Ann Marie Minihan, and John J. Minihan, Jr., Intervenor v. Commissioner

ANN MARIE MINIHAN, PETITIONER, AND JOHN J. MINIHAN,
JR., INTERVENOR v. COMMISSIONER OF INTERNAL
REVENUE, RESPONDENT
Docket No. 26595–09. Filed January 11, 2012.
P petitioned for review of R’s denial of innocent spouse
relief under I.R.C. sec. 6015(f), and R created a separate
account for each spouse in order to pursue collection from I
(P’s former husband) while collection against P was suspended
pursuant to I.R.C. sec. 6015(e)(1)(B). While P’s petition was
pending, R collected the entire tax liability at issue by levying
on a bank account owned jointly by P and I. As a result, P
now seeks a refund pursuant to I.R.C. sec. 6015(g)(1), in the
amount of 50% of the funds levied from the joint account. R
contends that P is not entitled to a refund of funds owned
jointly by P and I and applied to I’s liability. Held: Under
State law P owned a 50% share of the funds held in the joint
bank account, and she is not precluded from a refund under
I.R.C. sec. 6015(g)(1) of her share of levied funds.
Roger M. Ritt, for petitioner.
John J. Minihan, Jr., for himself.
Erika B. Cormier, for respondent.
GUSTAFSON, Judge: This case arises from petitioner Ann
Minihan’s timely request under section 6015(f) 1 for ‘‘innocent
spouse’’ relief from joint liability for tax years 2001, 2002,
1 Unless otherwise indicated, all citations of sections refer to the Internal Revenue Code of
1986 (26 U.S.C.), as amended, and all citations of Rules refer to the Tax Court Rules of Practice
and Procedure.
1
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2 138 UNITED STATES TAX COURT REPORTS (1)
2003, 2004, 2005, and 2006. The Internal Revenue Service
(IRS) denied Ms. Minihan’s request for relief because (it con-
cluded) she had not shown that it would be inequitable to
hold her responsible for the tax liability. On November 9,
2009, Ms. Minihan filed with this Court a timely petition
appealing the IRS’s denial of innocent spouse relief and
asking this Court to determine the appropriate relief avail-
able to her under section 6015—in particular, a refund of her
share of the funds taken by the IRS from a joint bank account
to satisfy the separate liability of her former husband, inter-
venor John Minihan, for the joint income tax debt.
The IRS contends (1) that Ms. Minihan is not entitled to
any relief from joint liability under section 6015 and (2) that,
even if she is entitled to such relief, she is not entitled to any
refund of the money levied from the joint account. On Feb-
ruary 1, 2011, the IRS moved for summary judgment pursu-
ant to Rule 121 on the second issue only, i.e., Ms. Minihan’s
non-entitlement to a refund of the levied funds. On March
21, 2011, the Court held a hearing on the IRS’s motion, took
that motion under advisement, and held a partial trial of the
facts pertinent to the refund issue. 2 The IRS’s motion for
summary judgment will be denied as moot (in view of the
partial trial), and the refund issue will be decided in favor
of Ms. Minihan.
FINDINGS OF FACT
At the time Ms. Minihan filed her petition, she resided in
Massachusetts. On March 2, 2010, Mr. Minihan intervened
in this action pursuant to Rule 325(b). At the time Mr.
Minihan filed his notice of intervention, he also resided in
Massachusetts.
2 The question whether a section 6015(f) petitioner is eligible for any relief is logically prior
to the question whether she is entitled to a particular form of relief (i.e., a refund); and in a
sense the Court’s holding a partial trial on the latter question first puts the cart before the
horse. However, because here the entire joint liability has been satisfied, petitioner’s request for
relief is moot (since the IRS will engage in no more collection activity) unless a refund is pos-
sible. The IRS sensibly moved for partial summary judgment on this issue, since if the motion
succeeded, the parties and the Court could avoid a trial on the fact-intensive and sometimes
vexing question of entitlement to equitable relief under section 6015(f). We follow the IRS’s lead
in addressing the refund question first; but we decide here that petitioner’s eligibility for section
6015(f) relief cannot be avoided in this case.
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(1) MINIHAN v. COMMISSIONER 3
The Minihans’ family and finances
Mr. and Ms. Minihan were married in 1989. They have
three daughters, born in 1990, 1992, and 1994. Throughout
their marriage Mr. Minihan worked outside the home in var-
ious business ventures, while Ms. Minihan worked as a
homemaker raising their daughters. Before their divorce, the
Minihans enjoyed (in Ms. Minihan’s words) an ‘‘upper-middle
class lifestyle’’ that included living in a $1.5 million home in
Hingham, Massachusetts, owning a summer home on Cape
Cod, and sending their daughters to private school.
Tax filings
Mr. Minihan handled the family finances. Ms. Minihan
alleges that it was not until after the Minihans’ financial
situation deteriorated in 2007 that Ms. Minihan became
aware of and involved in their finances. During the tax years
in question, Mr. Minihan prepared joint Federal income tax
returns for Mr. and Ms. Minihan. Both Mr. and Ms. Minihan
signed the returns for these years. However, allegedly unbe-
knownst to Ms. Minihan, when Mr. Minihan filed the joint
returns he did not remit payment of the Federal income tax
balances (or additions to tax) due for 2002, 2003, 2004, 2005,
or 2006. 3 This resulted in the IRS’s assessing the amounts
due, plus additions to tax. The IRS has never determined an
understatement or deficiency against Mr. or Ms. Minihan.
In 2004 the IRS started collection activity with regard to
the Minihans’ unpaid taxes, additions to tax, and interest for
tax years 2001 and 2002. Over the course of 2004 and 2005,
the IRS by levy collected $6,704.50, which the IRS applied
against the Minihans’ 2001 and 2002 tax liabilities. The IRS
did not make any additional levies until 2010.
Ms. Minihan says she first learned about the Federal
income tax delinquencies when she saw IRS correspondence
in July 2007 regarding their unpaid taxes. After learning
this information, Ms. Minihan resubmitted their joint
returns at her accountant’s suggestion (for reasons not clear
in our record), but she did not remit payments for the tax or
additions to tax due on those returns.
3 For 2001 the Minihans filed their joint return and paid their tax due on time but incurred
an estimated tax penalty, which remained unpaid until the IRS’s 2004 and 2010 levies collected
the entire amount due.
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4 138 UNITED STATES TAX COURT REPORTS (1)
Divorce, sale of house, and innocent spouse petition
The Minihans’ marriage rapidly deteriorated in the
summer of 2007, and Ms. Minihan filed for divorce in the
Probate and Family Court of Massachusetts on September
21, 2007. The divorce, which was not finalized until January
2011, was contentious and difficult for the Minihans. In 2008
the Minihans sold their family house in Hingham, Massachu-
setts—which the two of them had owned jointly—and depos-
ited the net proceeds from the sale into a joint Bank of
America certificate of deposit account, which likewise the two
of them owned jointly. 4 It was their mutual intention that
Mr. and Ms. Minihan would be co-owners of the Bank of
America account, that they would each be entitled to an
equal amount of the account, and that they would ‘‘keep the
money [in the account] so neither one could run off with it’’,
since the money in the account was to be used to fund their
children’s education. When the divorce was finalized in
January 2011, the final divorce decree provided that all of
the funds remaining in the Bank of America account—about
$26,000 after the IRS levies discussed below—would be used
to pay their children’s education expenses. Since the
remainder of the funds would be consumed with the chil-
dren’s education expenses, the divorce decree did not address
any further asset division with respect to this account.
On June 23, 2008, the IRS received Ms. Minihan’s Form
8857, Request for Innocent Spouse Relief, requesting relief
from joint and several liability for the tax due for tax years
2001 through 2006. In accordance with IRS procedure, upon
the filing of Ms. Minihan’s request for section 6015 relief, the
IRS moved Mr. and Ms. Minihan’s joint assessment accounts
to separate mirrored accounts for each of the tax years. 5
4 Although there are irregularities in the paperwork for the account, we find that it was a
joint account that Mr. and Ms. Minihan co-owned. In her objection to the IRS’s motion for sum-
mary judgment, Ms. Minihan included several exhibits that refer to her as ‘‘co owner of a CD
at Bank of America with an account # [ending 0682]’’ or refer to the Bank of America account
as ‘‘a joint bank account’’. In addition, Ms. Minihan testified, regarding the Bank of America
account, that ‘‘we both had to go to the bank and we both had to be there to sign for * * *
the withdrawal’’. Ms. Minihan’s post-trial submissions repeatedly refer to the account as a ‘‘joint
account’’. Finally, the Bank of America account’s ‘‘CD Deposit Receipt’’ and ‘‘Modification Agree-
ment’’ show that the account title included both Mr. and Ms. Minihan.
5 After Ms. Minihan filed her petition for innocent spouse relief, the IRS created separate mir-
rored accounts for the joint tax liability, pursuant to Internal Revenue Manual (IRM) pt.
25.15.12.17.3 (Nov. 9, 2007) (‘‘Mirror[ed] accounts are currently created for * * * Innocent
spouse [cases]’’). This allowed the IRS to pursue Mr. Minihan for collection on the entire joint
liability amount, while collection against Ms. Minihan was suspended. See id. pt. 25.15.15.1
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(1) MINIHAN v. COMMISSIONER 5
Thereafter, the IRS had a separate account for each spouse,
reflecting for each the same liabilities derived from their
joint filings.
In August 2009, in the midst of the divorce proceedings,
Mr. Minihan sent a letter to the IRS informing it about the
joint Bank of America account that held the proceeds from
the sale of their Hingham house. The bank account balance
at the time of the letter was about $230,000. Shortly after
receiving Mr. Minihan’s letter, the IRS issued to Ms. Minihan
a Final Appeals Determination denying her claim for
innocent spouse relief. In response, Ms. Minihan filed a
timely petition with this Court on November 9, 2009.
Collection of Mr. Minihan’s separate liability
By February 2010 the balance in the joint account was
about $170,000, since money in the account had been used
to pay for their children’s education expenses, legal fees asso-
ciated with the Minihans’ divorce, and unspecified State
taxes. In February 2010 the IRS issued two notices of levy to
Bank of America, attaching Mr. Minihan’s interest in the
Bank of America account. One levy was to satisfy his income
tax liabilities for the taxable years 2001 and 2002, and the
other was to satisfy his liabilities for the taxable years 2000,
2003, 2004, 2005, and 2006.
On March 2, 2010, the IRS received a levy payment of
$20,584.93 from Bank of America, which was applied to Mr.
Minihan’s income tax liabilities for the taxable years 2001
and 2002 in the amounts of $226.87 and $20,358.06 and
which satisfied the remaining liability for those years. On
March 11, 2010, the IRS received a levy payment of
$63,257.42 from Bank of America, which was applied to Mr.
Minihan’s income tax liabilities for the taxable years 2000,
2003, 2004, 2005, and 2006 in the amounts of $10,496.28,
$13,353.26, $11,949.34, $11,336.89, and $16,121.65 and
which satisfied the remaining liability for those years.
The IRS’s motion for summary judgment and trial
On February 1, 2011, the IRS moved for summary judg-
ment with regard to Ms. Minihan’s petition for relief under
(Mar. 21, 2008) (‘‘Mirroring will also allow collection activity to continue for the nonrequesting
spouse’’). Any payment collected from Mr. Minihan was credited to both mirrored accounts. See
id. pt. 25.15.12.17.3.
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6 138 UNITED STATES TAX COURT REPORTS (1)
section 6015(f). The IRS argued that, since the entire joint
and several liability had been fully paid (by application of the
levied funds to Mr. Minihan’s tax account), collection activity
would cease, and the only relief that Ms. Minihan might
thereafter seek would be a refund. The IRS contends that, as
a matter of law, Ms. Minihan is not entitled to a refund
because the liability was paid not with Ms. Minihan’s sepa-
rate funds, but with joint funds.
After hearing the parties’ arguments on the motion, the
Court took under advisement the IRS’s motion for summary
judgment and proceeded with a partial trial on the issue in
the IRS’s motion. Pro bono counsel entered an appearance on
Ms. Minihan’s behalf for trial. At trial Ms. Minihan con-
tended that the IRS had levied upon property that Mr.
Minihan could not acquire unilaterally and that a share of
the money levied constituted separate payments by Ms.
Minihan, of which she could be entitled to a refund.
After trial Ms. Minihan moved to reopen the record in
order to submit additional documentary evidence from Bank
of America regarding the ownership and nature of the joint
account. The proffered evidence included a ‘‘Certificate of
Deposit Receipt’’ and a ‘‘Modification Agreement’’ from Bank
of America. Although Mr. Minihan and the IRS object to Ms.
Minihan’s motion to reopen the record, we will overrule those
objections, reopen the record, and receive into evidence Ms.
Minihan’s documents submitted after trial. 6
Presently before the Court is the question whether Ms.
Minihan is precluded from obtaining a refund of the levied
6 Reopening the record to receive additional evidence is a matter within the discretion of the
trial court. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 331 (1971); Butler v.
Commissioner, 114 T.C. 276, 286–287 (2000). We exercise our discretion and grant Ms.
Minihan’s motion. However, she evidently offers the documents in an attempt to show that she
owned the account unilaterally, or that by the terms of the account Mr. Minihan could not (and
therefore his creditors could not) access the funds without her express consent. If we were decid-
ing only the IRS’s motion for summary judgment, the documents might be sufficient to raise
a genuine issue of material fact as to joint ownership; but having conducted a trial, we are actu-
ally deciding the issue and we do not (as under Rule 121) make every inference in Ms. Minihan’s
favor and impose on her only the burden to raise genuine issues of fact. Rather, we weigh evi-
dence and find facts; and in so doing, we find—in part on the basis of Ms. Minihan’s admissions
(see supra note 4)—that the account was a joint account. Therefore, reopening the trial record
for this evidence has little practical effect (and could even be criticized for that reason, see Butler
v. Commissioner, 114 T.C. at 287 (the Court ‘‘will not grant a motion to reopen the record unless
* * * the evidence probably would change the outcome of the case’’)); but we allow Ms.
Minihan’s late-produced documents into evidence lest there be any doubt that she has had her
day in court on this point.
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(1) MINIHAN v. COMMISSIONER 7
funds because they were funds from a joint account applied
to Mr. Minihan’s tax account.
OPINION
I. Standard and scope of review
In determining whether a taxpayer is entitled to equitable
relief under section 6015(f), we may consider evidence intro-
duced at trial which was not included in the administrative
record, Porter v. Commissioner, 130 T.C. 115, 117 (2008), and
we apply a de novo standard of review, Porter v. Commis-
sioner, 132 T.C. 203 (2009). Except as otherwise provided in
section 6015, the taxpayer bears the burden of proof. See
Rule 142(a); Alt v. Commissioner, 119 T.C. 306, 311 (2002),
aff ’d, 101 Fed. Appx. 34 (6th Cir. 2004).
II. Joint and several liability and section 6015(f) relief
A. General principles
Section 6013(d)(3) provides that if married taxpayers file a
joint return, the tax is computed on the taxpayers’ aggregate
income, and liability for the resulting tax is joint and several.
See also 26 C.F.R. sec. 1.6013–4(b), Income Tax Regs. That
is, each spouse is responsible for the entire joint tax liability.
However, section 6015(f) provides 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 inequi-
table 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.
Thus, a taxpayer may be relieved from joint and several
liability under section 6015(f) if, taking into account all the
facts and circumstances, it is inequitable to hold the tax-
payer liable.
In accord with the statutory provision that section 6015(f)
relief is to be granted ‘‘[u]nder procedures prescribed by the
Secretary’’, the Commissioner has issued revenue procedures
to guide IRS employees in determining whether a requesting
spouse is entitled to relief from joint and several liability. See
Rev. Proc. 2003–61, 2003–2 C.B. 296, modifying and super-
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8 138 UNITED STATES TAX COURT REPORTS (1)
seding Rev. Proc. 2000–15, 2000–1 C.B. 447. 7 Revenue Proce-
dure 2003–61, supra, lists the factors that IRS employees
should consider, and the Court may consult those same fac-
tors, among other factors, when reviewing the IRS’s denial of
relief under section 6015(f). See Washington v. Commissioner,
120 T.C. 137, 147–152 (2003). For purposes of this Opinion,
we assume (without deciding) that Ms. Minihan is entitled to
relief under section 6015(f), and we do not further address
that issue.
B. Section 6015(g)(1) refund relief
When a taxpayer seeks relief under section 6015(f), the
relief comes in the form of being excused from joint and sev-
eral liability for the joint tax due, and the taxpayers’s
liability is recalculated as if a married-filing-separately
return had been properly filed. Pullins v. Commissioner, 136
T.C. 432 (2011). If the IRS has not collected the joint tax due,
the taxpayer would then be required to pay only the portion
attributable to her, as calculated on a married-filing-sepa-
rately basis. Id. If the IRS has already collected the tax (the
situation that now exists in this case), the taxpayer may be
allowed a refund under section 6015(g)(1), which provides as
follows:
SEC. 6015(g). CREDITS AND REFUNDS.—
(1) IN GENERAL.—Except as provided in paragraphs (2) and (3), not-
withstanding any other law or rule of law (other than section 6511,
6512(b), 7121, or 7122), credit or refund shall be allowed or made to the
extent attributable to the application of this section.
However, before any taxpayer may be allowed a refund or
credit, there must be a determination that the taxpayer has
made an overpayment. Ordlock v. Commissioner, 126 T.C.
47, 69 (2006) (Thornton, J., concurring), aff ’d, 533 F.3d 1136(9th Cir. 2008). Section 6402 makes this expressly clear,
stating:
SEC. 6402(a). GENERAL RULE.—In the case of any overpayment, the Sec-
retary, within the applicable period of limitations, may credit the amount
of such overpayment, including any interest allowed thereon, against any
liability in respect to an internal revenue tax on the part of the person who
7 On January 5, 2012, the IRS released a proposed revenue procedure to supersede Revenue
Procedure 2003–61. See Notice 2012–8, 2012–4 I.R.B. 1. No changes are proposed there that
would affect the issues we discuss here.
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(1) MINIHAN v. COMMISSIONER 9
made the overpayment and shall * * * refund any balance to such person.
[Emphasis added.]
A taxpayer makes an overpayment if she remits funds to the
Secretary in excess of the tax for which she is liable. Jones
v. Liberty Glass Co., 332 U.S. 524, 531 (1947) (defining an
overpayment as ‘‘any payment in excess of that which is
properly due’’); see also Estate of Smith v. Commissioner, 123
T.C. 15, 21 (2004).
Therefore, even if a taxpayer is relieved from joint and sev-
eral liability for the tax due on a joint return by application
of section 6015(f), the taxpayer is not entitled to a refund
under section 6015(g)(1) unless the taxpayer made an over-
payment—i.e., ‘‘[paid] more than is owed, for whatever rea-
son or no reason at all.’’ United States v. Dalm, 494 U.S. 596,
610 n.6 (1990); see Ordlock v. Commissioner, 126 T.C. at 61
(holding that a taxpayer entitled to innocent spouse relief
was not entitled to a refund of joint tax liabilities paid using
community property assets of the marital estate); Kaufman
v. Commissioner, T.C. Memo. 2010–89 (declining section 6015
refund when funds were paid by deceased husband’s estate);
Rosenthal v. Commissioner, T.C. Memo. 2004–89 (‘‘It also
must be shown that the payments were not made with the
joint return and were not joint payments or payments that
the nonrequesting spouse made’’). This conclusion is con-
sistent with Revenue Procedure 2003–61, sec. 4.04(2), 2003–
2 C.B. at 299, in which the IRS stated:
In a case involving an underpayment of income tax, a requesting spouse
is eligible for a refund of separate payments that he or she made after July
22, 1998, if the requesting spouse establishes that he or she provided the
funds used to make the payment for which he or she seeks a refund. * * *
[Emphasis added.]
Accordingly, if we assume, arguendo, that Ms. Minihan is
eligible for relief under section 6015(f), the issue for decision
is whether the IRS’s levy on the joint Bank of America
account to satisfy Mr. Minihan’s tax liability can constitute
an overpayment by Ms. Minihan, entitling her to a refund.
If so, then relief might be available to Ms. Minihan, and we
would therefore need to determine whether she is entitled to
equitable relief under section 6015(f).
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10 138 UNITED STATES TAX COURT REPORTS (1)
III. The parties’ contentions
The IRS contends that the account it levied upon was a
joint account and that the proceeds from the levy satisfied
the entire liability at issue. Since Massachusetts law gives
either owner of a joint account the right to withdraw the
entire account balance, the IRS asserts that the levy was
proper and, as a result, Ms. Minihan is not entitled to a
refund. The IRS argues that Ms. Minihan is not entitled to
a refund because ‘‘the Bank of America levy payments came
from intervenor’s assets or joint assets, but not petitioner’s
separate assets’’.
In response, Ms. Minihan contends that the account was a
special account established during her and Mr. Minihan’s
divorce to fund their children’s education. She claims that
neither Mr. Minihan nor she could withdraw any amount
without the other’s consent. Accordingly, Ms. Minihan argues
that the IRS’s levy ‘‘acquired property which the intervenor
could not acquire unilaterally and, consequently, the
amounts levied cannot constitute solely payments of the
intervenor’’. Additionally, Ms. Minihan argues that the levy
was not a ‘‘joint payment’’ because the IRS levy was non-
consensual. Instead Ms. Minihan argues that, given the
nature of the account, a portion of the levy amounts to a
‘‘separate payment’’ by Ms. Minihan giving rise to an over-
payment by Ms. Minihan and entitling her to a refund. For
the reasons explained below, we hold that a portion of the
account did indeed constitute separate funds of Ms. Minihan
that might be refunded to her if she proves that she is enti-
tled to relief under section 6015(f).
IV. Analysis
A. Identifying a ‘‘separate payment’’
The requirement of Revenue Procedure 2003–61, supra,
that a petitioning spouse make a ‘‘separate payment’’ or ‘‘pro-
vide the funds’’ used to pay the joint tax liability in order to
be entitled to a refund under section 6015(g)(1), is in accord
with section 6402, which requires, inter alia, that in order to
obtain a refund, a person must make an overpayment. The
analysis of whether a payment is a ‘‘separate payment’’ is
straightforward when payments are voluntary or, if involun-
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(1) MINIHAN v. COMMISSIONER 11
tary (e.g., by levy), when the payments are from property
owned by only one spouse. See Leissner v. Commissioner,
T.C. Memo. 2003–191 (allowing a refund when a payment
resulted from a levy on the taxpayer’s solely owned IRA
account). The analysis gets considerably murkier when, as is
the case here, the payment arises from a levy on jointly
owned property.
The IRS attempts to simplify the analysis by arguing that
Ms. Minihan could not make a ‘‘separate payment’’ of the
levied property if the IRS properly levied against Mr. Minihan
and the money taken was not separately owned but jointly
owned. The IRS was barred from making involuntary collec-
tions from Ms. Minihan by section 6015(e)(1)(B)(i), which pro-
vides that ‘‘no levy * * * shall be made * * * against the
individual * * * requesting equitable relief under subsection
(f) * * * until the decision of the Tax Court has become
final.’’ The IRS therefore set up a separate account for Mr.
Minihan and effected the levy at issue in order to collect
from him. That being the case, the IRS argues, in effect, that
if the levy was proper under section 6331 and was not barred
by section 6015(e)(1)(B)(i) because the property seized was
co-owned by a taxpayer from whom the IRS was allowed to
collect (here, Mr. Minihan), then by definition the levied
property was not the separate property of the other co-owner
(Ms. Minihan).
We disagree with the IRS’s contention and conclude that
the relevant inquiry is whether under State law Ms. Minihan
has a surviving separate legal interest in the levied assets.
This conclusion is based on the following.
B. Provisional nature of section 6331
Congress has granted the Secretary of the Treasury (and
consequently the IRS) powerful tax collection tools, not the
least of which is the power granted in section 6331(a) to levy
on a delinquent taxpayer’s property. Section 6331(a) provides
that ‘‘[i]f any person liable to pay any tax neglects or refuses
to pay * * *, it shall be lawful for the Secretary to collect
such tax * * * by levy upon all property and rights to prop-
erty * * * belonging to such person’’.
Applying section 6331, the Supreme Court held in United
States v. Nat’l Bank of Commerce, 472 U.S. 713, 722 (1985),
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12 138 UNITED STATES TAX COURT REPORTS (1)
that the IRS can lawfully levy on a joint bank account to sat-
isfy one account holder’s individual tax liability. Under State
law the taxpayer had an unconditional right to withdraw the
entire joint account, even though the taxpayer was only one
of three owners. The Supreme Court held that since the tax-
payer had a State law right to withdraw the entire account,
the IRS as a creditor could withdraw the entire account under
Federal law (i.e., section 6331) notwithstanding State collec-
tion law that may exist. 8 Id. at 724.
However, the Supreme Court’s holding that the levy was
lawful did not end its discussion of the nondelinquent co-
owner’s subsequent claims on the levied funds. The Supreme
Court discussed as follows the provisional nature of a section
6331 levy:
‘‘The final judgment in [a levy] action settles no rights in the property sub-
ject to seizure.’’ United States v. New England Merchants National Bank,
465 F. Supp. 83, 87 (Mass. 1979). Other claimants, if they have rights, may
assert them. Congress recognized this when the Code’s summary-collection
procedures were enacted, S. Rep. No. 1708, 89th Cong., 2d Sess., 29 (1966),
U.S. Code Cong. & Admin. News 1966, p. 3722, and when it provided in
§ 7426 of the Code, 26 U.S.C. § 7426, that one claiming an interest in prop-
erty seized for another’s taxes may bring a civil action against the United
States to have the property or the proceeds of its sale returned.
* * * * * * *
The Court [in United States v. Rodgers, 461 U.S. 677 (1983)] * * * recog-
nized what we now make explicit: that § 6331 is a provisional remedy,
which does not determine the rights of third parties until after the levy
is made, in postseizure administrative or judicial hearings.
[Nat’l Bank of Commerce, 472 U.S. at 728, 731; fn. ref. omitted.]
Thus the Supreme Court made a distinction between the
question whether the IRS could properly proceed with a levy
(in answer to which it allowed the IRS to proceed) and the
question whether claimants (i.e., joint owners other than the
debtor) thereafter could nonetheless try to get money back
(in answer to which it held that they could make claims—for
instance, in District Court under section 7426 or administra-
tively under section 6343(b)).
Although the instant case arises in a section 6015 claim for
relief—not the context of Nat’l Bank of Commerce—the rea-
8 In United States v. Nat’l Bank of Commerce, 472 U.S. 713, 718 (1985), the Arkansas State
collection law at issue did not allow a creditor to subrogate to the position of the debtor with
regard to the debtor’s power to withdraw the entire joint account balance.
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(1) MINIHAN v. COMMISSIONER 13
soning of that case would still appear to be applicable: A law-
ful levy under section 6331 does not extinguish a third
party’s rights in levied property. 9
C. Refund of levied property under section 6015(g)(1)
First, however, we must determine whether the rights of
an ‘‘innocent spouse’’ who claims a refund under section
6015(g)(1) survive post-levy in the same way that the rights
of a section 7426 or section 6343(b) wrongful levy claimant
survive. In EC Term of Years Trust v. United States, 550
U.S. 429, 436 (2007), the Supreme Court held that a trust
which claimed an interest in money the IRS levied to satisfy
beneficiaries’ tax liabilities cannot maintain a refund suit
under 28 U.S.C. section 1346(a)(1) when the trust missed the
deadline to bring a section 7426 wrongful levy action. Id. The
Supreme Court concluded that section 7426 was the trust’s
exclusive remedy. Id. Accordingly, we consider whether the
holding of EC Term of Years Trust—that an available wrong-
ful levy claim under section 7426 precludes a subsequent
refund claim—might apply to preempt an innocent spouse’s
refund claim under section 6015(g)(1). (Since we conclude
that it does not, we do not need to address whether Ms.
Minihan could have pursued a wrongful levy action under
section 7426.)
The Supreme Court in EC Term of Years Trust, 550 U.S.
at 433, 435, followed the axiom that ‘‘ ‘a precisely drawn,
detailed statute pre-empts more general remedies’ ’’ to hold
that a refund claim under 28 U.S.C. section 1346(a)(1) (the
general remedy) is precluded by section 7426 (the precisely
drawn remedy) in the context of a third party’s claim for
refund of property ‘‘wrongfully levied upon’’.
However, Ms. Minihan’s claim for a refund—an ‘‘innocent
spouse’’ remedy under section 6015(g)(1)—is distinguishable
from the tax refund claims under 28 U.S.C. section 1346(a)(1)
9 This present case is distinguishable from Ordlock v. Commissioner, 126 T.C. 47 (2006), aff ’d,
533 F.3d 1136 (9th Cir. 2008), which held that a taxpayer entitled to innocent spouse relief is
not entitled to a refund after joint tax liabilities were collected from community property assets.
The present case deals with a section 6331 levy on a jointly owned bank account rather than
a section 6321 lien on community property, as was the case in Ordlock. The presence of a section
6331 levy in this case directly implicates the Supreme Court’s holding in Nat’l Bank of Com-
merce. Furthermore, the distinction between joint assets and community property is significant
because, for the purpose of creditors, the marital community estate is akin to a separate entity,
whereas a jointly owned asset is simply an asset in which a debtor has an interest. See Cal.
Fam. Code sec. 910 (West 2004).
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14 138 UNITED STATES TAX COURT REPORTS (1)
that were at issue in EC Term of Years Trust. Unlike the
statutes conferring tax refund jurisdiction (28 U.S.C. secs.
1346(a)(1) and 1491(a)(1)), the statute that confers ‘‘in-
nocent spouse’’ jurisdiction on the Tax Court—section
6015(e)(1)(A)—provides:
In addition to any other remedy provided by law, the individual may peti-
tion the Tax Court (and the Tax Court shall have jurisdiction) to deter-
mine the appropriate relief available to the individual under this section
* * * [Emphasis added.]
Moreover, section 6015(g)(1) provides that ‘‘notwithstanding
any other law or rule of law (other than section 6511,
6512(b), 7121, or 7122), credit or refund shall be allowed or
made to the extent attributable to the application of this sec-
tion.’’ (Emphasis added.) 10 Congress, by creating innocent
spouse remedies ‘‘in addition to any other remedy’’ 11 and by
allowing refunds ‘‘notwithstanding any other law or rule of
law’’, expressly foreclosed the proposition that section 7426 or
6343(b) could be the exclusive remedy for an innocent spouse
seeking a refund of levied property in which she had an
interest.
Whether or not wrongful levy claims under section 7426
(judicial claims) or section 6343(b) (administrative claims)
were available to her, Ms. Minihan is permitted to claim a
refund under section 6015(g)(1) to recover her share of levied
property, as she has done here.
D. Ms. Minihan’s rights in the levied property
We now apply the foregoing principles to the facts of this
case to decide whether Ms. Minihan could be entitled to a
refund under section 6015(g)(1) assuming, arguendo, that she
is entitled to innocent spouse relief under section 6015(f).
The parties contend that the answer depends on whether the
10 Cf. Ordlock v. Commissioner, 126 T.C. at 56 (concluding that the ‘‘notwithstanding’’ provi-
sion of section 6015(g)(1) does not take precedence over State community property laws which
are necessary to define ownership in payments).
11 Congress enacted section 6015 as a means of expanding relief to innocent spouses. See H.R.
Conf. Rept. No. 105–599, at 249–255 (1998), 1998–3 C.B. 747, 1003–1009; S. Rept. No. 105–174,
at 55–60 (1998), 1998–3 C.B. 537, 591–596; H.R. Rept. No. 105–364 (Part 1), at 60–62 (1997),
1998–3 C.B. 373, 432–434. With regard to section 6015(e)(3)(A) (the predecessor to section
6015(g)(1)), the House report stated: ‘‘The Tax Court may order refunds as appropriate where
it determines that the spouse qualifies for relief and an overpayment exists as a result of the
innocent spouse qualifying for such relief.’’ H.R. Rept. No. 105–364 (Part 1), supra at 61, 1998–
3 C.B. at 433.
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(1) MINIHAN v. COMMISSIONER 15
levy on the Bank of America account amounted to a ‘‘sepa-
rate payment’’ 12 by Ms. Minihan. Ultimately, Ms. Minihan’s
section 6015(g)(1) refund claim is a post-levy assertion of her
rights in the levied property and an avenue for her to recover
what may belong to her. See Nat’l Bank of Commerce, 472
U.S. at 728. Whether we use the terminology from Revenue
Procedure 2003–61, supra (i.e., identifying ‘‘separate pay-
ments’’), or the more general terminology used in Nat’l Bank
of Commerce, 472 U.S. at 731 (i.e., ‘‘determin[ing] the rights
of third parties * * * after the levy is made’’), the inquiry is
the same. We must determine (1) whether Ms. Minihan in
fact had a separate interest in the Bank of America account
and, if so, (2) whether that interest, as against the IRS, sur-
vived the levy. We turn to Massachusetts State law to
answer these questions.
1. Her separate interest in the joint bank account
A party to a Massachusetts joint bank account has the
power to withdraw, assign, or transfer part or all of the
funds in a joint account. Mass. Ann. Laws ch. 167D, sec. 5
(LexisNexis 2009). ‘‘Unlike a joint tenant of property held in
a traditional joint tenancy, therefore, * * * [a title holder of
a joint bank account] may effectively exercise control over the
entire interest, or any part of it, and divest, totally or par-
tially, the interest of the other.’’ Heffernan v. Wollaston
Credit Union, 567 N.E.2d 933, 937 (Mass. App. Ct. 1991); see
also United States v. U.S. Currency, $81,000, 189 F.3d 28, 34
(1st Cir. 1999) (holding that the rights conferred to a joint
account holder by Massachusetts statutes and case law in
fact give a joint account holder legal title in a joint account).
While a joint bank account establishes the rights of the co-
depositors as between them and the bank, it is not conclusive
between the parties as to the account’s ownership (i.e., the
issue of who has equitable title or real interest). Heffernan,
567 N.E.2d at 937 n.7. The real interest of each joint
12 The IRS casts the issue in terms of ‘‘separate assets’’ rather than ‘‘separate payment’’, but
for our purposes there is no meaningful distinction, because the analysis of whether Ms.
Minihan made a ‘‘separate payment’’ turns on whether Ms. Minihan had a distinct legal interest
in the bank account as determined under State law. We presume that such an interest would
also be a ‘‘separate asset’’. To the extent our conclusion regarding the IRS’s terminology is incor-
rect, then the IRS’s use of the term ‘‘separate assets’’ is misplaced, because the only relevant
inquiry is whether Ms. Minihan made a ‘‘separate payment’’ that resulted in an overpayment.
See Rosenthal v. Commissioner, T.C. Memo. 2004–89.
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16 138 UNITED STATES TAX COURT REPORTS (1)
depositor may be determined in an action in equity. Id.
(citing Blanchette v. Blanchette, 287 N.E.2d 459, 462–463
(Mass. 1972)). ‘‘The determination of the interest * * * in
the deposits in the joint accounts is dependent primarily on
what * * * [the] intention [of the parties] was, and this is a
question of fact.’’ Buckley v. Buckley, 17 N.E.2d 887, 888
(Mass. 1938) (emphasis added); see also Campagna v.
Campagna, 150 N.E.2d 699, 702 (Mass. 1958); Milan v.
Boucher, 189 N.E. 576, 578 (Mass. 1934); Rafuse v. Stryker,
No. 090107, 2010 WL 2431921, at *6 (Mass. Super. Apr. 21,
2010).
Accordingly, we turn to Mr. and Ms. Minihan’s intention
regarding the account. The money in the joint account came
from the sale of the couple’s long-time marital house, in
which they had made a home together during almost two
decades of marriage. Although the money to pay the mort-
gage had come from the earnings of Mr. Minihan, his earning
potential depended on Ms. Minihan’s making her contribu-
tion to the household by keeping house, raising the children,
and fulfilling the other responsibilities of the stay-at-home
spouse.
Most telling, however, is Mr. Minihan’s testimony at trial:
When asked why, on one occasion when he unilaterally with-
drew from the account $5,000 for himself, he also withdrew
$5,000 for Ms. Minihan, Mr. Minihan testified: ‘‘I did so
because it was equitable. That was—if one was going to take
out $10,000, the other one would take out $10,000’’. Mr.
Minihan had every incentive in this case to minimize Ms.
Minihan’s claim on the funds in the joint account, but even
his testimony suggests that the parties intended that Mr.
and Ms. Minihan each had a 50-percent interest in the
account, notwithstanding that the initial source of the funds
might be traced to Mr. Minihan’s paycheck.
Accordingly, we conclude that under Massachusetts law
Ms. Minihan had a 50-percent ownership interest in the joint
account.
2. Her interest’s survival of the levy
Under Nat’l Bank of Commerce, the IRS clearly has the
right to levy on a delinquent taxpayer’s joint bank accounts.
Similarly, under Massachusetts law other creditors can
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(1) MINIHAN v. COMMISSIONER 17
pursue collection of an individual debtor’s debts by levying on
joint bank accounts held by the debtor and a third party.
Prudential-Bache Sec., Inc. v. Comm’r of Revenue, 588 N.E.2d
639, 641 (Mass. 1992); R.H. White Co. v. Lees, 166 N.E. 705,
706 (Mass. 1929) (‘‘the deposit may be attached in a suit
against either depositor’’). However, whether the creditor is
the IRS or someone else, the inquiry does not end with the
creditor’s right to attach a joint bank account, because under
Massachusetts law nondebtor co-depositors have the right to
intervene and assert their ownership interests against those
creditors. See R.H. White Co., 166 N.E. at 706; Laubinger v.
Dep’t of Revenue, 672 N.E.2d 554, 557 (Mass. App. Ct. 1996).
The propriety of the creditor’s levy is one thing; the right of
a third party to assert a claim against the creditor for the
property it seized is another thing.
In particular, a co-depositor may bring a post-seizure
action to establish his rights in seized property and seek a
judgment against the seizing creditor for the amount of the
joint account that the nondebtor co-depositor owned. See
Colella v. N. Easton Sav. Bank, No. 95–00362, 1995 WL
670140 (Mass. Super. Sept. 11, 1995); see also Mass. Ann.
Law ch. 223, sec. 102. In Colella the North Easton Savings
Bank exercised its right of setoff against a debtor’s joint bank
account, of which the plaintiffs were co-depositors. After the
North Easton Savings Bank took the entire balance of the
account by setoff, the nondebtor co-depositor plaintiffs
brought an action against the bank alleging, inter alia, the
tort of conversion. The Massachusetts Superior Court, in
denying North Easton Savings Bank’s motion for summary
judgment, stated: ‘‘In sum, a bank, without the consent of co-
depositors, may not unilaterally seize and retain funds that
may not be actually owned by the individual debtor.’’ Colella,
1995 WL 670140 at *5 (emphasis added). Since, under
Massachusetts law, North Easton Savings Bank could not
retain the funds, the plaintiffs’ interest in the account sur-
vived the seizure.
We have concluded that Ms. Minihan was the owner of 50
percent of the Bank of America account. After the IRS levied
money from the account in order to satisfy Mr. Minihan’s tax
debt, any interest Ms. Minihan had in the seized money sur-
vived under Massachusetts law. See id. An available remedy
for Ms. Minihan to establish and retrieve her share of the
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18 138 UNITED STATES TAX COURT REPORTS (1)
levied funds is a refund claim under section 6015(g)(1). Ms.
Minihan has established her 50-percent interest in the
account, and she is therefore entitled under section
6015(g)(1) to a refund of any of her share of the money the
IRS seized from the joint account, if and to the extent she is
granted relief under section 6015(f).
V. Conclusion
The IRS is not entitled to judgment as a matter of law with
regard to Ms. Minihan’s potential claim for a refund under
section 6015(g)(1). As result, there remains for trial the issue
of whether Ms. Minihan is entitled to relief under section
6015(f).
To reflect the foregoing,
An appropriate order will be issued.
f
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