Susan P. Kechijian

United States Tax Court

T.C. Memo. 2022-127

SUSAN P. KECHIJIAN,

Petitioner

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

—————

Docket No. 3430-20. Filed December 28, 2022.

—————

P and H were parties to a previous deficiency case in

this Court. They filed joint federal income tax returns for

the years 2000 to 2004. In January 2010 R issued to P and

H notices of deficiency for those years. In April 2010 P and

H, represented by counsel whom H had hired, jointly filed

a petition asking this Court to redetermine those

deficiencies. Before their case was decided, H died in

September 2013, and P and E were named co-executors of

H’s estate. This Court substituted H’s estate as a party to

the deficiency case, and thereafter the co-petitioners were

P and H’s estate (with P and E as co-executors). In April

2017 this Court determined no deficiencies for 2000 to 2003

but decided that H and his business partner had failed to

report taxable income for 2004 and were thus liable for the

income tax deficiency as well as an accuracy-related

penalty under I.R.C. § 6662(a).

P then filed Form 8857, “Request for Innocent

Spouse Relief”, requesting relief under I.R.C. § 6015(b), (c),

and (f) from joint and several liability for the 2004 liability.

R denied this request.

In February 2020 P filed a Petition with this Court

challenging this denial. P moved for summary judgment

on grounds that she is eligible for innocent spouse relief

Served 12/28/22

2

[*2] under I.R.C. § 6015(b) and (c), and that, pursuant to I.R.C.

§ 6015(g)(2), res judicata arising from the previous

deficiency case does not bar her Petition because innocent

spouse relief was not at issue in that case and because she

did not meaningfully participate in that case. R opposed

the motion and cross-moved, arguing that P did

meaningfully participate in the previous deficiency case

both in her own capacity and as a co-executor of H’s estate

and that the I.R.C. § 6015(g)(2) exception to res judicata

therefore does not apply.

Held: P meaningfully participated in the previous

deficiency case through counsel, and res judicata therefore

precludes P from raising her I.R.C. § 6015 claim for the

year that was the subject of that case. The exception of

I.R.C. § 6015(g)(2) does not apply.

—————

Lynn F. Chandler and Lucas D. Garber, for petitioner.

Olivia H. Rembach and Timothy J. Driscoll, for respondent.

MEMORANDUM OPINION

GUSTAFSON, Judge: Petitioner Susan P. Kechijian seeks this

Court’s review, under section 6015(e), 1 of the denial by the Internal

Revenue Service (“IRS”) of her request for relief from joint and several

liability for a federal income tax liability for 2004, a year for which she

filed a joint return with her late husband. This case is currently before

the Court on Ms. Kechijian’s motion for summary judgment under Rule

121, to which respondent, the Commissioner of Internal Revenue, filed

a reply that we deemed a cross-motion for summary judgment. We will

grant respondent’s motion and sustain the IRS’s determination on

grounds of res judicata.

1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code (“the Code”, Title 26 of the United States Code) as in effect at the relevant times;

regulation references are to Title 26 of the Code of Federal Regulations (“Treas. Reg.”),

as in effect at the relevant times; and Rule references are to the Tax Court Rules of

Practice and Procedure.

3

[*3] Background

The following facts are based on the parties’ pleadings, motions

for summary judgment, and declarations attached thereto, as well as the

record of Ms. Kechijian’s prior deficiency case (of which we take notice

pursuant to Federal Rule of Evidence 201). 2 Unless otherwise noted,

these facts are not in dispute. When Ms. Kechijian filed her petition,

she resided in North Carolina. 3

2004 deficiency determination

Arthur E. Kechijian and Susan P. Kechijian filed joint federal

income tax returns for the years 2000 to 2004. The IRS thereafter

determined that Mr. Kechijian and his business partner, Larry E.

Austin, failed to report income they had received in those years related

to S corporation stock that they owned. For purposes of the

Commissioner’s motion, we assume that Ms. Kechijian had no

involvement in or knowledge of the unreported income and had no role

in dealing with the IRS’s audit. The IRS then issued to both the

Kechijians and the Austins (Larry Austin and his wife) notices of

deficiency determining deficiencies in federal income tax and penalties

for the years 2000 to 2004.

Deficiency case

In April 2010 both the Kechijians and the Austins timely

petitioned this Court for redetermination of the deficiencies and related

penalties. The Austins’ petition (Doc. 1 in No. 8966-10) and the

Kechijians’ petition (Doc. 1 in No. 8967-10) were both signed by Attorney

Lynn F. Chandler as “Counsel for [the plural] Petitioners”. The cases

were consolidated for briefing, trial, and opinion.

Mr. Kechijian died in September 2013, and in that month

Ms. Kechijian made a motion: “Petitioner Susan P. Kechijian, through

undersigned counsel, hereby moves this Court to substitute the personal

2 The record of which we take notice consists of the Tax Court’s record in Estate

of Kechijian v. Commissioner, Docket No. 8967-10, which was consolidated with Austin

v. Commissioner, Docket No. 8966-10, and was decided in Austin v. Commissioner, T.C.

Memo. 2017-69, aff’d sub nom. Est. of Kechijian v. Commissioner, Docket No. 18-2277,

962 F.3d 800 (4th Cir. 2020), and the record of the Court of Appeals for the Fourth

Circuit.

3 Unless stipulated otherwise, venue for an appeal in this case would evidently

be the U.S. Court of Appeals for the Fourth Circuit. See § 7482(b).

4

[*4] representatives of the Estate of Arthur E. Kechijian, deceased, who

are currently Susan P. Kechijian and Scott E. Hoehn, for Mr. Kechijian

in his individual capacity.” (Doc. 73 in No. 8967-10.) The “undersigned

counsel” was again Attorney Lynn F. Chandler. The Court granted that

motion, and Ms. Kechijian and Scott E. Hoehn, a senior employee of

Mr. Kechijian’s S corporation, began to represent Mr. Kechijian’s estate.

In December 2013 the Court denied cross-motions for summary

judgment that had been previously filed, see Austin v. Commissioner,

141 T.C. 551 (2013), and the parties thereafter conducted additional

discovery. The trial took place in May 2015, more than a year and a half

after Mr. Kechijian’s death. Throughout the case petitioners’ filings

identified Attorney Lynn F. Chandler as counsel for all petitioners,

including Susan Kechijian personally. Ms. Kechijian did not participate

in the IRS Appeals process while this deficiency case was docketed; she

did not participate in any pretrial meetings; she did not participate in

settlement negotiations; she did not sign any court documents; and she

did not otherwise participate at trial except sitting in the courtroom

during trial. Regarding her participation in the deficiency case after the

death of her husband, Ms. Kechijian stated in her declaration in the

current case:

After Art’s death, his estate was substituted as a party and

I was named again because I was a co-executor of Art’s

estate. However, I never participated[4] in the litigation in

any way before or after Art’s death. Scott Hoehn, my co-

executor and the former Controller of UMLIC [an S

corporation founded and directed by Mr. Kechijian and

Mr. Austin], handled all aspects of the litigation with the

law firm hired by my husband before his death, including

pretrial meetings, discovery, settlement negotiations, and

testifying at trial. I attended the trial and sat in the gallery

as an observer, but I did not participate in the trial and

provided no input whatsoever.

4 As we explain below in Part I.A, we assume that Ms. Kechijian’s allegations

are true, for purposes of the Commissioner’s motion for summary judgment; but under

Rule 121(d), sentence 4, the facts that we assume here are the specific facts about the

hiring of counsel, attendance at trial, providing input, and so forth, and not her broad

generalization that she “never participated”.

5

[*5] Similarly, Scott Hoehn, the co-executor of Mr. Kechijian’s estate,

stated in his declaration in the current case the following about Ms.

Kechijian’s participation in this deficiency case:

After Art’s death, I was substituted along with Susie as the

Petitioner representing Art’s estate. As a Co-Executor, . . .

I assumed sole responsibility for communicating with

counsel about the conduct of the Prior Litigation and did

not consult with Susie or include Susie in those

communications. Susie delegated all responsibility for the

Prior Litigation to me as her Co-Executor because the

issues involved UMLIC. Susie never had any involvement

with UMLIC during her marriage to Art, and she lacked

any knowledge or understanding of those issues.

For purposes of the Commissioner’s motion, we accept the allegations of

Ms. Kechijian and Mr. Hoehn.

In April 2017 this Court issued its opinion, determining no

deficiencies for 2000 to 2003 but holding that both Mr. Kechijian and

Mr. Austin had failed to include taxable compensation income for 2004

in their tax returns and sustaining the IRS’s determination that both

were also liable for accuracy-related penalties for 2004. Austin, T.C.

Memo. 2017-69. Decisions were entered in August 2018.

Petitioners—i.e., Ms. Kechijian personally, Ms. Kechijian and Mr.

Hoehn as representatives of the Estate of Arthur Kechijian, and the

Austins—appealed this Court’s decision to the U.S. Court of Appeals for

the Fourth Circuit. The notice of appeal was filed in the Tax Court on

behalf of all petitioners (including Ms. Kechijian personally) by Attorney

Lynn F. Chandler; and Ms. Chandler (among others) filed in the Court

of Appeals an “Appearance of Counsel Form” identifying herself as

counsel for all petitioners, including “Susan Kechijian, individual[ly]”.

The appellate briefs show Ms. Chandler as lead counsel. In June 2020

the Fourth Circuit upheld this Court’s judgment. See Est. of Kechijian

v. Commissioner, 962 F.3d at 802.

However, innocent spouse relief for Ms. Kechijian under section

6015 was not an issue raised in the deficiency case—neither in this

Court nor in the appeal.

6

[*6] Susan Kechijian’s request for relief

In June 2019 Ms. Kechijian filed with the IRS Form 8857,

“Request for Innocent Spouse Relief”, requesting relief from joint and

several liability pursuant to section 6015(b), (c), and (f). Attorney Lynn

F. Chandler signed the Form 8857 as “Preparer”. For purposes of the

Commissioner’s motion, we assume that Ms. Kechijian’s request for

relief had merit. The IRS denied her request in November 2019,

claiming that she did not meet the basic eligibility requirements.

Innocent spouse case

Ms. Kechijian then commenced this case by filing a Petition under

section 6015(e) in February 2020, asking this Court to review the relief

available to her under section 6015(b), (c), or (f). On December 8, 2021,

Ms. Kechijian (through counsel) moved for summary judgment under

Tax Court Rule 121, claiming (1) that she is entitled to relief under

section 6015(b), (2) that she is entitled to elect relief under section

6015(c), and (3) that under section 6015(g)(2), she is not barred by res

judicata from raising the innocent spouse relief in the current case

because she did not meaningfully participate in the prior deficiency case.

Regarding the lack of meaningful participation, Ms. Kechijian argues

that her participation in the previous deficiency case was limited to

being represented by her counsel and sitting in the gallery during the

trial. Ms. Chandler, Ms. Kechijian’s counsel in the previous deficiency

case, also concurrently represented Mr. Kechijian and subsequently

Mr. Kechijian’s estate in that case, and she continues to represent

Ms. Kechijian in this current case.

The Commissioner filed a response to Ms. Kechijian’s motion for

summary judgment. The Commissioner admits that, regarding the 2004

deficiency, Ms. Kechijian did not directly participate in the audit or in

meetings with the IRS Office of Appeals, did not directly participate in

pretrial meetings or discovery, did not directly participate in settlement

discussions, did not personally sign any pleadings or other court

documents, was not deposed, and was not called as a witness at trial.

The Commissioner instead argues that petitioner, in her capacity both

as a co-petitioner and as co-executor of Mr. Kechijian’s estate,

meaningfully participated in the prior deficiency case through her

counsel and is now barred by res judicata from raising her current claim

for innocent spouse relief. We issued an order deeming the

Commissioner’s response to be a cross-motion and allowing

Ms. Kechijian to file a response.

7

[*7] Discussion

I. General principles of law

A. Summary judgment

The purpose of summary judgment is to expedite litigation and

avoid unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C.

678, 681 (1988). We may grant a motion for summary judgment when

there is no genuine dispute of material fact and a decision may be

rendered as a matter of law. Rule 121(b); Elec. Arts, Inc. v.

Commissioner, 118 T.C. 226, 238 (2002).

The moving party bears the burden of presenting evidence to

“show that there is no genuine dispute as to any material fact and that

a decision may be rendered as a matter of law”, Rule 121(b); and if the

movant does so, then the opposing party “must set forth specific facts

showing that there is a genuine dispute for trial”, Rule 121(d). In

determining the presence or absence of a genuine dispute, the Court will

view factual materials and draw inferences in the light most favorable

to the nonmoving party. Dahlstrom v. Commissioner, 85 T.C. 812, 821

(1985). As we consider the Commissioner’s cross-motion for summary

judgment, we therefore will draw inferences in favor of Ms. Kechijian.

However, in doing so we keep in mind that the fourth sentence of

Rule 121(d) obliges the non-moving party to “set forth specific facts” (in

contrast to “mere allegations or denials”). Ms. Kechijian could not

immunize herself from summary judgment by a general denial that she

“participated meaningfully” under section 6015(g)(2) (discussed in

Part II below) but rather must “set forth specific facts showing that” she

did not participate meaningfully.

B. Relief from joint and several liability

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

joint federal income tax return, the tax is computed on their aggregated

income, and their liability to pay the tax shown on the return or found

to be owing is joint and several. See also Treas. Reg. § 1.6013-4(b). That

is, each spouse is liable for the entire tax liability. Under section 6015,

however, a taxpayer may seek relief from joint and several liability; and

if the IRS determines not to grant such relief to a taxpayer, then

section 6015(e) gives the taxpayer the right to petition this Court for

review of that determination.

8

[*8] C. Res judicata

Res judicata (Latin for “a thing adjudicated”), otherwise known

as “claim preclusion”, is an affirmative defense developed by the courts

to bar repetitious suits on the same cause of action, and this doctrine is

applicable to tax litigation. As the Supreme Court explained:

[W]hen a court of competent jurisdiction has entered a final

judgment on the merits of a cause of action, the parties to

the suit and their privies are thereafter bound “not only as

to every matter which was offered and received to sustain

or defeat the claim or demand, but as to any other

admissible matter which might have been offered for that

purpose.” . . .

....

. . . Income taxes are levied on an annual basis. Each year

is the origin of a new liability and of a separate cause of

action. Thus if a claim of liability or non-liability relating

to a particular tax year is litigated, a judgment on the

merits is res judicata as to any subsequent proceeding

involving the same claim and the same tax year.

Commissioner v. Sunnen, 333 U.S. 591, 597–98 (1948) (quoting

Cromwell v. Cnty. Of Sac, 94 U.S. 351, 352 (1876)). That is, each tax

year is a separate cause of action, and res judicata makes truly final a

final judgment for a particular tax year. Where the cause of action of a

taxpayer’s liability in a given tax year has already been litigated, the

parties may thereafter be barred from relitigating that liability—

whether by reference either to a “matter which was offered” in that prior

suit or to a “matter which might have been offered” in the prior suit—

unless an exception to the doctrine of res judicata applies.

However, section 6015(g)(2), discussed below, creates an

exception to res judicata in the case of an “innocent spouse” claiming

relief from joint liability in a subsequent suit, where that spouse did not

“participate[] meaningfully in such prior proceeding.”

9

[*9] II. Analysis

A. Res judicata bars litigation of innocent spouse relief from

the 2004 deficiency in this case.

Under the Supreme Court’s explication of res judicata in Sunnen,

this Court has required that four conditions be met to preclude the

relitigation of a claim: (1) the parties in each action must be identical (or

at least be in privity); (2) a court of competent jurisdiction must have

rendered the first judgment; (3) the prior action must have resulted in a

final judgment on the merits; and (4) the same cause of action or claim

must be involved in both suits. See Breland v. Commissioner, 152 T.C.

156, 161 (2019); Koprowski v. Commissioner, 138 T.C. 54, 62 (2012);

see also Covert v. LVNV Funding, LLC, 779 F.3d 242, 246 (4th Cir. 2015).

If a party appeals this Court’s decision to the appropriate Court of

Appeals (as Ms. Kechijian did after the adverse decision in the previous

deficiency case), then the judgment of that Court of Appeals shall be the

final decision (unless the case is thereafter granted certiorari by the

Supreme Court). See § 7481(a). “Once these conditions are met, each

party is prohibited from raising any claim or defense that was or could

have been raised as part of the litigation over the cause of action in the

prior case.” Koprowski, 138 T.C. at 62 (emphasis added). These four

conditions are met here:

First, in the prior deficiency proceedings, Ms. Kechijian was a

petitioner in the Tax Court, and the Commissioner of Internal Revenue

was the respondent; Ms. Kechijian was an appellant in the Fourth

Circuit, and the Commissioner was the appellee. See generally Austin,

T.C. Memo. 2017-69; Est. of Kechijian v. Commissioner, 962 F.3d 800.

In this case Ms. Kechijian is again the petitioner, and the Commissioner

is again the respondent. Thus, the parties are identical.

Second, in the prior deficiency case, the Kechijians filed their

deficiency suit in this Court, which is authorized under section 6213(a)

to hear such suits. We had jurisdiction in that prior case to render

judgment. The Fourth Circuit also had jurisdiction under section 7482

to review the decision rendered by this Court.

Third, the deficiency case concluded with the entry of a decision

on June 23, 2020, by the Fourth Circuit implementing our opinion filed

on April 24, 2017. The Fourth Circuit’s affirmance was the final

judgment on the merits of the Kechijians’ 2004 federal income tax

liability, for which they are jointly and severally liable.

10

[*10] Fourth, in the present case, Ms. Kechijian seeks innocent spouse

relief from that very liability—i.e., the federal income tax liability for

2004—as to which the Fourth Circuit affirmed this Court’s holding in

the deficiency case that she was jointly and severally liable. The subject

matter of the claims is thus identical.

Since these four conditions are present, relitigation of

Ms. Kechijian’s liability for the 2004 federal income tax deficiency is

barred by res judicata unless she can invoke some exception to its

application.

B. Ms. Kechijian has not shown that any exception to the

doctrine of res judicata applies.

1. The exception of section 6015(g)(2)

Ms. Kechijian argues that, pursuant to section 6015(g)(2), res

judicata does not bar her request for relief from joint liability under

section 6015 because such relief was not an issue in the previous

deficiency proceedings and she did not meaningfully participate in the

previous proceedings. Section 6015(g)(2) provides:

(2) Res judicata.—In the case of any election under

subsection (b) or (c) or of any request for equitable relief

under subsection (f), if a decision of a court in any prior

proceeding for the same taxable year has become final,

such decision shall be conclusive except with respect to the

qualification of the individual for relief which was not an

issue in such proceeding. The exception contained in the

preceding sentence shall not apply if the court determines

that the individual participated meaningfully in such prior

proceeding.

Under this statute, to escape the effect of res judicata from prior

litigation, Ms. Kechijian must show (1) that her innocent spouse claim

“was not an issue” in the prior deficiency case and (2) that she did not

“participate[] meaningfully” in the prior deficiency case. The

Commissioner concedes that Ms. Kechijian did not raise the issue of

innocent spouse relief in the previous deficiency case. Thus, the only

question before us is whether she “participated meaningfully” in the

previous deficiency case within the meaning of section 6015(g)(2).

11

[*11] 2. Meaningful participation

In an innocent spouse case, the requesting spouse ultimately

bears the burden of proving that she did not participate meaningfully in

the prior proceeding. See Deihl v. Commissioner, 134 T.C. 156, 162

(2010). In the context of summary judgment (explained in Part I.A

above), she bears the simpler burden of setting forth specific facts to

raise a “genuine dispute” on that issue. For the reasons we now explain,

we hold that Ms. Kechijian fails to carry this burden.

a. Facts and circumstances

The phrase “participated meaningfully” is not defined in section

6015(g)(2). This Court looks to the totality of the facts and

circumstances to determine whether a taxpayer participated

meaningfully in a prior proceeding. See Harbin v. Commissioner, 137

T.C. 93, 98 (2011); Rogers v. Commissioner, T.C. Memo. 2017-130,

at *13, aff’d, 908 F.3d 1094 (7th Cir. 2018). Particularly, this Court

views the following factors as probative of meaningful participation:

(1) exercising exclusive control over the handling of the prior proceeding;

(2) having a high level of participation in the prior proceeding (e.g.,

signing court documents and participating in settlement negotiations);

and (3) having the opportunity to raise a claim for relief from joint and

several liability in the prior proceeding. Harbin, 137 T.C. at 98; Rogers

v. Commissioner, T.C. Memo. 2018-53, at *97–98, supplemented by T.C.

Memo. 2019-61, aff’d, 9 F.4th 576 (7th Cir. 2021); see also Haag v.

Shulman, 683 F.3d 26, 31 (1st Cir. 2012), aff’g T.C. Memo. 2011-87.

Citing a proposed regulation, 5 Ms. Kechijian stresses the

following facts and circumstances: She did not participate in the IRS

Appeals process while the deficiency case was docketed; 6 she did not

5 Proposed Treasury Regulation section 1.6015-1(e)(3), 80 Fed. Reg. 72649,

72656 (Nov. 20, 2015), suggests a “nonexclusive list of acts to be considered”, and

Ms. Kechijian contends that consideration of those listed acts shows that she did not

meaningfully participate in the prior deficiency case. As we have previously explained,

proposed regulations do not have the force of law but rather “are merely suggestions

made for comment. Proposed regulations ‘carry no more weight than a position

advanced on brief by the respondent.’” Zinniel v. Commissioner, 89 T.C. 357, 369

(1987) (citations omitted) (quoting F.W. Woolworth v. Commissioner, 54 T.C. 1233,

1265–66 (1970)). In this instance, however, the facts and circumstances suggested in

the proposed regulation are consistent with the caselaw cited above.

6 Ms. Kechijian alleges more broadly (and we assume) that she “did not

participate in the IRS audit or Appeals process”. But section 6015(g)(2) has us consider

12

[*12] participate in any pretrial meetings; she did not participate in

settlement negotiations; she did not sign any court documents; and other

than sitting in the courtroom she did not participate at trial. All these

facts are relevant, and we assume them to be true. Taken by

themselves, they tend against a holding of meaningful participation.

b. Participation through counsel

On the record before us, however, those facts and circumstances

are overwhelmed by one additional fact: Ms. Kechijian had a lawyer who

represented her throughout the prior proceeding and who, on her behalf,

very meaningfully participated in that proceeding. 7 We have held that

“[t]he fact that the taxpayer was represented by counsel and

communicated with counsel at the prior proceeding is an indication of

meaningful participation”. Rogers, T.C. Memo. 2018-53, at *97–98. Ms.

Kechijian was the client of Attorney Lynn F. Chandler, who did

participate in pretrial meetings and settlement negotiations, did sign

and file court documents (including original and amended pleadings),

and did argue before the Court and examine witnesses at trial. A lawyer

who enters an appearance on behalf of a petitioner thereafter acts for

and on behalf of the petitioner. When a petitioner is represented by

counsel, the acts of counsel fulfill the obligations of the petitioner as

litigant. We do not disregard the acts of the attorney in order to conclude

(under Rule 123(a)) that the “party has failed to plead or otherwise

proceed” or to conclude (under Rule 123(b)) that there has been a “failure

of a petitioner properly to prosecute”. On the contrary, the represented

petitioner does adequately “proceed” and does “properly . . . prosecute”

her case by hiring a lawyer who fulfills her obligations.

The “participated meaningfully” standard of section 6015(g)(2)

cannot be reasonably construed to always require direct and immediate

her participation “in such prior proceeding”, i.e., a “proceeding” in which there was “a

decision of a court”. Her non-involvement in the administrative audit or Appeals

process is not directly relevant. The proposed regulation (which is not binding, see

supra note 5) does reasonably include, in its “list of acts to be considered”, “[w]hether

the requesting spouse participated in the IRS Appeals process while the prior

proceeding was docketed”, Prop. Treas. Reg. § 1.6015-1(e)(3), 80 Fed. Reg. at 72656

(emphasis added), since that activity before Appeals in a docketed case can be viewed

as a sort of adjunct to the Tax Court proceeding.

7 As Ms. Kechijian acknowledges, the proposed regulation that she cites does

include, on its “list of acts to be considered”, “whether the requesting spouse was

represented by counsel in the prior proceeding”. Prop. Treas. Reg. § 1.6015-1(e)(3),

80 Fed. Reg. at 72656.

13

[*13] participation by the petitioner herself as opposed to participation

by the petitioner’s lawyer retained for that purpose. It seems impossible

that Congress could have intended the perverse and even absurd results

of such a construction. If participating indirectly through counsel could

not constitute meaningful participation, then a deficiency petitioner

with a potential claim under section 6015 could sometimes exempt

herself from res judicata by retaining counsel to handle her deficiency

case, deliberately refraining from raising that claim in the deficiency

case, and then, if she lost that deficiency case, getting a second bite at

the apple by raising her section 6015 claim in an innocent spouse case

under section 6015(e). 8

We conclude that section 6015(g)(2) certainly contemplates that

participation through counsel in a prior proceeding can constitute

meaningful participation that triggers res judicata and bars a

subsequent innocent spouse case.

c. Potential non-meaningful participation

despite having counsel

Being represented by counsel in a prior proceeding is a fact

showing participation, but it is not the only relevant fact, and there can

be circumstances in which a taxpayer who was a co-petitioner

represented by counsel in a deficiency case nonetheless did not

meaningfully participate in that case. In Deihl, we held that a taxpayer

who (with her husband) was represented by counsel in prior

consolidated deficiency cases did not participate meaningfully in those

cases. Deihl, 134 T.C. at 165. The taxpayer did not sign any court

documents or review the petition or the stipulations of facts in the prior

cases. Id. at 163–64. The attorneys jointly representing the taxpayer

and her husband did not discuss these documents with the taxpayer. Id.

at 164. The taxpayer did not meet with any IRS personnel or participate

in any of the settlement negotiations. Id. Although the taxpayer in

Deihl testified briefly at trial in the deficiency cases, we concluded that

she testified “more like a third-party fact witness than a participating

litigant”, and that the taxpayer’s husband “controlled the litigation . . .

8 The record before does not suggest any such cynical calculation by Ms.

Kechijian, and we assume there was none. But it might often be true that a spouse

who hopes she and her husband will prevail in disproving a deficiency, but who also

has a potential innocent spouse claim, would prefer not to undermine her husband’s

credibility in the deficiency case by proving herself to have been an innocent spouse—

and him guilty.

14

[*14] until his death” after the trial had been concluded and the Tax

Court had issued its opinion. Id. at 165.

In Harbin, the ex-husband (Mr. Harbin) was the spouse

requesting relief under section 6015, and the ex-wife (Ms. Nalls) was the

non-requesting spouse and intervenor. The record showed that

Ms. Nalls exercised “exclusive control over the prior deficiency case”,

Harbin, 137 T.C. at 98, and that Mr. Harbin did not sign any court

documents other than the petition and the amended petition, see id.

at 94, 99. Moreover, Mr. Harbin’s innocent spouse relief claim was

directly in conflict with the interest of Ms. Nalls, but their joint attorney,

who represented both Mr. Harbin and Ms. Nalls, neither obtained

Mr. Harbin’s written consent waiving the conflict of interest nor even

disclosed this conflict to Mr. Harbin but “proceeded with the joint

representation despite the conflict of interest”. Id. at 99. We held that

Mr. Harbin did not participate meaningfully in the previous case

because the attorney’s concurrent representation of the two former

spouses, whose interests were adverse, “obscured and obstructed”

Mr. Harbin’s opportunity to raise a claim for relief under section 6015.

See id.

Thus, it is possible that a petitioner in a deficiency case who is

represented by an attorney in that case nonetheless does not participate

meaningfully in that case—depending on other facts and circumstances.

d. Ms. Kechijian’s meaningful participation

through counsel

The other facts and circumstances present in Deihl and Harbin

that disproved “meaningful” participation through counsel in those

cases are not shown or alleged here. The most significant distinction

between those cases and this one is that here Mr. Kechijian had died a

year and a half before the trial in this case. He was not able thereafter

to restrict Ms. Kechijian’s pursuit of her interests and, in particular, her

pursuit of a claim under section 6015. She was no longer under the

shadow of Mr. Kechijian but rather was in a position to control the

litigation however she wished—both as a petitioner in her own right and

as the co-executor of Mr. Kechijian’s estate.

As to her co-executor, Mr. Hoehn, we assume it is true, as

Ms. Kechijian alleges, that only he and not she gave instructions to

counsel for the handling of the deficiency case after Mr. Kechijian’s

death. However, that was by Ms. Kechijian’s choice. As Mr. Hoehn

15

[*15] explains, “Susie delegated all responsibility for the Prior

Litigation to me as her Co-Executor”. This may well have been a

sensible decision on Ms. Kechijian’s part, and it freed her from actually

having to make decisions about the litigation; that is, the manner in

which she decided to participate in the case was by delegation to Mr.

Hoehn and to her lawyer, Ms. Chandler.

Unlike the petitioner in Deihl, Ms. Kechijian had unrestricted

control over the prior deficiency case after Mr. Kechijian passed away in

September 2013—both as a co-petitioner personally and as a

representative of Mr. Kechijian’s estate. We ruled for the requesting

spouse in Deihl because the requesting spouse’s low level of

participation in the prior case was the result of the non-requesting

spouse’s controlling the litigation. That is not the case here.

Mr. Kechijian may have controlled the proceedings before his death, but

once he died and Ms. Kechijian was named the co-executor of his estate,

Ms. Kechijian’s husband was no longer controlling the case.

Unlike the petitioner in Harbin, Ms. Kechijian has made no

showing or allegation that the Kechijians’ joint attorney failed to

disclose any conflict of interest and proceeded with the joint

representation in the presence of such a conflict. In fact, Ms. Kechijian’s

declaration submitted in support of her motion for summary judgment

makes no allegation whatever as to any communication or lack of

communication between her attorney and herself about her interests.

She makes no comment about any respect in which the joint

representation obscured or obstructed her attorney’s attention to her

interests in the prior case, and she retained that same attorney to

represent her in this case. Thus, she does not articulate any reason to

conclude that she did not meaningfully participate through her attorney

even before Mr. Kechijian’s death; and after his death, she had no

possible competition for her attorney’s attention and loyalty. She was

in control as much as she chose to be.

Therefore, even though it is undisputed that Ms. Kechijian only

sat in the gallery during the trial in the prior deficiency case, she has

not alleged or shown that this was the result of her counsel’s and co-

executor’s excluding her from participating in that case. Without

evidence supporting such an exclusion, we can only conclude that

Ms. Kechijian’s low level of visible participation in the prior case was

due to her deliberate delegation of her responsibility in that case to her

attorney and her co-executor. Such delegation does not establish that

Ms. Kechijian did not meaningfully participate in the prior deficiency

16

[*16] case; to the contrary, it shows that Ms. Kechijian could have raised

the issue of innocent spouse relief in the prior deficiency case—but she

did not. Therefore, she does not qualify for the exception in section

6015(g)(2), and in this case she is not excepted from the application of

res judicata to the issue of innocent spouse relief from joint and several

liability.

Because res judicata bars Ms. Kechijian from relitigating her

joint and several liability for the 2004 federal income tax that she

already litigated in the prior deficiency case, we will deny

Ms. Kechijian’s motion for summary judgment, will grant the

Commissioner’s cross-motion for summary judgment, and will sustain

the IRS’s determination to deny Ms. Kechijian relief under section 6015

from joint and several liability for the 2004 deficiency and the accuracy-

related penalty.

To reflect the foregoing,

An appropriate order and decision will be entered.