Simon v. Comm'r

¶1MEMORANDUM FINDINGS OF FACT AND OPINION

¶2CHIECHI, Judge: This case arises from a request for equitable relief (relief) under section 6015(f)¹ with respect to petitioner's taxable year 1998. We must decide whether respondent abused respondent's discretion in denying petitioner such relief. We hold that respondent did not abuse respondent's discretion.

¶3FINDINGS OF FACT

¶4Some of the facts have been stipulated and are so found.

¶5Petitioner resided in Greensboro, North Carolina, at the time she filed the petition.

¶6Petitioner and Javester Simon (Mr. Simon), both college graduates, married on or about May 20, 1966, separated on or about March 5, 1999, and divorced on June 25, 2001. The judgment of divorce granting petitioner*221 and Mr. Simon a divorce did not impose any obligation on petitioner or Mr. Simon to pay any outstanding Federal income or other tax liabilities. Nor is there any other document relating to that divorce, such as a property settlement, that imposed any legal obligation on petitioner or Mr. Simon to pay any such liabilities. Although petitioner and Mr. Simon divorced in June 2001, division of the marital assets remains to be adjudicated by the North Carolina courts.

¶7During 1998, the year at issue, petitioner worked for Guilford Technical Community College (Guilford College), and Mr. Simon worked for Roadway Express, Inc. (Roadway Express). During that year, petitioner and Mr. Simon received wages of $ 34,681.20 and $ 58,016.49, respectively.

¶8Petitioner and Mr. Simon signed on April 15, 1999, and filed the signature form of Form 1040PC Format, U.S. Individual Income Tax Return, for taxable year 1998 (1998 return). ² In the 1998 return, they reported total wages of $ 92,697, total interest of $ 56, a retirement plan distribution of $ 40,420, total income of $ 133,173, total tax of $ 28,730, total tax payments of $ 16,658, and tax due of $ 12,443. Petitioner and Mr. Simon attached to*222 the 1998 return (1) Forms W-2, Wage and Tax Statement, for 1998 that reported their respective wages of $ 34,681.20 and $ 58,016.49 and respective Federal income tax (tax) withheld of $ 4,014.04 and $ 9,114.06 and (2) Form 1099R, Distributions From Pensions, Annuities, Retirement, or Profit- Sharing Plans, IRAs, Insurance Contracts, etc., for 1998 that reported a fully taxable gross retirement plan distribution of $ 40,419.71 to Mr. Simon (Mr. Simon's 1998 retirement plan distribution) by First Union National Bank, First Union IRA Department (First Union) and tax withheld of $ 3,529.70. The following jurat appeared immediately above the respective signatures of petitioner and Mr. Simon on the 1998 return and immediately below, inter alia, the $ 12,443 of tax shown due in that return: "Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete." Petitioner and Mr. Simon did not remit with the 1998 return any payment of the tax shown due.

¶9*223 On January 9, 2002, petitioner filed with the Internal Revenue Service (IRS) Form 8857, Request for Innocent Spouse Relief (petitioner's Form 8857), with respect to taxable year 1998. ³ At the request of the IRS, petitioner completed and submitted to the IRS Form 886-A, Innocent Spouse Questionnaire (petitioner's Form 886-A). In petitioner's Form 886-A, petitioner provided the responses indicated to the following questions with respect to the filing of the 1998 return:

¶10   2. If you are requesting relief from tax reported on the

¶11   original return:

¶12     a. Did you review the tax return before signing it?

¶13     I did not have an opportunity to review the return. My

¶14     former husband -- that [sic] the last minute -- insisted

¶15     that I sign the return immediately so that he could mail

¶16     the return before the deadline.

¶17     b. At the time you signed the return, were you aware there

¶18     was a balance due IRS? Please explain in detail.

¶19     No, I was not aware of any balance due because I was not

¶20     afforded the opportunity to review the return.

¶21*224      c. Describe how, at the time you signed the return, you and

¶22     your spouse planned to pay the tax due?

¶23     I was unaware of any taxes due because I did not know that

¶24     he had taken funds from his retirement.

¶25     d. Why did you file a joint return instead of married

¶26     filing separate?

¶27     We filed a joint return for thirty-three years while living

¶28     as husband and wife.

¶29In petitioner's Form 886-A, petitioner also alleged the following with respect to the filing of the 1998 return:

¶30   My former*225 husband customarily had our return completed by H& R

¶31   Block. The additional [retirement] income was reported. When the

¶32   form was given to me for my signature, my former husband

¶33   insisted that I sign it quickly in order to allow him sufficient

¶34   time to get to the post office.

¶35In response to questions relating to the preparation of the 1998 return, petitioner alleged in petitioner's Form 886-A that her only involvement with the preparation of that return was to give Mr. Simon Form W-2 for 1998 that she received from Guilford College. In this connection, petitioner further alleged in petitioner's Form 886-A that Mr. Simon gathered the information for the preparation of the 1998 return and delivered it to the return preparer, that she never accompanied Mr. Simon when he brought that information to the return preparer, and that Mr. Simon retrieved the 1998 return from the return preparer after it was completed.

¶36In response to questions relating to the existence of any joint bank accounts, petitioner alleged in petitioner's Form 886-A that during 1998 she and Mr. Simon had separate, not joint, bank accounts, that she did not review Mr. Simon's checkbook or*226 bank statements, that she did not open mail addressed to Mr. Simon, that she made payments for her automobile, her clothing, and certain unidentified food and furniture, and that Mr. Simon made payments for the mortgage, utilities, insurance, and his clothing.

¶37In response to a question relating to whether petitioner's payment of the tax liability for taxable year 1998 (unpaid 1998 liability) would cause an economic hardship to her, petitioner indicated that it would not. However, petitioner added that "it would be grossly unfair because I received no economic benefit -- in fact, I was not aware he withdrew these [retirement] funds".

¶38In response to a question asking for any other information in support of petitioner's position that she is entitled to relief under section 6015 with respect to taxable year 1998, petitioner stated:

¶39   I have remarried since my divorce [from Mr. Simon], and this is

¶40   my reason for saying … that if I had to pay, it would not

¶41   create an economic hardship, although it would be quite

¶42   difficult for me. Inasmuch as my former husband used the money

¶43   [the retirement distribution] entirely for himself, and kept

¶44*227    me totally unaware of its existence, I feel it is only fair that

¶45   he should accept the responsibility for paying the tax liability

¶46   he incurred.

¶47In petitioner's Form 886-A, petitioner did not claim that Mr. Simon abused her during their marriage.

¶48In considering petitioner's Form 8857, the IRS found that petitioner made an error in calculating the amount of tax due for taxable year 1998 that was shown in the 1998 return (i.e., $ 12,443). Respondent determined that the correct amount of tax due for that year is $ 12,072, of which $ 10,103 and $ 1,969 were attributable to Mr. Simon and petitioner, respectively.

¶49On September 9, 2002, the IRS made a preliminary administrative determination (IRS September 9, 2002 preliminary determination) with respect to petitioner's Form 8857. As pertinent here, the IRS September 9, 2002 preliminary determination denied petitioner relief under section 6015 with respect to taxable year 1998. ⁴ That preliminary determination stated in pertinent part:

¶501998 IRC 6015(f) claim

¶51Liability arose on or after July 22, 1998

¶52Joint return is valid

¶53There is enough information to determine the claim

¶54No OIC accepted

¶55Eligibility*228 factors:

¶56Underpayment of tax -relief is not available under IRC

¶576015(b) & 6015(c)Filed a joint return

¶58Claim filed timely

¶59Liability unpaid, or paid by the requesting spouse

¶60within the time period

¶61Not a fraudulent return

¶62No fraudulent transfer of assets

¶63No disqualified assets transferred

¶64Tier I factors (full scope):

¶65Taxpayers are currently divorced, widowed, legally

¶66separated, or they had been members of separate

¶67households prior to the claim for at least 12

¶68consecutive months

¶69Can't prove a belief that tax was to be paid

¶70Explanation:    At this time and the previous year

¶71         he had taken large amounts out of

¶72         his IRA, this is the main cause of

¶73         the balance due. She didn't

¶74         examine the return to see tax was

¶75         due.

¶76             Tier I factors (full scope)

¶77             not met

¶78Tier II factors:

¶79Taxpayers are currently divorced, widowed,           For

¶80legally separated, or they had been members of

¶81separate households prior to the claim for at

¶82least 12 consecutive months

¶83No*229 economic hardship                      Against

¶84Explanation:    per claimant

¶85No marital abuse

¶86No legal obligation established

¶87The liability is not solely attributable to           Against

¶88the non-requesting spouse

¶89Erroneous items: see allocation sheet, using the

¶90         percentage method on the itemized

¶91         deduction means part is

¶92         attributable to her.

¶93  Knowledge:

¶94  Background:

¶95   Claimant -  college         Spouse -    college

¶96  Involvement:

¶97   Claimant -  she said she      Spouse -

¶98         paid part of

¶99         the bills but

¶100         had no access

¶101         to his individual

¶102         accounts

¶103  Lifestyle changes:   none known

¶104  Spouse's elusiveness: she said he took out the

¶105             money and didn't tell her

¶106  Duty to inquire:    no review of the return,

¶107             he said he rushed her and

¶108             didn't give her*230 time

¶109  Living arrangements:  she said separated 3-98

¶110             but court papers say 5-5-

¶111             99

¶112The requesting spouse had knowledge or             Against

¶113reason to know

¶114Explanation:    When the return was filed there had

¶115         been two years of large withdrawls

¶116         from IRA. She didn't review the

¶117         return. She didn't do her duty to

¶118         inquire. Had she reviewed the

¶119         return and saw the IRA withhdrawls

¶120         she would have known something was

¶121         going on.

¶122No significant benefit gained

¶123In compliance with the tax laws

¶124Explanation:    returns were filed; however, she is

¶125         remarried and there is a SSA update

¶126         showing for december of 2001 which

¶127         would mean she should have filed

¶128         married filing separate or joint in

¶129         2001.

¶130Unique circumstances:  none

¶131Not meeting Tier II factors -  deny claim

¶132Tier II consideration: *231  Based on the above facts it is

¶133            equitable to hold the claimant

¶134            liable for the balance. She

¶135            didn't exam the return or

¶136            question how it would be paid,

¶137            part is attributable to her.

¶138            She should have known there

¶139            was a problem because of large

¶140            IRA withdrawls.

¶141             Tier II factors not met --

¶142             deny claim

¶143Ending statement: Tier I factors (full scope) not met

¶144         Tier II factors not met - deny

¶145         claim

¶146         Claim denied under IRC 6015(f)          full scope

¶147             Claim denied under IRC 6015(f)              -- full scope

¶148[Reproduced literally.]

¶149*232 In a letter dated November 6, 2002 (petitioner's November 6, 2002 letter), petitioner appealed to the IRS Appeals Office (Appeals Office) the IRS September 9, 2002 preliminary determination to deny her relief under section 6015 with respect to taxable year 1998.

¶150On September 17, 2003, Mr. Simon sent a letter (Mr. Simon's September 17, 2003 letter) to the IRS. He attached to that letter: (1) Form 1099R for 1997 that reported Mr. Simon's 1997 retirement plan distribution of $ 47,632.36 as fully taxable and (2) various statements for the period April 9 through April 30, 1997, that First Union prepared and sent to Mr. Simon. Mr. Simon's September 17, 2003 letter stated in pertinent part:

¶151   I'm submitting this information from the tax year 1997 and 1998.

¶152   It is in regard to the stock certificate I received from Caliber

¶153   System and rolled over to a qualified IRA. Somehow this

¶154   information was passed on as cash. The portion that I used in

¶155   1997 and 1998 was taxed and a penalty was assessed because I was

¶156   not 59 1/2 at the time of withdrawal.

¶157   The IRS has been holding all my refunds while we have exchanged

¶158   information. I have*233 received this paperwork from Caliber

¶159   Systems, Roadway Express, and Wachovia Bank. ⁵ I hope

¶160   this information will clear up the misunderstanding.

¶161   Also I need you to submit a form to me. I am no longer married

¶162   and need my divorced wife exempt from this matter. …

¶163   [Reproduced literally.]

¶164On May 18, 2004, the Appeals Office sent a letter to Mr. Simon (Appeals Office May 18, 2004 letter) regarding petitioner's appeal of the IRS September 9, 2002 preliminary determination. The Appeals Office May 18, 2004 letter stated in pertinent part:

¶165   Eleanor Collins [petitioner] ⁶ has requested

¶166   relief from tax liability as an innocent spouse for the tax

¶167   years shown above. If the IRS grants*234 relief, this would relieve

¶168   your spouse, in whole or in part, from having to pay the income

¶169   tax owed on these years. …

¶170   Our Examination function denied the request, Eleanor

¶171   Collins then asked our Appeals function to review the

¶172   request.

¶173   We are contacting you to see if you have any additional

¶174   information that you'd like to provide. You may benefit from

¶175   participating in this administrative appeal proceeding, since

¶176   we'll make our decision based on all the information we receive.

¶177   Should Eleanor Collins receive an innocent spouse

¶178   classification, the tax liability in whole or in part will be

¶179   yours alone.

¶180   I'm available to meet with you in an informal conference if

¶181   you'd like. You can present your position at this conference.

¶182   You can also participate by sending us material and information

¶183   that support your position. Because of our time frames in

¶184   dealing with appeals, I need to hear from you within the next 30

¶185   days.

¶186*235 On July 22, 2004, the Appeals Office completed a document entitled "Appeals Transmittal and Case Memo" (Appeals Office memorandum) that stated in pertinent part:

¶187         SUMMARY AND RECOMMENDATION

¶188   Does Eleanor M. Simon qualify as an innocent spouse under IRC

¶189section 6015 for tax year ending 1998?

¶190   No, the taxpayer does not qualify for relief as an innocent

¶191   spouse for tax year 1998. The amount of $ 10,103 of the $ 12,072

¶192   deficiency is allocable to the Non-requesting Spouse (NRS);

¶193   however, the Cincinnati Service Center disallowed the claim for

¶194   relief in full because the taxpayer did not have a belief the

¶195   tax would be paid in full at the time of signing the joint

¶196   return. I sustain their determination.

¶197           *   *   *   *   *   *   *

¶198            BRIEF BACKGROUND

¶199   The taxpayer filed a joint return with her former husband,

¶200   Javester Simon, for tax year 1998. She alleges she did not have

¶201   an opportunity to review the return because her husband insisted

¶202   she sign it immediately so that he could*236 mail it timely.

¶203   The taxpayer separated from her husband in 1998 or 1999 and

¶204   divorced him in June 2001.

¶205   The taxpayers filed their 1998 return with an underpayment of

¶206  $ 12,443 and included a large IRA distribution on the return for

¶207   such year.

¶208          DISCUSSION AND ANALYSIS

¶209   The taxpayer filed a Request for Innocent Spouse Relief, Form

¶210   8857, under IRC section 6015(b), (c) or (f) for 1997 & 1998.

¶211   Since the Cincinnati Service Center allocated the entire

¶212   deficiency to the NRS for 1997 and the taxpayer did not request

¶213   Appeal's consideration for this year, the discussion below is

¶214   limited to the 1998 tax year.

¶215IRC section 6015(b)            *   *   *   *   *   *   *

¶216   Does the taxpayer meet the requirements of IRC section

¶2176015(b)?    No, the taxpayer does not qualify for relief under IRC section

¶2186015(b) for tax year 1998. There was no understatement of tax

¶219   for this year.

¶220IRC section 6015(c)*237          *   *   *   *   *   *   *

¶221   Does the taxpayer meet the requirements of IRC section

¶2226015(c)?    No, the taxpayer does not meet the requirements of IRC section

¶2236015(c). There is no deficiency in tax allocable to the non-

¶224   requesting spouse for 1998. The tax liability is attributable

¶225   solely to the underpayment of tax upon filing the tax return,

¶226   plus interest and penalties.

¶227IRC section 6015(f)IRC section 6015(f) provides the IRS with the discretion to grant

¶228   equitable relief where a taxpayer is not entitled to relief

¶229   under either IRC section 6015(b) or (c). Equitable relief under

¶230IRC section 6015(f), however, is subject to two

¶231   limitations in accordance with -- Revenue Procedure 2000-

¶232   15, 2000-1 CB 447, Section 4.02:

¶233     If the return has been adjusted to reflect an

¶234     understatement , relief will be available only to

¶235     the extent of the liability shown on the return prior to

¶236*238      the adjustment, or If no adjustment is made,

¶237     relief is limited to the extent the unpaid liability

¶238     is due to the non-requesting spouse.

¶239   Explanation of IRC section 6015(f)    In Revenue Procedure 2000-15, the IRS delineates qualifications

¶240   necessary to be granted equitable relief under IRC section

¶2416015(f). Threshold eligibility qualifications are:

¶242   Joint return filed

¶243   Timely filed claim for relief

¶244   Relief not available under other sections of the

¶245   statute

¶246   There was no transfer of assets between spouses as

¶247   part of a fraudulent scheme

¶248   Return was not filed with fraudulent intent on the

¶249   part of the requesting spouse

¶250   Liability remains unpaid

¶251   No disqualified assets transferred to requesting

¶252   spouse. If so, relief only available to the ex-

¶253   tent that the liability exceeds the value of the

¶254   transferred assets.

¶255   Nonetheless, under section 4.03 of Revenue Procedure 2000-15,

¶256   relief is still possible for requesting spouses who meet the

¶257   threshold eligibility*239 requirements above, but do not otherwise

¶258   qualify for relief under any other sections. This last relief

¶259   provision is only available where it would be inequitable to

¶260   hold the requesting spouse liable for the understatement. Under

¶261   this section, equitable relief may be granted for

¶262   underpayments after consideration of local factors (Tier 1) or

¶263   for underpayments and understatements after consideration of the

¶264   centralized review factors (Tier 2). If an underpayment does not

¶265   qualify under the Tier 1 factors, the Tier 2 factors should be

¶266   considered. All understatement and deficiency cases should

¶267   consider the Tier 2 factors only.

¶268   Equitable relief under the Tier 1 factors will ordinarily be

¶269   granted under section 6015(f) if all of the following four

¶270   local factors are met:

¶271   Spouse is divorced, separated, widowed, or lived

¶272   apart of the 12 months prior to the date request

¶273   filed

¶274   Requesting spouse had a reasonable belief that the

¶275   tax was paid or was going to be paid the time the

¶276   spouse signed the return.

¶277   Undue hardship would result if*240 equitable relief is

¶278   not granted, and

¶279   The unpaid liability at issue is attributable to

¶280   the non-requesting spouse.

¶281   The IRS has authority to grant relief in circumstances where it

¶282   is clearly inequitable to hold the requesting spouse liable for

¶283   the tax and where a spouse had reasonable belief that the tax

¶284   reported on his/her return would be paid. The use of Tier 2

¶285   factors, however, should be limited to those cases where it

¶286   would be clearly inequitable to hold the requesting

¶287   spouse liable for the tax.

¶288   Does the taxpayer qualify for equitable relief under IRC

¶289section 6015(f)

¶290   In my opinion, no, the taxpayer does not qualify for equitable

¶291   relief.

¶292   When considering equitable relief, the following factors should

¶293   be considered:

¶294   Martial status

¶295   Economic hardship

¶296   Spousal abuse

¶297   Legal obligation of non-requesting spouse

¶298   No knowledge or reason to know

¶299   Liability attributable to non-requesting spouse

¶300   Of the above factors, the ones in the taxpayer's favor are

¶301   Marital status

¶302   Liability*241 attributable to non-requesting spouse

¶303   In my opinion, these factors are outweighed by the fact this

¶304   year was the second year of withdrawals from the NRS's IRA

¶305   accounts. The likelihood that she did not know of the

¶306   withdrawals from beginning in 1997, that were included on the

¶307   1997 tax return, is diminished in the second year. In addition,

¶308   the withdrawals were included in the income of the 1998 tax

¶309   return and the return clearly reflected a balance due In excess

¶310   of $ 12,000. It is clearly not believable that the taxpayer did

¶311   not know of this liability due.

¶312   She further provided no evidence that she believed the tax would

¶313   be paid at the time the tax return was filed.

¶314             EVALUATION

¶315   Based on the above discussion, the taxpayer has failed to show

¶316   that she is entitled to relief under either IRC section 6015(b)(c)    or (f). I recommend that the determination of the Innocent

¶317   Spouse Unit is sustained in 1998..

¶318   [Reproduced literally.]

¶319Also on July 22, 2004, the Appeals Office sent to petitioner*242 a "Notice of Determination Concerning Your Request for Relief from Joint and Several Liability under Section 6015" (notice of determination). In the notice of determination, the Appeals Office denied petitioner relief under section 6015 with respect to taxable year 1998. The notice of determination stated in pertinent part: "For 1998, you do not qualify for relief under IRC section 6015(b)(c) or (f). [Reproduced literally.]"

¶320As of the time of the trial in this case, Mr. Simon continued to maintain that Mr. Simon's 1998 retirement plan distribution of $ 40,420 is not income for 1998 and should not have been included in the 1998 return.

¶321OPINION

¶322We review respondent's denial of relief under section 6015(f) for abuse of discretion.⁷*243Butler v. Commissioner, 114 T.C. 276, 292 (2000). Petitioner bears the burden of proving that respondent abused respondent's discretion in denying that relief.⁸ See Jonson v. Commissioner, 118 T.C. 106, 125 (2002), affd. 353 F.3d 1181 (10th Cir. 2003).

¶323Section 6015(f) grants respondent discretion to relieve an individual who files a joint return from joint and several liability with respect to that return. That section provides:

¶324SEC. 6015(f). Equitable Relief. -- Under procedures prescribed

¶325   by the Secretary, if --

¶326     (1) taking into account all the facts and circumstances, it

¶327     is inequitable to hold the individual liable for any unpaid

¶328     tax or any deficiency (or any portion of either); and

¶329     (2) relief is not available to such individual under

¶330     subsection*244 (b) or (c),

¶331   the Secretary may relieve such individual of such liability. In

¶332   the instant case, the parties agree that relief is not available

¶333   to petitioner under section 6015(b) or (c), thereby satisfying

¶334section 6015(f)(2). They disagree over whether petitioner is

¶335   entitled to relief under section 6015(f).

¶336In support of her position that she is entitled to relief under section 6015(f), petitioner relies, inter alia, on the testimony of Mr. Simon and her own testimony. We found Mr. Simon's testimony to be questionable and not credible in certain material respects. For example, Mr. Simon testified that he signed petitioner's name on the 1998 return. We did not believe that testimony. We also found Mr. Simon's testimony to be at times confusing, confused, internally inconsistent, and/or inconsistent with certain of the parties' stipulations of fact and certain exhibits attached to those stipulations (stipulated exhibits). We shall not rely on Mr. Simon's testimony to support petitioner's position in this case. We also found petitioner's testimony to be questionable and not credible in certain material respects. For example, petitioner testified*245 that she did not sign the 1998 return. We did not believe that testimony. Moreover, petitioner's testimony that she did not sign the 1998 return is inconsistent with the parties' stipulation that she did sign that return and certain stipulated exhibits in which she represented to the IRS that she signed that return. A stipulation is to be treated, to the extent of its terms, as a conclusive admission by the parties to the stipulation, unless otherwise permitted by the Court or agreed upon by those parties. Rule 91(e). The Court will not permit a party to a stipulation to qualify, change, or contradict a stipulation in whole or in part except that it may do so where justice requires. Justice does not require the Court to permit petitioner to contradict and attempt to change the parties' stipulation that she signed the 1998 return. We shall not rely on petitioner's testimony to support her position in this case.

¶337Turning now to our consideration of section 6015(f), as directed by that section, respondent has prescribed procedures in Rev. Proc. 2000-15, 2000-1 C.B. 447 (Revenue Procedure 2000-15) ⁹ that are to be used in determining whether it would be inequitable to find*246 the requesting spouse liable for part or all of the liability in question. Section 4.01 of Revenue Procedure 2000-15 lists seven conditions (threshold conditions) which must be satisfied before the IRS will consider a request for relief under section 6015(f). In the instant case, respondent concedes that those conditions are satisfied. Where, as here, the requesting spouse satisfies the threshold conditions, section 4.01 of Revenue Procedure 2000-15 provides that a requesting spouse may be relieved under section 6015(f) of all or part of the liability in question if, taking into account all the facts and circumstances, the IRS determines that it would be inequitable to hold the requesting spouse liable for such liability.

¶338*247 Where, as here, the requesting spouse satisfies the threshold conditions, section 4.02(1) of Revenue Procedure 2000-15 sets forth the circumstances under which the IRS ordinarily will grant relief to that spouse under section 6015(f) in a case, like the instant case, where a liability is reported in a joint return but not paid. As pertinent here, those circumstances, which section 4.02 of Revenue Procedure 2000-15 and we refer to as elements, are:

¶339  (a) At the time relief is requested, the requesting spouse is no

¶340   longer married to … the nonrequesting spouse …;

¶341   (b) At the time the return was signed, the requesting spouse had

¶342   no knowledge or reason to know that the tax would not be paid.

¶343   The requesting spouse must establish that it was reasonable for

¶344   the requesting spouse to believe that the nonrequesting spouse

¶345   would pay the reported liability. …; and

¶346   (c) The requesting spouse will suffer economic hardship if

¶347   relief is not granted. For purposes of this section, the

¶348   determination of whether a requesting spouse will suffer

¶349   economic hardship will be made*248 by the Commissioner or the

¶350   Commissioner's delegate, and will be based on rules similar to

¶351   those provided in section 301.6343-1(b)(4) of the Regulations on

¶352   Procedure and Administration. [Rev. Proc. 2000-15, sec. 4.02(1),

¶3532000-1 C.B. at 448.]

¶354(We shall hereinafter refer to the elements set forth in section 4.02(1)(a), (b), and (c) of Revenue Procedure 2000-15 as the marital status element, the knowledge or reason to know element, and the economic hardship element, respectively.)

¶355Section 4.02(2) of Revenue Procedure 2000-15 provides that relief granted under section 4.02(1) of that revenue procedure is subject to the following limitations:

¶356  (a) If the return is or has been adjusted to reflect an

¶357   understatement of tax, relief will be available only to the

¶358   extent of the liability shown on the return prior to any such

¶359   adjustment; and

¶360   (b) Relief will only be available to the extent that the unpaid

¶361   liability is allocable to the nonrequesting spouse.

¶362Turning to the three elements set forth in section 4.02(1) of Revenue Procedure 2000-15,*249 the presence of which will ordinarily result in a grant of relief under section 6015(f), in the instant case, (1) respondent concedes that the marital status element is present, (2) the parties dispute whether the knowledge or reason to know element is present, and (3) petitioner concedes that the economic hardship element is not present. In light of petitioner's concession that the economic hardship element is not present, petitioner does not qualify for relief under section 4.02(1) of Revenue Procedure 2000-15.

¶363The IRS may nonetheless grant relief to petitioner under section 4.03 of Revenue Procedure 2000-15. That section provides a partial list of positive and negative factors which respondent is to take into account in considering whether to grant an individual relief under section 6015(f). No single factor is to be determinative in any particular case; all factors are to be considered and weighed appropriately; and the list of factors is not intended to be exhaustive. Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B. at 448.

¶364As pertinent here, section 4.03(1) of Revenue Procedure 2000-15 sets forth the following positive*250 factors which weigh in favor of granting relief under section 6015(f):

¶365  (a) Marital status. The requesting spouse is …

¶366   divorced from the nonrequesting spouse.

¶367   (b) Economic hardship. The requesting spouse would suffer

¶368   economic hardship (within the meaning of section 4.02(1)(c) of

¶369   this revenue procedure) if relief from the liability is not

¶370   granted.

¶371   (c) Abuse. The requesting spouse was abused by the

¶372   nonrequesting spouse, but such abuse did not amount to duress.

¶373   (d) No knowledge or reason to know. In the case of a

¶374   liability that was properly reported but not paid, the

¶375   requesting spouse did not know and had no reason to know that

¶376   the liability would not be paid. …

¶377   (e) Nonrequesting spouse's legal obligation. The

¶378   nonrequesting spouse has a legal obligation pursuant to a

¶379   divorce decree or agreement to pay the outstanding liability.

¶380   This will not be a factor weighing in favor of relief if the

¶381   requesting spouse knew or had reason to know, at the time the

¶382   divorce decree or agreement was entered into, that the

¶383   nonrequesting*251 spouse would not pay the liability.

¶384   (f) Attributable to nonrequesting spouse. The liability

¶385   for which relief is sought is solely attributable to the

¶386   nonrequesting spouse.

¶387(We shall hereinafter refer to the positive factors set forth in section 4.03(1)(a), (b), (c), (d), (e), and (f) of Revenue Procedure 2000-15 as the marital status positive factor, the economic hardship positive factor, the abuse positive factor, the knowledge or reason to know positive factor, the legal obligation positive factor, and the attribution positive factor, respectively.)

¶388We note initially that the parties do not dispute that the marital status positive factor, the knowledge or reason to know positive factor, and the economic hardship positive factor set forth in section 4.03(1)(a), (d), and (b), respectively, of Revenue Procedure 2000-15 are the same as the marital status element, the knowledge or reason to know element, and the economic hardship element set forth in section 4.02(1)(a), (b), and (c), respectively, of that revenue procedure.

¶389With respect to the marital status positive factor set forth in section 4.03(1)(a) of Revenue Procedure 2000-15,*252 respondent concedes that that factor is present in the instant case.

¶390With respect to the economic hardship positive factor set forth in section 4.03(1)(b) of Revenue Procedure 2000-15, petitioner concedes that that factor is not present in the instant case.

¶391With respect to the abuse positive factor set forth in section 4.03(1)(c) of Revenue Procedure 2000-15, petitioner concedes that that factor is not present in the instant case.

¶392With respect to the knowledge or reason to know positive factor set forth in section 4.03(1)(d) of Revenue Procedure 2000-15, the parties disagree over whether that factor is present in the instant case. Petitioner argues that the knowledge or reason to know positive factor is present. In support of that argument, petitioner asserts on brief:

¶393   Petitioner has stated that during the spouses' [petitioner's and

¶394   Mr. Simon's] 33 year marriage, she [petitioner] never had

¶395   opportunity to examine the tax returns prior to filing, and that

¶396   she completely relied upon Mr. Simon to handle the couple's tax

¶397   matters. She has consistently stated that on the evening of the

¶398   filing*253 deadline, Mr. Simon always hurriedly presented a

¶399   completed return to Petitioner for her immediate signature and,

¶400   upon that signature, hurried to the post office to affect a

¶401   timely mailing. This position … is clearly stated as part of

¶402   the administrative record. Petitioner stated this same position

¶403   at trial. Further, the same position, regarding, in general, the

¶404   couple's filing habit, was supported by Mr. Simon in his

¶405   testimony at trial.

¶406   Finally, Respondent, in its determination, even relied upon that

¶407   same position [of petitioner] as its own basis for determining

¶408   that Petitioner should have known of the liability. In fact, as

¶409   part of Respondent's administrative record, the Tax Examiner

¶410   actually stated that Petitioner did not examine the return. The

¶411   Tax Examiner did not even consider whether Petitioner actually

¶412   inquired of payment of the tax. Instead, the Examiner based her

¶413   determination on the rationale that Petitioner "should have

¶414   known something was going on", referring only to the liability

¶415   itself. … there is no evidence that Petitioner*254 had actual

¶416   knowledge of the underpayment.

¶417  … it is not reasonable for Petitioner to have known that the

   tax would not be paid. All of the Petitioner's relevant evidence



   indicates that Petitioner never even inquired about the tax



   prior to receiving Respondent's notice of unpaid liability.



   Further, Respondent has produced no evidence that Petitioner



   inquired about the tax.



   Knowledge of the liability, whether actual or constructive, is



   not equal to knowledge of whether Petitioner knew or should have



   known whether the tax would be paid. It is not reasonable for



   Petitioner to inquire about payment of an unknown



   underpayment if Petitioner did not actually know about the



   underpayment itself.



           *   *   *   *   *   *   *



   The facts in this case are similar to those in

Wiest v. Commissioner, T.C. Memo 2003-91. In Wiest,

¶418   … As to equitable relief under section 6015(f), the

¶419   determination letter provided that "underpayment was evident at

¶420   the signing of the joint return. The taxpayer*255 would have had

¶421   knowledge/reason to know of the underpayment at the time of

¶422   signing the tax return." … The Court held [in Wiest]

¶423   that Respondent abused his discretion in denying relief under

¶424section 6015(f) with respect to an amount of tax reported on

¶425   petitioner's joint return but not paid. [Reproduced literally.]

¶426Respondent argues that the knowledge or reason to know positive factor is not present in the instant case. In support of that argument, respondent asserts on brief:

   Despite the fact that the text "AMOUNT YOU OWE [$ ] 12443" was an



   inch above petitioner's signature on the [1998] return …,



   she claimed ignorance that any tax was owed. If petitioner was



   unaware that tax was due, she had a duty to inquire whether tax



   was owed. …



   This Court has held that when taxpayers fail to fulfill their



   duty of inquiry, they are ordinarily charged with constructive

   knowledge of any understatements on their returns.

Demirjian v. Commissioner, T.C. Memo. 2004-22;

Cohen v. Commissioner, T.C. Memo. 1987-537 …. Accordingly, *256 having

   failed her duty of inquiry, petitioner is charged with

   constructive knowledge of the tax due on the return. See

Castle v. Commissioner, T.C. Memo. 2002-142 n. 7; ….

 *   *   *   *   *   *   *

¶427   Plaintiff [sic] presented no evidence to the IRS on this factor

¶428   [knowledge or reason to know positive factor] because she

¶429   claimed that she was unaware that tax was due when the return

¶430   was filed. Due to the absence of evidence at the administrative

¶431   level, this factor does not favor relief. As argued above,

¶432   petitioner is held to have constructive knowledge of the tax due

¶433   per return.

¶434In further support of respondent's argument that the knowledge or reason to know positive factor is not present in the instant case, respondent asserts on brief:

¶435   Petitioner argues that the determination is arbitrary because

¶436   the IRS did not consider whether petitioner knew the tax would

¶437   not be paid. The argument is hollow because petitioner's alleged

¶438   ignorance of the tax is factually and logically divergent from

¶439   alleging*257 knowledge that the tax would not be paid. It is

¶440   illogical to allege that one was ignorant that tax was due but

¶441   one had knowledge that the tax would not be paid.

¶442   Petitioner's argument is flawed because it relies on the

¶443   supposed failure of the IRS to consider these divergent factual

¶444   allegations. Petitioner alleged to be ignorant of the tax, which

¶445   the IRS rejected. Petitioner cannot bemoan that the

¶446   determination was arbitrary because the IRS did not consider a

¶447   factual issue that was factually divergent and could not be

¶448   raised, ie., knowledge regarding payment of the tax.

¶449           *   *   *   *   *   *   *

¶450   At best for petitioner, the knowledge of payment factor is

¶451   neutral in the analysis due to petitioner's claimed ignorance

¶452   that any tax was owed. … [Reproduced literally.]

¶453We turn first to petitioner's reliance on Wiest v. Commissioner, T.C. Memo. 2003-91. That case is materially distinguishable from the instant case. In Wiest, the taxpayer took the position before the IRS and the Court that he relied on his spouse to file the return*258 in question and to pay the tax shown due in that return and that he was unaware that she had not. In contrast, in the instant case, petitioner took the position before the IRS, and takes the position before the Court, that at the time she signed the 1998 return she did not know that that return showed tax due and that therefore at that time she could not have known that Mr. Simon would not pay any such tax. Thus, unlike the taxpayer in Wiest, petitioner did not claim before the IRS, and does not claim before the Court, that she relied on Mr. Simon to pay the tax shown due in the 1998 return. In addition, unlike the instant case, in Wiest, the Court found that the spouse of the taxpayer deceived the taxpayer with respect to the filing of the return in question and the payment of the tax shown due in that return. Moreover, unlike the instant case, in Wiest, the IRS based its determination that the taxpayer was not entitled to relief under section 6015(f) principally on its conclusions that the unpaid liability in question was not solely attributable to the taxpayer's spouse and that the taxpayer had knowledge or reason to know of that unpaid liability. In concluding that the taxpayer*259 had knowledge or reason to know of the unpaid liability in question, the IRS equated the taxpayer's knowledge or reason to know that an amount of tax was shown due in the return in question with knowledge or reason to know that such amount shown due would not be paid. In contrast, in the instant case, the Appeals Office based its determination that petitioner is not entitled to relief under section 6015(f) on its conclusions that the unpaid 1998 liability was not attributable solely to Mr. Simon, that "It is clearly not believable that the taxpayer [petitioner] did not know of this liability due", and that petitioner "provided no evidence that she believed the tax would be paid at the time the tax return was filed" ¹⁰ as well as on the absence of any (1) economic hardship, (2) spousal abuse, and (3) legal obligation of Mr. Simon to pay such liability. On the record before us, we find that petitioner's reliance on Wiest v. Commissioner, supra, is misplaced. On that record, we reject petitioner's arguments in reliance on that case.

¶454*260 We turn now to whether petitioner has carried her burden of establishing that the knowledge or reason to know positive factor is present in the instant case. In support of her position for relief under section 6015(f), petitioner chose to present her case to the IRS and to the Court by claiming that she did not know and had no reason to know that there was tax shown due in the 1998 return. Petitioner must bear the consequences of that choice. On the record before us, we have serious reservations about petitioner's contention that she did not know that the 1998 return showed tax due because she was "hurried" when she signed that return. Nonetheless, assuming arguendo that we were to accept such a contention, on the instant record, we find that, by signing the 1998 return, petitioner is charged with constructive knowledge of, inter alia, the tax shown due in that return. See Park v. Commissioner, 25 F.3d 1289, 1299 (5th Cir. 1994), affg. T.C. Memo. 1993-252; see also Hayman v. Commissioner, 992 F.2d 1256, 1262 (2d Cir. 1993), affg. T.C. Memo. 1992-228. Having found that at the time petitioner signed the 1998 return she had constructive*261 knowledge of the tax shown due in that return, we further find that petitioner should have inquired about whether such tax shown due would be paid. It would be inequitable to allow petitioner to turn a blind eye to the tax shown due in the 1998 return. The amount of such tax shown due was large enough as to put her on notice that further inquiry should be made as to whether it would be paid. She failed to do so. She thus failed to present any evidence to the IRS and to the Court with respect to whether the tax shown due in the 1998 return would be paid. On the record before us, we find that petitioner has failed to carry her burden of establishing that the knowledge or reason to know positive factor is present in the instant case.

¶455With respect to the legal obligation positive factor set forth in section 4.03(1)(e) of Revenue Procedure 2000-15, petitioner concedes that there is no legal obligation for Mr. Simon to pay any tax due for taxable year 1998. We find that petitioner concedes that that factor is not present in the instant case.

¶456With respect to the attribution positive factor set forth in section 4.03(1)(f) of Revenue Procedure 2000-15, petitioner*262 concedes that the unpaid 1998 liability is not solely attributable to Mr. Simon. ¹¹ We find that petitioner concedes that the attribution positive factor is not present in the instant case.

¶457Turning to the negative factors weighing against granting relief under section 6015(f) set forth in section 4.03(2) of Revenue Procedure 2000-15, as pertinent here, those factors are:

¶458  (a) Attributable to the requesting spouse. The unpaid

¶459   liability … is attributable to the requesting spouse.

¶460   (b) Knowledge, or reason to know. A requesting spouse

¶461   knew or had reason to know … that the reported liability

¶462   would be unpaid at the time the return was signed. This is an

¶463   extremely strong factor weighing against relief. Nonetheless,

¶464   when the factors in favor of equitable relief are unusually

¶465*263   strong, it may be appropriate to grant relief under section

¶466   6015(f) in limited situations where a requesting spouse knew or

¶467   had reason to know that the liability would not be paid ….

¶468   (c) Significant benefit. The requesting spouse has

¶469   significantly benefitted (beyond normal support) from the unpaid

¶470   liability ….

¶471   (d) Lack of economic hardship. The requesting spouse will

¶472   not experience economic hardship (within the meaning of section

¶473   4.02(1)(c) of this revenue procedure) if relief from liability

¶474   is not granted.

¶475   (e) Noncompliance with federal income tax laws. The

¶476   requesting spouse has not made a good faith effort to comply

¶477   with federal income tax laws in the tax years following the tax

¶478   year or years to which the request for relief relates.

¶479   (f) Requesting spouse's legal obligation. The requesting

¶480   spouse has a legal obligation pursuant to a divorce decree or

¶481   agreement to pay the liability.

¶482(We shall hereinafter refer to the negative factors set forth in section 4.03(2)(a), (b), (c), (d), (e), and (f) of Revenue Procedure 2000-15*264 as the attribution negative factor, the knowledge or reason to know negative factor, the significant benefit negative factor, the economic hardship negative factor, the tax law noncompliance negative factor, and the legal obligation negative factor, respectively.)

¶483We note initially that the parties do not dispute that the knowledge or reason to know negative factor, the economic hardship negative factor, and the legal obligation negative factor set forth in section 4.03(2)(b), (d), and (f), respectively, of Revenue Procedure 2000-15 are the opposites of the knowledge or reason to know positive factor, the economic hardship positive factor, and the legal obligation positive factor set forth in section 4.03(1)(d), (b), and (e), respectively, of that revenue procedure. We also note that the parties do not dispute that the attribution negative factor set forth in section 4.03(2)(a) of Revenue Procedure 2000-15 is essentially the opposite of the attribution positive factor set forth in section 4.03(1)(f) of that revenue procedure. ¹²

¶484*265 We have found above that petitioner has failed to carry her burden of establishing that the knowledge or reason to know positive factor set forth in section 4.03(1)(d) of Revenue Procedure 2000-15 is present in the instant case and that petitioner concedes that the economic hardship positive factor set forth in section 4.03(1)(b) of that revenue procedure is not present in the instant case. On the instant record, we further find that petitioner has failed to carry her burden of establishing that the knowledge or reason to know negative factor set forth in section 4.03(2)(b) of Revenue Procedure 2000-15 is not present in the instant case and that petitioner concedes that the economic hardship negative factor set forth in section 4.03(2)(d) of that revenue procedure is present in the instant case.

¶485With respect to the attribution negative factor set forth in section 4.03(2)(a) of Revenue Procedure 2000-15, we have found that petitioner concedes that the unpaid 1998 liability is not solely attributable to Mr. Simon. Respondent concedes that a significant portion (approximately 84 percent) of that liability is attributable to Mr. Simon. On the record*266 before us, we find that a significant portion of the liability for taxable year 1998 is not attributable to petitioner.

¶486With respect to the significant benefit negative factor set forth in section 4.03(2)(c) of Revenue Procedure 2000-15, respondent does not dispute that that factor is not present in the instant case.

¶487With respect to the tax law noncompliance negative factor set forth in section 4.03(2)(e) of Revenue Procedure 2000-15, respondent does not dispute that that factor is not present in the instant case.

¶488With respect to the legal obligation negative factor set forth in section 4.03(2)(f) of Revenue Procedure 2000-15, we have found that, because petitioner concedes that Mr. Simon does not have a legal obligation to pay any tax due for 1998, petitioner concedes that the legal obligation positive factor set forth in section 4.03(1)(e) of that revenue procedure is not present in the instant case. We have also found that there is no separate legal obligation, such as a divorce decree or a property settlement, that requires petitioner to pay any such tax due. ¹³ On the record before us, we find that the legal obligation negative factor*267 is not present in the instant case.

¶489On the record before us, we find that petitioner has failed to carry her burden of establishing any other factors that weigh in favor of granting relief under section 6015(f) and that are not set forth in sections 4.02(1) and 4.03(1) of Revenue Procedure 2000-15.

¶490Based upon our examination of the entire record before us, we find that petitioner has failed to carry her burden of showing that respondent abused respondent's discretion in denying her relief under section 6015(f) with respect to the unpaid 1998 liability.

¶491We have considered all of the parties' arguments and contentions that are not discussed herein, and we find them to be without merit, irrelevant, and/or moot.

¶492To reflect the foregoing,

¶493Decision will be entered for respondent.