United States Tax Court

United States Tax Court

T.C. Summary Opinion 2023-6

AHMED MAREGN MOHAMED,

Petitioner

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

—————

Docket No. 22316-21S.

Filed March 7, 2023.

—————

Ahmed Maregn Mohamed, pro se.

Amanda K. Bartmann, for respondent.

SUMMARY OPINION

PANUTHOS, Special Trial Judge: This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in effect

when the petition was filed. 1 Pursuant to section 7463(b), the decision

to be entered is not reviewable by any other court, and this opinion shall

not be treated as precedent for any other case.

Petitioner seeks review under section 6015(e)(1) of the Internal

Revenue Service’s final determination with respect to petitioner’s

request for innocent spouse relief under section 6015.

The sole issue for decision is whether petitioner is entitled to

relief under section 6015 from liability for federal income tax for tax year

2017 (year in issue).

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

Revenue Code (Code), Title 26 U.S.C., in effect at all relevant times, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

Served 03/07/23

2

Background

Some of the facts have been stipulated and are so found. We

incorporate the Stipulation of Facts and the attached Exhibits by this

reference. The record consists of the Stipulation of Facts with attached

Exhibits and the testimony of Ahmed Maregn Mohamed and Xiaoli Jin.

filed.

Petitioner resided in Maryland when the Petition was timely

During the year in issue, petitioner was married to Zemzem

Bedada. Petitioner and Ms. Bedada separated on July 18, 2018. A

Judgement of Absolute Divorce was entered on January 22, 2021. The

document does not address legal obligations for any taxes, interest, or

penalties arising out of their jointly filed tax returns.

During the year in issue, petitioner worked as a civil engineer for

at least two employers, including Sheladia Associates. Ms. Bedada

worked for CVS Pharmacy. Petitioner and Ms. Bedada maintained a

joint checking account from which household expenses were paid.

Petitioner’s Tax Return

Petitioner and Ms. Bedada timely filed a joint Form 1040, U.S.

Individual Income Tax Return, for the year in issue. The 2017 return

as well as some returns for prior years was prepared by H&R Block.

Petitioner submitted documents to H&R Block and signed the prepared

return. The signed and filed return did not include petitioner’s wages of

$15,625 from Sheladia Associates, petitioner’s unemployment

compensation of $3,870, or Ms. Bedada’s qualified dividends of $679

from CVS Health Corporation. The return reflected an overpayment of

$12,936.

After respondent applied an overpayment credit offset of $216, a

refund of $12,720 was issued to petitioner and Ms. Bedada on April 24,

2018. The total amount of the refund was deposited into their joint

account. Most of this refund was used to pay household expenses. On

July 6, 2018, $3,389 was transferred from the joint account to Ms.

Bedada’s personal bank account.

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Examination

On February 27, 2020, respondent began review of petitioner’s

unreported income. On March 2, 2020, respondent assessed 2 additional

tax of $5,602.

On March 13, 2020, petitioner requested innocent spouse relief

for the year in issue by filing Form 8857, Request for Innocent Spouse

Relief. Petitioner indicated that he had not reviewed the tax return

before it was filed and that a mistake had been made by the preparer.

Petitioner also indicated that he had knowledge of Ms. Bedada’s income

as a “W–2” and a “health-related benefit.” On June 1, 2021, respondent

made a final determination denying innocent spouse relief on the basis

of petitioner’s failure to meet the requirements of section 6015(b), (c), or

(f). A determining factor that weighed against relief for petitioner was

that he had actual knowledge of the portion of the understatement of

tax that was attributable to Ms. Bedada.

On May 21, 2020, Ms. Bedada also requested innocent spouse

relief for the year in issue. On November 27, 2021, she was granted

relief for the year in issue under section 6015(c). This determination

was made on the basis that most of the understatement of tax was

attributable to the erroneous items of petitioner with whom she filed the

joint return and that she did not have actual knowledge of the omitted

income items attributable to petitioner.

On April 15, 2021, the overpayment from tax year 2020 was offset

by $2,633 and applied to the underpayment for the year in issue.

On June 21, 2021, petitioner filed the Petition with this Court.

As of August 3, 2022, petitioner’s IRS account transcript reflects

a balance due account status as “currently not collectible - not due to

hardship.”

Discussion

Married taxpayers may elect to file a joint federal income tax

return. § 6013(a). If a joint return is made, generally each spouse is

jointly and severally liable for the entire tax due on their aggregate

income for that year. § 6013(d)(3). In certain circumstances, however,

2 The record does not reveal the basis for the assessment.

There is no

indication nor any assertion by petitioner that the assessment was improper.

4

section 6015 allows a spouse to obtain relief from joint and several

liability. § 6015(a). Under section 6015(a), a spouse may seek relief

from joint and several liability under section 6015(b) or, if eligible, may

allocate liability according to provisions set forth in section 6015(c).

Petitioner is not entitled to relief under section 6015(b) or (c) because he

had actual knowledge of the items giving rise to the liability. See

§ 6015(b)(1)(C), (c)(3)(C); see also Cheshire v. Commissioner, 115 T.C.

183 (2000), aff’d, 282 F.3d 326 (5th Cir. 2002). If a taxpayer does not

qualify for relief under section 6015(b) or (c), the taxpayer may seek

equitable relief under section 6015(f). See Porter v. Commissioner, 132

T.C. 203, 206 (2009).

A taxpayer may seek relief from joint and several liability by

raising the matter as an affirmative defense in a petition for

redetermination of a deficiency or, as in this case, by filing a standalone

petition challenging the Commissioner’s final determination denying

the taxpayer’s claim for such relief (or his failure to rule on the

taxpayer’s claim within six months of its filing). See § 6015(e)(1); Maier

v. Commissioner, 119 T.C. 267, 270–71 (2002), aff’d, 360 F.3d 361 (2d

Cir. 2004).

In determining whether a taxpayer is entitled to relief under

section 6015(b), (c), or (f), we apply a de novo standard of review and our

scope of review is limited to the “administrative record established at

the time of the determination, and . . . any additional newly discovered

or previously unavailable evidence.” See § 6015(e)(7); see also Thomas

v. Commissioner, No. 12982-20, 160 T.C. (Feb. 13, 2023); Porter, 132 T.C.

at 210; Soler v. Commissioner, T.C. Memo. 2022-78, at *5–6. Petitioner

generally bears the burden of proving that he is entitled to equitable

relief under section 6015(f). See Rule 142(a)(1); see also Porter, 132 T.C.

at 210.

I.

Section 6015(f) Equitable Relief

As indicated, petitioner does not qualify for relief under section

6015(b) or (c), and we consider whether he is entitled to equitable relief

under section 6015(f). As directed by section 6015(f), the Commissioner

has prescribed procedures to determine whether a requesting spouse is

entitled to equitable relief from joint and several liability. Those

procedures are set forth in Rev. Proc. 2013-34, § 4, 2013-43 I.R.B. 397,

399–403. Although the Court is not bound by the eligibility guidelines

set forth in Rev. Proc. 2013-34, the Court considers those factors when

reviewing a taxpayer’s claim for relief under section 6015(f). See Pullins

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v. Commissioner, 136 T.C. 432, 438–39 (2011); Pocock v. Commissioner,

T.C. Memo. 2022-55, at *14. Ultimately the Court’s determination rests

on an evaluation of all the facts and circumstances. See Porter, 132 T.C.

at 210.

A.

Threshold Conditions

There are several threshold conditions that the requesting spouse

must satisfy to be considered for equitable relief: (1) a joint return was

filed for the year(s) in issue; (2) the tax liability from which the

requesting spouse seeks relief is attributable in full or in part to an item

of the nonrequesting spouse; (3) relief is not available to the requesting

spouse under section 6015(b) or (c); (4) no assets were transferred

between the spouses as part of a fraudulent scheme; (5) the

nonrequesting spouse did not transfer disqualified assets (as defined by

section 6015(c)(4)(B)) to the requesting spouse; (6) the requesting spouse

did not knowingly participate in the filing of a fraudulent joint return;

and (7) the claim for relief is timely filed. Rev. Proc. 2013-34, § 4.01,

2013-43 I.R.B. at 399–400.

While 97%3 of the liability is attributable to petitioner and does

not satisfy the threshold conditions, approximately 3% of the liability is

attributable to Ms. Bedada. As petitioner satisfies the other threshold

conditions, we will consider whether petitioner is entitled to equitable

relief under section 6015(f) as to the 3% portion of the liability

attributable to Ms. Bedada.

B.

Equitable Factors

If a requesting spouse is not eligible for streamlined relief, 4 we

will next and finally consider the request for relief, taking into account

The total amount of unreported income was $20,174. The amount

attributable to petitioner is $19,495, approximately 97% of the total unreported

income. The amount attributable to Ms. Bedada is $679, approximately 3% of the total

unreported income.

3

4 Once a taxpayer has satisfied the threshold conditions, the Court will

consider whether the requesting spouse is eligible for streamlined relief. Streamlined

determinations granting equitable relief under section 6015(f) are available if the

requesting spouse can establish that he or she (1) is no longer married to the

nonrequesting spouse; (2) would suffer economic hardship if relief were not granted;

and (3) lacked knowledge or reason to know of the understatement at the time the

return at issue was signed. Rev. Proc. 2013-34, § 4.02, 2013-43 I.R.B. at 400.

Petitioner is not entitled to streamlined relief because he had knowledge or reason to

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all the facts and circumstances. Rev. Proc. 2013-34, § 4.03(2), 2013-43

I.R.B. at 400–03, sets forth the following seven nonexclusive factors to

be considered in determining whether, taking into account all facts and

circumstances, equitable relief under section 6015(f) should be granted:

(1) the current marital status of the spouses; (2) whether the requesting

spouse will suffer economic hardship if relief is not granted; (3) whether

the requesting spouse knew or had reason to know of the item giving

rise to the understatement; (4) whether either spouse has a legal

obligation to pay the outstanding federal income tax liability;

(5) whether the requesting spouse significantly benefited from the

understatement; (6) whether the requesting spouse has made a good

faith effort to comply with income tax laws in the years following the

year for which relief is sought; and (7) whether the requesting spouse

was in poor mental or physical health when the return at issue was filed,

when the request for relief was made, or at the time of trial.

II.

Analysis

In making a determination under section 6015(f), the Court

considers the enumerated factors as well as any other relevant facts. No

single factor is dispositive, and “[t]he degree of importance of each factor

varies depending on the requesting spouse’s facts and circumstances.”

Rev. Proc. 2013-34, § 4.03(2), 2013-43 I.R.B. at 400; see Pullins, 136 T.C.

at 448; Hall v. Commissioner, T.C. Memo. 2014-171, at *38.

A.

Marital Status

If the requesting spouse is no longer married to the nonrequesting

spouse, this factor will weigh in favor of granting relief. See Rev. Proc.

2013-34, § 4.03(2)(a), 2013-43 I.R.B. at 400. If the requesting spouse is

still married to the nonrequesting spouse, this factor is neutral. Id.

Petitioner and Ms. Bedada separated in 2018 and officially

divorced in 2021. This factor favors petitioner.

B.

Economic Hardship

Economic hardship exists if satisfaction of the tax liability, in

whole or in part, would result in the requesting spouse’s being unable to

meet his reasonable basic living expenses. Rev. Proc. 2013-34,

§ 4.03(2)(b), 2013-43 I.R.B at 401. Where the requesting spouse’s income

know of the understatement when the return at issue was signed, as he was aware of

the income item of Ms. Bedada.

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is below 250% of the federal poverty guidelines, this factor will weigh in

favor of relief, unless the requesting spouse has assets out of which he

can make payments towards the tax liability and still adequately meet

his reasonable basic living expenses. Id. If denying relief from joint and

several liability will not cause the requesting spouse to suffer economic

hardship, this factor will be neutral. Id.

Petitioner has been granted currently not collectible status for tax

year 2017 as of October 23, 2021. There is nothing in the record from

which to conclude that denying relief would cause economic hardship.

This factor is neutral.

C.

Knowledge or Reason to Know

If the requesting spouse knew or had reason to know of the items

giving rise to the understatement when the return was filed, this factor

will weigh against relief. Rev. Proc. 2013-34, § 4.03(2)(c), 2013-43 I.R.B.

at 401–02. If the requesting spouse did not know or have reason to know

of the understatement, this factor will weigh in favor of relief. Id.

Actual knowledge of the item giving rise to the understatement or

deficiency will not be weighted more heavily than any other factor. Id.

Petitioner knew of the item giving rise to the understatement

when he was assisted by H&R Block in preparing the return and when

it was filed. Although petitioner testified credibly that he made a

mistake in not reviewing the return carefully, he knew of the income

item when the return was filed. This factor favors respondent.

D.

Legal Obligation

This factor will favor relief where the nonrequesting spouse has

the sole obligation to pay an outstanding federal tax liability pursuant

to a divorce decree or other legally binding agreement. Rev. Proc. 201334, § 4.03(2)(d), 2013-43 I.R.B. at 402. This factor is neutral where both

spouses have such an obligation, or the divorce decree or agreement is

silent as to any such obligation. Id.

The divorce decree is silent as to legal obligation to pay any taxes,

interest, or penalties arising from petitioner and Ms. Bedada’s jointly

filed tax returns. This factor is neutral.

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E.

Significant Benefit

Significant benefit is any benefit in excess of normal support.

Rev. Proc. 2013-34, § 4.03(2)(e), 2013-43 I.R.B. at 402. If the requesting

spouse has received a significant benefit, enjoying the “benefits of a

lavish lifestyle, such as owning luxury assets and taking expensive

vacations,” this factor weighs against relief. Id. If the amount of unpaid

tax or understatement was small such that neither spouse received a

significant benefit, this factor is neutral. Id. Whether the amount of

unpaid tax or understatement is small such that neither spouse received

a significant benefit will vary depending on the facts and circumstances

of each case. Id.

There is no indication that petitioner or Ms. Bedada lived a lavish

lifestyle. The record demonstrates that funds from the joint account

were used to pay their household expenses. While the Court notes there

was a wire transfer from the joint account to Ms. Bedada’s personal

account, we do not view this as significant. Since neither spouse

received a significant benefit, this factor is neutral.

F.

Compliance with Income Tax Laws

This factor weighs in favor of relief if the requesting spouse is in

compliance with the income tax laws for taxable years after being

divorced from the nonrequesting spouse.

Rev. Proc. 2013-34,

§ 4.03(2)(f)(i), 2013-43 I.R.B. at 402. If the requesting spouse is not in

compliance, this factor will weigh against relief, unless he made a good

faith effort to comply with the tax laws but was unable to fully comply.

Id.

Petitioner is in compliance with the income tax laws and was

placed in currently not collectible status not due to hardship. This factor

favors petitioner.

G.

Mental or Physical Health

If the requesting spouse was in poor mental or physical health

when the return was filed or when he requested relief, this factor will

weigh in favor of relief. Rev. Proc. 2013-34, § 4.03(2)(g), 2013-43 I.R.B.

at 403. The Court also considers a taxpayer’s mental and physical

health at the time of trial. See Pullins, 136 T.C. at 454; Bell v.

Commissioner, T.C. Memo. 2011-152.

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Petitioner does not assert nor is there anything in the record that

would indicate that he was in poor mental or physical health when the

return was filed, when he requested relief, or at the time of trial. This

factor is neutral.

Conclusion

The Court evaluates all of the relevant facts and circumstances to

reach a conclusion and no single factor is dispositive. See Pullins, 136

T.C. at 448. After weighing the factors and considering the facts and

circumstances, the Court is unable to conclude that it would be

inequitable to hold petitioner liable for the tax liability. Petitioner had

knowledge of the item giving rise to the unreported income before

signing the return. Therefore, petitioner is not entitled to relief under

section 6015(b), (c), or (f).

We have considered all arguments, and, to the extent not

addressed herein, we conclude that they are moot, irrelevant, or without

merit.

To reflect the foregoing,

Decision will be entered for respondent.