, because a preponderance of the factors enumerated in that procedure weighed against relief. The taxpayer had reason to know or actually knew at the time he signed the joint returns that the tax liabilities would not be paid. In addition, the taxpayer would not suffer economic hardship if the relief were not granted because he had many assets that he could sell without undue hardship. The taxpayer also failed to show that he received no significant benefit from the tax underpayment. Finally, at least part of the tax liabilities were attributable to the taxpayer's income-producing activities.

M.R. Motsko, 91 TCM 711, Dec. 56,423(M), TC Memo. 2006-17.

The IRS did not abuse its discretion when it denied a taxpayer innocent spouse relief under Code Sec. 6015(f). The liability was due the improper reporting of a distribution from the taxpayer's husband's Code Sec. 401(k) plan prior to the couple's divorce. The taxpayer was not entitled to equitable relief under Code Sec. 6015(f) and the guidelines of Rev. Proc. 2003-61, 2003-2 CB 298, because she had knowledge of the item giving rise to the deficiency and failed to comply with tax laws in subsequent years, factors that outweighed the facts that she and her husband were divorced and that she suffered abuse.

T.J. Fox, 91 TCM 731, Dec. 56,428(M), TC Memo. 2006-22.

It was not equitable to hold a spouse, who had limited involvement in the family's finances, jointly and severally liable with respect to a tax deficiency attributable to her husband's participation in a sham straddle transaction because she did not benefit from the transaction and, given her assets and limited number of years remaining in the work force, imposing the tax liability on her would result in a severe economic hardship.

P.E. Campbell, 91 TCM 735, Dec. 56,430(M), TC Memo. 2006-24.

The IRS's denial of equitable innocent spouse relief to a requesting ex-spouse was not an abuse of discretion. The requesting spouse failed to prove that denial of such relief would subject her to economic hardship.

J.H. Krasner, 91 TCM 765, Dec. 56,437(M), TC Memo. 2006-31.

The Tax Court properly found that it lacked jurisdiction to review the IRS's denial of an innocent spouse's refund claim for one tax year because no deficiency notice had been issued for that year. However, the Tax Court improperly decided that the taxpayer's refund request for another tax year was time-barred. The Tax Court lacked jurisdiction to make that determination because no deficiency notice had been issued for that year either.

T.E. Bartman, CA-8, 2006-1 USTC ¶50,298, aff'g in part and rev'g in part 87 TCM 1213, Dec. 55,608(M), TC Memo. 2004-93.

An individual was not entitled to additional innocent spouse relief from joint liability for income taxes, related penalty, additions to tax, and interest. She was not entitled to relief under Code Sec. 6015(b) because she had knowledge of interest on the home mortgages and of the various business activities of her former husband's sales business. The IRS correctly concluded that she qualified generally for relief under Code Sec. 6015(c). However, the court held that she qualified for relief with regard to the entire deficiency, not just 50 percent thereof, because the entire deficiency was attributable to her husband. The IRS incorrectly rejected her request for Code Sec. 6015(f) equitable relief as to half the income tax underpayment nominally attributable to her. The IRS abused its discretion in not granting her relief for the entire amount, and not half, of the balance of the tax underpayment and the related penalty, additions to tax, and interest. The severity of the spousal abuse she suffered during her marriage strongly favored granting her relief.

C. McKnight, 92 TCM 76, Dec. 56,576(M), TC Memo. 2006-155.

A 69-year-old research scientist was entitled to innocent spouse relief from deficiencies that resulted from her husband's investment in a tax shelter partnership. The taxpayer would have suffered economic hardship; therefore, it would have been inequitable to deny her innocent spouse relief.

H.M. Korchak, 92 TCM 199, Dec. 56,609(M), TC Memo. 2006-185.

The IRS abused its discretion in denying a divorced taxpayer innocent spouse relief under Code Sec. 6015(f); based on an application of the factors set forth in Rev. Proc. 2000-15, 2001 CB 447 (which, although superseded, applied to the IRS's determination), to hold her liable would be inequitable. All of the factors either favored the taxpayer or were neutral. The taxpayer was divorced when she sought relief and she did not significantly benefit from her former husband's underpayment of tax. Also, she would suffer economic hardship if the relief were not granted in that she had a reasonable need to retain her modest retirement account. Further, she did not know or have reason to believe that the tax at issue would not be paid. Her husband intentionally mislead her into thinking he was fulfilling their tax obligations. Also, the underpaid tax was solely attributable to her former husband. His agreement in their property settlement to pay community debt, including the taxes at issue, also favored her. Finally, the taxpayer did not participate in any wrongdoing.

D. Van Arsdalen, 93 TCM 953, Dec. 56,852(M), TC Memo. 2007-48.

The IRS abused its discretion in denying a divorced taxpayer innocent spouse relief under Code Sec. 6015(f) based on an application the factors set forth in Rev. Proc. 2000-15, 2001 CB 447 (which, although superseded by Rev. Proc. 2003-61, 2003 C.B. 296, was still applicable in this case). All of the factors either favored the taxpayer or were neutral. The taxpayer participated as a helper in her ex-husband's business, signed their joint income tax returns, and admitted that she knew their tax liabilities would not be paid. However, her ex-husband controlled the receipts from the business, she had no access to the money and she had no or little influence over the use of those funds. Thus, her knowledge that the taxes would not be paid was not fatal to her request for relief. Further, the taxpayer's debts far exceeded the value of her assets and her current income was below her expenses. The fact that she had remarried was not enough to show that she would not suffer economic hardship if she had to pay the taxes, especially since she received no support from her current husband.

L.D. Farmer, 93 TCM 1052, Dec. 56,881(M), TC Memo. 2007-74.

The IRS did not abuse its discretion in denying a taxpayer innocent spouse relief under Code Sec. 6015(f). Although all of the tax liability was attributable to her husband's business activities, the taxpayer had received significant benefit from the underpayment; she knew, or had reason to know the liability would be unpaid; and she failed to produce any evidence of economic hardship should she be held jointly liable for the unpaid taxes.

B. Ware, 93 TCM 1196, Dec. 56,924(M), TC Memo. 2007-112.

There was no abuse of discretion in the IRS's denial of equitable innocent spouse to a widow who failed to establish that the taxes at issue would be paid within a reasonable period of time and that she would suffer economic hardship if innocent spouse relief was denied. The widow alleged that at the time she signed the tax returns she believed the taxes would be paid from her husband's bankruptcy estate, from his pension funds, or from future earnings derived from her husband's return to work. Her hope that payment would eventually be made based on various contingencies was not reasonable. Furthermore, financial information submitted to the IRS Appeals officer showed excess monthly income over expenses of almost $3,000 and her court testimony, although providing generalized approximations of an updated and different financial picture, was not substantiated by any supporting documentation. Finally, the widow's shortcomings with regard to income tax delinquencies in subsequent years failed to show good faith efforts on her part.

D.A. Banderas, 93 TCM 1247, Dec. 56,943(M), TC Memo. 2007-129.

A married taxpayer was not eligible for equitable innocent spouse relief under Code Sec. 6015(f). Although the taxpayer met the threshold requirements for equitable relief, she failed to meet the conditions set out in Rev. Proc. 2000-15, 2000-1 CB 447, because she was still married to the nonrequesting spouse at the time relief was requested, she was not abused, she knew or had reason to know that the liability reported on the returns would not be paid, she was not in compliance with federal tax laws and she failed to verify that she would suffer economic hardship if relief was not granted.

T.G. Butner, 93 TCM 1290, Dec. 56,952(M), TC Memo. 2007-136.

The IRS abused its discretion in denying an individual equitable relief from joint and several liability under Code Sec. 6015(f). Most of the factors in section 4.03 of Rev. Proc. 2003-61, 2003-2 CB 296, either favored granting her relief or were of neutral impact. Although the taxpayer had constructive knowledge of the taxes due because she signed the returns, the liabilities reported on those returns were solely attributable to her husband's businesses. Further, she derived no significant benefit from the failure to pay the tax liabilities for the years at issue and she would suffer even greater economic hardship than already existed if forced to pay the outstanding tax liability.

C.K. Beatty, 93 TCM 1422, Dec. 56,984(M), TC Memo. 2007-167.

A former wife was denied innocent spouse relief with regard to tax liability related to a disallowed charitable contribution deduction because she was aware at the time the couple signed their joint return that a charitable contribution claimed on the return had not been made. She did not qualify for equitable relief under Code Sec. 6015(f) because, since no contribution was made by either spouse, the tax liability was attributable to both her and the former husband.

C.R. Schwendeman, Dec. 57,047(M), TC Memo. 2007-227.

The IRS abused its discretion in denying innocent spouse relief based on the factors set forth in Rev. Proc. 2000-15, 2001 CB 447. The IRS acted arbitrarily in using the taxpayer's knowledge at the time he signed the amended return. The husband did not significantly benefit from the embezzlement income or from not paying the taxes on that income, where the income was not significant to their life, and the husband did not have the unpaid tax money available for his personal use. The fact that the husband lacked economic hardship was not enough to justify denying relief. The parties agreed on the other factors set forth in the revenue procedure.

D.B. Billings, Dec. 57,056(M), TC Memo. 2007-234.

A former spouse was denied equitable relief for one tax year at issue, but was granted relief for the second tax year. The IRS did not abuse its discretion in denying her innocent spouse relief for the first tax year at issue because she knew of the distribution, failed to establish economic hardship, benefitted from the distribution, and, therefore, failed to act with reasonable cause and good faith in the filing of the return for that tax year. With respect to the second tax year at issue, however, the IRS abused its discretion in denying equitable relief to the individual because most of the factors in section 4.03 of Rev. Proc. 2003-61, 2003-2 CB 296, favored granting her relief, in that: the individual was divorced from her husband who had abused her throughout the marriage; she derived no significant benefit from the distribution from his IRA during that tax year; she did not sign the return; and was not aware of a tax liability until she began filing her own individual returns.

S.K. Dowell, Dec. 57,157(M), TC Memo. 2007-326.

The taxpayer was not eligible for equitable relief from liability. It was not reasonable for petitioner to rely on her husband to pay the tax, given her knowledge of their financial history. Nor did she show that she would suffer economic hardship if the relief was not granted. Several of the factors listed in section 4.03 of Rev. Proc. 2003-61 weighed against the granting of equitable relief. In particular, the court noted that no showing of hardship had been made, the taxpayer had knowledge of the items leading to the deficiency, and the divorce decree did not relieve the taxpayer of liability for the couple's taxes.

S.L. Gonce, Dec. 57,161(M), TC Memo. 2007-328.

A husband was not entitled to innocent spouse relief from income tax liabilities, interest and penalties assessed against the couple. He failed to demonstrate that the taxes at issue were understated or that he and his wife were no longer married, living together or legally separated. He did not qualify for equitable relief because he failed to demonstrate that the IRS had denied relief under Code Sec. 6015(f) or that he had petitioned the Tax Court under Code Sec. 6015(e).

W. Bucy, DC W.Va., 2007-2 USTC ¶50,822.

The IRS did not abuse its discretion by denying a married woman's claim for innocent spouse relief. Equitable relief under Code Sec. 6015(f) was not available because a wife did not provide any evidence that she would suffer economic hardship if relief was not granted, or that she did not have sufficient assets to pay the tax liability or that the burden of paying it would fall on her instead of her husband.

J.D. Dunne, 95 TCM 1236, Dec. 57,368(M), TC Memo. 2008-63.

The IRS abused its discretion in denying a request for equitable innocent spouse relief under Code Sec. 6015(f). With regard to the factors set out in Rev. Proc. 2000-15, 2000-1 CB 448, applicable at the time relief was requested, the IRS abused its discretion in failing to consider whether the couple was still married, whether there was abuse or if a finding of liability would impose economic hardship on the wife. Although the couple was not divorced at the time of the request and they were living in the same home, they were using separate bedrooms, so the marital status factor was deemed to favor the wife. Evidence of abuse and economic hardship was present, but the IRS failed to follow up on the evidence. Relief was proper because the only factor that ultimately weighed against the wife was her knowledge of the underpayment.

C. Nihiser, 95 TCM 1531, Dec. 57,445(M), TC Memo. 2008-135.

The IRS properly denied innocent spouse relief under the equitable relief rules of Code Sec. 6015(f) based on the factors presented in Rev. Proc. 2003-61. The taxpayer failed to present any evidence that she would suffer economic hardship if relief was not granted despite being given ample opportunity to do so by the IRS.

R.M. Toppi, 95 TCM 1612, Dec. 57,471(M), TC Memo. 2008-156.

The IRS abused its discretion in denying a request for equitable relief under Code Sec. 6015(f). The taxpayer satisfied the relevant safe harbor conditions set out in section 4.02 of Rev. Proc. 2000-15.

K.S. Alioto, 96 TCM 63, Dec. 57,506(M), TC Memo. 2008-185.

An individual was not entitled to equitable innocent spouse relief from a tax underpayment arising from a joint return she had filed with her former husband. Her husband's "shopaholic" tendencies and the couple's history of financial difficulties meant she had reason to know that her husband would not pay the tax liability. Denying relief would not impose an economic hardship on her. With respect to the balancing test for equitable relief, she had filed a timely return for only one year after the year at issue; her claim that her ex-husband had been even less compliant with the tax laws was irrelevant. There was no evidence that the emotional abuse allegedly caused by her ex-husband's spending incapacitated her. Although the couple's divorce agreement obligated the ex-husband to pay the liability, she knew that he was unlikely to do so. Finally, her claim that the underpayment was at least partially attributable to her ex-husband's separate property was irrelevant.

K.L. Stolkin, 96 TCM 143, Dec. 57,532(M), TC Memo. 2008-211.

An individual was entitled to innocent spouse relief from joint and several liability under Code Sec. 6015. The applicable factors in section 4.03 of Rev. Proc. 2000-15, 2000-1 CB 448, which applied at the time that innocent spouse relief was requested, favored granting her relief. Of the six positive factors, two factors weighed in favor of relief and four factors did not apply. Of the six negative factors, only one factor weighed against granting relief, and the others did not apply.

L. Wiener, 96 TCM 227, Dec. 57,555(M), TC Memo. 2008-230.

The Office of Chief Counsel determined that an individual who had requested innocent spouse relief under Code Sec. 6015, and who had her account reduced to zero in an administrative procedure, did not have her liability abated; therefore, that liability could be reinstated. The IRS initially determined that the taxpayer was entitled to complete relief from three years of tax liability, and entered a transaction code in her file that reduced her liability account balance to zero. It was later determined that the taxpayer was, in fact, not entitled to innocent spouse relief. The taxpayer's contention that the zeroing of her account constituted an abatement of liability was incorrect. Abatement, under Code Sec. 6404, applies to a liability that is excessive, erroneous, or assessed after expiration of the limitation period. In this case, the zeroing of the taxpayer's account was a mere administrative procedure, unrelated to the abatement procedure. If the IRS chose to reinstate her liability, it could enter a new transaction code and reverse its previous grant of relief.

CCA Letter Ruling 200802030.

An individual was not entitled to equitable innocent spouse relief from tax liabilities owed with her former husband that related to disallowed pass-through credits and losses reported from the husband's investment in a limited partnership tax shelter. She knew or had reason to know at the time she signed the couple's joint returns that there was an understatement of tax and she would not suffer economic hardship if relief was not granted

W.L. Greer, Dec. 57,722(M), TC Memo. 2009-20.