Diane Fernandez v. Commissioner , 114 T.C. No. 21 ( 2000 )

114 T.C. No. 21UNITED STATES TAX COURT
DIANE FERNANDEZ, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16710-99. Filed May 10, 2000.
P submitted a request to R for innocent spouse
relief pursuant to sec. 6015(b), (c), and (f), I.R.C.
R mailed to P a determination which denied the
requested relief. P filed a timely petition with the
Court pursuant to sec. 6015(e), I.R.C. P seeks review
of R’s denial of relief under sec. 6015(b), (c), and
(f), I.R.C. R moved to dismiss for lack of
jurisdiction and to strike as to sec. 6015(f), I.R.C.
R further moved to strike certain allegations of fact
raised by P in the petition.
Held: We have jurisdiction to review a request for
innocent spouse relief under sec. 6015(f), I.R.C., when
P makes a requisite election under sec. 6015(b) and/or
(c), I.R.C., and files a timely petition with the Tax
Court pursuant to sec. 6015(e), I.R.C. See Butler v.
Commissioner, 114 T.C. ___ (2000). Accordingly, R’s
motion to dismiss for lack of jurisdiction and to
strike is denied. Held, further, allegations of fact
raised in the petition are relevant to P’s request for
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innocent spouse relief. R’s motion to strike P’s
allegations of fact is denied.
Francine K. Cardella, for petitioner.
Rose E. Gole, for respondent.
OPINION
COHEN, Chief Judge: This case was assigned to Chief Special
Trial Judge Peter J. Panuthos pursuant to the provisions of
section 7443A(b)(5). Unless otherwise indicated, section
references are to the Internal Revenue Code as amended, and all
Rule references are to the Tax Court Rules of Practice and
Procedure. The Court agrees with and adopts the opinion of the
Special Trial Judge, which is set forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
PANUTHOS, Chief Special Trial Judge: This matter is before
the Court on respondent’s motion to dismiss for lack of
jurisdiction and to strike. The issues for decision are: (1)
Whether this Court has jurisdiction to review the denial of a
request for innocent spouse relief pursuant to section 6015(f);
and (2) whether certain allegations of fact asserted in the
petition are relevant to petitioner’s request for innocent spouse
relief.
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Background
In March 1999, petitioner submitted to respondent a request
for relief from joint and several liability for taxable year 1988
under section 6015(b), (c), and (f). In a letter dated July 27,
1999, respondent denied the requested relief.1 The determination
letter advised that petitioner was not entitled to relief and
included the following explanation: “Because the taxpayer Diane
Fernandez had actual and constructive knowledge of the Capital
Gains and the tax underpayment. In addition, the petitioning
spouse received a significant financial benefit when she received
sales proceeds of $19,532.13 in tax year 1988.”
On October 28, 1999, petitioner filed a timely petition with
this Court pursuant to section 6015(e) to review respondent’s
denial of relief. Petitioner asserts entitlement to relief under
section 6015(b), (c), and (f). The petition sets forth several
bases of error by respondent and alleges facts in support of such
bases. Two of such allegations of fact are:
1
Petitioner asserts in the petition that the
determination letter was mailed to petitioner and her agent on
Oct. 6, 1999. Respondent, in his answer to the petition, denies
for lack of sufficient information whether a copy of the
determination was mailed on Oct. 6, 1999. Respondent did not
provide any evidence of the mailing date of the July 27, 1999,
letter. While the record is not clear as to the mailing date of
respondent’s determination letter, we note that the petition,
which was postmarked Oct. 25, 1999, and received by the Court on
Oct. 28, 1999, would be timely even assuming the determination
letter was mailed on July 27, 1999. See secs. 6015(e)(1), 7502.
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5. The facts upon which the petitioner relies, as
the basis of the petitioner’s case, are as follows:
* * * * * * *
B. The Petitioner was not in control of the
marital finances, which were one of the governing
factors in the preparation of the 1988 jointly filed
income tax return.
C. The sale of the house in question was owned
exclusively by the Petitioner’s former spouse. The
Petitioner had neither a proprietary nor a financial
interest in the house which was sold which caused the
underpayment of the income tax assessed.
Respondent filed an answer to the petition and subsequently
filed a motion to dismiss for lack of jurisdiction and to strike
as to relief sought under section 6015(f). Respondent further
moved to strike the allegations of fact contained in paragraphs
5.B. and 5.C. of the petition. At the time of filing the
petition, petitioner resided in Elmhurst, New York.
Discussion
1. General
Congress enacted section 6015 in the Internal Revenue
Service Restructuring and Reform Act of 1998, Pub. L. 105-206,
sec. 3201, 112 Stat. 685, 734, as a means of expanding relief to
innocent spouses. See H. Conf. Rept. 105-599, at 53 (1998); S.
Rept. 105-174, at 65, 68 (1998); H. Rept. 105-364 (Part I) at 60-
62 (1998). Section 6015(a) provides that, if an individual has
made a joint return, he or she may elect to seek relief from
joint and several liability under subsection (b). In addition,
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such individual may elect to limit his or her liability under
subsection (c) if eligible.
Section 6015(b) enumerates requirements for seeking innocent
spouse relief. Specifically, section 6015(b) provides:
SEC. 6015(b). Procedures For Relief From Liability
Applicable to All Joint Filers.--
(1) In general.--Under procedures prescribed by
the Secretary, if–-
(A) a joint return has been made for a
taxable year;
(B) on such return there is an understatement
of tax attributable to erroneous items of 1
individual filing the joint return;
(C) the other individual filing the joint
return establishes that in signing the return he
or she did not know, and had no reason to know,
that there was such understatement;
(D) taking into account all the facts and
circumstances, it is inequitable to hold the other
individual liable for the deficiency in tax for
such taxable year attributable to such
understatement; and
(E) the other individual elects (in such form
as the Secretary may prescribe) the benefits of
this subsection not later than the date which is 2
years after the date the Secretary has begun
collection activities with respect to the
individual making the election,
then the other individual shall be relieved of
liability for tax (including interest, penalties, and
other amounts) for such taxable year to the extent such
liability is attributable to such understatement.
Subsection (c) of section 6015 provides an opportunity to
limit liability, as follows:
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SEC. 6015(c). Procedures to Limit Liability for
Taxpayers No Longer Married or Taxpayers Legally Separated
or Not Living Together.--
(1) In general.--Except as provided in this
subsection, if an individual who has made a joint
return for any taxable year elects the application of
this subsection, the individual's liability for any
deficiency which is assessed with respect to the return
shall not exceed the portion of such deficiency
properly allocable to the individual under subsection
(d).
* * * * * * *
(3) Election.--
(A) Individuals eligible to make election.--
(i) In general.--An individual shall
only be eligible to elect the application of
this subsection if–
(I) at the time such election is
filed, such individual is no longer
married to, or is legally separated
from, the individual with whom such
individual filed the joint return to
which the election relates; or
(II) such individual was not a
member of the same household as the
individual with whom such joint return
was filed at any time during the
12-month period ending on the date such
election is filed.
(ii) Certain taxpayers ineligible to
elect.--If the Secretary demonstrates that
assets were transferred between individuals
filing a joint return as part of a fraudulent
scheme by such individuals, an election under
this subsection by either individual shall be
invalid (and section 6013(d)(3) shall apply
to the joint return).
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Section 6015(f) provides an additional opportunity for
relief as follows:
SEC. 6015(f). Equitable Relief.--Under procedures
prescribed by the Secretary, if–-
(1) taking into account all the facts and
circumstances, it is inequitable to hold the individual
liable for any unpaid tax or any deficiency (or any
portion of either); and
(2) relief is not available to such individual
under subsection (b) or (c), the Secretary may relieve
such individual of such liability.
2. Jurisdiction
The first issue to be decided is whether this Court has
jurisdiction to review a denial of a request for innocent spouse
relief pursuant to section 6015(f).
The Tax Court is a court of limited jurisdiction, and we may
exercise our jurisdiction only to the extent authorized by
Congress. See Gati v. Commissioner, 113 T.C. 132, 133 (1999);
Yuen v. Commissioner, 112 T.C. 123, 124 (1999); Bourekis v.
Commissioner, 110 T.C. 20, 24 (1998). The question of the
Court’s jurisdiction is fundamental and must be addressed when
raised by a party or on the Court’s own motion. See Naftel v.
Commissioner, 85 T.C. 527, 530 (1985).
A. Section 6015(e)
The petition herein has been filed pursuant to section
6015(e). Section 6015(e), as pertinent here, provides:
SEC. 6015(e). Petition for review by Tax Court.--
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(1) In general.--In the case of an individual who
elects to have subsection (b) or (c) apply–-
(A) In general.--The individual may petition
the Tax Court (and the Tax Court shall have
jurisdiction) to determine the appropriate relief
available to the individual under this section if
such petition is filed during the 90-day period
beginning on the date on which the Secretary mails
by certified or registered mail a notice to such
individual of the Secretary's determination of
relief available to the individual.
Notwithstanding the preceding sentence, an
individual may file such petition at any time
after the date which is 6 months after the date
such election is filed with the Secretary and
before the close of such 90-day period.
* * * * * * *
(3) Applicable rules.--
(A) Allowance of credit or refund.-–Except as
provided in subparagraph (B), notwithstanding any
other law or rule of law * * *, credit or refund
shall be allowed or made to the extent
attributable to the application of subsection (b)
or (f).
(B) Res judicata.--In the case of any
election under subsection (b) or (c), if a
decision of the Tax Court in any prior proceeding
for the same taxable year has become final, such
decision shall be conclusive except with respect
to the qualification of the individual for relief
which was not an issue in such proceeding. The
exception contained in the preceding sentence
shall not apply if the Tax Court determines that
the individual participated meaningfully in such
prior proceeding.
* * * * * * *
(4) Notice to other spouse.–- The Tax Court shall
establish rules which provide the individual filing a
joint return but not making the election under
subsection (b) or (c) with adequate notice and an
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opportunity to become a party to a proceeding under
either such subsection.
We have been asked, in this “stand alone” petition filed
pursuant to section 6015(e)(1)(A), to decide whether we have
authority to review a denial of relief under section 6015(f).
Since our jurisdiction in this case is dependent upon section
6015(e)(1)(A), we look to the language of section 6015 to
determine whether we have authority to review a denial of relief
under section 6015(f). In Butler v. Commissioner, 114 T.C. ___
(2000), respondent argued that section 6015(e) precluded judicial
review of claims made pursuant to section 6015(f). We opined in
Butler that “We find nothing in section 6015(e) that precludes
our review of respondent’s denial of equitable relief to
petitioner”.
In this case, respondent asserts that, since section
6015(e)(1) provides “in the case of an individual who elects to
have subsection (b) or (c) apply”, the language of the statute
limits our jurisdiction to the review of an election made under
subsection (b) or (c). Therefore, respondent contends, we do not
have jurisdiction to review relief under subsection (f). We do
not agree, as explained more fully below.
When we interpret section 6015(e) to determine the scope of
our jurisdiction, our purpose is to give effect to Congress’
intent. To accomplish this, we must begin with the statutory
language, which is the most persuasive evidence of the statutory
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purpose. See United States v. American Trucking Associations,
Inc., 310 U.S. 534, 542-543 (1940). Usually, the plain meaning
of the statutory language is conclusive. See United States v.
Ron Pair Enters., Inc., 489 U.S. 235, 242 (1989); Woodral v.
Commissioner, 112 T.C. 19, 23 (1999). If a statute is silent or
ambiguous, we may look to the statute’s legislative history in an
attempt to determine congressional intent. See Burlington N.
R.R. v. Oklahoma Tax Commn., 481 U.S. 454, 461 (1987); Griswold
v. United States, 59 F.3d 1571, 1575-1576 (11th Cir. 1995). When
a statute appears to be clear on its face, there must be
unequivocal evidence of legislative purpose before interpreting
the statute so as to override the plain meaning of the words used
therein. See Huntsberry v. Commissioner, 83 T.C. 742, 747-748
(1984); see also Pallottini v. Commissioner, 90 T.C. 498, 503
(1988), and the cases cited therein.
We first look to the prefatory language contained in section
6015(e)(1) which states: “in the case of an individual who elects
to have subsection (b) or (c) apply”. We conclude that this
language does not contain words of limitation that confine our
jurisdiction to review of an election under subsections (b)
and/or (c), as respondent contends. Rather, we understand this
language to encompass the procedural requirement applicable to
all joint filers seeking innocent spouse relief and, therefore,
states the prerequisite to seeking our review of such relief.
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Section 6015(a)(1) provides that, if an individual has made
a joint return, he or she may elect to seek innocent spouse
relief pursuant to the procedures set forth in subsection (b).
If the individual is eligible, he or she may also elect to limit
their liability pursuant to subsection (c). See sec. 6015(a)(2).
Subsections (b) and (c), read together, encompass all joint
filers who have the opportunity to seek innocent spouse relief.
Section 6015(f) provides an additional opportunity for
relief to those taxpayers who do not otherwise meet the
requirements of subsection (b) or (c). Specifically, section
6015(f) provides that if, taking into account all the facts and
circumstances, it is inequitable to hold the individual liable
for any unpaid tax or any deficiency (or any portion of either),
and relief is not available to such individual under subsection
(b) or (c), the Secretary may relieve such individual of such
liability. Section 6015(f) does not require an affirmative
election for relief as do subsections (b) and (c). We interpret
this to mean that section 6015(f) provides an additional
opportunity for relief to those individuals who elect relief
under subsection (b) or (c) but do not meet one or more of the
respective requirements of those subsections. In fact, a
prerequisite for relief under section 6015(f) is that relief is
not available under section 6015(b) or (c). See sec. 6015(f)(2).
Therefore, we conclude, before an individual may petition this
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Court for review of innocent spouse relief, including relief
under subsection (f), such individual must make an election under
subsections (b) and/or (c).
As we pointed out in Butler v. Commissioner, supra, the
statutory language which grants jurisdiction to the Tax Court
over subsection (f) is found in the statutory text: “the
individual may petition the Tax Court (and the Tax Court shall
have jurisdiction) to determine the appropriate relief available
to the individual under this section”. Sec. 6015(e)(1)(A)
(emphasis added). It is our view that Congress intended the term
“under this section” to include all subsections of section 6015
in their entirety.
Our interpretation of the term “under this section” is
consistent with our recent interpretation of identical language
used in section 6404(g)2 which provides in part that the “Tax
Court shall have jurisdiction * * * to determine whether the
Secretary’s failure to abate interest under this section was an
abuse of discretion” (emphasis added). We held in Woodral v.
Commissioner, supra at 22-23, that “Section 6404(g) clearly
grants the Court jurisdiction to review the Commissioner’s
failure to abate interest under all subsections of section 6404
and does not limit the Court’s jurisdiction to review cases
2
Sec. 6404(g) was redesignated sec. 6404(i) by the
Internal Revenue Restructuring and Reform Act of 1998, Pub. L.
105-206, secs. 3305(a), 3309(a), 112 Stat. 743, 745.
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arising only under section 6404(e)” (emphasis added). We also
note that Congress recently amended section 6015(e)(3)(A) in
recognition of the distinction between the terms “section” and
“subsection”. Congress amended section 6015(e)(3)(A) by striking
“of this section” and inserting “of subsection (b) or (f)”.
Omnibus Consolidated and Emergency Supplemental Appropriations
Act of 1999, Pub. L. 105-277, sec. 4002(c), 112 Stat. 2681-906.
B. Legislative History
In Butler v. Commissioner, supra, we opined that the
legislative history of section 6015 supported an interpretation
that section 6015 does not limit our authority to review section
6015(f). For the same reasons as fully discussed in Butler, we
hold that the legislative history of section 6015 makes clear
that Congress did not intend to limit our review of section 6015.
C. Section 6015(f)
Section 6015(f) provides that the Commissioner may relieve
an individual of liability if, taking into account all the facts
and circumstances, it is inequitable to hold the individual
liable for any unpaid tax or deficiency (or portion thereof), and
relief is not available to such individual under subsection (b)
or (c). Respondent asserts that we do not have jurisdiction to
review a denial of a claim for innocent spouse relief under
section 6015(f) because the granting of such relief is
discretionary.
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This argument is identical to that made in Butler v.
Commissioner, supra. We concluded in Butler v. Commissioner,
supra, that the Commissioner’s authority is not committed solely
to agency discretion and is, therefore, susceptible to judicial
review. We further concluded that we are well equipped to decide
whether it was an abuse of discretion for respondent to deny
relief to a taxpayer under section 6015(f). For the same reasons
as more fully discussed in Butler v. Commissioner, supra, we
conclude that we have authority to review respondent’s denial of
petitioner’s claim for equitable relief.
3. Allegations of Fact
In her petition to this Court, petitioner asserted error by
respondent for failing to consider certain facts in his denial of
innocent spouse relief. Petitioner recited the alleged facts in
her petition, see supra p. 4, as bases for such error.
Respondent moved to strike the paragraphs from the petition
as not relevant to the determination of whether petitioner is
entitled to innocent spouse relief. Petitioner is required to
set forth clear and concise statements of the facts on which
petitioner bases the assignments of error. See Rule 34(b)(5);
Jarvis v. Commissioner, 78 T.C. 646, 658 (1982); Gordon v.
Commissioner, 73 T.C. 736, 739 (1980); Risner v. Commissioner,
T.C. Memo. 1996-82. Such facts are relevant to the issue of
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innocent spouse relief. Accordingly, respondent’s motion to
strike is denied.
To reflect the foregoing,
An order will be issued
denying respondent’s motion to
dismiss for lack of
jurisdiction and to strike
with respect to section
6015(f) and to strike with
respect to allegations of fact
asserted in the petition.