Suzanne Vance Fain, a.k.a. Suzanne Fain-Poisson v. Commissioner , 129 T.C. No. 11 ( 2007 )

129 T.C. No. 11UNITED STATES TAX COURT
SUZANNE VANCE FAIN, a.k.a. SUZANNE FAIN-POISSON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 214-07. Filed October 2, 2007.
P sought review of respondent’s denial of
innocent-spouse relief under section 6015, triggering
respondent’s obligation to notify her husband of his
right to intervene. Her husband died before receiving
the notice. Respondent moved for a continuance to
allow notification of any heirs or personal
representatives of his estate.
Held: A nonrequesting spouse’s right to intervene
survives death, and respondent is obliged to try
appropriate means to notify any heirs, executors, or
administrators.
Thomas E. Crowe, for petitioner.
Derek W. Kaczmarek, for respondent.
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OPINION
HOLMES, Judge: Suzanne Vance Fain filed this case when the
Commissioner refused to grant her innocent-spouse relief from her
unpaid tax liability for 1999. Her case was already on a trial
calendar when Commissioner’s counsel realized that the IRS had
not notified her husband of his right to intervene. That turned
out to be impossible--he was dead.
We are called to plug a small but noticeable gap in the tax
law--is a nonrequesting spouse’s right to intervene extinguished
by death or does it instead pass to a successor-in-interest?
Background
According to the pleadings already filed in this case, the
Fains filed a joint tax return for 1999. It showed that they
owed about $15,000, but neither Fain paid. The couple later
separated, and eventually the Commissioner began to try to
collect the unpaid tax.
In February 2006, Suzanne filed a request for innocent-
spouse relief under section 60151 with the Commissioner. He
denied it in September 2006, and Suzanne filed a petition seeking
review with this Court. Section 6015(e)(4) required us to issue
rules that provide nonrequesting spouses “with adequate notice
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code for the year in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
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and an opportunity to become a party.” Our Court’s Rule 325--
which we promulgated to answer that section’s call--requires the
IRS to serve notice that a petition has been filed "on the other
individual filing the joint return” no later than 60 days from
the date that the petition itself was served. The Commissioner
overlooked this obligation here until the case was already on a
trial calendar. Then he learned that Robert Fain had died in
2002.
Discussion
The first question we have to answer is whether Robert’s
right to intervene survives his death. There's no clear answer
in the Code or regulations, so we rely on analogy, some
background principles of law, and a nod to reasonableness. We
start with the language of section 6015(e)(4), which gives a
nonrequesting spouse the unconditional right to “become a party.”
We have already held that this means that he has a right to
intervene within the meaning of rule 24(a)(1) of the Federal
Rules of Civil Procedure. Van Arsdalen v. Commissioner, 123 T.C.
135, 143 (2004). And it is generally the case that a right to
intervene passes to a decedent’s estate. See, e.g., Salt River
Pima-Maricopa Indian Cmty. v. United States, 231 Ct. Cl. 1033(1982). An estate’s right to intervene in some cases does not,
of course, imply a general rule that all rights to intervene sur-
vive death. But Franklin observed long ago that nothing in life
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is certain but death and taxes. And the Internal Revenue Code
makes sure that taxes survive even death. Sec. 6901(a)(1)(A)(i),
(h). The survival of a decedent’s tax liability means that as a
practical matter his heirs or beneficiaries may be affected by
the outcome of an innocent-spouse case. The opportunity to
intervene is an opportunity to protect those interests, because
granting innocent-spouse relief will make the estate of the
nonrequesting spouse the only source of payment for any unpaid
tax the deceased has left behind.
Turning to the Code again, we find that it also states, as a
general rule, that any person acting for another person in a
fiduciary capacity shall assume the powers, rights, duties, and
privileges of that person with respect to taxes, sec. 6903, and
that the word "fiduciary" includes executors and administrators,
sec. 7701(a)(6).
We have already applied these sections to allow executors
and administrators to seek innocent-spouse relief, e.g., Jonson
v. Commissioner, 118 T.C. 106 (2002) (estate of deceased spouse
able to request relief under section 6015), affd. 353 F.3d 1181,
1184 (10th Cir. 2003), and the Commissioner himself has ruled
likewise, Rev. Rul. 2003-36, 2003-1 C.B. 849. Construing the
Code to allow executors and administrators to intervene to oppose
relief seems equally justified.
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We finally note that allowing intervention is reasonable be-
cause it likely will increase the probability that we'll reach
the right result in any particular case. This is why we’ve con-
strued the right of a living spouse to intervene not just to op-
pose a petition, e.g., King v. Commissioner, 115 T.C. 118, 125
(2000), but also to support it, e.g., Van Arsdalen, 123 T.C. at
142.
We note that this is our construction of a statutory right,
and should not be confused with the issue of whether someone who
is jointly liable on a tax debt has constitutional standing to
challenge the Commissioner’s decision to let another taxpayer off
the hook for that debt. The Ninth Circuit--the circuit to which
this case would be appealed because Suzanne was a Nevada resident
when she filed her petition--has held that a nonrequesting spouse
lacks standing to challenge on appeal our decision to grant
innocent-spouse relief precisely because the spouse’s liability
would remain the same whether or not relief was granted,
Baranowicz v. Commissioner, 432 F.3d 972, 975 (9th Cir. 2005),
affg. T.C. Memo. 2003-274, and we are not faced with that issue
here.
The last question is what the Commissioner should do when
neither he nor the requesting spouse has any idea whether there
is an estate and whether it has a personal representative. While
there may well be circumstances in which the Court’s discretion
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points in another direction, in this case we agree with the
Commissioner that it is appropriate to use an analogy to our
long-followed procedure in deficiency cases. That procedure, as
described in Nordstrom v. Commissioner, 50 T.C. 30, 32 (1968), is
to file an order requiring both parties
to furnish the Tax Court, insofar as
ascertainable and to the best of their
abilities, the names and addresses of the
heirs at law of the decedent, under the law
of the jurisdiction wherein the decedent was
a resident when his death occurred
and for the Court to then notify the heirs. Id.We think this is the most reasonable procedure in the
absence of a statute or regulation providing differently. To
enable the parties to search for heirs, this case will be
continued,
And an appropriate order will
be issued.