The recent decision in Jodell Sample v. Commissioner of Internal Revenue, T.C. Memo. 2025-118, presents a complex application of Internal Revenue Code (I.R.C.) § 6015, particularly concerning the interaction of knowledge standards across subsections (b), (c), and (f) relief, and the critical role of the administrative record in a stipulated Tax Court case. This analysis details the facts, the scope of the taxpayer’s requests for relief from joint and several liability, and the court’s strict application of statutory and procedural standards.

Factual Background

The petitioner, Jodell Sample, and her husband, Joseph Schara (a practicing dentist in Minnesota), filed joint federal income tax returns. Sample worked as the office manager and receptionist in Schara’s dental practice, which was the couple’s main source of income. Sample’s formal education concluded with high school, and she heavily relied on Schara regarding the family’s finances. She admitted to signing their joint returns without reading them and not checking the business books or the mail. Schara consistently assured her that any unpaid tax debts were "just temporary" and that he would handle them.

The couple’s tax troubles spanned nearly a decade. Schara stopped reporting his dental practice income starting in 2011, and eventually stopped reporting Sample’s salary as well. By 2015, when a revenue officer visited their office, their accumulated tax debt had grown significantly. Despite this revelation, Sample did not immediately involve herself in the finances.

The liabilities at issue covered tax years 2011, 2012, 2013, 2014, 2017, and 2018. For 2011 through 2014, the combined outstanding balance reached $589,393 by the end of 2021. Notably, the 2014 return was the first to omit Sample’s wages from the dental office.

The couple legally separated in late March 2019 after Sample learned the full extent of their financial problems. The separation agreement was unusually favorable to Sample, granting her their main residence, a second home in Montana, one car, and Schara’s entire § 401(k) account, while Schara agreed to assume sole responsibility for all federal and state tax debts. However, the court noted that despite the legal separation, they continued to physically reside together in the marital home through at least 2021.

Taxpayer’s Request for Relief

Spouses who file a joint return are generally jointly and severally liable for the tax reported, pursuant to I.R.C. § 6013(d)(3). Sample sought relief from this joint liability under I.R.C. § 6015. Section 6015 offers three forms of relief: subsection (b) (relief from an understatement of tax), subsection (c) (allocation of a deficiency for separated/divorced spouses), and subsection (f) (equitable relief). Significantly, § 6015(f) is the only subsection that allows relief from an unpaid tax liability (underpayment) in addition to an understatement.

Sample filed numerous requests for relief:

2011–2013: She requested only equitable relief under § 6015(f).
2014: She requested relief under § 6015(b), (c), and (f).
2017: She requested innocent spouse relief during a Collection Due Process (CDP) hearing (I.R.C. § 6330) initiated after receiving a notice of intent to levy.
2018: She filed a Form 8857, Request for Innocent Spouse Relief, directly to the IRS’s Cincinnati Centralized Innocent Spouse Operation (CCISO).

The IRS issued final determinations denying relief for all years. Sample timely petitioned the Tax Court, and the cases were consolidated. Sample consented to submit all three cases for decision without a trial under Rule 122, agreeing to a fully stipulated record, despite the ability to offer testimony regarding newly discovered or previously unavailable information.

Court’s Analysis of Legal Standards and Scope of Review

The Tax Court organized its analysis by first addressing the forms of relief, the paths to seeking relief, and the applicable standards of review.

Standard and Scope of Review

The court noted that the standard and scope of review vary by the path a taxpayer uses to seek relief. For stand-alone petitions filed under § 6015, the review is de novo and is based upon the administrative record and any additional newly discovered or previously unavailable evidence (I.R.C. § 6015(e)(7); Kruja v. Commissioner, T.C. Memo. 2019-136, at *8 n.4).

For the 2017 tax year, where relief was requested during a CDP hearing (I.R.C. § 6330), the court concluded that raising an innocent-spouse defense transforms the resulting determination, at least for spousal defenses, into a determination under § 6015. This interpretation, endorsed by the Second Circuit in Wright v. Commissioner, 571 F.3d 215, 220 (2d Cir. 2009), and the Third Circuit in Ahmed v. Commissioner, 64 F.4th 477, 487 (3d Cir. 2023), mandates that the court apply the same de novo standard and scope provided by § 6015(e)(7).

Procedural Objection

Sample argued that the IRS improperly denied her the opportunity to present new evidence and rebut government findings, asserting she was owed a hearing before CCISO issued its preliminary determinations. The court rejected this, pointing out two primary problems:

Sample failed to take advantage of existing opportunities to submit supplemental material at the administrative level after her Forms 8857 were deemed valid and complete. The IRS is not obligated to ask for additional information unless the form is incomplete (IRM 25.15.3.10.3 (Jan. 10, 2020); IRM 25.15.6.8.8 (June 19, 2017)).
Sample chose not to submit any newly discovered or previously unavailable evidence when the case reached the Tax Court, instead agreeing to a fully stipulated decision under Rule 122. The court referenced Roman v. Commissioner, 87 T.C.M. (CCH) 835, 837 (2004), confirming that no statutory or regulatory provision mandates that taxpayers receive an unlimited opportunity to supplement the administrative record.

Application of Law to the Facts

Section 6015(b) Relief (2014 Understatement)

Section 6015(b) relief requires that all conditions be satisfied (Reynolds v. Commissioner, 124 T.C.M. (CCH) 311 (2022)). The key failure point for Sample was the requirement that the requesting spouse did not know and had no reason to know of the understatement at the time of signing the return (I.R.C. § 6015(b)(1)). The court applies the "knowledge-of-the-transaction" test, assessing whether the taxpayer was "aware of the circumstances that gave rise to the understatement of income" (Cheshire v. Commissioner, 282 F.3d 326, 332–33 (5th Cir. 2002); Wilson v. Commissioner, 113 T.C.M. (CCH) 1301 (T.C. 2017)).

The court acknowledged Sample’s lack of financial sophistication but found that the 2014 return was "obviously error-ridden". It omitted nearly $200,000 in business income and Sample’s own W-2 wages. Because Sample was the office manager and was paid from the business, she had insight into the income, and the failure to question these items created an inference of knowledge (Treas. Reg. § 1.6015-2(c)). The court concluded that § 6015(b)(1)(C) does not protect the "intentionally ignorant" (Hall v. Commissioner, 108 T.C.M. (CCH) 199 (2014)).

Conclusion on § 6015(b): Denied for 2014. The court found Sample had reason to know of the understatement.

Section 6015(c) Relief (2014 Deficiency)

Section 6015(c) allows for deficiency allocation if, among other requirements, the requesting spouse did not have actual knowledge of the items giving rise to the deficiency (I.R.C. § 6015(c)(3)). This is a more favorable standard than § 6015(b) because the IRS bears the burden of proving actual knowledge (Mitchell v. Commissioner, 292 F.3d 800, 804 (D.C. Cir. 2002)).

The court found that the Commissioner met this burden regarding the unreported business income. Sample worked at the practice, knew it was the family's primary income source, and stated in her application that she knew Schara had "substantial income". This established actual knowledge that income was being earned and should have been reported.

Conclusion on § 6015(c): Partially Denied for 2014. Relief was denied for the portion of the deficiency attributable to the unreported business income but granted for other components (like interest, capital-gain distributions, and dividends) that the Commissioner failed to defend [35, 37 n.11].

Section 6015(f) Equitable Relief (All Years)

The analysis for equitable relief follows the three-step framework of Revenue Procedure 2013-34.

Threshold Factors (Rev. Proc. 2013-34, § 4.01): The Commissioner conceded that Sample satisfied all threshold factors for all years at issue.

Streamlined Relief (Rev. Proc. 2013-34, § 4.02): Streamlined relief requires meeting all three conditions, including a finding that the requesting spouse would suffer economic hardship if relief were not granted. The court evaluates hardship based on facts available in the record (Pullins v. Commissioner, 136 T.C. 432, 446 (2011)). Sample reported $12,000 in total monthly income (including $8,000 alimony), which exceeded the 250% federal poverty guideline threshold. Her income also exceeded her reasonable basic monthly living expenses ($10,500) by more than $300. Coupled with assets totaling nearly $900,000, the court found she could make payments toward the tax liability while maintaining reasonable living expenses.

Conclusion on Streamlined Relief: Denied for all years. Sample failed the economic hardship test.

Multifactor Balancing Test (Rev. Proc. 2013-34, § 4.03): The court weighed the listed factors to determine if granting relief would be equitable.

Marital Status (§ 4.03(2)(a)): Sample was legally separated in March 2019. This factor favors relief.
Knowledge (§ 4.03(2)(c)): This factor required separate analysis for underpayments (U/P) versus understatements (U/S).
- Underpayments (2011–2014): Sample relied on Schara's assurances that the tax balances were "just temporary" and being handled. This factor weighs in favor of relief.
- Understatement (2014): As previously found under § 6015(b), Sample had reason to know Schara underreported business income and her own wages. This factor weighs against relief.
- Underpayments (2017 & 2018): After the 2015 revenue officer visit, Sample knew of the trouble. Her rapid separation and filing of the innocent-spouse claim shortly after the Department of Justice began collection litigation (United States v. Schara, No. 19-cv-696, D. Minn.) demonstrated that by the time the 2018 return was filed, she knew Schara would not pay. This factor weighs against relief.
Legal Obligation (§ 4.03(2)(d)): Schara assumed sole legal liability in the separation agreement. However, because the court found Sample likely knew Schara would fail to pay when she signed the agreement, this factor was deemed neutral.
Significant Benefit (§ 4.03(2)(e)): The benefit must be traceable to the omission of income (Zaher v. Commissioner, 103 T.C.M. (CCH) 1071, 1074 (2012)). Although Sample received substantial assets in the separation, the IRS conceded and the court agreed there was no evidence of significant benefit resulting from the failure to pay the tax liabilities. This factor was found to be neutral.
Compliance (§ 4.03(2)(f)(i)): The Commissioner conceded that Sample’s post-separation compliance with tax laws favored her. This factor weighs in favor of relief.
Physical and Mental Health (§ 4.03(2)(e)): Sample reported no health problems. This factor was neutral.

Conclusions of the Court

The ultimate conclusion rested on whether Sample should reasonably have reacted to Schara’s tax troubles by disentangling herself from the joint filing status. The court used the 2015 revenue officer visit as the dividing line for determining the reasonableness of her ignorance.

The court granted relief only for tax years where Sample’s lack of knowledge regarding the underpayment was deemed reasonable, resulting in a split decision.

Relief Granted: Equitable relief under I.R.C. § 6015(f) for tax years 2011, 2012, and 2013. (Knowledge factor favored Sample for these years' underpayments).
Relief Denied: Relief was denied for tax years 2014, 2017, and 2018. (The knowledge factor weighed against Sample for the 2014 understatement and the 2017 and 2018 underpayments).

The court issued an order directing the parties to agree on the wording of the decisions in these cases.

Analogy to solidify understanding: The court's application of the different knowledge standards under § 6015 is like evaluating an investment portfolio. Under § 6015(c), the IRS must prove actual knowledge of a specific bad asset (a direct understanding of the problematic item), which is a high bar. Under § 6015(b) and (f), the taxpayer must prove they had no reason to know (or "reason to know" weighs against them), meaning they are held responsible if a reasonable person, reviewing their account statements (the tax return), would have questioned obvious discrepancies or massive losses (omitted income or huge unpaid balances). After the 2015 IRS visit, Sample was reasonably expected to look at the portfolio’s performance, and by 2017 and 2018, her continued failure to act constituted "reason to know" that her partner could not cover the bills.

Prepared with assistance from NotebookLM.