Taxpayer, Never Having Filed a Joint Return, Could Not Obtain Innocent Spouse Relief

A taxpayer who filed her petition in Tax Court asking for innocent spouse relief under IRC §6015 discovered that the Tax Court could not offer her relief because there, in fact, had not been a joint return filed.  In the case of Abdelhadi v. Commissioner, TC Memo 2018-183, the Tax Court ruled that because she had filed a petition for redetermination of the deficiency, the Court could only rule whether she was entitled to §6015 style relief—and, not having actually filed a joint return, there was no such relief available.

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Tax Petition Filed Late and Case Dismissed, Despite IRS Giving Taxpayer Erroneous Deadline Date

The Fourth Circuit Court of Appeals affirmed the Tax Court’s determination that an individual who filed her Tax Court petition on the date IRS representatives twice told her was the final day to file had missed the deadline and the case could not be heard.  The case in question is Nauflett v. Commissioner, CA4, Case No. 17-1986.

The matter that Shari wanted to be heard by the Tax Court is described by the Circuit Court panel as follows:

The IRS charged Shari and Derek Nauflett, wife and husband and joint income tax filers, as jointly and severally liable for unpaid taxes, interest, and penalties for tax years 2002–04 and 2008.1 Nauflett requested relief under the innocent spouse doctrine. The letters of final determination from the IRS denying Nauflett's request were dated June 17, 2015, and contained the following statement: “If you disagree with our decision, you can file a petition with the United States Tax Court to review our denial. You must file your petition within 90 days from the date of this letter. . . . [T]he IRS cannot change the time period.” E.g., J.A. 15.

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Despite Finding Taxpayer Had Constructive Knowledge of Income, Innocent Spouse Relief Under Section 6015(c) Granted

A taxpayer was granted innocent spouse relief in the case of Bishop v. Commissioner, TC Summary Opinion 2018-1, despite the fact that the Tax Court found that he should have been aware of the distribution that gave rise to the liability. 

The taxpayer’s spouse had inherited an IRA account from her father in 2009.  From 2009 to 2013 various distributions had been taken from the account, ranging from $4,000 to $48,000, and reported on the couple’s joint income tax return.

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Divorce Decree Splitting Ex-Spouse's Liability for Prior Taxes Did Not Control Innocent Spouse Relief

In the case of Asad and Akel v. Commissioner, TC Memo 2017-80 the IRS agreed each of the now divorced spouses should be liable for only a portion of the tax due, each qualifying for innocent spouse relief under IRC §6015 for tax liabilities arising from rental properties owned by the other spouse.

However, the taxpayers in this case, while accepting that neither should be liable for the entire balance due, argued that rather than using the allocation the IRS arrived at based on the ownership of the properties leading to the tax liability, each should be relieved of 50% of the liability.  That is, they proposed to split the tax evenly.

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Petition to Challenge IRS Denial of Innocent Spouse Relief Filed Too Late Despite Filing on Date Provided for in IRS Correspondence

If the IRS erroneously informs a taxpayer that the last day for filing a Tax Court petition is later than the actual deadline (90 days after the IRS mailed its determination of final relief in this case as provided in IRC §6015(e)(1)(A)), does that extent the time the taxpayer has to file with the Tax Court?  In the case of Rubel v. Commissioner, CA3, No. 16-3526, the Third Circuit Court of Appeals ruled that the answer is no—the Tax Court lacks jurisdiction to hear the case once the 90-day period expires, despite the erroneous information provided by the IRS.

In the case in question the IRS had denied Nancy’s request for innocent spouse relief on January 4, 2016 for two tax years and on January 13, 2016 for another tax year.  The date 90 days from those dates were April 4, 2016 for the first two years and April 12, 2016 for the final year.

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Even Though Entire Understatement Attributable to Requesting Spouse's Income, Tax Court Grants Partial Equitable Innocent Spouse Relief

The IRS had denied §6015(f) innocent spouse relief to Joseph Boyle in the case of Boyle v. Commissioner, TC Memo 2016-87 since the interest and penalties from which he sought relief were directly related to income from his sole proprietorship.  But the Tax Court did not agree given the facts of the case.

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Failure to Notice Obvious Issues with Returns Fatal to Innocent Spouse Relief

At first glance Sletta Arobo appeared to be a perfect “innocent spouse” candidate.  But, as we’ll discover in her case (Arobo v. Commissioner, TC Memo 2016-66) even the “perfect” candidate has certain minimum duties with regard to the tax return and when she ignored these duties she lost the possibility of gaining innocent spouse relief.

The tax in this case arose from her husband’s business, as well as a failure to file returns for a number of years.  

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