Ann Marie Minihan, and John J. Minihan, Jr., Intervenor v. Commissioner

ANN MARIE MINIHAN, PETITIONER, AND JOHN J. MINIHAN,

JR., INTERVENOR v. COMMISSIONER OF INTERNAL

REVENUE, RESPONDENT

Docket No. 26595–09. Filed January 11, 2012.

P petitioned for review of R’s denial of innocent spouse

relief under I.R.C. sec. 6015(f), and R created a separate

account for each spouse in order to pursue collection from I

(P’s former husband) while collection against P was suspended

pursuant to I.R.C. sec. 6015(e)(1)(B). While P’s petition was

pending, R collected the entire tax liability at issue by levying

on a bank account owned jointly by P and I. As a result, P

now seeks a refund pursuant to I.R.C. sec. 6015(g)(1), in the

amount of 50% of the funds levied from the joint account. R

contends that P is not entitled to a refund of funds owned

jointly by P and I and applied to I’s liability. Held: Under

State law P owned a 50% share of the funds held in the joint

bank account, and she is not precluded from a refund under

I.R.C. sec. 6015(g)(1) of her share of levied funds.

Roger M. Ritt, for petitioner.

John J. Minihan, Jr., for himself.

Erika B. Cormier, for respondent.

GUSTAFSON, Judge: This case arises from petitioner Ann

Minihan’s timely request under section 6015(f) 1 for ‘‘innocent

spouse’’ relief from joint liability for tax years 2001, 2002,

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

1986 (26 U.S.C.), as amended, and all citations of Rules refer to the Tax Court Rules of Practice

and Procedure.

1

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2 138 UNITED STATES TAX COURT REPORTS (1)

2003, 2004, 2005, and 2006. The Internal Revenue Service

(IRS) denied Ms. Minihan’s request for relief because (it con-

cluded) she had not shown that it would be inequitable to

hold her responsible for the tax liability. On November 9,

2009, Ms. Minihan filed with this Court a timely petition

appealing the IRS’s denial of innocent spouse relief and

asking this Court to determine the appropriate relief avail-

able to her under section 6015—in particular, a refund of her

share of the funds taken by the IRS from a joint bank account

to satisfy the separate liability of her former husband, inter-

venor John Minihan, for the joint income tax debt.

The IRS contends (1) that Ms. Minihan is not entitled to

any relief from joint liability under section 6015 and (2) that,

even if she is entitled to such relief, she is not entitled to any

refund of the money levied from the joint account. On Feb-

ruary 1, 2011, the IRS moved for summary judgment pursu-

ant to Rule 121 on the second issue only, i.e., Ms. Minihan’s

non-entitlement to a refund of the levied funds. On March

21, 2011, the Court held a hearing on the IRS’s motion, took

that motion under advisement, and held a partial trial of the

facts pertinent to the refund issue. 2 The IRS’s motion for

summary judgment will be denied as moot (in view of the

partial trial), and the refund issue will be decided in favor

of Ms. Minihan.

FINDINGS OF FACT

At the time Ms. Minihan filed her petition, she resided in

Massachusetts. On March 2, 2010, Mr. Minihan intervened

in this action pursuant to Rule 325(b). At the time Mr.

Minihan filed his notice of intervention, he also resided in

Massachusetts.

2 The question whether a section 6015(f) petitioner is eligible for any relief is logically prior

to the question whether she is entitled to a particular form of relief (i.e., a refund); and in a

sense the Court’s holding a partial trial on the latter question first puts the cart before the

horse. However, because here the entire joint liability has been satisfied, petitioner’s request for

relief is moot (since the IRS will engage in no more collection activity) unless a refund is pos-

sible. The IRS sensibly moved for partial summary judgment on this issue, since if the motion

succeeded, the parties and the Court could avoid a trial on the fact-intensive and sometimes

vexing question of entitlement to equitable relief under section 6015(f). We follow the IRS’s lead

in addressing the refund question first; but we decide here that petitioner’s eligibility for section

6015(f) relief cannot be avoided in this case.

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(1) MINIHAN v. COMMISSIONER 3

The Minihans’ family and finances

Mr. and Ms. Minihan were married in 1989. They have

three daughters, born in 1990, 1992, and 1994. Throughout

their marriage Mr. Minihan worked outside the home in var-

ious business ventures, while Ms. Minihan worked as a

homemaker raising their daughters. Before their divorce, the

Minihans enjoyed (in Ms. Minihan’s words) an ‘‘upper-middle

class lifestyle’’ that included living in a $1.5 million home in

Hingham, Massachusetts, owning a summer home on Cape

Cod, and sending their daughters to private school.

Tax filings

Mr. Minihan handled the family finances. Ms. Minihan

alleges that it was not until after the Minihans’ financial

situation deteriorated in 2007 that Ms. Minihan became

aware of and involved in their finances. During the tax years

in question, Mr. Minihan prepared joint Federal income tax

returns for Mr. and Ms. Minihan. Both Mr. and Ms. Minihan

signed the returns for these years. However, allegedly unbe-

knownst to Ms. Minihan, when Mr. Minihan filed the joint

returns he did not remit payment of the Federal income tax

balances (or additions to tax) due for 2002, 2003, 2004, 2005,

or 2006. 3 This resulted in the IRS’s assessing the amounts

due, plus additions to tax. The IRS has never determined an

understatement or deficiency against Mr. or Ms. Minihan.

In 2004 the IRS started collection activity with regard to

the Minihans’ unpaid taxes, additions to tax, and interest for

tax years 2001 and 2002. Over the course of 2004 and 2005,

the IRS by levy collected $6,704.50, which the IRS applied

against the Minihans’ 2001 and 2002 tax liabilities. The IRS

did not make any additional levies until 2010.

Ms. Minihan says she first learned about the Federal

income tax delinquencies when she saw IRS correspondence

in July 2007 regarding their unpaid taxes. After learning

this information, Ms. Minihan resubmitted their joint

returns at her accountant’s suggestion (for reasons not clear

in our record), but she did not remit payments for the tax or

additions to tax due on those returns.

3 For 2001 the Minihans filed their joint return and paid their tax due on time but incurred

an estimated tax penalty, which remained unpaid until the IRS’s 2004 and 2010 levies collected

the entire amount due.

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4 138 UNITED STATES TAX COURT REPORTS (1)

Divorce, sale of house, and innocent spouse petition

The Minihans’ marriage rapidly deteriorated in the

summer of 2007, and Ms. Minihan filed for divorce in the

Probate and Family Court of Massachusetts on September

21, 2007. The divorce, which was not finalized until January

2011, was contentious and difficult for the Minihans. In 2008

the Minihans sold their family house in Hingham, Massachu-

setts—which the two of them had owned jointly—and depos-

ited the net proceeds from the sale into a joint Bank of

America certificate of deposit account, which likewise the two

of them owned jointly. 4 It was their mutual intention that

Mr. and Ms. Minihan would be co-owners of the Bank of

America account, that they would each be entitled to an

equal amount of the account, and that they would ‘‘keep the

money [in the account] so neither one could run off with it’’,

since the money in the account was to be used to fund their

children’s education. When the divorce was finalized in

January 2011, the final divorce decree provided that all of

the funds remaining in the Bank of America account—about

$26,000 after the IRS levies discussed below—would be used

to pay their children’s education expenses. Since the

remainder of the funds would be consumed with the chil-

dren’s education expenses, the divorce decree did not address

any further asset division with respect to this account.

On June 23, 2008, the IRS received Ms. Minihan’s Form

8857, Request for Innocent Spouse Relief, requesting relief

from joint and several liability for the tax due for tax years

2001 through 2006. In accordance with IRS procedure, upon

the filing of Ms. Minihan’s request for section 6015 relief, the

IRS moved Mr. and Ms. Minihan’s joint assessment accounts

to separate mirrored accounts for each of the tax years. 5

4 Although there are irregularities in the paperwork for the account, we find that it was a

joint account that Mr. and Ms. Minihan co-owned. In her objection to the IRS’s motion for sum-

mary judgment, Ms. Minihan included several exhibits that refer to her as ‘‘co owner of a CD

at Bank of America with an account # [ending 0682]’’ or refer to the Bank of America account

as ‘‘a joint bank account’’. In addition, Ms. Minihan testified, regarding the Bank of America

account, that ‘‘we both had to go to the bank and we both had to be there to sign for * * *

the withdrawal’’. Ms. Minihan’s post-trial submissions repeatedly refer to the account as a ‘‘joint

account’’. Finally, the Bank of America account’s ‘‘CD Deposit Receipt’’ and ‘‘Modification Agree-

ment’’ show that the account title included both Mr. and Ms. Minihan.

5 After Ms. Minihan filed her petition for innocent spouse relief, the IRS created separate mir-

rored accounts for the joint tax liability, pursuant to Internal Revenue Manual (IRM) pt.

25.15.12.17.3 (Nov. 9, 2007) (‘‘Mirror[ed] accounts are currently created for * * * Innocent

spouse [cases]’’). This allowed the IRS to pursue Mr. Minihan for collection on the entire joint

liability amount, while collection against Ms. Minihan was suspended. See id. pt. 25.15.15.1

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(1) MINIHAN v. COMMISSIONER 5

Thereafter, the IRS had a separate account for each spouse,

reflecting for each the same liabilities derived from their

joint filings.

In August 2009, in the midst of the divorce proceedings,

Mr. Minihan sent a letter to the IRS informing it about the

joint Bank of America account that held the proceeds from

the sale of their Hingham house. The bank account balance

at the time of the letter was about $230,000. Shortly after

receiving Mr. Minihan’s letter, the IRS issued to Ms. Minihan

a Final Appeals Determination denying her claim for

innocent spouse relief. In response, Ms. Minihan filed a

timely petition with this Court on November 9, 2009.

Collection of Mr. Minihan’s separate liability

By February 2010 the balance in the joint account was

about $170,000, since money in the account had been used

to pay for their children’s education expenses, legal fees asso-

ciated with the Minihans’ divorce, and unspecified State

taxes. In February 2010 the IRS issued two notices of levy to

Bank of America, attaching Mr. Minihan’s interest in the

Bank of America account. One levy was to satisfy his income

tax liabilities for the taxable years 2001 and 2002, and the

other was to satisfy his liabilities for the taxable years 2000,

2003, 2004, 2005, and 2006.

On March 2, 2010, the IRS received a levy payment of

$20,584.93 from Bank of America, which was applied to Mr.

Minihan’s income tax liabilities for the taxable years 2001

and 2002 in the amounts of $226.87 and $20,358.06 and

which satisfied the remaining liability for those years. On

March 11, 2010, the IRS received a levy payment of

$63,257.42 from Bank of America, which was applied to Mr.

Minihan’s income tax liabilities for the taxable years 2000,

2003, 2004, 2005, and 2006 in the amounts of $10,496.28,

$13,353.26, $11,949.34, $11,336.89, and $16,121.65 and

which satisfied the remaining liability for those years.

The IRS’s motion for summary judgment and trial

On February 1, 2011, the IRS moved for summary judg-

ment with regard to Ms. Minihan’s petition for relief under

(Mar. 21, 2008) (‘‘Mirroring will also allow collection activity to continue for the nonrequesting

spouse’’). Any payment collected from Mr. Minihan was credited to both mirrored accounts. See

id. pt. 25.15.12.17.3.

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6 138 UNITED STATES TAX COURT REPORTS (1)

section 6015(f). The IRS argued that, since the entire joint

and several liability had been fully paid (by application of the

levied funds to Mr. Minihan’s tax account), collection activity

would cease, and the only relief that Ms. Minihan might

thereafter seek would be a refund. The IRS contends that, as

a matter of law, Ms. Minihan is not entitled to a refund

because the liability was paid not with Ms. Minihan’s sepa-

rate funds, but with joint funds.

After hearing the parties’ arguments on the motion, the

Court took under advisement the IRS’s motion for summary

judgment and proceeded with a partial trial on the issue in

the IRS’s motion. Pro bono counsel entered an appearance on

Ms. Minihan’s behalf for trial. At trial Ms. Minihan con-

tended that the IRS had levied upon property that Mr.

Minihan could not acquire unilaterally and that a share of

the money levied constituted separate payments by Ms.

Minihan, of which she could be entitled to a refund.

After trial Ms. Minihan moved to reopen the record in

order to submit additional documentary evidence from Bank

of America regarding the ownership and nature of the joint

account. The proffered evidence included a ‘‘Certificate of

Deposit Receipt’’ and a ‘‘Modification Agreement’’ from Bank

of America. Although Mr. Minihan and the IRS object to Ms.

Minihan’s motion to reopen the record, we will overrule those

objections, reopen the record, and receive into evidence Ms.

Minihan’s documents submitted after trial. 6

Presently before the Court is the question whether Ms.

Minihan is precluded from obtaining a refund of the levied

6 Reopening the record to receive additional evidence is a matter within the discretion of the

trial court. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 331 (1971); Butler v.

Commissioner, 114 T.C. 276, 286–287 (2000). We exercise our discretion and grant Ms.

Minihan’s motion. However, she evidently offers the documents in an attempt to show that she

owned the account unilaterally, or that by the terms of the account Mr. Minihan could not (and

therefore his creditors could not) access the funds without her express consent. If we were decid-

ing only the IRS’s motion for summary judgment, the documents might be sufficient to raise

a genuine issue of material fact as to joint ownership; but having conducted a trial, we are actu-

ally deciding the issue and we do not (as under Rule 121) make every inference in Ms. Minihan’s

favor and impose on her only the burden to raise genuine issues of fact. Rather, we weigh evi-

dence and find facts; and in so doing, we find—in part on the basis of Ms. Minihan’s admissions

(see supra note 4)—that the account was a joint account. Therefore, reopening the trial record

for this evidence has little practical effect (and could even be criticized for that reason, see Butler

v. Commissioner, 114 T.C. at 287 (the Court ‘‘will not grant a motion to reopen the record unless

* * * the evidence probably would change the outcome of the case’’)); but we allow Ms.

Minihan’s late-produced documents into evidence lest there be any doubt that she has had her

day in court on this point.

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(1) MINIHAN v. COMMISSIONER 7

funds because they were funds from a joint account applied

to Mr. Minihan’s tax account.

OPINION

I. Standard and scope of review

In determining whether a taxpayer is entitled to equitable

relief under section 6015(f), we may consider evidence intro-

duced at trial which was not included in the administrative

record, Porter v. Commissioner, 130 T.C. 115, 117 (2008), and

we apply a de novo standard of review, Porter v. Commis-

sioner, 132 T.C. 203 (2009). Except as otherwise provided in

section 6015, the taxpayer bears the burden of proof. See

Rule 142(a); Alt v. Commissioner, 119 T.C. 306, 311 (2002),

aff ’d, 101 Fed. Appx. 34 (6th Cir. 2004).

II. Joint and several liability and section 6015(f) relief

A. General principles

Section 6013(d)(3) provides that if married taxpayers file a

joint return, the tax is computed on the taxpayers’ aggregate

income, and liability for the resulting tax is joint and several.

See also 26 C.F.R. sec. 1.6013–4(b), Income Tax Regs. That

is, each spouse is responsible for the entire joint tax liability.

However, section 6015(f) provides as follows:

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, a taxpayer may be relieved from joint and several

liability under section 6015(f) if, taking into account all the

facts and circumstances, it is inequitable to hold the tax-

payer liable.

In accord with the statutory provision that section 6015(f)

relief is to be granted ‘‘[u]nder procedures prescribed by the

Secretary’’, the Commissioner has issued revenue procedures

to guide IRS employees in determining whether a requesting

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

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

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8 138 UNITED STATES TAX COURT REPORTS (1)

seding Rev. Proc. 2000–15, 2000–1 C.B. 447. 7 Revenue Proce-

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

should consider, and the Court may consult those same fac-

tors, among other factors, when reviewing the IRS’s denial of

relief under section 6015(f). See Washington v. Commissioner,

120 T.C. 137, 147–152 (2003). For purposes of this Opinion,

we assume (without deciding) that Ms. Minihan is entitled to

relief under section 6015(f), and we do not further address

that issue.

B. Section 6015(g)(1) refund relief

When a taxpayer seeks relief under section 6015(f), the

relief comes in the form of being excused from joint and sev-

eral liability for the joint tax due, and the taxpayers’s

liability is recalculated as if a married-filing-separately

return had been properly filed. Pullins v. Commissioner, 136

T.C. 432 (2011). If the IRS has not collected the joint tax due,

the taxpayer would then be required to pay only the portion

attributable to her, as calculated on a married-filing-sepa-

rately basis. Id. If the IRS has already collected the tax (the

situation that now exists in this case), the taxpayer may be

allowed a refund under section 6015(g)(1), which provides as

follows:

SEC. 6015(g). CREDITS AND REFUNDS.—

(1) IN GENERAL.—Except as provided in paragraphs (2) and (3), not-

withstanding any other law or rule of law (other than section 6511,

6512(b), 7121, or 7122), credit or refund shall be allowed or made to the

extent attributable to the application of this section.

However, before any taxpayer may be allowed a refund or

credit, there must be a determination that the taxpayer has

made an overpayment. Ordlock v. Commissioner, 126 T.C.

47, 69 (2006) (Thornton, J., concurring), aff ’d, 533 F.3d 1136

(9th Cir. 2008). Section 6402 makes this expressly clear,

stating:

SEC. 6402(a). GENERAL RULE.—In the case of any overpayment, the Sec-

retary, within the applicable period of limitations, may credit the amount

of such overpayment, including any interest allowed thereon, against any

liability in respect to an internal revenue tax on the part of the person who

7 On January 5, 2012, the IRS released a proposed revenue procedure to supersede Revenue

Procedure 2003–61. See Notice 2012–8, 2012–4 I.R.B. 1. No changes are proposed there that

would affect the issues we discuss here.

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(1) MINIHAN v. COMMISSIONER 9

made the overpayment and shall * * * refund any balance to such person.

[Emphasis added.]

A taxpayer makes an overpayment if she remits funds to the

Secretary in excess of the tax for which she is liable. Jones

v. Liberty Glass Co., 332 U.S. 524, 531 (1947) (defining an

overpayment as ‘‘any payment in excess of that which is

properly due’’); see also Estate of Smith v. Commissioner, 123

T.C. 15, 21 (2004).

Therefore, even if a taxpayer is relieved from joint and sev-

eral liability for the tax due on a joint return by application

of section 6015(f), the taxpayer is not entitled to a refund

under section 6015(g)(1) unless the taxpayer made an over-

payment—i.e., ‘‘[paid] more than is owed, for whatever rea-

son or no reason at all.’’ United States v. Dalm, 494 U.S. 596,

610 n.6 (1990); see Ordlock v. Commissioner, 126 T.C. at 61

(holding that a taxpayer entitled to innocent spouse relief

was not entitled to a refund of joint tax liabilities paid using

community property assets of the marital estate); Kaufman

v. Commissioner, T.C. Memo. 2010–89 (declining section 6015

refund when funds were paid by deceased husband’s estate);

Rosenthal v. Commissioner, T.C. Memo. 2004–89 (‘‘It also

must be shown that the payments were not made with the

joint return and were not joint payments or payments that

the nonrequesting spouse made’’). This conclusion is con-

sistent with Revenue Procedure 2003–61, sec. 4.04(2), 2003–

2 C.B. at 299, in which the IRS stated:

In a case involving an underpayment of income tax, a requesting spouse

is eligible for a refund of separate payments that he or she made after July

22, 1998, if the requesting spouse establishes that he or she provided the

funds used to make the payment for which he or she seeks a refund. * * *

[Emphasis added.]

Accordingly, if we assume, arguendo, that Ms. Minihan is

eligible for relief under section 6015(f), the issue for decision

is whether the IRS’s levy on the joint Bank of America

account to satisfy Mr. Minihan’s tax liability can constitute

an overpayment by Ms. Minihan, entitling her to a refund.

If so, then relief might be available to Ms. Minihan, and we

would therefore need to determine whether she is entitled to

equitable relief under section 6015(f).

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10 138 UNITED STATES TAX COURT REPORTS (1)

III. The parties’ contentions

The IRS contends that the account it levied upon was a

joint account and that the proceeds from the levy satisfied

the entire liability at issue. Since Massachusetts law gives

either owner of a joint account the right to withdraw the

entire account balance, the IRS asserts that the levy was

proper and, as a result, Ms. Minihan is not entitled to a

refund. The IRS argues that Ms. Minihan is not entitled to

a refund because ‘‘the Bank of America levy payments came

from intervenor’s assets or joint assets, but not petitioner’s

separate assets’’.

In response, Ms. Minihan contends that the account was a

special account established during her and Mr. Minihan’s

divorce to fund their children’s education. She claims that

neither Mr. Minihan nor she could withdraw any amount

without the other’s consent. Accordingly, Ms. Minihan argues

that the IRS’s levy ‘‘acquired property which the intervenor

could not acquire unilaterally and, consequently, the

amounts levied cannot constitute solely payments of the

intervenor’’. Additionally, Ms. Minihan argues that the levy

was not a ‘‘joint payment’’ because the IRS levy was non-

consensual. Instead Ms. Minihan argues that, given the

nature of the account, a portion of the levy amounts to a

‘‘separate payment’’ by Ms. Minihan giving rise to an over-

payment by Ms. Minihan and entitling her to a refund. For

the reasons explained below, we hold that a portion of the

account did indeed constitute separate funds of Ms. Minihan

that might be refunded to her if she proves that she is enti-

tled to relief under section 6015(f).

IV. Analysis

A. Identifying a ‘‘separate payment’’

The requirement of Revenue Procedure 2003–61, supra,

that a petitioning spouse make a ‘‘separate payment’’ or ‘‘pro-

vide the funds’’ used to pay the joint tax liability in order to

be entitled to a refund under section 6015(g)(1), is in accord

with section 6402, which requires, inter alia, that in order to

obtain a refund, a person must make an overpayment. The

analysis of whether a payment is a ‘‘separate payment’’ is

straightforward when payments are voluntary or, if involun-

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(1) MINIHAN v. COMMISSIONER 11

tary (e.g., by levy), when the payments are from property

owned by only one spouse. See Leissner v. Commissioner,

T.C. Memo. 2003–191 (allowing a refund when a payment

resulted from a levy on the taxpayer’s solely owned IRA

account). The analysis gets considerably murkier when, as is

the case here, the payment arises from a levy on jointly

owned property.

The IRS attempts to simplify the analysis by arguing that

Ms. Minihan could not make a ‘‘separate payment’’ of the

levied property if the IRS properly levied against Mr. Minihan

and the money taken was not separately owned but jointly

owned. The IRS was barred from making involuntary collec-

tions from Ms. Minihan by section 6015(e)(1)(B)(i), which pro-

vides that ‘‘no levy * * * shall be made * * * against the

individual * * * requesting equitable relief under subsection

(f) * * * until the decision of the Tax Court has become

final.’’ The IRS therefore set up a separate account for Mr.

Minihan and effected the levy at issue in order to collect

from him. That being the case, the IRS argues, in effect, that

if the levy was proper under section 6331 and was not barred

by section 6015(e)(1)(B)(i) because the property seized was

co-owned by a taxpayer from whom the IRS was allowed to

collect (here, Mr. Minihan), then by definition the levied

property was not the separate property of the other co-owner

(Ms. Minihan).

We disagree with the IRS’s contention and conclude that

the relevant inquiry is whether under State law Ms. Minihan

has a surviving separate legal interest in the levied assets.

This conclusion is based on the following.

B. Provisional nature of section 6331

Congress has granted the Secretary of the Treasury (and

consequently the IRS) powerful tax collection tools, not the

least of which is the power granted in section 6331(a) to levy

on a delinquent taxpayer’s property. Section 6331(a) provides

that ‘‘[i]f any person liable to pay any tax neglects or refuses

to pay * * *, it shall be lawful for the Secretary to collect

such tax * * * by levy upon all property and rights to prop-

erty * * * belonging to such person’’.

Applying section 6331, the Supreme Court held in United

States v. Nat’l Bank of Commerce, 472 U.S. 713, 722 (1985),

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12 138 UNITED STATES TAX COURT REPORTS (1)

that the IRS can lawfully levy on a joint bank account to sat-

isfy one account holder’s individual tax liability. Under State

law the taxpayer had an unconditional right to withdraw the

entire joint account, even though the taxpayer was only one

of three owners. The Supreme Court held that since the tax-

payer had a State law right to withdraw the entire account,

the IRS as a creditor could withdraw the entire account under

Federal law (i.e., section 6331) notwithstanding State collec-

tion law that may exist. 8 Id. at 724.

However, the Supreme Court’s holding that the levy was

lawful did not end its discussion of the nondelinquent co-

owner’s subsequent claims on the levied funds. The Supreme

Court discussed as follows the provisional nature of a section

6331 levy:

‘‘The final judgment in [a levy] action settles no rights in the property sub-

ject to seizure.’’ United States v. New England Merchants National Bank,

465 F.Supp. 83, 87 (Mass. 1979). Other claimants, if they have rights, may

assert them. Congress recognized this when the Code’s summary-collection

procedures were enacted, S. Rep. No. 1708, 89th Cong., 2d Sess., 29 (1966),

U.S. Code Cong. & Admin. News 1966, p. 3722, and when it provided in

§ 7426 of the Code, 26 U.S.C. § 7426, that one claiming an interest in prop-

erty seized for another’s taxes may bring a civil action against the United

States to have the property or the proceeds of its sale returned.

* * * * * * *

The Court [in United States v. Rodgers, 461 U.S. 677 (1983)] * * * recog-

nized what we now make explicit: that § 6331 is a provisional remedy,

which does not determine the rights of third parties until after the levy

is made, in postseizure administrative or judicial hearings.

[Nat’l Bank of Commerce, 472 U.S. at 728, 731; fn. ref. omitted.]

Thus the Supreme Court made a distinction between the

question whether the IRS could properly proceed with a levy

(in answer to which it allowed the IRS to proceed) and the

question whether claimants (i.e., joint owners other than the

debtor) thereafter could nonetheless try to get money back

(in answer to which it held that they could make claims—for

instance, in District Court under section 7426 or administra-

tively under section 6343(b)).

Although the instant case arises in a section 6015 claim for

relief—not the context of Nat’l Bank of Commerce—the rea-

8 In United States v. Nat’l Bank of Commerce, 472 U.S. 713, 718 (1985), the Arkansas State

collection law at issue did not allow a creditor to subrogate to the position of the debtor with

regard to the debtor’s power to withdraw the entire joint account balance.

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(1) MINIHAN v. COMMISSIONER 13

soning of that case would still appear to be applicable: A law-

ful levy under section 6331 does not extinguish a third

party’s rights in levied property. 9

C. Refund of levied property under section 6015(g)(1)

First, however, we must determine whether the rights of

an ‘‘innocent spouse’’ who claims a refund under section

6015(g)(1) survive post-levy in the same way that the rights

of a section 7426 or section 6343(b) wrongful levy claimant

survive. In EC Term of Years Trust v. United States, 550

U.S. 429, 436 (2007), the Supreme Court held that a trust

which claimed an interest in money the IRS levied to satisfy

beneficiaries’ tax liabilities cannot maintain a refund suit

under 28 U.S.C. section 1346(a)(1) when the trust missed the

deadline to bring a section 7426 wrongful levy action. Id. The

Supreme Court concluded that section 7426 was the trust’s

exclusive remedy. Id. Accordingly, we consider whether the

holding of EC Term of Years Trust—that an available wrong-

ful levy claim under section 7426 precludes a subsequent

refund claim—might apply to preempt an innocent spouse’s

refund claim under section 6015(g)(1). (Since we conclude

that it does not, we do not need to address whether Ms.

Minihan could have pursued a wrongful levy action under

section 7426.)

The Supreme Court in EC Term of Years Trust, 550 U.S.

at 433, 435, followed the axiom that ‘‘ ‘a precisely drawn,

detailed statute pre-empts more general remedies’ ’’ to hold

that a refund claim under 28 U.S.C. section 1346(a)(1) (the

general remedy) is precluded by section 7426 (the precisely

drawn remedy) in the context of a third party’s claim for

refund of property ‘‘wrongfully levied upon’’.

However, Ms. Minihan’s claim for a refund—an ‘‘innocent

spouse’’ remedy under section 6015(g)(1)—is distinguishable

from the tax refund claims under 28 U.S.C. section 1346(a)(1)

9 This present case is distinguishable from Ordlock v. Commissioner, 126 T.C. 47 (2006), aff ’d,

533 F.3d 1136 (9th Cir. 2008), which held that a taxpayer entitled to innocent spouse relief is

not entitled to a refund after joint tax liabilities were collected from community property assets.

The present case deals with a section 6331 levy on a jointly owned bank account rather than

a section 6321 lien on community property, as was the case in Ordlock. The presence of a section

6331 levy in this case directly implicates the Supreme Court’s holding in Nat’l Bank of Com-

merce. Furthermore, the distinction between joint assets and community property is significant

because, for the purpose of creditors, the marital community estate is akin to a separate entity,

whereas a jointly owned asset is simply an asset in which a debtor has an interest. See Cal.

Fam. Code sec. 910 (West 2004).

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14 138 UNITED STATES TAX COURT REPORTS (1)

that were at issue in EC Term of Years Trust. Unlike the

statutes conferring tax refund jurisdiction (28 U.S.C. secs.

1346(a)(1) and 1491(a)(1)), the statute that confers ‘‘in-

nocent spouse’’ jurisdiction on the Tax Court—section

6015(e)(1)(A)—provides:

In addition to any other remedy provided by law, the individual may peti-

tion the Tax Court (and the Tax Court shall have jurisdiction) to deter-

mine the appropriate relief available to the individual under this section

* * * [Emphasis added.]

Moreover, section 6015(g)(1) provides that ‘‘notwithstanding

any other law or rule of law (other than section 6511,

6512(b), 7121, or 7122), credit or refund shall be allowed or

made to the extent attributable to the application of this sec-

tion.’’ (Emphasis added.) 10 Congress, by creating innocent

spouse remedies ‘‘in addition to any other remedy’’ 11 and by

allowing refunds ‘‘notwithstanding any other law or rule of

law’’, expressly foreclosed the proposition that section 7426 or

6343(b) could be the exclusive remedy for an innocent spouse

seeking a refund of levied property in which she had an

interest.

Whether or not wrongful levy claims under section 7426

(judicial claims) or section 6343(b) (administrative claims)

were available to her, Ms. Minihan is permitted to claim a

refund under section 6015(g)(1) to recover her share of levied

property, as she has done here.

D. Ms. Minihan’s rights in the levied property

We now apply the foregoing principles to the facts of this

case to decide whether Ms. Minihan could be entitled to a

refund under section 6015(g)(1) assuming, arguendo, that she

is entitled to innocent spouse relief under section 6015(f).

The parties contend that the answer depends on whether the

10 Cf. Ordlock v. Commissioner, 126 T.C. at 56 (concluding that the ‘‘notwithstanding’’ provi-

sion of section 6015(g)(1) does not take precedence over State community property laws which

are necessary to define ownership in payments).

11 Congress enacted section 6015 as a means of expanding relief to innocent spouses. See H.R.

Conf. Rept. No. 105–599, at 249–255 (1998), 1998–3 C.B. 747, 1003–1009; S. Rept. No. 105–174,

at 55–60 (1998), 1998–3 C.B. 537, 591–596; H.R. Rept. No. 105–364 (Part 1), at 60–62 (1997),

1998–3 C.B. 373, 432–434. With regard to section 6015(e)(3)(A) (the predecessor to section

6015(g)(1)), the House report stated: ‘‘The Tax Court may order refunds as appropriate where

it determines that the spouse qualifies for relief and an overpayment exists as a result of the

innocent spouse qualifying for such relief.’’ H.R. Rept. No. 105–364 (Part 1), supra at 61, 1998–

3 C.B. at 433.

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(1) MINIHAN v. COMMISSIONER 15

levy on the Bank of America account amounted to a ‘‘sepa-

rate payment’’ 12 by Ms. Minihan. Ultimately, Ms. Minihan’s

section 6015(g)(1) refund claim is a post-levy assertion of her

rights in the levied property and an avenue for her to recover

what may belong to her. See Nat’l Bank of Commerce, 472

U.S. at 728. Whether we use the terminology from Revenue

Procedure 2003–61, supra (i.e., identifying ‘‘separate pay-

ments’’), or the more general terminology used in Nat’l Bank

of Commerce, 472 U.S. at 731 (i.e., ‘‘determin[ing] the rights

of third parties * * * after the levy is made’’), the inquiry is

the same. We must determine (1) whether Ms. Minihan in

fact had a separate interest in the Bank of America account

and, if so, (2) whether that interest, as against the IRS, sur-

vived the levy. We turn to Massachusetts State law to

answer these questions.

1. Her separate interest in the joint bank account

A party to a Massachusetts joint bank account has the

power to withdraw, assign, or transfer part or all of the

funds in a joint account. Mass. Ann. Laws ch. 167D, sec. 5

(LexisNexis 2009). ‘‘Unlike a joint tenant of property held in

a traditional joint tenancy, therefore, * * * [a title holder of

a joint bank account] may effectively exercise control over the

entire interest, or any part of it, and divest, totally or par-

tially, the interest of the other.’’ Heffernan v. Wollaston

Credit Union, 567 N.E.2d 933, 937 (Mass. App. Ct. 1991); see

also United States v. U.S. Currency, $81,000, 189 F.3d 28, 34

(1st Cir. 1999) (holding that the rights conferred to a joint

account holder by Massachusetts statutes and case law in

fact give a joint account holder legal title in a joint account).

While a joint bank account establishes the rights of the co-

depositors as between them and the bank, it is not conclusive

between the parties as to the account’s ownership (i.e., the

issue of who has equitable title or real interest). Heffernan,

567 N.E.2d at 937 n.7. The real interest of each joint

12 The IRS casts the issue in terms of ‘‘separate assets’’ rather than ‘‘separate payment’’, but

for our purposes there is no meaningful distinction, because the analysis of whether Ms.

Minihan made a ‘‘separate payment’’ turns on whether Ms. Minihan had a distinct legal interest

in the bank account as determined under State law. We presume that such an interest would

also be a ‘‘separate asset’’. To the extent our conclusion regarding the IRS’s terminology is incor-

rect, then the IRS’s use of the term ‘‘separate assets’’ is misplaced, because the only relevant

inquiry is whether Ms. Minihan made a ‘‘separate payment’’ that resulted in an overpayment.

See Rosenthal v. Commissioner, T.C. Memo. 2004–89.

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16 138 UNITED STATES TAX COURT REPORTS (1)

depositor may be determined in an action in equity. Id.

(citing Blanchette v. Blanchette, 287 N.E.2d 459, 462–463

(Mass. 1972)). ‘‘The determination of the interest * * * in

the deposits in the joint accounts is dependent primarily on

what * * * [the] intention [of the parties] was, and this is a

question of fact.’’ Buckley v. Buckley, 17 N.E.2d 887, 888

(Mass. 1938) (emphasis added); see also Campagna v.

Campagna, 150 N.E.2d 699, 702 (Mass. 1958); Milan v.

Boucher, 189 N.E. 576, 578 (Mass. 1934); Rafuse v. Stryker,

No. 090107, 2010 WL 2431921, at *6 (Mass. Super. Apr. 21,

2010).

Accordingly, we turn to Mr. and Ms. Minihan’s intention

regarding the account. The money in the joint account came

from the sale of the couple’s long-time marital house, in

which they had made a home together during almost two

decades of marriage. Although the money to pay the mort-

gage had come from the earnings of Mr. Minihan, his earning

potential depended on Ms. Minihan’s making her contribu-

tion to the household by keeping house, raising the children,

and fulfilling the other responsibilities of the stay-at-home

spouse.

Most telling, however, is Mr. Minihan’s testimony at trial:

When asked why, on one occasion when he unilaterally with-

drew from the account $5,000 for himself, he also withdrew

$5,000 for Ms. Minihan, Mr. Minihan testified: ‘‘I did so

because it was equitable. That was—if one was going to take

out $10,000, the other one would take out $10,000’’. Mr.

Minihan had every incentive in this case to minimize Ms.

Minihan’s claim on the funds in the joint account, but even

his testimony suggests that the parties intended that Mr.

and Ms. Minihan each had a 50-percent interest in the

account, notwithstanding that the initial source of the funds

might be traced to Mr. Minihan’s paycheck.

Accordingly, we conclude that under Massachusetts law

Ms. Minihan had a 50-percent ownership interest in the joint

account.

2. Her interest’s survival of the levy

Under Nat’l Bank of Commerce, the IRS clearly has the

right to levy on a delinquent taxpayer’s joint bank accounts.

Similarly, under Massachusetts law other creditors can

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(1) MINIHAN v. COMMISSIONER 17

pursue collection of an individual debtor’s debts by levying on

joint bank accounts held by the debtor and a third party.

Prudential-Bache Sec., Inc. v. Comm’r of Revenue, 588 N.E.2d

639, 641 (Mass. 1992); R.H. White Co. v. Lees, 166 N.E. 705,

706 (Mass. 1929) (‘‘the deposit may be attached in a suit

against either depositor’’). However, whether the creditor is

the IRS or someone else, the inquiry does not end with the

creditor’s right to attach a joint bank account, because under

Massachusetts law nondebtor co-depositors have the right to

intervene and assert their ownership interests against those

creditors. See R.H. White Co., 166 N.E. at 706; Laubinger v.

Dep’t of Revenue, 672 N.E.2d 554, 557 (Mass. App. Ct. 1996).

The propriety of the creditor’s levy is one thing; the right of

a third party to assert a claim against the creditor for the

property it seized is another thing.

In particular, a co-depositor may bring a post-seizure

action to establish his rights in seized property and seek a

judgment against the seizing creditor for the amount of the

joint account that the nondebtor co-depositor owned. See

Colella v. N. Easton Sav. Bank, No. 95–00362, 1995 WL

670140 (Mass. Super. Sept. 11, 1995); see also Mass. Ann.

Law ch. 223, sec. 102. In Colella the North Easton Savings

Bank exercised its right of setoff against a debtor’s joint bank

account, of which the plaintiffs were co-depositors. After the

North Easton Savings Bank took the entire balance of the

account by setoff, the nondebtor co-depositor plaintiffs

brought an action against the bank alleging, inter alia, the

tort of conversion. The Massachusetts Superior Court, in

denying North Easton Savings Bank’s motion for summary

judgment, stated: ‘‘In sum, a bank, without the consent of co-

depositors, may not unilaterally seize and retain funds that

may not be actually owned by the individual debtor.’’ Colella,

1995 WL 670140 at *5 (emphasis added). Since, under

Massachusetts law, North Easton Savings Bank could not

retain the funds, the plaintiffs’ interest in the account sur-

vived the seizure.

We have concluded that Ms. Minihan was the owner of 50

percent of the Bank of America account. After the IRS levied

money from the account in order to satisfy Mr. Minihan’s tax

debt, any interest Ms. Minihan had in the seized money sur-

vived under Massachusetts law. See id. An available remedy

for Ms. Minihan to establish and retrieve her share of the

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18 138 UNITED STATES TAX COURT REPORTS (1)

levied funds is a refund claim under section 6015(g)(1). Ms.

Minihan has established her 50-percent interest in the

account, and she is therefore entitled under section

6015(g)(1) to a refund of any of her share of the money the

IRS seized from the joint account, if and to the extent she is

granted relief under section 6015(f).

V. Conclusion

The IRS is not entitled to judgment as a matter of law with

regard to Ms. Minihan’s potential claim for a refund under

section 6015(g)(1). As result, there remains for trial the issue

of whether Ms. Minihan is entitled to relief under section

6015(f).

To reflect the foregoing,

An appropriate order will be issued.

f

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