Ordlock v. Cir

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

LOIS E. ORDLOCK, 

Petitioner-Appellant, No. 06-74539

v.

 Tax Ct. No.

17021-02

COMMISSIONER OF INTERNAL

REVENUE, OPINION

Respondent-Appellee.



Appeal from a Decision of the

United States Tax Court

Argued and Submitted

April 9, 2008—Pasadena, California

Filed July 24, 2008

Before: Harry Pregerson, Dorothy W. Nelson, and

Ferdinand F. Fernandez, Circuit Judges.

Opinion by Judge Pregerson

9211

ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE 9213

COUNSEL

Clayton J. Vreeland, Vreeland Law Firm, Inc., Los Angeles,

California, for the petitioner-appellant.

Teresa E. McLaughlin and Rachel I. Wollitzer, Tax Division,

United States Department of Justice, Washington, D.C., for

the respondent-appellee.

9214 ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE

OPINION

PREGERSON, Circuit Judge:

Lois E. Ordlock appeals the Tax Court’s determination that

she is ineligible for a refund under 26 U.S.C. § 60151 for pay-

ments on her husband’s tax debt paid from their community

property. After reviewing the language and legislative history

of § 6015, we affirm the decision of the Tax Court.

BACKGROUND

Lois Ordlock and her husband, Bayard M. Ordlock, live in

California, a community property state. The Ordlocks filed

joint federal income tax returns in California for the years

1982, 1983, and 1984. Because all three returns understated

the Ordlocks’ tax liabilities, the Commissioner of the Internal

Revenue Service made several assessments of additional

amounts of tax, penalties, and interest owed by the Ordlocks

for those three years.

Over the next two decades, the Ordlocks made several pay-

ments on the tax debt. Except for one payment of $2,485

made from Mrs. Ordlock’s separate property,2 all payments

and credits applied to the couple’s tax debt were made from

community property.3 The Ordlocks remained married at the

time all payments were made, and are still married today.

1

Unless otherwise indicated, all statutory references are to the Internal

Revenue Code (26 U.S.C.).

2

See Cal. Fam. Code § 770(a) (“Separate property of a married person

includes all of the following: (1) All property owned by the person before

marriage; (2) All property acquired by the person after marriage by gift,

bequest, devise, or descent; (3) The rents, issues, and profits of the prop-

erty described in this section.”).

3

See Cal. Fam. Code § 760 (“Except as otherwise provided by statute,

all property, real or personal, wherever situated, acquired by a married

person during the marriage while domiciled in this state is community

property.”).

ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE 9215

On March 4, 1999, Mrs. Ordlock filed a request under

§ 6015(b) for “innocent spouse” relief from joint and several

liability on the tax debt for the years 1982, 1983, and 1984.

On July 26, 2002, the Commissioner mailed Mrs. Ordlock a

Notice of Determination that granted her relief under

§ 6015(b) of $160,912 for all three years. In relevant part, the

Notice stated:

Subject: Notice of Determination Concerning Your

Request for Relief from Joint and Several Liability

under Section 6015.

Dear Mrs. Ordlock:

We’ve made a decision about your appeal request for

innocent spouse relief . . . .

We call the decision we made a determination.

When we abate a tax or penalties or interest we call

it relief from the liability. . . .

Internal Revenue Code Section 6015 allows us to

abate in full or in part a tax liability when we deter-

mine that someone qualifies as an innocent-spouse.

We’ve determined, for the above tax year(s), that:

We find you eligible for relief under Section 6015(b)

in the amount of $160,912.00.

The Notice further indicated that Mrs. Ordlock’s remaining

tax liability for 1982, 1983, and 1984 was zero. The Notice

did not address whether Mrs. Ordlock was eligible for any

refund of the amount that she previously paid.

Mrs. Ordlock sought review of the Notice, and the parties

eventually decided to submit the case for decision to the Tax

Court. The parties agreed that Mrs. Ordlock was entitled to

9216 ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE

relief from joint and several liability under § 6015(b) for the

years 1982, 1983, and 1984. The parties also agreed that Mrs.

Ordlock was entitled to a refund of $2,485 for the payment on

the tax debt that she made with her separate property. Their

dispute centered on whether Mrs. Ordlock was entitled to a

refund of the payments the Ordlocks made from community

property. Mrs. Ordlock argued that § 6015 requires the pay-

ments she made from community property to be allocated

between herself and her husband, despite the continued exis-

tence of the marital community. The Commissioner argued

that § 6015 does not preempt community property law for

purposes of calculating refunds.

On January 19, 2006, the Tax Court issued its opinion in

favor of the Commissioner. Ordlock v. Comm’r, 126 T.C. 47

(2006). On June 20, 2006, the Tax Court entered its final deci-

sion, incorporating its January opinion. On September 11,

2006, Mrs. Ordlock filed her timely notice of appeal to this

court. See § 7483.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction over all final decisions of the Tax

Court under § 7482(a)(1). We review the Tax Court’s inter-

pretation of the tax code de novo. Biehl v. Comm’r, 351 F.3d

982, 985 (9th Cir. 2003).

I. Federal Income Tax Law and

California Community Property Law

Married couples who file joint returns are generally jointly

and severally liable for the full amount of tax due on their

combined incomes, even though one spouse may have earned

more than the other. See § 6013(d)(3); Ness v. Comm’r, 954

F.2d 1495, 1497 (9th Cir. 1992). Married couples may avoid

joint liability by filing separate returns and paying tax at the

rates applicable to married persons filing separate returns.

§ 1(d).

ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE 9217

Under § 6321, if a taxpayer does not pay an assessed tax

after a notice and demand, a lien in favor of the United States

in the amount of the delinquency arises “upon all property and

rights to property, whether real or personal” belonging to the

taxpayer. E.g., United States v. Craft, 535 U.S. 274, 276

(2002). It is well established that state law controls the deter-

mination of the nature of the legal interest the taxpayer has in

property for purposes of § 6321. In re McIntyre, 222 F.3d

655, 658 (9th Cir. 2000).

In California, all property acquired by a married person

during the marriage is generally considered community prop-

erty. See Cal. Fam. Code § 760. Under § 910(a) of the Cali-

fornia Family Code, community property is liable not only for

the joint debts of the couple, but also for the separate liabili-

ties of one spouse:

Except as otherwise expressly provided by statute,

the community estate is liable for a debt incurred by

either spouse before or during marriage, regardless

of which spouse has the management and control of

the property and regardless of whether one or both

spouses are parties to the debt or to a judgment for

the debt.

This state law reflects the principle articulated by the Califor-

nia Supreme Court that “the policy of protecting the . . . credi-

tors [of a spouse] outweighs the policy of protecting family

income . . . .” Babb v. Schmidt, 496 F.2d 957, 959 (9th Cir.

1974) (quoting Weinberg v. Weinberg, 432 P.2d 709, 711

(Cal. 1967)).

II. Innocent Spouse Relief

[1] Because § 6013(d) makes individuals who file joint tax

returns strictly liable for the income tax debts of their spouses,

Congress has long provided limited “innocent spouse” relief

9218 ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE

for certain spouses who are jointly and severally liable for tax

liability stemming from a joint return.

Congress first provided “innocent spouse” relief in

§ 6013(e) of the 1954 Code, which was enacted in 1971. See

Act of January 12, 1971, Pub. L. No. 91-679, § 1, 84 Stat.

2063 (1971). In 1998, Congress repealed § 6013(e) and

replaced it with § 6015, which provides expanded forms of

innocent spouse relief. See Internal Revenue Service Restruc-

turing and Reform Act of 1998, Pub L. No. 105-206, § 3201,

112 Stat. 685, 740 (1998) (“the 1998 Act”). Section 6015

replaced § 6013(e) for any liability for tax arising after July

22, 1998 and for any liability for tax remaining unpaid as of

that date.4

To qualify for innocent spouse relief, the taxpayer must

show that the couple filed a joint return, that the return con-

tained an understatement attributable to “erroneous items” of

the other spouse, and that in signing the return, the “innocent

spouse” did not know or have reason to know of the under-

statement. See § 6015(b).5 The taxpayer must also show it

would be inequitable to hold her liable. § 6015(b)(1)(D).

[2] A taxpayer can qualify for innocent spouse relief under

one of three provisions of § 6015: § (b), § (c), or § (f). Section

6015(b) is available to all joint filers. Section 6015(c) applies

4

Although the liability in this case arose prior to enactment of § 6015,

§ 6015 applies here because the liability remained unpaid on the date of

enactment.

5

The 1971 version of the statute listed very similar criteria. In fact, the

only significant difference between the 1971 version and the 1998 version

is that the 1998 version eliminates the requirement that the understatement

be “substantial.” See Guth v. Comm’r, 897 F.2d 441, 443 (9th Cir. 1990)

(finding under the 1971 Act that “[t]he taxpayer must show that the couple

filed a joint return, that the return contained a substantial tax understate-

ment attributable to the other spouse’s errors, and that in signing the

return, the ‘innocent spouse’ did not know or have reason to know of the

substantial understatement”).

ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE 9219

only to those taxpayers who are no longer married, legally

separated, or not living together. Section 6015(f) provides for

selective equitable relief for those taxpayers who do not meet

the requirements of § (b) or § (c).

If a taxpayer is found eligible for innocent spouse relief, the

taxpayer may then seek a refund for any payments that the

taxpayer made on the non-innocent spouse’s tax debt. See

§ 6015(g).6

III. Rules of Statutory Construction

[3] Whether § 6015 preempts community property law for

purposes of calculating innocent spouse refunds is an issue of

first impression that depends upon statutory construction.

The “starting point in every case involving construction of

a statute is the language itself.” Greyhound Corp. v. Mt. Hood

Stages, Inc., 437 U.S. 322, 330 (1978) (internal quotation

marks omitted). “In ascertaining the plain meaning of a stat-

ute, the court must look to the particular statutory language at

issue, as well as the language and design of the statute as a

whole.” McCarthy v. Bronson, 500 U.S. 136, 139 (1991)

(quotation marks and brackets omitted). Where the words of

a statute are not conclusive as to congressional intent, they

should be placed in their proper context by resort to legisla-

tive history. League to Save Lake Tahoe, Inc. v. Trounday,

598 F.2d 1164, 1172 (9th Cir. 1979).

6

Section 6015(g) was not enacted until 2000. It replaced the language

regarding refunds from § 6015(e)(3) of the 1998 Act, as amended. See

Community Renewal Tax Relief Act of 2000, Pub. L. No. 106-554, 114

Stat. 2763.

As the original House report explains, the refund provision allows the

court to “order refunds as appropriate where it determines the spouse qual-

ifies for relief and an overpayment exists as a result of the innocent spouse

qualifying for such relief.” H.R. Rep. No. 105-364 (Pt. 1), at 61 (1997).

This language demonstrates that the authority to issue a refund flows from

the determination of relief from joint and several liability.

9220 ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE

“Because domestic relations are preeminently matters of

state law . . . Congress, when it passes general legislation,

rarely intends to displace statutory authority in this area.”

Mansell v. Mansell, 490 U.S. 581, 587 (1989). Moreover, the

Supreme Court has held that federal law supplants community

property law only where the congressional intent to accom-

plish such a result is clear and unequivocal. See id.; His-

quierdo v. Hisquierdo, 439 U.S. 572, 581 (1979).

IV. Statutory Analysis

[4] The question before us is whether Congress, in enacting

§ 6015, intended to preempt California community property

law with respect to an innocent spouse’s right to a refund. The

answer depends on our interpretation of certain language in

§ 6015(a) and § 6015(g), the refund provision. We address

each section in turn.

A. Section 6015(a)

[5] Section 6015(a) provides:

(a) In general.—Notwithstanding § 6013(d)(3)—

(1) an individual who has made a joint

return may elect to seek relief under the

procedures prescribed under subsection (b);

and

(2) if such individual is eligible to elect the

application of subsection (c), such individ-

ual may, in addition to any election under

paragraph (1), elect to limit such individu-

al’s liability for any deficiency with respect

to such joint return in the manner pre-

scribed under subsection (c).

Any determination under this section shall be made

without regard to community property laws.

ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE 9221

(Emphasis added.)

Mrs. Ordlock argues that the final sentence of § 6015(a) is

comprehensive and applies to all sections of § 6015, including

§ 6015(g). She contends that this broad statement demon-

strates Congress’s clear intent to preempt community property

law for the purpose of calculating refunds.

The Commissioner argues that the final sentence of

§ 6015(a) does not demonstrate Congress’s intent to preempt

community property law with respect to all subsections of

§ 6015. Rather, Congress intended that the final sentence of

§ 6015(a) apply only to determinations made under § 6015.

According to the Commissioner, the plain language of

§ 6015(a) indicates that the only “determination” within the

meaning of § 6015 is the initial decision that a taxpayer is an

innocent spouse. Whether that innocent spouse is then eligible

for a refund, however, is a separate question governed by the

applicable law of the state in which that spouse resides. In

other words, the allowance of a refund is not a determination,

and thus is not affected by the directive found in § 6015(a) to

disregard community property laws.

We agree with the Commissioner.

[6] First, the root word “determine” (or some conjugation

of it) appears five times in § 6015.7 In each instance, it is used

7

It appears four times in § 6015(e) and once in § 6015(g)(2). In

§ 6015(e), which governs petitions for review by the Tax Court of deter-

minations of relief from joint and several liability, the word “determina-

tion” is used three times to refer to the IRS’s determination (or final

determination) of relief. See §§ 6015(e)(1)(A)(i)(I); 6015(e)(5) (twice).

The word “determine” is also used in § 6015(e) in granting the Tax Court

jurisdiction to review the IRS’s determination of relief. See

§ 6015(e)(1)(A).

“Determine” is used one last time, in § 6015(g)(2). That provision, how-

ever, merely addresses the res judicata effect of prior proceedings for

innocent spouse relief from joint and several liability — which turns in

part on whether the Tax Court “determines” that the individual partici-

pated meaningfully in the prior proceeding. See § 6015(g)(2).

9222 ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE

to refer to the Commissioner’s decision that the petitioning

spouse is an innocent spouse who is eligible for some degree

of relief from joint and several tax liability. Thus, it appears

that this decision is the “determination” that the final sentence

of § 6015(a) contemplates should be made “without regard to

community property laws.”

By contrast, the word “determine” is absent from

§ 6015(g)(1), the refund provision of the statute. Instead,

§ 6015(g)(1) states that any “credit or refund shall be allowed

or made to the extent attributable to the application of this

section.” (emphasis added). This is a significant distinction.

See Huffman v. Comm’r, 978 F.2d 1139, 1145 (9th Cir. 1992)

(“Words with a fixed legal or judicially settled meaning,

where the context so requires, must be presumed to have been

used in that sense.”). Presumably, if Congress had intended

the final sentence of § 6015(a) to preempt community prop-

erty laws with respect to the issuance of a refund, it would

have clarified that the decision to make such an issuance was

a “determination” within the meaning of the statute.8

We find that the text of the statute provides, at the very

least, some indication that Congress used the word “determi-

nation” in the final sentence of § 6015(a) to refer only to the

Commissioner’s decision regarding relief from joint and sev-

eral liability.

We also find that the legislative history of the statute sup-

ports this interpretation.

8

And, as Tax Court Judge Thornton explained in his concurrence, the

allowance of a refund or credit is not technically “determined” under

§ 6015; it is decided under §§ 6401 and 6402, which govern overpay-

ments. See Ordlock, 126 T.C. at 69-71.

Moreover, the Notice of Determination issued to Mrs. Ordlock provides

additional evidence that the IRS uses the word “determination” as a term

of art in the innocent spouse context. The Notice of Determination explic-

itly states that the decision regarding eligibility for innocent spouse status

is called a determination.

ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE 9223

From the time of the first enactment of “innocent spouse”

relief under § 6013(e) in 1971, there was language that pre-

empted the operation of community property law, but only for

the limited purpose of “the determination of the spouse to

whom such items of gross income . . . are attributable.”9 This

makes sense: because community property law contemplates

that property acquired by the couple during marriage belongs

to the marital community, the IRS must ignore community

property law when deciding whether the “items” listed on the

couple’s tax return are the responsibility of an individual

spouse. Thus, the “determination” long required by § 6013(e)

suspended community property law solely for purposes of

determining which spouse was responsible for the “item” on

the federal income tax return that gave rise to the tax liability.10

The final sentence of § 6015(a) did not appear in the statute

until Congress passed the 1998 Act, expanding the availabil-

ity of innocent spouse relief. To understand why Congress

replaced the old language with the new, we turn to the House

and Senate bills.

The House bill would have liberalized the availability of

innocent spouse relief by repealing understatement thresholds

and by making relief available and apportionable to the extent

that the spouse lacked knowledge or reason to know about the

understatement. Notably, the House bill would have carried

forward the old language of § 6013(e) providing that “the

determination of the spouse to whom items of gross income

(other than gross income from property) are attributable shall

be made without regard to community property laws.” H.R.

Rep. No. 105-364 (Pt. 1), at 19.

9

This language, first placed in § 6013(e)(2)(a) by the 1971 Act, see 84

Stat. 2063, was moved to 6013(e)(5) as part of the Deficit Reduction Act

of 1984, Pub. L. No. 98-369, 424, 98 Stat. 494, 801-02.

10

Mrs. Ordlock asserts that, under the prior version of the statute, the

Commissioner would issue community property refunds for tax overpay-

ments to California innocent spouses. We have found no authority sup-

porting that assertion.

9224 ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE

Like the House bill, the Senate bill was designed to make

innocent spouse relief more widely available. The Senate,

however, proposed two completely new approaches for

expanding relief. First, the Senate bill would have allowed

certain spouses to elect “separate liability relief,” which, in

essence, would retroactively place the spouses on a separate-

return footing. Under this form of relief, detailed rules and

regulations were required to allocate almost all items on the

tax return between the spouses. Second, the Senate bill con-

tained a limited form of equitable relief. H.R. 2676,

§ 3201(a), as amended and passed by the Senate on May 7,

1998, reprinted in 144 Cong. Rec. S8620 (1998).

The Senate’s proposal to allow separate-liability elections

introduced additional complexity into the process of allocat-

ing items between spouses. Accordingly, because there were

more scenarios in which the IRS would have to label an item

on a tax return as belonging to an individual spouse instead

of the “community,” there were more instances in which the

IRS would have to disregard community property laws. As a

result, broader language was required than was found in the

House bill, which preempted community property laws only

for purposes of allocating gross income between spouses.

Accordingly, the Senate bill included the language now found

in the final sentence of § 6015(a).

When the differences between the House and Senate bills

were reconciled in conference, the final version included the

House’s provision for greater general innocent spouse relief

(§ 6015(b)), the Senate’s provision for separate liability relief

(§ 6015(c)), and the Senate’s provision for equitable relief

(§ 6015(f)). Because the Senate’s provisions for separate lia-

bility and equitable relief survived conference, the broad lan-

guage of § 6015(a) also made it into the final version of the

statute.

This history strongly suggests that the final sentence of

§ 6015(a) was drafted to account for the expanded means of

ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE 9225

allocating items between spouses to determine eligibility for

innocent spouse relief — not to expand the preemption of

community property laws to the issuance of refunds. Signifi-

cantly, nothing in the legislative reports suggests that Con-

gress intended to set aside state law ownership interests in

property for refund purposes. To the contrary, the Senate

report makes it clear that community property law was to be

preempted only in the context of allocating items between

spouses so as to place them on a separate return basis. See S.

Rep. No. 105-174, at 56, 57 (1998) (defining the scope of the

preemption of community property laws as applicable with

respect to “[t]he allocation of items”). Similarly, the Confer-

ence report does not acknowledge any difference between the

House and Senate bills regarding the suspension of commu-

nity property laws.

[7] In conclusion, after considering the disputed language

in the context of the statute as a whole, we hold that the final

sentence of § 6015(a) does not preempt community property

law for purposes of the issuance of innocent spouse refunds.

B. Section 6015(g)

[8] Mrs. Ordlock also relies on § 6015(g), the refund provi-

sion itself, as evidence that Congress intended to preempt Cal-

ifornia community property law with respect to the issuance

of refunds. Section 6015(g) provides:

(g) Credits and refunds.—

(1) In general.—Except as provided in

paragraphs (2) and (3), notwithstanding any

other law or rule of law (other than sec-

tions 6511, 6512(b), 7121, or 7122), credit

or refund shall be allowed or made to the

extent attributable to the application of this

section.

9226 ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE

(2) Res judicata.—In the case of any elec-

tion under subsection (b) or (c) or of any

request for equitable relief under subsection

(f), if a decision of a court in any prior pro-

ceeding for the same taxable year has

become final, such decision shall be con-

clusive except with respect to the qualifica-

tion of the individual for relief which was

not an issue in such proceeding. The excep-

tion contained in the preceding sentence

shall not apply if the court determines that

the individual participated meaningfully in

such prior proceeding.

(3) Credit and refund not allowed under

subsection (c).—No credit or refund shall

be allowed as a result of an election under

subsection (c).

(Emphasis added.)

Mrs. Ordlock argues that the “notwithstanding any other

rule of law” language means that state community property

laws should be disregarded in calculating the proper refund.

The Commissioner argues that Mrs. Ordlock’s interpretation

ignores both common sense and the context of the statute.

Again, we agree with the Commissioner.

[9] First, we turn to the disputed language. Although sec-

tions of a statute generally should be read to give effect, if

possible, to every clause, we have previously stated that the

phrase “notwithstanding any other law or rule of law” should

not always be read literally. See, e.g., Or. Natural Res. Coun-

cil v. Thomas, 92 F.3d 792, 796-97 (9th Cir. 1996); E.P. Paup

Co. v. Director, OWCP, 999 F.2d 1341, 1348 (9th Cir. 1993);

Kee Leasing Co. v. McGahan (In re Glacier Bay), 944 F.2d

577, 582 (9th Cir. 1991). Here, construing the “notwithstand-

ing” phrase of § 6015(g) as a broad preemption clause would

ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE 9227

mean that all state property laws in community property states

and common law states should be ignored in calculating

refunds. Moreover, as the Tax Court majority noted, “[e]ven

if limited to community property provisions, [Mrs. Ordlock’s]

position leaves us with no law or resource to define the own-

ership of the payments made . . . on the tax liabilities for the

years at issue.” 126 T.C. at 56.

Because it is unlikely that Congress intended the “notwith-

standing any other rule law of law” phrase to be a broad,

catch-all preemption clause, we examine its context and its

history of the phrase to derive its meaning.

First, we note that the “notwithstanding” phrase does not

appear in isolation. Rather, it is qualified by a parenthetical:

“notwithstanding any other law or rule of law (other than sec-

tions 6511, 6512(b), 7121, or 7122) . . . .” § 6015(g)(1)

(emphasis added). Accordingly, the “notwithstanding phrase”

is subject to certain exceptions, we examine those exceptions

to see if we can carve out the “general.” Sections 6511 and

6512 pertain to statutes of limitations on the allowance of a

credit or refund. See §§ 6511 & 6512(b). Sections 7121 and

7122 establish the finality of closing agreements and compro-

mises entered into with the IRS. See §§ 7121 & 7122. Thus,

these statutes have something in common: they all bar certain

innocent spouses from refund eligibility under various provi-

sions of the tax code.

When we juxtapose these statutes with the broad “notwith-

standing any other law or rule of law language,” we begin to

discern its meaning. In drafting this language, Congress

wanted certain provisions of the Internal Revenue Code bar-

ring refund eligibility — §§ 6511, 6512, 7121, and 7122 —

to remain in effect. Congress, however, did not want “other”

laws or rules of law to bar innocent spouses from refund eligi-

bility, and it drafted broad language to that effect.

9228 ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE

[10] The Commissioner argues that the “other rule of law”

that Congress was concerned about was the doctrine of “res

judicata.” We find the Commissioner’s argument persuasive

for two main reasons. First, § 6015(g)(2), which restricts the

application of § 6015(g)(1), is entitled “Res judicata.”

§ 6015(g)(2). This is good indication Congress had res judi-

cata in mind as it was drafting the refund provision. Second,

there is a long history of tax statutes granting some transi-

tional relief from res judicata in connection with the enact-

ment and amendment of the “innocent spouse” statutes.11

These statutes indicate that the “law or rule of law” Congress

was contemplating when it began inserting such language into

the innocent spouse statute had nothing to do with community

property. Instead, Congress wanted to avoid the “law” of res

judicata, while still respecting other limits on refunds that

appear throughout the Internal Revenue Code.

[11] We acknowledge that the “notwithstanding any other

law or rule of law” language is far from transparent. However,

we find the Commissioner’s contextual and historical inter-

pretation of this phrase more persuasive than Mrs. Ordlock’s

far-reaching one. Accordingly, we do not read into the “not-

withstanding” language of § 6015(g)(1) a mandate preempt-

ing the operation of community laws in making refunds. It is

far more likely that Congress meant to avoid certain bars to

refund eligibility while still respecting others, and used the

11

For example, § 2114 of the Tax Reform Act of 1976, Pub. L. No. 04-

455, 90 Stat. 1520, 1907 (1976), amended the effective date of provisions

of the 1971 Act to allow the refund of any overpayment to taxpayers to

whom the application of § 6013(e) “is prevented by res judicata . . . with-

out regard to such rule of law.” (emphasis added).

Additionally, § 6004 of the Technical and Miscellaneous Revenue Act

of 1988, Pub. L. No. 100-647, 102 Stat. 3342, 3685, amended the effective

date of provisions of the Deficit Reduction Act of 1984, Pub. L. No. 98-

369, 98 Stat. 494, 801-02, to allow for the making of refunds resulting

from relief from liability to innocent spouses “notwithstanding any law or

rule of law (including res judicata).” (emphasis added).

ORDLOCK v. COMMISSIONER OF INTERNAL REVENUE 9229

expansive “notwithstanding any law or rule of law” language

to achieve that goal.

On a final note, we observe that Congress demonstrated its

knowledge of the community property law implications of

innocent spouse relief in other parts of § 6015. For example,

in § 6015(d), Congress provided several rules for allocating

items for purposes of determining eligibility for relief. Section

6015(d) also authorized the IRS to write additional allocation

rules if necessary. However, no part of § 6015 made provi-

sions for assigning refund payments between spouses if com-

munity property laws were not to apply. This silence speaks

volumes. The process of assigning the economic sources of

the payments made by Mrs. Ordlock and her husband would

likely involve a complex factual analysis. It would also put

the IRS in a different position than any other creditor collect-

ing on the personal debts of a married taxpayer residing in

California. See Cal. Fam. Code § 910. The absence of any

legislative history addressing this issue is further indication

that Congress did not intend to preempt community property

law for refund purposes.

CONCLUSION

[12] Nothing in § 6015 clearly preempts California commu-

nity property law with respect to an innocent spouse’s entitle-

ment to a refund for a community property payment on the

non-innocent spouse’s federal income tax liability. Accord-

ingly, we AFFIRM the decision of the Tax Court.