Charlene Donia Strinz n.k.a. Charlene Montour, Petitioners

T .C . Summary Opinion 2008-10 8

UNITED STATES TAX COUR T

CHARLENE DONIA STRINZ, n ..k .a . CHARLENE MONTOUR , Petitioner v . COMMISSIONER- ;OF INTERNAL REVENUE, . Responden t CHARLENE D . STRINZ, n .k .a . CHARLENE MONTOUR, Petitioner v . COMMISSIONER OF INTERNAL REVENUE, Responden t Docket Nos . 20179-05S, 897--06S . Filed August 25, 2008 .

Charlene Montour, pro se .

Robert V . Boeshaar and Jessica Yu , for respondent .

GERBER, Judge : These' casesl were heard pursuant t o provisions of section 7463 of the Internal Revenue Code 'n effec t

SERVED Aug 25 2008 when the petitions were fi-led ..2 Pursuant to section 7463(b), the decisions to be entered are not reviewable by any other court , and"this"'"opinion shall not be treated as precedent for any othe r Petitioner sought relief from joint and several ta x liability'for 1994, 1995, and 1996 . She applied for relief unde r section '6015(b), (c), and (f), and respondent, in determinations,' denied such relief . Petitioner timely petitioned this Court for review of respondent's determinations .

Background Petitioner,,?at .the time of .filing .(cid:127)her .petitions, resided i n the State of Washington . `She filed joint returns,with her forme r husband³ for 1994, 1995, and 1996 .

For each year the return wa s prepared by a professional preparer and reflected a balance o tax due . Petitioner earned a small amount of wages each year from her work at her husband's construction . company, but the underpayments were, . in substantial part, due to income reporte d on Schedules C, Profit or Loss From Business, for th e construction company .

Petitioner was responsible . for th e household bills and expenditures during the years in issue . .

Forconvenience, petitioner's,former`husband will be' referred to'as her husband ., When the 1994,-1995-,, and 1996 .returns were filed, p tit-ioner was aware°of the couple's financial difficulties and tha they were having a hard time paying their :living- . expenses . Because she worked at. her husband's construction company, . she wa als o aware of its financial situation and that it was also-havin g trouble paying. its' obligations . ;Petitioner and her husband had filed for bankruptcy and their unpaidtax'liabilities fog 1991 , 1992, and 1993 were, discharged, but the 1994, . 1995, .. and 996 ta x liabilities were not qualified for .discharge .

Petitioner separated from her husband during 1995 and obtained a final-., divorce effective December-31, 1997 . A~though separated, petitioner and her husband continued- ;to file joint returns throughout the years at issue . After the separa ion , petitioner showed her husband's girlfriend how to run t h administrative .office of-the construction business . . Those dutie s included handling financial matters, typing contracts, b'ying office supplies ; -and°re .lated duties . In .connection with the divorce,- . petitioner's .husband had made ;an oral promise t pay th e Federal income taxes, but hedid not keep his promise . rhere ..wa s no legal obligation under the divorce decree for payment of th e income tax liability . Petitioner's husband did not force her t o sign the returns or intimidate her in such a way that sh :signe d under duress . .

-Petitioner filed for relief from'joint and several liability . Respondent's determination was that she was not entitled to relief under section 6015(b) or (c) . because the assessments were based-'on underpayments°of tax reported due .

Respondent also`reviewed all of=the factors to be considered fo r relief under" :section"6015-(f) and determined,that'she :was no t entitled to equitable relief . .

Discussio n Section 6015(b) and (c) provides for relief fromfjoint,and . .

several liability in'situations where there is an understatemen t of tax or .a deficiency in tax, respectively .

Because , these(cid:127)cases ., involveunderpayments'of -tax'reported on joint returns , petitioner is not entitled to .-relief under either section-6,015(b ) or (c) .

Section 60151(f) gives the . Commissioner discretion to ;. gran t relief-from joint and-several liability '>if, taking into account , all of the fact's and' 'circumstances 'it is inequitable to hold an individual liable for anykunpaid ''tax and relief :i s , not'availabl e under section 6015(b) or (c), .

As ° directed by 'section 6015 (f) , the Commissioner ,ha s prescribed guidelines in Rev . Proc 2003-61, sec . ; .4 .03(2), 2003-2 a C .B . 296, 298, which lists the eight nonexclusive- factors that the Commissioner will consider in determining whether,- taking into account all the facts and circumstances, it is inequitable to holds the - requesting . spouse liable for . all . or ,part of he , deficiency, and full or partial'°equitable relief unde r 6015(f) should be granted .

These nonexclusive factors include whether : ( .1) T h requesting spouse is separated or .divorced from the' nonrequestin g spouse ; (2) the requesting spouse will suffer economic h rdshi p without relief ; (3) the requesting spouse did not know o ,hav e reason to know that the nonrequesting spouse would not p y th e income tax liability ;-(4) the nonrequesting°spouse,had a lega l obligation to pay the outstanding liability ; (5) the requestin g spouse received a-significant benefit from the item giving ris e to the deficiency ; (6) .the(cid:127)requesting spouse has .,made a joo d faith'effort to comply with income . tax laws .in subsequent years ;- (7) the requesting spouse was abused by the nonrequestin spouse ; and (8) the : requesting . spouse was in poor mental or phys'ca l health when signing the return or requesting relief . Rev . Proc .ft- 2003-61, sec . :4 .03(2), further .provide.s that no single f cto r will .be determinative,'but that all . relevant factors wi l considered . .

The Appeals . officer determined that the first and , s factors were in petitioner's favor, the second and third against her, and the fourth and fifth were neutral . .. Wit to the seventh and . .eighth factors, . the Appeals officer d that petitioner was not abused .(cid:127)and no special consideratio n arises'from petitioner's mental and!,physical health .

, We will now consider whether there was an abuse o f discretion in the denial of, relief on thezbasis~of-the abov e listed relief factors . After trial .and-,the_opportunity t consider petitioner' .s testimony,, itsi .appears that the Appeals officerwas correct in, the ana°lysisy of the eighth factor . There is no question about-,whether petitioner was . separated or divorced and about her subsequent complliance, and so these factors weig h in her favor .

With respect to ..economic hardship,°petit=ioner is currently employed and she has not established economic hardship ., In that regard,-petitioner and her husband. were ,relieved- of ; :1991, 1992, , and-1993 income tax in an amount approaching .,$200, .000 .during'* their bankruptcy proceeding . This . factor weighs agains t petiti,oner .

On the basis of petitioner's 'testimony, .it is . clear .x that .she had reason to know that(cid:127) her 'husband would not pay .thetaxe s reported on the returns as she was aware of the interna l operations of ,his business and 'their personal' .inability,;to~,p their bills . ...' Accordingly, this fact'orweighs .against petitioner .

1I Although petitioner's husband had made'an .oral pr-omise(cid:127)to, , pay the'tax liabilities, there was` no .enforceablervlegal ii 7 - obligation to do so . It was reasonable for the Appeals office r to treat this factor as neutral .

It is not clear that petitioner received a signifi c nt ' benefit from the fact that there were tax underpayments, but i t is likely that she and . her husband lived on the :receipts of the business, although the taxes were unpaid . . Again, it was reasonable for the Appeals officer to treat this factor i s neutral .

Finally, petitioner's husband was prone to overindulge in alcohol and may have .used abusive language, but petition r was not influenced or intimidated by his actions and these c ndition s did not play a factor in petitioner's choice to sign joi t returns . There has been no showing that petitioner's me tal o r physical health should play a role in the consideratio n of whether she should have been granted relief under sectio n 6015(f) .

In view of the foregoing, we hold that respondent's refusa l to grant petitioner relief from joint and . several liabilty fo r the 1994, .1995, and 1996 tax years . was justified .

To reflect the foregoing,