The opinion
121 T.C. No. 3
UNITED STATES TAX COURT
YVONNE E. THURNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
SCOTT P. THURNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 9971-01, 3586-02. Filed July 11, 2003.
On Jan. 30, 1991, the Court entered a decision in
docket No. 8407-87 redetermining Ps’ joint tax
liabilities for 1980 and 1981. In June 1991, R
assessed the taxes, additions to tax, and increased
interest as set forth in the above-referenced decision.
Ps’ joint tax liability for 1980 was fully paid as of
May 4, 1992. A portion of Ps’ joint tax liability for
1981 remained unpaid as of the dates the petitions were
filed in these cases.
On Dec. 2, 1991, Ps filed a joint Federal income
tax return for 1990 reporting tax due. No remittance
was made with this return. Ps submitted a delinquent
joint return for 1992, and R made adjustments to this
return. R subsequently assessed taxes and penalties
due from Ps for 1990 and 1992.
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On Jan. 7, 2000, the United States brought an
action against Ps in Federal District Court to reduce
to judgment their unpaid assessments for 1981, 1990,
and 1992. Ps raised only frivolous arguments in this
proceeding. Both Ps executed the pertinent documents
filed in the District Court action. Neither P asserted
in the District Court action an entitlement to relief
from joint and several liability pursuant to sec. 6015,
I.R.C. On Aug. 11, 2000, the District Court granted
the Government’s motion for summary judgment and
entered a judgment against Ps in the amounts of the
unpaid assessments for 1981, 1990, and 1992. The
District Court’s judgment was affirmed on appeal and
became final.
In 2001, Ps filed separate elections with R
claiming relief from joint and several liability under
sec. 6015, I.R.C. R did not respond to Ps’ elections.
Ps then filed with the Court separate petitions for
determination of relief from joint and several
liability for 1980, 1981, 1990, and 1992. R filed a
motion for summary judgment in each case.
Held: R’s motions for summary judgment are
granted in that Ps cannot claim relief under sec. 6015,
I.R.C., for 1980 inasmuch as their joint tax liability
for that year was fully paid prior to the effective
date of sec. 6015, I.R.C. Held, further, R’s motion
for summary judgment as to P-H is granted as to the
taxable years 1981, 1990, and 1992 in that P-H
“participated meaningfully” in the District Court
collection action, and, therefore, P-H’s claims are
barred under the doctrine of res judicata as delineated
in sec. 6015(g)(2), I.R.C. Held, further, R’s motion
for summary judgment as to P-W is denied as to the
taxable years 1981, 1990, and 1992 in that the question
whether P-W “participated meaningfully” in the District
Court collection action presents a material issue of
fact.
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Yvonne E. Thurner, pro se in docket No. 9971-01.
Scott P. Thurner, pro se in docket No. 3586-02.
James M. Klein, Mark J. Miller, and Charles Hall, for
respondent.
OPINION
COHEN, Judge: This case was assigned to Chief Special Trial
Judge Peter J. Panuthos, pursuant to the provisions of section
7443A(b)(5) and Rules 180, 181, and 183.1 The Court agrees with
and adopts the opinion of the Chief Special Trial Judge, which is
set forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
PANUTHOS, Chief Special Trial Judge: These consolidated
cases are before the Court on respondent’s Motions for Summary
Judgment, as supplemented, filed pursuant to Rule 121. As
explained in detail below, we shall grant respondent’s Motion for
Summary Judgment, as supplemented, as to petitioner Scott P.
Thurner, and grant respondent partial summary judgment as to
petitioner Yvonne E. Thurner.
1
Section references are to sections of the Internal
Revenue Code, as amended, and Rule references are to the Tax
Court Rules of Practice and Procedure.
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Background
The record establishes and/or the parties do not dispute the
following facts. Petitioner Yvonne E. Thurner and petitioner
Scott P. Thurner (petitioners) are husband and wife. At the time
the petitions were filed, petitioners resided in Elm Grove,
Wisconsin.
A. Taxable Years 1980 and 1981
Petitioners filed joint Federal income tax returns for 1980
and 1981. Respondent subsequently determined deficiencies of
$351,855 and $512,052 in petitioners’ Federal income taxes for
1980 and 1981, respectively. Respondent also determined that
petitioners were liable for additions to tax for negligence under
section 6653(a) and increased interest under section 6621(c) for
1980 and 1981. Petitioners challenged respondent’s
determinations in a petition filed with the Court at docket No.
8407-87.
In Thurner v. Commissioner, T.C. Memo. 1990-529, we
sustained (with minor adjustments) respondent’s determinations
for 1980 and 1981. The Court entered its decision in docket No.
8407-87 on January 30, 1991, and no appeal was filed.
In June 1991, respondent assessed the deficiencies,
additions to tax, and increased interest as redetermined by the
Court in Thurner v. Commissioner, supra. Shortly thereafter,
respondent began collection activities. Petitioners’ tax
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liability for 1980 was fully paid as of May 4, 1992. Although
respondent collected a portion of petitioners’ taxes for 1981,
their tax liability for that year was not fully paid as of the
dates the petitions were filed in the instant cases.
B. Taxable Years 1990 and 1992
On December 2, 1991, petitioners filed a joint Federal
income tax return for 1990 reporting tax due in the amount of
$217,475. Petitioners failed to remit with their return the
amount reported to be due. On December 2, 1991, respondent
assessed the tax that petitioners reported due for 1990 and
statutory interest. Sec. 6201(a)(1).
Petitioners submitted to respondent a delinquent joint tax
return for 1992. Respondent reviewed the return and determined,
pursuant to the so-called math error provisions of section
6213(b), that petitioners were liable for tax in the amount of
$75,532, as well as for penalties and interest. On April 28,
1997, respondent assessed such tax, penalties, and interest for
1992.
C. Collection Litigation
On January 7, 2000, the United States filed suit against
petitioners in the United States District Court for the Eastern
District of Wisconsin (docket No. 00-C-0082) to reduce to
judgment the unpaid assessments entered against petitioners for
the taxable years 1981, 1990, and 1992. (For convenience, we
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will refer to the United States District Court for the Eastern
District of Wisconsin as the District Court and the
aforementioned proceeding as the District Court collection
action.) The records in the instant cases include copies of
various documents that petitioners filed in the District Court
collection action. These documents reflect that petitioners,
prosecuting the case pro sese, raised only frivolous and
groundless arguments. Both petitioners signed the documents
filed with the District Court. Neither petitioner asserted in
the District Court collection action an entitlement to relief
from joint and several liability under section 6015.
On August 11, 2000, the District Court granted the
Government’s motion for summary judgment and entered a judgment
in favor of the United States for unpaid assessed balances for
the taxable years 1981, 1990, and 1992 in the amounts of
$1,924,000.19, $537,514.10, and $193,618.56, respectively.
Petitioners filed an appeal with the Court of Appeals for the
Seventh Circuit. The Court of Appeals affirmed the District
Court’s judgment and granted the Government’s motion for
sanctions against petitioners for prosecuting a frivolous appeal.
United States v. Thurner, 21 Fed. Appx. 477 (7th Cir. 2001). The
Supreme Court later denied petitioners’ petition for writ of
certiorari.
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D. Forms 8857
On December 21, 2000, petitioner Yvonne E. Thurner filed
with respondent Form 8857, Request for Innocent Spouse Relief,
requesting relief from joint and several liability under section
6015 with regard to the taxable years 1980, 1981, 1990, and 1992.
On August 2, 2001, petitioner Scott P. Thurner filed with
respondent Form 8857 requesting relief from joint and several
liability under section 6015 with regard to the taxable years
1980, 1981, 1990, and 1992. Respondent did not respond to
petitioners’ claims for relief from joint and several liability.
E. Petitions
On August 10, 2001, petitioner Yvonne E. Thurner filed with
the Court a petition for determination of relief from joint and
several liability on a joint return with regard to her tax
liabilities for 1980, 1981, 1990, and 1992. On February 15,
2002, petitioner Scott P. Thurner filed with the Court a petition
for determination of relief from joint and several liability on a
joint return with regard to his tax liabilities for 1980, 1981,
1990, and 1992. Although the petitions are not entirely clear,
it appears that petitioners claim that they are entitled to
relief under section 6015(b) and (f).2
2
The record indicates that, at the time the petitions were
filed in these cases, petitioners were not divorced or legally
separated and that petitioners continued to live together.
Therefore, petitioners would not qualify for relief from joint
and several liability under sec. 6015(c).
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F. Respondent’s Motions for Summary Judgment
As indicated, respondent maintains that he is entitled to
judgment in these cases as a matter of law. Respondent avers
that petitioners are not eligible for relief from joint and
several liability under section 6015 for 1980 because their taxes
for that year were paid in full as of May 4, 1992--a date prior
to the effective date of section 6015. Respondent also contends
that petitioners are barred from claiming relief from joint and
several liability for the taxable years 1981, 1990, and 1992
under the doctrine of res judicata. In particular, respondent
asserts that petitioners’ claims are barred because they failed
to raise such claims in the earlier District Court collection
action.
Petitioners filed Objections to respondent’s Motions for
Summary Judgment. Both petitioners submitted affidavits along
with their Objections. Petitioner Scott P. Thurner’s affidavit
states in pertinent part:
2. All matters in any way relating to the disputes
between my family and the Internal Revenue Service,
prior to my wife’s decision to pursue Innocent
Spouse Relief, was handled exclusively by myself.
* * * * * * *
7. The only thing my wife did during the * * *
[District Court collection action] was to sign the
necessary documents in the places that I directed her
to sign.
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Consistent with these statements, petitioner Yvonne E. Thurner’s
affidavit states that, prior to the time she claimed relief from
joint and several liability under section 6015, all of the
family’s tax matters were handled exclusively by her husband.
Pursuant to notice, these cases were called for hearing at
the Court’s motions session in Washington, D.C. Following the
hearing, respondent filed supplements to his motions describing
the bases for the assessments entered against petitioners for
1990 and 1992 and providing transcripts of account for the years
in issue.
Discussion
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. See Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted with respect to all or any part of the legal issues in
controversy “if the pleadings, answers to interrogatories,
depositions, admissions, and any other acceptable materials,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that a decision may be
rendered as a matter of law.” Rule 121(b); Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th
Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753, 754 (1988);
Naftel v. Commissioner, 85 T.C. 527, 529 (1985). The moving
party bears the burden of proving that there is no genuine issue
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of material fact, and factual inferences will be read in a manner
most favorable to the party opposing summary judgment. See
Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v.
Commissioner, 79 T.C. 340, 344 (1982).
A. Section 6015
Spouses filing joint Federal income tax returns generally
are jointly and severally liable for all taxes due. Sec.
6013(d)(3). However, under certain circumstances, section 6015
provides that a spouse may be relieved from joint and several
liability on a joint return.
Section 6015 was enacted as part of the Internal Revenue
Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L.
105-206, sec. 3201(a), 112 Stat. 685, 734. Section 6015 applies
to any liability for tax arising after July 22, 1998, and to any
liability for tax arising on or before July 22, 1998, but
remaining unpaid as of such date. RRA 1998 sec. 3201(g), 112
Stat. 740. Section 6015 is not applicable if the tax was paid in
full on or before July 22, 1998. Washington v. Commissioner, 120
T.C. 137, 155 (2003).
Broadly stated, section 6015(b) provides procedures for
relief from liability applicable to all joint filers; section
6015(c) provides procedures to limit liability for taxpayers who
filed a joint return but are no longer married, are legally
separated, or are not living together; and section 6015(f)
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provides for equitable relief in cases where relief is not
available to a taxpayer under section 6015(b) or (c).
Petitioners invoked the Court’s jurisdiction in these cases
under section 6015(e)(1)(A)(i)(II). The latter provision permits
a taxpayer to file a petition with the Court if 6 months have
elapsed since the taxpayer filed his or her election for relief
with the Commissioner and the Commissioner has not issued a final
determination granting or denying relief.
B. Taxable Year 1980
RRA 1998 sec. 3201(g), 112 Stat. 740, states in unambiguous
terms that relief under section 6015 is available only with
respect to any liability for tax arising after July 22, 1998, and
any liability for tax arising on or before July 22, 1998, but
remaining unpaid as of such date. There is no dispute that
petitioners’ tax liability for 1980 arose before July 22, 1998,
and that such liability was fully paid before that date.
Consequently, we hold that respondent is entitled to judgment as
a matter of law that petitioners are not eligible for relief
under section 6015 with regard to their tax liability for 1980.
See Washington v. Commissioner, supra.
C. Taxable Years 1981, 1990, and 1992
The judicial doctrine of res judicata provides that, when a
court of competent jurisdiction enters a final judgment on the
merits of a cause of action, the parties to the action are bound
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by every matter that was or could have been offered and received
to sustain or defeat the claim. Commissioner v. Sunnen, 333 U.S.
591, 597 (1948); see Gustafson v. Commissioner, 97 T.C. 85, 91
(1991); Wooten v. Commissioner, T.C. Memo. 2003-113. The
doctrine of res judicata “serves to promote judicial economy and
the repose of disputes” by avoiding repetitious lawsuits.
Gustafson v. Commissioner, supra at 91. Because Federal income
taxes are determined on an annual basis, each year is a separate
cause of action, and res judicata is applied to bar subsequent
proceedings involving the same tax year. Commissioner v. Sunnen,
supra at 597-598; Calcutt v. Commissioner, 91 T.C. 14, 21 (1988).
Section 6015(g)(2) modifies the common law doctrine of res
judicata with regard to claims for relief from joint and several
liability. Section 6015(g)(2)3 provides in pertinent part:
SEC. 6015(g). Credits and Refunds.--
* * * * * * *
(2) Res judicata.--In the case of any election
under subsection (b) or (c), if a decision of a court
in any prior proceeding for the same taxable year has
become final, such decision shall be conclusive except
with respect to the qualification of the individual for
relief which was not an issue in such proceeding. The
exception contained in the preceding sentence shall not
3
Sec. 313(a)(2)(A) of the Consolidated Appropriations Act
of 2001, Pub. L. 106-554, 114 Stat. 2763A-640 (2000),
redesignated former subsec. (g) as subsec. (h) and inserted after
subsec. (f) a new subsec. (g) (as quoted above). For a more
detailed discussion of the legislative history of sec.
6015(g)(2), see Vetrano v. Commissioner, 116 T.C. 272, 280
(2001).
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apply if the court determines that the individual
participated meaningfully in such prior proceeding.
As we pointed out in Vetrano v. Commissioner, 116 T.C. 272,
280 (2001), under common law principles of res judicata, a
taxpayer who was a party to a prior proceeding for the same
taxable year would be barred from seeking relief from joint and
several liability whether or not the claim had been raised as an
issue in the prior proceeding. Section 6015(g)(2) alters that
result by providing:
an individual cannot make an election under section
6015(b) or (c) for any taxable year that is the subject
of a final court decision, unless the individual’s
qualification for relief under section 6015(b) or (c)
was not an issue in the prior court proceeding and the
individual did not participate meaningfully in the
prior proceeding. * * * [Vetrano v. Commissioner,
supra at 278.]
Petitioners assert that respondent’s reliance on the
doctrine of res judicata in these cases is misplaced. First,
petitioners maintain that section 6015(g)(2) expressly limits the
application of res judicata to claims for relief under section
6015(b) and (c), and, therefore, they are not barred from
asserting that they are entitled to equitable relief under
subsection (f). Second, petitioners argue that respondent has
failed to prove that petitioners (particularly petitioner
Yvonne E. Thurner) participated meaningfully in the District
Court collection action within the meaning of section 6015(g)(2).
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Contrary to petitioners’ initial argument, we conclude that
a claim for equitable relief under section 6015(f) is subject to
the application of the doctrine of res judicata as delineated in
section 6015(g)(2). In Fernandez v. Commissioner, 114 T.C. 324,
330-331 (2000), in the context of a discussion regarding our
jurisdiction to review claims for equitable relief under section
6015(f), we observed:
Section 6015(f) provides an additional opportunity
for relief to those taxpayers who do not otherwise meet
the requirements of subsection (b) or (c).
Specifically, section 6015(f) provides that if, 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 relief is not available to such individual
under subsection (b) or (c), the Secretary may relieve
such individual of such liability. Section 6015(f)
does not require an affirmative election for relief as
do subsections (b) and (c). We interpret this to mean
that section 6015(f) provides an additional opportunity
for relief to those individuals who elect relief under
subsection (b) or (c) but do not meet one or more of
the respective requirements of those subsections. In
fact, a prerequisite for relief under section 6015(f)
is that relief is not available under section 6015(b)
or (c). See sec. 6015(f)(2). * * *
Consistent with the foregoing, a claim for equitable relief
under section 6015(f) is subordinate and ancillary to a claim for
relief under section 6015(b) or (c). Given the secondary nature
of such claims, an express reference in subsection (g)(2) to a
claim for equitable relief under section 6015(f) is not necessary
to bring those claims within the purview of subsection (g)(2).
Simply put, as a subordinate and ancillary claim, a claim for
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equitable relief under section 6015(f) is subject to the same
standards for the application of the doctrine of res judicata
that Congress imposed under section 6015(g)(2) with respect to
claims for relief under section 6015(b) and (c).4
There is no dispute that the traditional prerequisites for
the application of the doctrine of res judicata are present in
these cases. As previously mentioned, petitioners were parties
to the District Court collection action brought by the Government
to reduce to judgment petitioners’ unpaid assessments for the
taxable years 1981, 1990, and 1992. The District Court is a
court of competent jurisdiction with regard to such collection
actions. Sec. 7402. The District Court collection action was
initiated on January 7, 2000, well after the July 22, 1998,
effective date of section 6015. Thus, petitioners could have
(but did not) raise their claims for relief from joint and
several liability under section 6015 as a defense in the District
Court collection action. Cf. United States v. Shanbaum, 10 F.3d
305, 313-314 (5th Cir. 1994). The District Court’s decision
granting the Government’s Motion for Summary Judgment, a decision
4
For the sake of completeness, we note that the Secretary
published regulations, applicable to all elections or requests
for relief filed on or after July 18, 2002, in which the
Secretary appears to take the position that claims for equitable
relief under sec. 6015(f) are subject to the application of the
doctrine of res judicata under sec. 6015(g)(2). See secs.
1.6015-1(e), (h)(1) and 1.6015-4, Income Tax Regs., 67 Fed. Reg.
47285, 47286 (July 18, 2002).
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on the merits, was affirmed on appeal and is now final. See
Kunkes v. United States, 78 F.3d 1549, 1550 n.2 (Fed. Cir. 1996);
Hubicki v. ACF Indus., Inc., 484 F.2d 519, 524 (3d Cir. 1973).
Petitioners nevertheless contend that respondent cannot rely
on the doctrine of res judicata because the question whether
petitioners “participated meaningfully” in the District Court
collection action, within the meaning of section 6015(g)(2),
presents a material issue of fact. We note a subtle divergence
in petitioners’ positions on this point. Specifically, while
petitioner Scott P. Thurner contends in very general terms that
respondent failed to satisfy his burden of proving that there is
no dispute as to a material fact, petitioner Yvonne E. Thurner
goes a step further and alleges that she did not participate
meaningfully in the District Court collection action inasmuch as
she simply complied with her husband’s instructions to sign the
pleadings and various other documents that were filed with the
District Court.
The record clearly establishes that petitioner Scott P.
Thurner participated meaningfully in the District Court
collection action. The documents that petitioners filed in the
District Court collection action were signed by both petitioners
and amply demonstrate that petitioner Scott P. Thurner was fully
engaged in that proceeding. In addition, petitioner Scott P.
Thurner acknowledged in the affidavit attached to his Objection
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that he maintained exclusive control over all tax matters
including the handling of the District Court collection action.
Accordingly, we hold that respondent is entitled to summary
judgment that petitioner Scott P. Thurner is barred under section
6015(g)(2) from claiming relief under section 6015 for the years
1981, 1990, and 1992.
In contrast, we are unable to conclude on this record that
petitioner Yvonne E. Thurner participated meaningfully in the
District Court collection action. Petitioner Yvonne E. Thurner’s
assertion that she merely complied with her husband’s
instructions to sign the pleadings and various other documents
that were filed in the District Court collection action raises an
issue of material fact as to her level of participation in that
proceeding. Under the circumstances, drawing factual inferences
in a manner most favorable to the party opposing summary
judgment, see Dahlstrom v. Commissioner, 85 T.C. at 821, we
conclude that respondent is not entitled to summary judgment that
petitioner Yvonne E. Thurner is barred from claiming relief under
section 6015 for the years 1981, 1990, and 1992. The question of
the applicability of the bar of res judicata under section
6015(g)(2) as to petitioner Yvonne E. Thurner can be resolved
only after further development of the record through discovery or
trial of the case.
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Conclusion
Petitioners are not entitled to relief under section 6015
with regard to the taxable year 1980 because their taxes for that
year were fully paid prior to the effective date of section 6015.
In addition, petitioner Scott P. Thurner is not entitled to
relief under section 6015 with regard to the taxable years 1981,
1990, and 1992 due to the application of the doctrine of res
judicata as set forth in section 6015(g)(2).
To reflect the foregoing,
An Order and Decision will be
entered in docket No. 3586-02
granting respondent’s Motion for
Summary Judgment, as supplemented,
and an appropriate Order will be
issued in docket No. 9971-01.