Pullins v. Commissioner

SUZANNE PULLINS, PETITIONER v. COMMISSIONER OF

INTERNAL REVENUE, RESPONDENT

Docket No. 23793–08. Filed May 5, 2011.

P filed joint tax returns with her husband—timely for tax

year 1999 and untimely (in October 2004) for 2002 and 2003.

Each return showed a balance due that was not paid when

the return was filed. P signed the returns but did not review

or question them. She knew or should have known that the

taxes reported on them were not fully paid, but she did not

know that her former husband had omitted income from one

of the returns. She received no specific benefit from the non-

payment of the taxes. In 2003 the IRS issued a levy notice to

P for 1999. P and her former husband separated in late 2004.

In 2005 the IRS issued levy notices for 2002 and 2003. There-

after, P divorced her former husband, and the State court

allocated all of the couple’s tax debts to him and awarded him

proceeds from the sale of their jointly owned house, from

which proceeds he could have paid the liabilities. P requested

‘‘innocent spouse’’ relief from the IRS on April 22, 2008 (more

than 2 years after the IRS’s collection activity began), and the

IRS denied the requested relief. P petitioned this Court for

relief, and by the time of trial she was disabled as a result

of complications from surgery. This case would be appealed to

the U.S. Court of Appeals for the Eighth Circuit. Held: We

will follow our holding in Lantz v. Commissioner, 132 T.C. 131

(2009), revd. 607 F.3d 479 (7th Cir. 2010)—i.e., that the 2-

year deadline imposed by 26 C.F.R. sec. 1.6015–5(b)(1),

Income Tax Regs., is invalid—notwithstanding the contrary

decisions by the U.S. Courts of Appeals for the Seventh Cir-

cuit in Lantz and for the Third Circuit in Mannella v.

Commissioner, 631 F.3d 115 (3d Cir. 2011), revg. 132 T.C. 196

(2009). Held, further, P is entitled to relief from joint and sev-

eral liability under I.R.C. sec. 6015(f).

432

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(432) PULLINS v. COMMISSIONER 433

Kathryn J. Sedo, for petitioner.

Lisa R. Woods, for respondent.

GUSTAFSON, Judge: Petitioner Suzanne Pullins requested

section 6015 ‘‘innocent spouse’’ relief from joint liability for

income taxes for tax years 1999, 2002, and 2003. 1 The

Internal Revenue Service (IRS) denied Ms. Pullins’s request

because she did not request relief within two years of the

IRS’s first collection activity against her. The IRS then

reevaluated Ms. Pullins’s request on the merits and again

determined that she was not entitled to relief. Ms. Pullins

petitioned this Court, and the issue for decision is whether

she is entitled to relief from joint liability under section 6015.

We hold that she is.

FINDINGS OF FACT

At the time she filed the petition, Ms. Pullins lived in Min-

nesota.

Ms. Pullins’s marriage and finances

Ms. Pullins completed high school. She and Curtis Shirek

married in 1984. Both Mr. Shirek and Ms. Pullins wrote

checks from their joint bank account to pay family bills.

However, Mr. Shirek dominated the relationship, made the

decisions for the family, and determined when any bills

would be paid.

For each year in issue, Mr. Shirek worked in construction.

Ms. Pullins was not involved in Mr. Shirek’s construction

activity. Some or all of Mr. Shirek’s earnings were reported

on Forms 1099–MISC, Miscellaneous Income. Mr. Shirek did

not make quarterly prepayments of income tax.

In 1999 Ms. Pullins did not work outside the home, but in

2002 and 2003 she performed secretarial work because her

family needed the income. Ms. Pullins earned wages of

$19,902 in 2002 and $13,055 in 2003, and her employer with-

held from her wages Federal income tax of $937 in 2002 and

$550 in 2003. Ms. Pullins’s income tax was underwithheld in

1 Unless otherwise indicated, all citations of sections refer to the Internal Revenue Code of

1986 (26 U.S.C.), as amended.

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434 136 UNITED STATES TAX COURT REPORTS (432)

2002 by $719, as she acknowledges, 2 and it was overwith-

held in 2003 by $22. 3

The tax returns and assessments at issue

For all three years at issue, Mr. Shirek employed a return

preparer to prepare the couple’s joint Federal income tax

returns. Ms. Pullins’s wage income was reported on the 2002

and 2003 returns.

In general, Mr. Shirek’s construction income was reported

on Schedules C, Profit or Loss From Business, attached to

their returns. Mr. Shirek reported net income from his

construction activity of $58,760 for 1999, $85,333 for 2002,

and $51,624 for 2003. He also earned and reported $961 in

wages in 1999. However, for 1999 he omitted $10,374 in

income that was reported on a Form 1099–MISC.

Ms. Pullins signed each of the returns, but she did not

review the returns or question Mr. Shirek about any items

on the returns or any documents used to prepare the returns.

She did not sign the returns under duress. When Ms. Pullins

signed the 1999 return, she did not know about the omission

of Mr. Shirek’s income.

Ms. Pullins and Mr. Shirek filed joint Federal income tax

returns for the years in issue as follows:

Payment made

Year Date filed Balance due 1 with return

1999 Oct. 18, 2000 $12,823 $150

2002 Oct. 12, 2004 25,811 -0-

2 Ms. Pullins computes her individual liability by using married-filing-separately status and

using the standard deduction. Respondent has not disputed her arithmetic but uses a different

method: Respondent takes the liability for those years as reported (i.e., using married filing

jointly status) and allocates that liability between the spouses according to the amount of the

income attributable to each. On that basis respondent computes that Ms. Pullins’s income tax

was underwithheld in both years—i.e., by $3,395 in 2002 and $940 in 2003. Ms. Pullins has

not disputed respondent’s arithmetic but disagrees with his method. Our use of Ms. Pullins’s

method is explained below in part II.C.1.a.

3 Ms. Pullins’s income tax on her wages was overwithheld by $22 in 2003. On her administra-

tive request for relief submitted in April 2008 she requested a refund for this year, which would

be made (if at all) from the only payment shown on the 2003 transcript in the record—i.e., with-

held tax deemed paid in April 2004. However, even if we otherwise had authority to determine

an overpayment, Ms. Pullins’s request was submitted too late for her to obtain such relief.

Under section 6511(a), a refund claim must be filed ‘‘within 3 years from the time the return

was filed’’ (i.e., within three years after October 2004) or ‘‘within * * * 2 years from the time

the tax was paid’’ (i.e., within two years after April 2004). The April 2008 request for relief was

too late by either of these measures.

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(432) PULLINS v. COMMISSIONER 435

Payment made

Year Date filed Balance due 1 with return

2003 Oct. 12, 2004 13,188 -0-

1 The balance due reflects the amount that Ms. Pullins and Mr.

Shirek reported as owed on their returns after accounting for

withholding and estimated tax payments.

The IRS assessed the tax due for 1999 (as reported on the

return) in December 2000 and imposed an addition to tax for

failure to timely pay the tax due. The IRS eventually learned

about the missing income and in August 2002 assessed

$3,430 of additional tax attributable to it.

The IRS’s collection efforts

On November 1, 2000 (before the assessment of the addi-

tional tax), Mr. Shirek and Ms. Pullins entered into an

installment agreement to pay the 1999 tax liability. In 2000

and 2001 Ms. Pullins wrote checks on the joint bank account

as payments toward the 1999 liability. The IRS applied

refunds from tax years 2000 and 2001 toward the 1999

liability. In November 2003 the IRS terminated the install-

ment agreement after Mr. Shirek and Ms. Pullins defaulted

on the agreement. On November 15, 2003, the IRS sent

notices of intent to levy to each of Ms. Pullins and Mr. Shirek

for tax year 1999.

On November 29, 2004, after receiving the untimely

returns for 2002 and 2003, the IRS assessed the amounts

reported as tax due and imposed additions to tax for failure

to timely pay and for late filing. 4 On April 5 and 7, 2005

(after Ms. Pullins filed for divorce, as discussed below), the

IRS sent notices of intent to levy to both Ms. Pullins and Mr.

Shirek for tax years 2002 and 2003.

The dissolution of the marriage

Ms. Pullins and Mr. Shirek separated in late 2004, and

Mr. Shirek moved out of the family home in December

2004—i.e., after they had filed their 2002 and 2003 returns.

Ms. Pullins filed for divorce in February 2005. While the

4 The IRS did not impose a late filing addition to tax for 1999, apparently because it consid-

ered the 1999 return timely filed on extension. The due dates, on extension, for 2002 and 2003

were October 15, 2003, and August 15, 2004, respectively. The October 12, 2004, filing date was

well after those due dates.

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436 136 UNITED STATES TAX COURT REPORTS (432)

divorce was pending, Ms. Pullins and Mr. Shirek sold the

family home. The California State court granted Ms. Pullins

the divorce in September 2005 and held that Mr. Shirek was

responsible for paying the 1999, 2002, and 2003 tax debts.

The divorce judgment awarded each spouse $125,227 from

the sale of the marital home and also awarded each spouse

certain items of property.

Finances, remarriage, and tax compliance in subsequent years

Ms. Pullins earned $23,634 in 2004 and $18,216 in 2005.

Her tax returns for those years were due after she filed for

divorce; but she did not timely file tax returns for those

years, and the record does not reflect when or whether she

filed a return for 2006.

For her 2007 return, Ms. Pullins submitted a $25 payment

when she requested an extension of time to file (around the

time that she requested innocent spouse relief for 1999, 2002,

and 2003). She received an extension for her 2007 return

until October 15, 2008. Ms. Pullins filed the 2007 return on

October 22, 2008, reporting total tax of $2,485, withholding

credits of $2,082, and tax due of $403. She paid $25 toward

that liability when she filed the return. The IRS assessed the

tax shown and imposed a failure-to-timely-pay addition to

tax. Ms. Pullins made additional payments in 2009 toward

her 2007 liability.

Ms. Pullins remarried in 2007. She stopped working in

October 2008 and as a result of complications from surgery

is now disabled. At the time of trial she was receiving

monthly long-term disability insurance payments of $1,700.

Shortly before trial she qualified for monthly Social Security

disability benefits of $791. Those benefits will reduce her

insurance payment, and she expects her total monthly dis-

ability income to be $2,091 while the insurance payments

continue. Ms. Pullins expects her disability to be permanent,

and this expectation is reasonable.

Request for relief

On April 22, 2008, Ms. Pullins filed a Form 8857, Request

for Innocent Spouse Relief, with the IRS to request relief

under section 6015. On the Form 8857 she did not indicate

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(432) PULLINS v. COMMISSIONER 437

that she had been abused, and she did not allege any mental

or physical health problems.

Ms. Pullins submitted her request roughly four and a half

years after the IRS issued the November 2003 levy notice for

tax year 1999 and slightly more than three years after the

April 2005 levy notices for tax years 2002 and 2003.

OPINION

I. Joint and several liability and section 6015 relief generally

Section 6013(d)(3) provides that when taxpayers file a joint

return, the tax is computed on their aggregate income, and

their liability to pay the tax shown on the return or found

to be owing is joint and several. See also 26 C.F.R. sec.

1.6013–4(b), Income Tax Regs. That is, each spouse is liable

for the entire joint tax liability.

Section 6015 provides three types of relief from joint and

several liability: (1) full or apportioned relief under section

6015(b); (2) proportionate relief for divorced or separated tax-

payers under section 6015(c); and (3) equitable relief under

section 6015(f) when relief is unavailable under either section

6015(b) or (c).

Subsections (b) and (c) both include explicit time limits for

requesting relief. Absent a request’s being submitted within

two years of the first collection action against the requesting

taxpayer, the statute bars relief under either subsection. Sec.

6015(b)(1)(E), (c)(3)(B). Ms. Pullins requested relief under

section 6015 more than two years after the IRS began collec-

tion action against her. Therefore she is not entitled to relief

under subsection (b) or (c). 5

In section 6015(f) Congress did not impose a time limit for

requesting relief. However, by regulation the IRS purported to

impose a two-year time limit. See 26 C.F.R. sec. 1.6015–

5 The tax returns in issue all report tax due, but Ms. Pullins and Mr. Shirek did not pay the

tax with the returns. Thus, they had underpayments for each year in issue. Pursuant to section

6015(b)(1)(B), relief under section 6015(b) is available only for an ‘‘understatement’’, not an un-

derpayment; and pursuant to section 6015(c)(1), relief under section 6015(c) is available only for

a ‘‘deficiency’’, not an underpayment. See Washington v. Commissioner, 120 T.C. 137, 146–147

(2003). Section 6015(f) is broader and permits relief from ‘‘any unpaid tax or any deficiency (or

any portion of either)’’. Thus, even if she had requested relief within two years, Ms. Pullins’s

only possible avenue for relief for the underpayments is under section 6015(f). See Hopkins v.

Commissioner, 121 T.C. 73, 88 (2003). For 1999 Mr. Shirek omitted $10,374 of income, and that

omission results in an understatement of tax. Although section 6015(b) and (c) may provide re-

lief from understatements, due to the late request for relief, only section 6015(f) may provide

relief in this case, even for the liability resulting from this unreported income.

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438 136 UNITED STATES TAX COURT REPORTS (432)

5(b)(1). As is discussed briefly below, we have held that regu-

lation to be invalid.

II. Equitable relief under section 6015(f)

A. Statutory text

Section 6015(f) provides:

SEC. 6015(f). EQUITABLE RELIEF.—Under procedures prescribed by the

Secretary, if—

(1) taking into account all the facts and circumstances, it is inequi-

table 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.

Thus, section 6015(f) may offer relief from joint and several

liability, provided that the taxpayer shows that it is inequi-

table to hold her liable upon consideration of all the facts and

circumstances.

B. Procedure and burden of proof

Congress provided this Court express authority to review

the IRS’s denial of equitable relief under section 6015(f),

granting jurisdiction ‘‘to determine the appropriate relief

available to the individual under this section’’. Sec.

6015(e)(1). We conduct a trial de novo when determining

whether a taxpayer is entitled to relief under section 6015(f),

and we may consider evidence outside the administrative

record. Porter v. Commissioner (Porter I), 130 T.C. 115, 117

(2008). We employ a de novo standard of review, rather than

reviewing for abuse of discretion; and the requesting spouse

bears the burden of proving that she is entitled to equitable

relief under section 6015(f). Porter v. Commissioner (Porter

II), 132 T.C. 203, 210 (2009).

C. Factors for evaluating equitable relief: Revenue Proce-

dure 2003–61

In accord with the statutory provision that relief is to be

granted under section 6015(f) following ‘‘procedures pre-

scribed by the Secretary,’’ the IRS has issued revenue proce-

dures to guide its employees in determining whether a tax-

payer is entitled to relief from joint and several liability. See

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(432) PULLINS v. COMMISSIONER 439

Rev. Proc. 2003–61, 2003–2 C.B. 296, modifying and super-

seding Rev. Proc. 2000–15, 2000–1 C.B. 447. Revenue Proce-

dure 2003–61, supra, lists the factors that IRS employees

should consider, and the Court consults those same factors

when reviewing the IRS’s denial of relief. See Washington v.

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

Revenue Procedure 2003–61, supra, provides a three-step

analysis for IRS personnel to follow in evaluating requests for

relief: Section 4.01 lists seven threshold conditions that must

be met before the IRS will grant any relief; section 4.02 lists

circumstances in which the IRS will ordinarily grant relief as

to liabilities that were reported on a return (the underpay-

ments at issue in this case); and section 4.03 sets out eight

non-exclusive factors that the IRS will consider in deter-

mining whether equitable relief should be granted. See Rev.

Proc. 2003–61, 2003–2 C.B. at 297–298.

1. Section 4.01: Threshold conditions

The threshold conditions of section 4.01 of Revenue Proce-

dure 2003–61 are:

(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. * * * [6]

(4) No assets were transferred between the spouses as part of a fraudu-

lent scheme by the spouses.

(5) The nonrequesting spouse did not transfer disqualified assets to the

requesting spouse. * * *

(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 * * * [absent certain enumerated exceptions.]

The IRS admits that, in large part, Ms. Pullins satisfies

these requirements: She filed joint returns for the years in

issue; she is not eligible for relief under section 6015(b) or (c);

there is no evidence of fraudulent asset transfers; there is no

evidence of disqualified asset transfers; Ms. Pullins did not

6 See part II.C.1.b below, discussing the two-year requirement.

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440 136 UNITED STATES TAX COURT REPORTS (432)

file the returns with any fraudulent intent; and considering

that Ms. Pullins did not work in 1999 and that Mr. Shirek’s

income dwarfed Ms. Pullins’s income in 2002 and 2003, it is

clear that most of the underpayments result from omissions

of Mr. Shirek’s construction income. Thus, Ms. Pullins has

largely satisfied the threshold conditions of section 4.01 of

Revenue Procedure 2003–61. Two exceptions merit discus-

sion:

a. Tax attributable to Ms. Pullins

The exception to her satisfaction of these conditions is her

2002 underwithholding of $719; and to the extent of that

underwithholding, she did not meet the seventh threshold

condition and we do not grant relief. As we stated above, for

purposes of determining the extent of her liability for or over-

payment of tax on her own income, we use Ms. Pullins’s com-

putation on the basis of married-filing-separately status,

rather than the IRS’s computation that made a pro rata

allocation of the reported liability (based on married-filing-

jointly status). To reckon the amount of tax liability that Ms.

Pullins should have to pay because it is fairly attributable to

her, we think that on the facts of this case it is reasonable

to figure Ms. Pullins’s tax liability separately. The IRS’s

method assumes a joint liability and then attributes to her

a pro rata share of the joint liability, but the purpose of sec-

tion 6015 is to grant relief from joint liability. Under the IRS’s

method, if we found Ms. Pullins to be otherwise entitled to

section 6015 relief, we would nonetheless leave her liable for

a portion of the joint liability. 7 Our aim here, however, is to

figure Ms. Pullins’s own liability apart from joint liability

and then ensure that we do not excuse her from paying her

own liability. To accomplish that aim, a determination of her

separate liability, 8 rather than an allocation of the joint

liability, is most reasonable here.

7 For example, the joint liabilities include self-employment tax on Mr. Shirek’s construction

income, which tax accounts for 45 percent of the joint Federal income tax the IRS assessed for

2002. The IRS’s pro rata approach would allocate a proportionate share of that self-employment

tax to Ms. Pullins, even though the self-employment tax is calculated on Mr. Shirek’s income

alone, see 26 C.F.R. sec. 1.6017–1(b)(1), and became Ms. Pullins’s liability only because she filed

jointly with Mr. Shirek, see 26 C.F.R. sec. 1.6017–1(b)(2).

8 As an analogy, see 26 C.F.R. sec. 1.6013–4(d) (to allocate liability where a supposedly joint

return was signed under duress, ‘‘The return is adjusted to reflect only the tax liability of the

individual who voluntarily signed the return, and the liability is determined at the applicable

rates in section 1(d) for married individuals filing separate returns’’ (emphasis added)).

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(432) PULLINS v. COMMISSIONER 441

b. Requesting relief more than two years after the IRS’s first

collection activity

The third threshold condition of section 4.01 of Revenue

Procedure 2003–61 states a deadline that the IRS promul-

gated by regulation in 26 C.F.R. section 1.6015–5(b)(1). That

regulation purports to impose a two-year deadline on

requests for relief under section 6015(f), and Ms. Pullins did

not meet that deadline. 9 In Lantz v. Commissioner, 132 T.C.

131 (2009), revd. 607 F.3d 479 (7th Cir. 2010), we held that

the two-year deadline imposed by the regulation is an invalid

interpretation of section 6015(f). After the U.S. Court of

Appeals for the Seventh Circuit reversed Lantz, we reconsid-

ered the matter but did not change our position. See Hall v.

Commissioner, 135 T.C. 374 (2010). The U.S. Court of

Appeals for the Third Circuit has recently held the two-year

deadline to be valid, see Mannella v. Commissioner, 631 F.3d

115 (3d Cir. 2011), revg. 132 T.C. 196 (2009), but for the rea-

sons we have previously expressed, we respectfully disagree.

The court to which an appeal would lie in this case—the

Court of Appeals for the Eighth Circuit—has not addressed

this issue, and we therefore follow our holding in Lantz and

treat the IRS’s two-year deadline as invalid.

In Mayo Found. for Med. Educ. & Research v. United

States, 562 U.S. ll, ll, 131 S. Ct. 704, 713 (2011), the

Supreme Court recently clarified that the standard by which

the validity of regulations will be measured—with regard to

tax matters as well as other matters, and with regard to

‘‘general authority’’ regulations as well as ‘‘specific grant of

authority’’ regulations—is the two-step standard of Chevron

U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837

(1984).

However, Mayo prompts no reconsideration of our holding

in Lantz that the regulation at issue here is invalid. When

9 Ms. Pullins explained that she did not request relief because she thought she did not need

it, since the State court had ordered her husband to pay the taxes. Although given an oppor-

tunity to do so at trial, the IRS made no contention that it suffered any prejudice as a result

of the timing of her request or that Ms. Pullins was culpable for her delay in submitting her

request more than two years after the collection notices. Given our position on the invalidity

of the regulation’s two-year deadline, Ms. Pullins did not contend that, and we therefore do not

address whether, the regulation’s two-year deadline is subject to equitable tolling. Cf. Mannella

v. Commissioner, 631 F.3d 115 (3d Cir. 2011) (remanding to consider whether equitable tolling

applies), revg. 132 T.C. 196 (2009); Hall v. Commissioner, 135 T.C. 374, 387 n.5 (2010) (Wells,

J., concurring) (‘‘such a period of limitations would be subject to the ‘doctrine’ of equitable toll-

ing’’).

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442 136 UNITED STATES TAX COURT REPORTS (432)

we decided Lantz, we used the now-mandated Chevron

standard:

Following Golsen v. Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985

(10th Cir. 1971), we apply the law of the Court of Appeals to which an

appeal in the case would normally lie. Section 1.6015–5, Income Tax Regs.,

was issued under both a general grant of authority under section 7805 and

a specific grant of authority under section 6015(h). T.D. 9003, 2002–2 C.B.

294. The U.S. Court of Appeals for the Seventh Circuit has held that regu-

lations issued under general or specific authority of the IRS to promulgate

necessary rules are entitled to Chevron deference. * * * Accordingly, we

will follow the Chevron standard in this analysis. [Lantz v. Commissioner,

supra at 137; fn. ref. omitted.]

Thus, in Lantz we held the two-year deadline invalid under

the Chevron standard, and consequently we follow Lantz

(and Mayo and Chevron) today.

2. Section 4.02: Circumstances ordinarily allowing relief

Section 4.02 of Revenue Procedure 2003–61 provides three

conditions that, if satisfied, will ordinarily qualify a

requesting spouse for relief by the IRS from liability for an

underpayment of a properly reported liability. The conditions

are:

(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 non-

requesting 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. * * *

(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). * * *

[Rev. Proc. 2003–61, sec. 4.02(1), 2003–2 C.B. at 298.]

Ms. Pullins meets only one of these three conditions, as we

now show.

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(432) PULLINS v. COMMISSIONER 443

a. Married, separated, or divorced

Mr. Shirek moved out in December 2004, and he and Ms.

Pullins were divorced in 2005. She filed her request for relief

in 2008. Ms. Pullins clearly satisfies the first condition.

b. Knowledge or reason to know

Ms. Pullins argues that she did not know of the unpaid

liabilities when the returns were filed in October 2000 and

October 2004—first because she had no knowledge of any

unpaid tax liability on the returns and second because she

reasonably believed that Mr. Shirek would pay any taxes

due. Neither of these arguments is persuasive.

(1) Knowledge of the liabilities

As to her alleged ignorance of the liabilities, Ms. Pullins

testified that she did not notice the amounts of tax shown as

due on the returns (but not paid with the returns) when she

signed them; and she claims that she was unaware that any

amount of tax was due. She explained that she was ignorant

of any tax liability until she filed for divorce in February

2005.

However, Ms. Pullins did not explain why she wrote checks

to the IRS from the couple’s bank account in 2000 and 2001—

with memo lines specifically referring to tax year 1999—to

make partial payments toward the 1999 tax liability if she

did not know that she and her husband had a problem with

unpaid taxes. Her joining Mr. Shirek in entering into an

installment agreement in November 2000 further dem-

onstrates her awareness of their outstanding liabilities. On

these facts, we find her contention that she did not know

about the couple’s tax liabilities until she filed for divorce in

2005 is not credible.

Ms. Pullins asserted that she signed the returns without

reviewing them because she trusted Mr. Shirek. We recog-

nize that many taxpayers trust their spouse to prepare and

file their tax returns and pay their taxes, but we note that

The rate of tax applied against a given amount of income generally is

lower when the income is reported on a joint return than when a husband

and wife file separate returns. The price which the law exacts for this

privilege is that taxpayers who file a joint return are jointly and severally

liable for the amount of tax due, see 26 U.S.C. § 6013(d)(3) (1982), regard-

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444 136 UNITED STATES TAX COURT REPORTS (432)

less of the source of income reported and notwithstanding the fact that one

spouse may be less informed about the contents of the return. See

Sonnenborn v. Commissioner, 57 T.C. 373, 381 (1971); 26 U.S.C. §

6013(d)(3) (1982). [Stevens v. Commissioner, 872 F.2d 1499, 1503 (11th Cir.

1989), affg. T.C. Memo. 1988–63.]

A taxpayer may not obtain the benefits of joint filing

status but then obtain relief from joint and several liability

by ignoring or avoiding facts fully disclosed on a return she

signed. Hayman v. Commissioner, 992 F.2d 1256, 1262 (2d

Cir. 1993) (taxpayer who claims to have signed returns with-

out reading them is nevertheless charged with constructive

knowledge of their contents), affg. T.C. Memo. 1992–228. We

impute to a taxpayer knowledge of what she could have

gleaned from the tax returns she signed, if she had taken the

time to review them. Porter v. Commissioner, 132 T.C. at

211–212. Accordingly, Ms. Pullins is chargeable with knowl-

edge of the liabilities that were reported on the returns she

signed. 10

(2) Knowledge that her husband would not pay the liabi-

lities

In evaluating whether a requesting spouse knew or had

reason to know her nonrequesting spouse would not pay the

tax liability, the IRS considers the level of education attained

by the requesting spouse, any evasiveness or deceit by the

nonrequesting spouse, how involved the requesting spouse

was in the activity generating the income tax liability, the

requesting spouse’s involvement in financial matters of the

household, her business or financial expertise, and any lavish

or unusual expenditures compared to past spending levels.

Rev. Proc. 2003–61, sec. 4.03(2)(a)(iii)(C), 2003–2 C.B. at 298.

There is no evidence of lavish or increased spending in

1999, and by 2002 the family finances were sufficiently tight

that Ms. Pullins had started working to help make ends

meet. Ms. Pullins had access to the couple’s joint checking

account, but she explained that Mr. Shirek controlled the

finances and made the decisions for the family. Ms. Pullins

10 The foregoing discussion addresses only the liabilities that were actually reported on the

returns that Ms. Pullins signed—i.e., the great bulk of the liabilities. For purposes of the anal-

ysis under Rev. Proc. 2003–61, sec. 4.02(1)(b), 2003–2 C.B. 296, 298, that discussion is adequate.

As to the $3,430 of tax for 1999 that is attributable to the construction income that Mr. Shirek

omitted from the return, see infra pt. II.C.3.a.(3).

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(432) PULLINS v. COMMISSIONER 445

was not involved in Mr. Shirek’s construction activity, which

generated most of the income for the family. There is no evi-

dence of deceit in the record, but Ms. Pullins did allege in a

statement attached to her request for relief that she had filed

for divorce when she learned that Mr. Shirek was keeping

money from her. Ms. Pullins completed high school and does

not claim sophisticated business or financial knowledge or

expertise.

Ms. Pullins testified that she never had reason to question

Mr. Shirek about payment of taxes. However, she made pay-

ments toward the 1999 liabilities and entered into the

installment agreement, and by 2002 they needed more

income and she had to start working to help support the

family; so it is clear that she was aware of their financial

problems. The question is whether the requesting spouse

knew the taxes would be paid on time or reasonably

promptly after the returns were filed. Schepers v. Commis-

sioner, T.C. Memo. 2010–80. The partial payment submitted

with the 1999 return and the subsequent installment agree-

ment demonstrate slow and perhaps reluctant payment—of

which Ms. Pullins was fully aware. The application of

refunds from the couple’s 2000 and 2001 returns toward the

1999 liability provided her further information about Mr.

Shirek’s tax payments. We do not find that when she signed

the returns she reasonably believed that Mr. Shirek would

promptly pay the liabilities shown on the returns.

The California court that granted Ms. Pullins’s divorce

from Mr. Shirek allocated the outstanding tax liabilities to

Mr. Shirek. The court also ordered the couple to split the

$250,454 gain from the sale of their marital home. Thus, Mr.

Shirek had the means to pay the 1999, 2002, and 2003 Fed-

eral income tax liabilities in September 2005 when the court

filed the judgment of dissolution and awarded him $125,227

of the proceeds from the sale of the home. Accordingly, when

the court issued the divorce decree, it was reasonable for Ms.

Pullins to expect Mr. Shirek to obey the court and pay the

tax debts. However, it is her knowledge or reason to know at

the time she signed the tax returns that is critical to this

inquiry; and under the circumstances she had reason to

doubt, when she signed the returns, that Mr. Shirek would

pay the liabilities.

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446 136 UNITED STATES TAX COURT REPORTS (432)

c. Economic hardship

The IRS evaluates a requesting spouse’s claim of economic

hardship by considering any information offered by the indi-

vidual that is relevant to the determination, including her

income, assets and liabilities, age, ability to earn, responsi-

bility for dependents, the amounts reasonably necessary for

basic living expenses, the allowable living expenses for her

geographic area, and other factors. See Wiener v. Commis-

sioner, T.C. Memo. 2008–230; 26 C.F.R. sec. 301.6343–

1(b)(4)(ii), Proced. & Admin. Regs. (incorporated into Rev.

Proc. 2003–61 by its sec. 4.02(1)(c)). It is clear that Ms.

Pullins is disabled. At trial Ms. Pullins was manifestly in

pain, short of breath, and uncomfortable sitting or standing

for long periods. Her disability plainly compromises her

ability to earn and is properly taken into account in deter-

mining whether she faces economic hardship. However, her

disability is not the only factor to be considered, and two

other considerations prevent the conclusion that she has

established economic hardship:

(1) Economic facts at the time of trial

Ms. Pullins testified that she receives long-term disability

insurance payments (which may terminate on some unspec-

ified future date), that she expected she would soon begin

receiving Social Security disability benefit payments, that

her monthly disability income would be $2,091, and that she

expects her disability to be permanent. She further testified

that she has commenced divorce proceedings against her

second husband and expected to move out of his house when

her Social Security disability benefit payments commence.

She argues that, when she is on her own, her disability pay-

ments will be insufficient to cover her expenses.

A hypothetical hardship is insufficient to justify relief; a

taxpayer must demonstrate that imposing joint and several

liability is ‘‘inequitable in present terms’’, Von Kalinowski v.

Commissioner, T.C. Memo. 2001–21, and poses a present eco-

nomic hardship. When evaluating economic hardship, the

Office of Appeals necessarily views the requesting spouse’s

financial situation as of the hearing date; but we properly

consider the evidence presented at the de novo trial, see

Porter I, and we consequently evaluate her financial situa-

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(432) PULLINS v. COMMISSIONER 447

tion and prospects as of that time, see Nihiser v. Commis-

sioner, T.C. Memo. 2008–135, 95 T.C.M. (CCH) 1531, 1538

(2008) (‘‘we should * * * look at the evidence presented at

trial, and the state of her finances at that time. * * * But

we must also consider * * * [petitioner’s] future ability to

earn her current salary and pay her basic living expenses’’).

As of the date of trial, Ms. Pullins continued to live with

Mr. Pullins—her second husband—and he apparently paid

her expenses. While her disability payments are admittedly

modest, as long as she and Mr. Pullins continue to live

together—i.e., on the facts at the time of trial—their house-

hold apparently has a monthly budget surplus and some

ability to pay the tax debt. Moreover, Ms. Pullins did not

introduce any evidence of what her expenses might be if she

moves from the home she has shared with Mr. Pullins. Thus,

she presented virtually no detail to substantiate her claim of

economic hardship, whether in her current circumstance with

her husband or in an anticipated future on her own.

(2) Assets on hand

Ms. Pullins did not offer any evidence at trial 11 to show

whether she had any assets. 12 This evidentiary gap is espe-

cially significant because in 2005 she received $125,227 of

the proceeds of the sale of her previous marital home. She

testified that she used part of those proceeds for living

expenses, to purchase a car, and to relocate from California

to Minnesota. However, she did not state whether she still

had any of those funds as of the date of trial.

Ms. Pullins has the burden of proof, and on this record she

has not proved that she will suffer economic hardship if relief

is not granted.

11 Similarly, when Ms. Pullins submitted her request for relief to the IRS in April 2008, she

did not show her assets. The reason for that omission may be that the then-current version of

Form 8857, Request for Innocent Spouse Relief, as revised in June 2007, did not specifically re-

quire disclosure of a requesting spouse’s assets. The subsequent version of Form 8857 as revised

in September 2010 includes an additional section that asks: ‘‘Tell us about your assets. Your

assets are your money and property. Property includes real estate, motor vehicles, stocks, bonds,

and other property that you own. Tell us the amount of cash you have on hand and in your

bank accounts. Also give a description of each item of property, the fair market value of each

item, and the balance of any outstanding loans you used to acquire each item.’’

12 When a taxpayer fails to produce evidence in her possession which, if true, would be favor-

able, we may presume that the evidence, if produced, would favor the opposing party. Wichita

Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1165 (1946), affd. 162 F.2d 513 (10th Cir.

1947).

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448 136 UNITED STATES TAX COURT REPORTS (432)

3. Alternative facts-and-circumstances test

Where, as here, the requesting spouse satisfies the

threshold conditions of Revenue Procedure 2003–61, section

4.01, but fails to qualify for relief under section 4.02, she

may nevertheless obtain relief under the facts and cir-

cumstances test of section 4.03. The IRS considers a nonexclu-

sive list of factors to determine whether ‘‘taking into account

all the facts and circumstances, it is inequitable to hold the

requesting spouse liable’’: (1) whether the requesting spouse

is separated or divorced from the nonrequesting spouse; (2)

whether the requesting spouse would suffer economic hard-

ship if not granted relief; (3) whether, in the case of an

underpayment, the requesting spouse knew or had reason to

know that the other spouse would not pay the liability, and,

in the case of a deficiency, whether the requesting spouse did

not know and had no reason to know of the item giving rise

to the deficiency; (4) whether the nonrequesting spouse had

a legal obligation to pay the outstanding tax liability pursu-

ant to a divorce decree or agreement; (5) whether the

requesting spouse received a significant benefit from the

unpaid income tax liability or the item giving rise to the defi-

ciency; and (6) whether the requesting spouse has made a

good faith effort to comply with the tax laws for the taxable

years following the years for which she requests relief. Id.

sec. 4.03(2), 2003–2 C.B. at 298–299.

Other factors that may indicate relief is appropriate when

present but that will not weigh against granting relief when

absent are: (i) whether the nonrequesting spouse abused the

requesting spouse and (ii) whether the requesting spouse was

in poor mental or physical health at the time she signed the

tax return or when she requested relief. Id. sec. 4.03(2)(b),

2003–2 C.B. at 299.

We analyze all relevant facts and circumstances, with all

factors considered and appropriately weighted and no single

factor determinative, in determining whether it is inequi-

table to hold a taxpayer liable for a joint tax liability. See

Porter II, 132 T.C. at 214.

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(432) PULLINS v. COMMISSIONER 449

a. Applying the facts and circumstances factors

(1) Marital status

Ms. Pullins had divorced Mr. Shirek when she requested

innocent spouse relief. This factor weighs in favor of relief.

(2) Economic hardship

Generally, economic hardship exists when collection of the

tax liability will render the taxpayer unable to meet basic

living expenses. 26 C.F.R. sec. 301.6343–1(b)(4)(i). As dis-

cussed above in part II.C.2.c., Ms. Pullins failed to make a

convincing showing of economic hardship. She failed to make

an accounting of her assets, and it appears that as long as

she lives with her second husband, she has some income

available to pay toward her tax liability; consequently, she

has not proved economic hardship. However, Ms. Pullins is

disabled, and the marriage on which her support currently

depends was, at the time of the trial, evidently at risk of dis-

solution. Balancing her inability to work and the modest dis-

ability income she will receive against the lack of evidence on

assets and expenses, we find this factor to weigh only mod-

erately against granting relief.

(3) Knowledge or reason to know

Ms. Pullins actually knew about (or is imputed with knowl-

edge about) the liabilities reported on the returns she signed,

and she did not have a reasonable belief that Mr. Shirek

would reasonably promptly pay those liabilities. See supra

pt. II.C.2.b.

However, in the case of a deficiency, the question is

whether the requesting spouse did not know and had no rea-

son to know of the item giving rise to the deficiency—in this

case, the $10,374 of construction income that Mr. Shirek

omitted in 1999 (which generated an additional tax liability

of $3,430). Ms. Pullins did not know of that omission and,

given her non-involvement in his construction business, she

could not reasonably be expected to have known. This was

not an instance in which a husband failed altogether to

report income from a business that his wife knew about;

rather, here the husband reported about 85 percent of the

income. As to the unreported portion of the liability (i.e., the

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450 136 UNITED STATES TAX COURT REPORTS (432)

deficiency), Ms. Pullins lacked knowledge, and to the extent

of $3,430 of the joint liability this factor weighs in favor of

granting relief.

As to the underpayments, however, as noted Ms. Pullins

has not proved that she did not know and had no reason to

know, when she signed the returns at issue, that Mr. Shirek

would not pay the tax liabilities reflected there. For most of

the liability, therefore, this factor weighs against granting

relief.

(4) Nonrequesting spouse’s legal obligation

The California court’s August 2005 judgment ordered Mr.

Shirek to pay the 1999, 2002, and 2003 Federal income tax

and California Franchise Tax Board liabilities, and it also

ordered him to appear on behalf of Ms. Pullins, defend her,

and hold her harmless from those debts. Moreover, Mr.

Shirek had the means to pay the Federal income taxes after

the divorce, given that the property distribution awarded

$125,227 to each spouse from the sale of the marital resi-

dence. We are not bound (by collateral estoppel or otherwise)

to the determination of a State family court, and that court

does not have the power to adjust a spouse’s Federal tax

liabilities. However, when evaluating what is equitable in

this instance under section 6015(f), we will assign consider-

able weight to the determination of the State court which

placed the responsibility for satisfying the tax debts on Mr.

Shirek.

Revenue Procedure 2003–61, sec. 4.03(2)(a)(iv), 2003–2

C.B. at 298, provides that the nonrequesting spouse’s legal

obligation ‘‘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.’’ Considering the cir-

cumstances that existed at the time of the divorce (as

opposed to the time she signed the returns, see supra part

II.C.2.b.), the record does not contain any evidence indicating

that Ms. Pullins had any reason to expect that Mr. Shirek

would ignore the family court order and fail to pay the tax

debts. Accordingly, this factor clearly weighs in favor of

granting Ms. Pullins relief.

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(432) PULLINS v. COMMISSIONER 451

(5) Significant benefit

The significant benefit factor examines whether the

requesting spouse directly or indirectly received ‘‘significant

benefit (beyond normal support) from the unpaid income tax

liability’’. Rev. Proc. 2003–61, sec. 4.03(2)(a)(v), 2003–2 C.B.

at 299 (referencing 26 C.F.R. section 1.6015–2(d)). Ms.

Pullins did share in the benefit of Mr. Shirek’s income for the

years in issue; but there is nothing in the record to indicate

that, during her marriage to Mr. Shirek, Ms. Pullins received

any specific or extraordinary benefit from their nonpayment

of their tax liabilities. The IRS points to their acquisition of

‘‘waverunners, a golf cart and a camper/trailer’’; but while it

is certainly true that a family should not buy such items

rather than pay their taxes, we think these items do not rise

to a level that implicates significant benefit to Ms. Pullins.

More difficult to evaluate is the IRS’s contention that Ms.

Pullins benefited from the nonpayment of taxes by her

receipt of increased proceeds from the equity in the marital

home. The IRS observes:

Upon her divorce from Mr. Shirek, Petitioner received $125,000.00 from

the sale of the marital home. * * * Had Petitioner and Mr. Shirek used

the equity of $250,000 in their home to pay their tax liabilities at the time

they were due, the money Petitioner would have received from the sale of

the marital home would have been significantly less. See George v.

Commissioner, T.C. Memo. 2004–261. In George, the Court found that the

requesting spouse received a significant benefit when she received pension

and life insurance funds after the death of the nonrequesting spouse. The

Court noted these funds could have been used during the nonrequesting

spouse’s lifetime to pay the tax liabilities and the requesting spouse would

have received a reduced amount of money. Consequently, the requesting

spouse received a significant benefit from the nonpayment of the taxes. Id.

Likewise, Petitioner would have received far less money during her divorce

had the tax liabilities been paid when due.

It is true that the proceeds to be distributed to the spouses

in the divorce proceedings would have been reduced if the

couple had used the equity in the marital home to pay their

tax debts. However, two considerations defeat the contention

that this resulted in significant benefit to Ms. Pullins:

First, George v. Commissioner, T.C. Memo. 2004–261,

involved not proceeds from the sale of a marital home but

pension and life insurance funds. Unlike the funds in George,

here the equity interest in the home was created by the fam-

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452 136 UNITED STATES TAX COURT REPORTS (432)

ily’s mortgage payments—i.e., one of its routine living

expenditures. By definition, significant benefit is ‘‘beyond

normal support’’. Rev. Proc. 2003–61, sec. 4.03(2)(a)(v). Mort-

gage payments on a middle-class home constitute normal

support that is not considered to generate ‘‘significant ben-

efit’’. It is therefore difficult to explain how, before the prop-

erty distribution in the divorce, any significant benefit could

arise from the equity interest that is simply the result of

those mortgage payments.

Second, Ms. Pullins’s first opportunity to drawn down

equity from the home to pay the taxes was when the house

was sold and the proceeds were distributed in the divorce

proceedings. It does not appear—and we cannot assume—

that nonpayment of the taxes at that time actually benefited

her or (to put it differently) that payment of the taxes at the

time of the distribution would have reduced her share of the

distribution. The divorce court awarded Mr. Shirek half (i.e.,

$125,227) of the proceeds and ordered him to pay the taxes

unilaterally; thus, the court evidently intended that Ms.

Pullins receive $125,227 not reduced by tax payments. If

instead Ms. Pullins and Mr. Shirek had agreed that the

taxes would be paid directly from the proceeds, then on the

basis of everything we know, it is altogether likely that the

court would have awarded Ms. Pullins $125,227 and given

Mr. Shirek only the remainder. If that is true, then Ms.

Pullins did not benefit from the nonpayment of the taxes at

that time but rather suffered the detriment, not intended by

the divorce court, of having her share of the proceeds remain

at risk of IRS collection.

Under the circumstances of this case, we find that Ms.

Pullins did not realize significant benefit from the non-

payment of the taxes. Accordingly, this factor weighs in favor

of granting relief.

(6) Compliance with Federal tax laws

Where the requesting spouse has made a good-faith effort

to comply with Federal tax laws in years following the years

for which she requests relief, this compliance can weigh in

favor of relief. Ms. Pullins testified that she mailed tax

returns for tax years 2004 and 2005 with filing status of

married filing separate and single, respectively. She asserted

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(432) PULLINS v. COMMISSIONER 453

that she mailed those returns the Saturday before trial in

September 2009. As of the date of trial, the IRS had no record

of receiving the returns, and Ms. Pullins offered no evidence

of their filing. The record does not clearly reflect whether or

when Ms. Pullins filed a Federal income tax return for

2006—or whether she had an obligation to file for 2006. She

requested an extension of time to file her 2007 return, and

it was due on October 15, 2008. She filed the return one

week late, with a balance due, and she paid that balance,

plus interest and additions to tax, by February 24, 2009.

Ms. Pullins asserts that her mailing her 2004 and 2005

Federal income tax returns the weekend before trial in Sep-

tember 2009 shows that she was in compliance with her tax

filing obligations at the time of trial. Those returns both

claim an overpayment and request a refund. However, she

filed each of those returns several years after they were due

and on the eve of trial. We cannot say that she has proved

that she made a good-faith effort to comply with Federal

income tax laws in the years following the years in issue.

Accordingly, this factor weighs against granting relief.

(7) Abuse

At trial Ms. Pullins testified that Mr. Shirek became an

abusive alcoholic at the end of their marriage. She still

trusted him when they signed the 2002 and 2003 returns in

October 2004, but he moved out of the family home in

December 2004, and she filed for divorce in February 2005.

Ms. Pullins did not inform the IRS before trial that she suf-

fered abuse at Mr. Shirek’s hands. On the contrary, in her

April 2008 request for relief on Form 8857, she explicitly

answered ‘‘No’’ to question 10: ‘‘Were you a victim of spousal

abuse or domestic violence during any of the tax years you

want relief?’’

At trial, however, Ms. Pullins alleged that Mr. Shirek

emotionally abused her during the marriage. When ques-

tioned about her ‘‘No’’ answer on Form 8857, she explained

that she made a simple mistake and checked the wrong box.

However, the following additional instructions accompany

the ‘‘Yes’’ box:

Attach a statement to explain the situation and when it started. Provide

photocopies of any documentation, such as police reports, a restraining

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454 136 UNITED STATES TAX COURT REPORTS (432)

order, a doctor’s report or letter, or a notarized statement from someone

who was aware of the situation.

Ms. Pullins did not describe or document any alleged abuse

in an attachment to her Form 8857; and she did not explain

why, if she mistakenly checked ‘‘No’’, she did not follow the

‘‘Yes’’ instructions and do so. 13

Ms. Pullins has not introduced any evidence to corroborate

her testimony—contradicted by her Form 8857—that she suf-

fered abuse from Mr. Shirek. Accordingly, we do not find that

she proved abuse. This factor does not weigh in favor of

relief—and it also does not weigh against granting relief. See

Rev. Proc. 2003–61, sec. 4.03(2)(b), 2003–2 C.B. at 299.

(8) Mental or physical health

There is no evidence that Ms. Pullins was ill when she

signed the returns in issue or when she requested relief in

April of 2008. See id. sec. 4.03(2)(b)(ii). This factor ordinarily

would not weigh in favor of or against granting relief in the

IRS’s analysis. See id. sec. 4.03(2)(b). However, having

observed Ms. Pullins at trial in September 2009, we conclude

that she is now disabled and unable to work and earn income

and that she may be permanently so. We find that her obvi-

ously impaired health at the time of the trial de novo is rel-

evant, and we conclude that this factor weighs in favor of

granting relief.

b. Weighing the facts and circumstances

This is a close case. Three factors favor retained liability:

Ms. Pullins’s failure to prove economic hardship, her lack of

a reasonable expectation that Mr. Shirek would pay the

liabilities when she signed the returns, and her failure to

timely file her returns and pay her taxes since the years in

issue. However, four factors favor relief—Ms. Pullins’s

divorce from Mr. Shirek, Mr. Shirek’s legal obligation to pay

the tax liabilities, Ms. Pullins lack of significant benefit from

the nonpayment, and Ms. Pullins’s poor health—and a fifth

13 Ms. Pullins explained that she did not allege abuse during her divorce proceedings because

she wanted the divorce to proceed quickly so that she could get out of the marriage. This ration-

ale may be perfectly logical for the divorce proceedings and may explain why the California fam-

ily court judgment does not discuss abuse. Thus, we do not rely on that judgment to prove or

disprove abuse. However, she completed Form 8857 in April 2008, long after the divorce pro-

ceedings had concluded.

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(432) PULLINS v. COMMISSIONER 455

favors relief as to the 1999 deficiency, i.e., her lack of knowl-

edge of Mr. Shirek’s unreported income. Especially weighty

here is the fact that the divorce court—with the family’s cir-

cumstances set out before it in greater detail than was pos-

sible in our tax case—determined that Mr. Shirek should pay

the taxes, placed proceeds in his hands sufficient to do so,

and allocated resources to Ms. Pullins on the assumption

that he would do so and she would not have to.

Accordingly, after considering and weighing all the factors,

we find that with the exception of her underwithholding of

$719 of her own liability in 2002, it would be inequitable to

hold Ms. Pullins liable for the 1999, 2002, and 2003 tax

liabilities.

To reflect the foregoing,

An appropriate decision will be entered.

f

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