Gwendolyn A. Ewing v. Commissioner

118 T.C. No. 31UNITED STATES TAX COURT
GWENDOLYN A. EWING, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1940-01. Filed May 31, 2002.
P and H filed a joint return. A portion of the
tax shown on the return was not paid. R has not
asserted a deficiency against P or H. P submitted to R
a request for relief from joint and several liability
under sec. 6015, I.R.C. R mailed a notice of
determination denying P relief under sec. 6015(b), (c),
and (f), I.R.C. The notice of determination was not
mailed to P’s last known address. P actually received
the notice of determination by the 88th day after the
notice was mailed. The envelope containing P’s
petition was postmarked 92 days after the mailing of
the notice of determination. The petition was received
and filed 99 days after the date R mailed the notice of
determination. The petition was filed more than 6
months after P submitted her request for relief to R.
Held: We have jurisdiction to determine whether P
is entitled to equitable relief under sec. 6015(f),
I.R.C., regarding the underpayment of tax shown on P’s
joint return.
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Held, further: P’s petition was timely filed
under sec. 6015(e)(1)(A), I.R.C. In accordance with
sec. 6015(e)(1)(A), I.R.C., P’s petition was filed more
than 6 months after the date she submitted her request
for relief to R. R failed to mail his notice of
determination to P’s last known address pursuant to
sec. 6015(e)(1)(A), I.R.C. The misaddressed notice of
determination prejudiced P’s ability to file her
petition within 90 days after the mailing of R’s notice
of determination.
Karen L. Hawkins, for petitioner.
Thomas M. Rohall, for respondent.
OPINION
RUWE, Judge: This case is before the Court on respondent’s
Motion to Dismiss for Lack of Jurisdiction. Respondent’s motion
is based on the ground that the petition was not timely filed.
We held a hearing on respondent’s motion during which we raised
sua sponte the issue of whether we lack jurisdiction under
section 6015(e)1 to review respondent’s denial of equitable
relief pursuant to section 6015(f) where no deficiency has been
asserted.
The Tax Court may exercise jurisdiction only to the extent
authorized by Congress. Fernandez v. Commissioner, 114 T.C. 324,
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code currently in effect, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
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328 (2000); Gati v. Commissioner, 113 T.C. 132, 133 (1999).2
Whether this Court has jurisdiction is fundamental and may be
raised by a party or on the Court’s own motion. Fernandez v.
Commissioner, supra at 328; Naftel v. Commissioner, 85 T.C. 527,
530 (1985).
Background
Petitioner and her husband filed a joint tax return for
1995. They reported tax due on their return but did not pay the
full amount reported. Respondent has not asserted a deficiency
against either petitioner or her husband for 1995.
On February 2, 1999, petitioner filed a Form 8857, Request
for Innocent Spouse Relief (And Separation of Liability and
Equitable Relief), requesting “equitable relief” for a portion of
the amount of the unpaid tax liability shown on the 1995 joint
return. On October 31, 2000, respondent mailed a Notice of
Determination Concerning Relief From Joint and Several Liability
Under Internal Revenue Code Section 6015 (notice of
determination). In the notice of determination, respondent
listed the type of relief requested as relief under section
6015(b), (c), and (f). Respondent determined that petitioner was
2
The Tax Court, like all Federal courts, is a court of
limited jurisdiction. Flight Attendants Against UAL Offset v.
Commissioner, 165 F.3d 572, 578 (7th Cir. 1999); see also Estate
of Wenner v. Commissioner, 116 T.C. 284, 286 (2001).
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entitled to “no relief from tax under section 6015" because
petitioner had knowledge of the liability and was still married
and living with her husband. The notice of determination was not
sent to petitioner’s last known address.
Petitioner filed a petition to this Court pursuant to
section 6015(e) seeking review of respondent’s denial of relief
from joint and several liability. The petition was received and
filed on February 7, 2001, 99 days after the date respondent
mailed the notice of determination. The envelope containing the
petition was postmarked January 31, 2001, 92 days after the date
respondent mailed the notice of determination. The date shown on
the petition was January 27, 2001, 88 days after the date
respondent mailed the notice of determination.
Discussion
Under present law, there are three primary jurisdictional
bases upon which this Court may review a claim for relief from
joint and several liability. First, a claim may be raised as an
affirmative defense in a petition for redetermination of a
deficiency filed pursuant to section 6213(a). Butler v.
Commissioner, 114 T.C. 276, 287-288 (2000). A second basis upon
which we may exercise jurisdiction is contained in section
6015(e). This provision allows a spouse who has requested relief
to petition the Commissioner’s denial of relief, or to petition
the Commissioner’s failure to make a timely determination. Such
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cases are referred to as “stand alone” cases, in that they are
independent of any deficiency proceeding. Fernandez v.
Commissioner, supra at 329. A third situation where we may
exercise jurisdiction to determine relief from joint and several
liability is where the issue is properly raised in a collection
proceeding under sections 6320 and 6330.3 In the instant case,
petitioner’s claim for relief from joint and several liability
was made in a “stand alone” petition filed pursuant to section
6015(e).
I. Election Requirement in Section 6015(e)
In Fernandez v. Commissioner, supra at 330, we interpreted
the then existing prefatory language in section 6015(e)(1)--“in
the case of an individual who elects to have subsection (b) or
(c) apply”--to encompass a procedural requirement applicable to
all joint filers seeking relief from joint liability. We noted
that section 6015(f) provides an additional opportunity for
relief to those taxpayers who do not otherwise meet the
requirements of subsections (b) or (c). Fernandez v.
Commissioner, supra at 330. Petitioner is seeking relief under
section 6015(f). Section 6015(f) permits relief from joint and
several liability where “it is inequitable to hold the individual
3
Additionally, we have held that we may address a claim for
relief from joint and several liability pleaded as an affirmative
defense in a matter properly before this Court under sec. 6404
(relating to the Commissioner’s determination not to abate
interest). Estate of Wenner v. Commissioner, supra at 288.
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liable for any unpaid tax or any deficiency (or any portion of
either)”. (Emphasis added.) Congress did not limit equitable
relief under section 6015(f) to situations where a deficiency has
been asserted. H. Conf. Rept. 105-599, at 254-255, 1998-3 C.B.
747, 1008-1009. However, a prerequisite for relief under section
6015(f) is that relief is not available under section 6015(b) or
(c), which deal with deficiency situations. Sec. 6015(f)(2);
Fernandez v. Commissioner, 114 T.C. at 330-331. Thus, in every
case where the taxpayer submits a request to the Commissioner for
relief under section 6015, and such request includes a claim for
relief under section 6015(f), the Commissioner must first examine
both subsections (b) and (c) to determine whether relief is
available under those subsections before determining whether
relief is available under section 6015(f). Respondent therefore
treated petitioner’s request for relief under section 6015 as an
election under section 6015(b), (c), and (f).4
4
Respondent’s position is that our holding in Fernandez v.
Commissioner, 114 T.C. 324, 331 (2000), requiring an election
under sec. 6015(b) or (c), is satisfied by the statutory
requirement that an individual must fail to qualify for relief
under sec. 6015(b) and (c) as a prerequisite to being eligible
for relief under sec. 6015(f). Respondent recognizes that
taxpayers who have correctly reported but not paid their tax
liabilities can request relief under either sec. 6015(b) or (c)
despite the fact that they do not qualify for relief under those
subsections.
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II. Jurisdiction Over Claims Involving Underpayment of Tax
The first issue for decision is whether this Court has
jurisdiction under section 6015(e) to review the denial of a
request for relief from joint and several liability where no
deficiency has been asserted. Both petitioner and respondent
agree that we have such jurisdiction.
A. Background of Section 6015
In order to decide this jurisdictional issue, it is
necessary to review the evolution of the pertinent statutory
provisions and caselaw. Congress enacted section 6015 in 1998 as
part of the Internal Revenue Service Restructuring and Reform Act
of 1998, Pub. L. 105-206, sec. 3201(a), 112 Stat. 734.5 As
originally enacted, section 6015(e) provided, in pertinent part:
5
Sec. 6015 replaced former sec. 6013(e). Sec. 6013(e)
provided that a spouse could be relieved of tax liability if the
spouse proved: (1) A joint return was filed; (2) the return
contained a substantial understatement of tax attributable to
grossly erroneous items of the other spouse; (3) in signing the
return, the spouse seeking relief did not know, and had no reason
to know, of the substantial understatement; and (4) under the
circumstances it would be inequitable to hold the spouse seeking
relief liable for the substantial understatement. Relief under
sec. 6013(e) was difficult for many taxpayers to obtain. In
1998, Congress repealed sec. 6013(e) and enacted sec. 6015 in
order to make relief from joint and several liability more
accessible. Internal Revenue Service Restructuring and Reform
Act of 1998, Pub. L. 105-206, sec. 3201(a), 112 Stat. 734; H.
Conf. Rept. 105-599, at 249 (1998), 1998-3 C.B. 747, 1003.
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SEC. 6015(e). Petition for Review by Tax Court.--
(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
* * * [Emphasis added.]
Section 6015(f) provides:
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),[6]
the Secretary may relieve such individual of such
liability. [Emphasis added.]
In two cases decided while the above-quoted statutory
language of section 6015(e) was still in effect, we held that
this Court had jurisdiction to review denials of requests for
relief from joint and several liability pursuant to section
6015(f) in both deficiency and “stand alone” proceedings. In
Butler v. Commissioner, 114 T.C. 276 (2000), we addressed the
issue of whether we have authority to review a denial of relief
6
Subsecs. (b) and (c) of sec. 6015 provide separate grounds
for relief from joint and several liability attributable to
understatements of tax on returns or any “deficiencies”. As
previously noted, the return in issue did not understate the tax,
and there was no “deficiency”.
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under section 6015(f) where a claim for relief from joint and
several liability was raised as an affirmative defense in a
petition for redetermination of a deficiency filed pursuant to
section 6213(a). We interpreted the term “under this section” in
section 6015(e)(1)(A) to include all subsections of section 6015.
Butler v. Commissioner, supra at 289-290. We found nothing in
section 6015(e) that precluded our review of the Commissioner’s
denial of equitable relief pursuant to section 6015(f) where the
taxpayer makes an election for relief pursuant to section 6015(b)
or (c). Id. Additionally, we rejected the Commissioner’s
argument that his authority to grant equitable relief is
committed to agency discretion because we found that the
circumstances allowing action to be committed solely to agency
discretion were not present. Id. at 291.
In Fernandez v. Commissioner, supra, we addressed the issue
of whether we have authority to review a denial of relief under
section 6015(f) where a “stand alone” petition is filed pursuant
to section 6015(e). We described section 6015(f) as follows:
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) * * *
[Id. at 332; emphasis added.]
As we did in Butler v. Commissioner, supra, we expressed the view
that Congress intended the term “under this section” in section
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6015(e)(1)(A) to include all subsections of section 6015 in their
entirety. Fernandez v. Commissioner, supra at 331.7
Our opinions in Fernandez v. Commissioner, supra, and Butler
v. Commissioner, supra, examined the legislative history of
section 6015 and concluded that it supported our authority to
review the application of section 6015(f). Although Fernandez v.
Commissioner, supra, and Butler v. Commissioner, supra, both
involved deficiencies, we did not limit our holding to deficiency
situations or otherwise indicate that this Court lacks
jurisdiction in a nondeficiency situation involving a claim for
relief from liability for an underpayment of tax shown on a joint
return. As we pointed out in Butler v. Commissioner, supra at
290, the House report states that “The bill specifically provides
that the Tax Court has jurisdiction to review any denial (or
failure to rule) by the Secretary regarding an application for
innocent spouse relief”, and the Senate report provides that “The
Tax Court has jurisdiction of disputes arising from the separate
liability election.” The proposed Senate amendment applied the
separate liability election to situations involving deficiency
determinations and situations where the tax shown on the return
was not paid with the return. S. Rept. 105-174, at 57-58 (1998),
1998-3 C.B. 537, 593-594. The Senate amendment clearly provided
7
The Commissioner has acquiesced in our decision in
Fernandez v. Commissioner, supra, in 2000-23 I.R.B. 002.
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for Tax Court review in situations involving both deficiencies
and underpayments of tax shown on the return. Id. at 56, 1998-3
C.B. at 592. The Senate amendment also added an “Equitable
Relief” provision similar to what is now contained in section
6015(f), providing equitable relief “for any unpaid tax or any
deficiency”. 144 Cong. Rec. S4577 (daily ed. May 8, 1998). The
Senate amendment also provided for Tax Court jurisdiction “In the
case of an individual who elects to have this section [section
6015] apply”. Id. The conference agreement did not include the
portion of the Senate amendment applying the separate liability
election in situations where the tax shown on the return was not
paid with the return. However, the conference agreement added
section 6015(f) which, like the Senate amendment, allows
equitable relief for unpaid tax shown on the return. H. Conf.
Rept. 105-599, at 254 (1998), 1998-3 C.B. 755, 1008. The
conference agreement followed the Senate amendment in
establishing Tax Court jurisdiction in this area. Id.The following language contained in the conference report
supports our view that, in enacting section 6015, Congress
intended for this Court to have jurisdiction over situations
involving any claim for relief from joint and several liability,
including nondeficiency situations where an individual is seeking
relief only for an underpayment of tax shown on a joint return:
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The conference agreement follows the Senate
amendment with respect to deficiencies of a taxpayer
who is no longer married to, is legally separated from,
or has been living apart for at least 12 months from
the person with whom the taxpayer originally filed the
joint return. The conference agreement also includes
the provision in the House bill expanding the
circumstances in which innocent spouse relief is
available. Taxpayers, whether or not eligible to make
the separate liability election, may be granted
innocent spouse relief where appropriate. In addition,
the conference agreement authorizes the Secretary to
provide equitable relief in appropriate situations.
The conference agreement follows the House bill and the
Senate amendment in establishing jurisdiction in the
Tax Court over disputes arising in this area. [H.
Conf. Rept. 105-599, supra at 251, 1998-3 C.B. at 1005;
emphasis added.]
The language in the conference report indicates that the
reference to disputes arising in “this area” was intended to
encompass claims for relief arising under section 6015(b), (c),
and (f). The reference to our jurisdiction comes directly after
the conference report discussed the Senate amendment (relating to
section 6015(c)), the House bill (relating to section 6015(b)),
and the conference agreement’s new provision authorizing
equitable relief in appropriate situations (relating to section
6015(f)). The conference report then states that it follows the
House bill and Senate amendment in establishing jurisdiction in
this Court over disputes arising in “this area”.8 Additionally,
8
The General Explanation of Tax Legislation Enacted in 1998
prepared by the Staff of the Joint Committee on Taxation states:
The provision establishes three procedures for
limiting the portion of a joint and several liability
(continued...)
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the conference report provides that “The conference agreement
follows the House Bill and the Senate amendment with respect to
procedural rules, including the jurisdiction of the Tax Court to
review matters relating to this provision.” H. Conf. Rept. 105-
599, supra at 255, 1998-3 C.B. at 1009 (emphasis added). The
references to “this area” and “this provision” reflect Congress’s
intent that our jurisdiction extend to claims arising under all
three subsections of section 6015, including claims for relief in
nondeficiency situations. Had Congress intended to limit our
jurisdiction to deficiency situations only, presumably it would
not have used such broad terms as “this area” and “this
provision” to describe the scope of our authority to review
claims for relief from joint and several liability. See, e.g.,
Fernandez v. Commissioner, 114 T.C. at 331 (interpreting
reference to “this section” in section 6015(e)(1)(A) to encompass
8
(...continued)
that is a spouse’s (or former spouse’s) responsibility.
First, the provision establishes a separate liability
election for a taxpayer who is no longer married to, is
legally separated from, or has been living apart at all
times for at least 12 months from the person with whom
the taxpayer originally filed the joint return.
Second, the provision expands the circumstances in
which innocent spouse relief similar to that available
under prior law is available. Third, the provision
authorizes the Secretary to provide equitable relief in
appropriate situations. The provision also establishes
jurisdiction in the Tax Court over disputes arising in
this area. [Staff of Joint Comm. on Taxation, General
Explanation of Tax Legislation Enacted in 1998, at 67
(J. Comm. Print 1998); emphasis added.]
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all subsections of section 6015); Butler v. Commissioner, 114
T.C. at 290 (same); Woodral v. Commissioner, 112 T.C. 19, 22-23
(1999) (interpreting reference to “this section” in section
6404(g) to encompass all subsections of section 6404).
Accordingly, we conclude that, in enacting section 6015, Congress
did not intend to limit our authority to review claims for relief
from joint and several liability to deficiency situations.
B. Amendment of Section 6015(e)
Subsequent to our opinions in Fernandez v. Commissioner,
supra, and Butler v. Commissioner, supra, Congress amended
section 6015(e) effective on December 21, 2000. Consolidated
Appropriations Act, 2001 (Consolidated Appropriations Act, 2001),
Pub. L. 106-554, app. G, sec. 313, 114 Stat. 2763, 2763A-641-643.
As a result, section 6015(e) currently provides, in pertinent
part:
SEC. 6015(e). Petition for Review by Tax Court.--
(1) In general.–-In the case of an individual
against whom a deficiency has been asserted and who
elects to have subsection (b) or (c) apply--
(A) In general.–-In addition to any
other remedy provided by law, 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 * * *
[Emphasis added.]
The petition in the instant case was filed after the effective
date of this provision. The issue we must decide is whether the
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amendment to section 6015(e) by the Consolidated Appropriations
Act, 2001, presents a new requirement that a deficiency must be
asserted before this Court has jurisdiction to review
respondent’s denial of equitable relief pursuant to section
6015(f) in a “stand alone” proceeding.
In interpreting section 6015(e), our purpose is to give
effect to Congress’s intent. Fernandez v. Commissioner, supra at
329. We begin with the statutory language, and we interpret that
language with reference to the legislative history primarily to
learn the purpose of the statute and to resolve any ambiguity in
the words contained in the language. Allen v. Commissioner, 118
T.C. 1, 7 (2002) (and cases cited therein). Usually, the plain
meaning of the statutory language is conclusive. United States
v. Ron Pair Enters., Inc., 489 U.S. 235, 242 (1989); Woodral v.
Commissioner, supra at 23. If the statute is ambiguous or
silent, we may look to the statute’s legislative history to
determine congressional intent. Burlington N. R.R. v. Okla. Tax
Commn., 481 U.S. 454, 461 (1987); Fernandez v. Commissioner,
supra at 329-330. Finally, because the changes to the relief
from joint and several liability rules “were designed to correct
perceived deficiencies and inequities in the prior version” of
the rules, this curative legislation should be construed
liberally to effectuate its remedial purpose. Flores v. United
States, 51 Fed. Cl. 49, 53 (2001) (citing Tcherepnin v. Knight,
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389 U.S. 332, 336 (1967); Piedmont & N. Ry. Co. v. ICC, 286 U.S.
299, 311-312 (1932)).
Our interpretation of section 6015(e) concerns the new
language “against whom a deficiency has been asserted”. However,
section 6015(e)(1)(A) still contains the provision giving this
Court jurisdiction “to determine the appropriate relief available
to the individual under this section” (emphasis added), which, as
previously explained, we have held gives us jurisdiction over the
propriety of equitable relief under section 6015(f). Equitable
relief under section 6015(f) is, and always has been, available
in nondeficiency situations. Under these circumstances, the
amendment to section 6015(e)(1) referring to situations where “a
deficiency has been asserted” and the retention of the language
in that same section giving us jurisdiction over “the appropriate
relief available to the individual under this section” creates an
ambiguity. Therefore, it is appropriate to consult the
legislative history of the amendment made by the Consolidated
Appropriations Act, 2001.
The conference report accompanying the Consolidated
Appropriations Act, 2001, provides the following discussion
regarding the amendment of section 6015(e):
Timing of request for relief.--Confusion currently
exists as to the appropriate point at which a request
for innocent spouse relief should be made by the
taxpayer and considered by the IRS. Some have read the
statute to prohibit consideration by the IRS of
requests for relief until after an assessment has been
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made, i.e., after the examination has been concluded,
and if challenged, judicially determined. Others have
read the statute to permit claims for relief from
deficiencies to be made upon the filing of the return
before any preliminary determination as to whether a
deficiency exists or whether the return will be
examined. The consideration of innocent spouse relief
requires that the IRS focus on the particular items
causing a deficiency; until such items are identified,
the IRS cannot consider these claims. Congress did not
intend that taxpayers be prohibited from seeking
innocent spouse relief until after an assessment has
been made; Congress intended the proper time to raise
and have the IRS consider a claim to be at the same
point where a deficiency is being considered and
asserted by the IRS. This is the least disruptive for
both the taxpayer and the IRS since it allows both to
focus on the innocent spouse issue while also focusing
on the items that might cause a deficiency. It also
permits every issue, including the innocent spouse
issue, to be resolved in single administrative and
judicial process. The bill clarifies the intended time
by permitting the election under (b) and (c) to be made
at any point after a deficiency has been asserted by
the IRS. A deficiency is considered to have been
asserted by the IRS at the time the IRS states that
additional taxes may be owed. Most commonly, this
occurs during the Examination process. It does not
require an assessment to have been made, nor does it
require the exhaustion of administrative remedies in
order for a taxpayer to be permitted to request
innocent spouse relief. * * * [H. Conf. Rept. 106-
1033, at 1023 (2000); see also Vetrano v. Commissioner,
116 T.C. 272, 279 (2001).]
The conference report indicates that the language “against whom a
deficiency has been asserted” was inserted into section 6015(e)
to clarify the proper time for making a request to the
Commissioner for relief from joint and several liability for tax
that may have been underreported on the return. Congress wanted
to prevent taxpayers from submitting premature requests to the
Commissioner for relief from potential deficiencies before the
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Commissioner had asserted that additional taxes were owed.
Congress also wanted to make it clear that a taxpayer does not
have to wait until after an assessment has been made before
submitting a request to the Commissioner for relief under section
6015. Overall, the legislative history indicates that Congress
was concerned with the proper timing of a request for relief for
underreported tax and intended that taxpayers not be allowed to
submit a request to the Commissioner regarding underreported tax
until after the issue was raised by the IRS.9
There is nothing in the legislative history indicating that
the amendment of section 6015(e) by the Consolidated
Appropriations Act, 2001, was intended to eliminate our
jurisdiction regarding claims for equitable relief under section
6015(f) over which we previously had jurisdiction. The stated
purpose for inserting the language “against whom a deficiency has
been asserted” into section 6015(e) was to clarify the proper
9
We note that sec. 1.6015-5(b)(5), Proposed Income Tax
Regs., 66 Fed. Reg. 3888, 3902 (Jan. 17, 2001), also expresses
the view that the Commissioner will not consider premature claims
for relief under sec. 6015(b), (c), and (f). The proposed
regulation provides, in pertinent part:
(5) Premature requests for relief. The Secretary
will not consider premature claims for relief under
§1.6015-2, §1.6015-3, or §1.6015-4. A premature claim
is a claim for relief that is filed for a tax year
prior to the receipt of a notification of an audit or a
letter or notice from the Secretary indicating that
there may be an outstanding liability with regard to
that year. * * *
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time for a taxpayer to submit a request to the Commissioner for
relief under section 6015 regarding underreported taxes.10 We
conclude that the amendment of section 6015(e) does not preclude
our jurisdiction to review the denial of equitable relief under
section 6015(f) where a deficiency has not been asserted.
In the instant case, petitioner filed a claim for relief
from joint and several liability for an amount of tax correctly
shown on the return but not paid with the return. Because
respondent has not challenged the tax reported on the return, no
deficiency has been asserted. In this situation, petitioner may
be entitled to relief under section 6015(f) because subsection
(f) applies where “it is inequitable to hold the individual
liable for any unpaid tax or any deficiency”.11 Sec. 6015(f)
(emphasis added); Fernandez v. Commissioner, 114 T.C. at 332; H.
10
Sec. 6015(c)(3)(B) was amended at the same time to provide
that the time for electing relief was “after a deficiency for
such year is asserted”. Consolidated Appropriations Act, 2001
(Consolidated Appropriations Act, 2001), Pub. L. 106-554, app. G,
sec. 313, 114 Stat. 2763A-640.
11
A request for relief from joint and several liability can
be made by submitting a Form 8857, Request for Innocent Spouse
Relief (And Separation of Liability and Equitable Relief), to the
Commissioner. The instructions accompanying the Form 8857
provide that relief under sec. 6015(f) generally applies only to
an underpayment of tax, or part or all of any understatement of
tax that does not qualify for both sec. 6015(b) and sec. 6015(c)
relief. An underpayment is defined as “tax that is properly
shown on your return but [which] has not been paid.” An
understatement of tax, or deficiency, is defined as “the
difference between the total amount of tax that the IRS
determines should have been shown on the return, and the amount
that actually was shown on the return.”
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Conf. Rept. 105-599, supra at 254-255, 1998-3 C.B. at 1008-1009;
Rev. Proc. 2000-15, 2000-5 I.R.B. 447; see also Smith v.
Commissioner, T.C. Memo. 2001-313.12 Because the tax was
reported on the return, respondent need not issue a notice of
deficiency in order to assess the tax. Bresson v. Commissioner,
111 T.C. 172 (1998), affd. 213 F.3d 1173 (9th Cir. 2000).
Respondent and petitioner are both aware that petitioner has an
unpaid tax liability which is due. In this situation, Congress’s
concern regarding premature requests for relief is not present
because there is no dispute over the amount of tax required to be
shown on the return.
C. Conclusion
Both parties agree that petitioner is jointly and severally
liable for the unpaid tax unless she is entitled to equitable
relief under section 6015(f). Respondent has treated the request
as an election under section 6015(b), (c), and (f). Both parties
agree that the absence of a deficiency is no impediment to our
jurisdiction in the instant case. After examining section 6015
12
In Smith v. Commissioner, T.C. Memo. 2001-313, the
taxpayer filed a petition under sec. 6015 seeking relief from
joint and several liability for an underpayment of tax shown on
her 1987 joint tax return and a deficiency related to her 1992
joint tax return. The Commissioner had previously granted relief
under sec. 6015 for a deficiency related to the 1987 return. We
exercised our jurisdiction to review the Commissioner’s denial of
equitable relief under sec. 6015(f) for the underpayment of tax
shown on the 1987 return and decide whether petitioner was
entitled to relief from joint and several liability for the 1992
deficiency.
- 21 -
as originally enacted, the subsequent amendment by the
Consolidated Appropriations Act, 2001, the legislative history
and relevant caselaw, we agree with the parties and hold that the
absence of an asserted deficiency does not deprive us of
jurisdiction over petitioner’s claim for equitable relief
pursuant to section 6015(f).
III. Timeliness of Petition
The next issue is whether the petition was timely filed
under section 6015(e). Section 6015(e)(1)(A) provides, in
pertinent part, that an individual may file a petition:
(i) at any time after the earlier of--
(I) the date the Secretary mails, by
certified or registered mail to the taxpayer’s
last known address, notice of the Secretary’s
final determination of relief available to the
individual, or
(II) the date which is 6 months after the
date such election is filed with the Secretary,
and
(ii) not later than the close of the 90th day
after the date described in clause (i)(I).[13]
13
As originally enacted, sec. 6015(e)(1)(A) provided:
(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
(continued...)
- 22 -
In the instant case, the petition was filed more than 6
months after the date petitioner submitted to respondent her
request for relief under section 6015. The notice of
determination was not mailed to petitioner’s last known address.
Thus, the petition was not filed later than the close of the 90th
day after the date respondent mailed the notice of determination
to petitioner’s last known address. While this would seem to end
the matter, respondent argues that petitioner received the notice
in sufficient time to file a timely petition within 90 days and
that somehow we should therefore find that the petition was filed
after the 90-day period described in section 6015(e)(1)(A)(ii).
Respondent relies on the fact that the petition is dated 2
days before the 90th day after respondent mailed the notice of
13
(...continued)
is 6 months after the date such election is filed with
the Secretary and before the close of such 90-day
period.
Congress amended sec. 6015(e) effective on Dec. 21, 2000.
Consolidated Appropriations Act, 2001, 114 Stat. 2763, 2763A-641-
643. The conference report accompanying the Consolidated
Appropriations Act, 2001, notes that under the statute as
originally enacted, the time period for filing a petition under
sec. 6015(e) began on the date of the determination as opposed to
the day after the determination. H. Conf. Rept. 106-1033, at
1023 (2000). The report explains that the purpose of the
amendment to sec. 6015(e)(1)(A) was to clarify the computation of
the time period for seeking a redetermination in the Tax Court
under sec. 6015(e) by conforming it to the generally applicable
90-day period to petition the Tax Court with respect to a
deficiency notice. Id. The conference report does not indicate
why the reference to the taxpayer’s last known address was added
to sec. 6015(e)(1)(A).
- 23 -
determination. Respondent points out that the petition would
have been timely if mailed on the date shown on the petition.
Respondent notes that cases involving a notice of deficiency have
recognized that actual receipt of the notice without prejudicial
delay is sufficient for the notice to be effective even though
not sent to the taxpayer’s last known address. Assuming that
this rationale could have some application in deciding when the
90-day period referred to in section 6015(e)(1)(A)(ii) begins, we
find that the improperly addressed notice did result in
prejudicial delay.
In a deficiency proceeding, our jurisdiction depends on the
issuance of a valid notice of deficiency and a timely filed
petition. Rule 13(a), (c); Monge v. Commissioner, 93 T.C. 22, 27
(1989). Section 6212(a) authorizes the Commissioner to send a
notice of deficiency to a taxpayer by certified mail or
registered mail. The taxpayer must generally file a petition to
this Court within 90 days after the date the notice of deficiency
is mailed. Sec. 6213(a). Section 6212(b)(1) provides that it
“shall be sufficient” for jurisdictional purposes if the
Commissioner mails the notice of deficiency to the taxpayer at
the taxpayer’s last known address. Frieling v. Commissioner, 81
T.C. 42, 52 (1983). It is well settled that, although a
deficiency notice properly mailed to a taxpayer’s last known
address provides the Commissioner with a “safe harbor” under
- 24 -
section 6212(b), an improperly addressed notice of deficiency
remains valid under section 6212(a) if it is actually received in
sufficient time to permit the taxpayer to file a timely petition
for redetermination. Mulvania v. Commissioner, 81 T.C. 65, 67-69
(1983), affd. 769 F.2d 1376 (9th Cir. 1985).
The determination of whether a taxpayer’s ability to file a
timely petition has been prejudiced by an improperly addressed
notice is factual in nature. Looper v. Commissioner, 73 T.C.
690, 699 (1980). In general, the cases in which we have held
that an improperly addressed notice of deficiency was actually
received with sufficient time to permit the taxpayer to file a
timely petition for redetermination have involved receipt with at
least 30 days left in the filing period. See, e.g., Mulvania v.
Commissioner, supra at 68 (74 days remaining); Bowers v.
Commissioner, T.C. Memo. 1991-609 (69 days remaining); Fileff v.
Commissioner, T.C. Memo. 1990-452 (60 days remaining); George v.
Commissioner, T.C. Memo. 1990-147 (52 days remaining); Bulakites
v. Commissioner, T.C. Memo. 1998-256 (45 days remaining); Loftin
v. Commissioner, T.C. Memo. 1986-322 (30 days remaining); Eger v.
Commissioner, T.C. Memo. 1984-325 (30 days remaining). In a
situation where a notice was actually received with only 17 days
left in the filing period, we held that the taxpayer was
prejudiced by the improperly addressed notice because he did not
- 25 -
let the notice languish and “he took responsible steps in an
attempt to fulfill requisites to contest the Commissioner’s
determination in the Tax Court.” Looper v. Commissioner, supra
at 699.
Applying this standard in the context of a notice of
determination under section 6015,14 we find that petitioner’s
ability to timely file the petition was prejudiced by the
improperly addressed notice. At the hearing, petitioner stated
that during the relevant time period she was busy attending to
her injured husband and did not know when she received the notice
of determination. The only evidence of a specific date shows
that the notice was received by January 27, 2001, which was the
14
While we dispose of respondent’s argument by applying
caselaw dealing with jurisdictional requirements under sec. 6213,
we note that the statutory language in sec. 6015(e)(1)(A) is
different in several respects, including the fact that sec.
6015(e)(1)(A) specifically counts the 90-day period from the date
the notice of determination is mailed to the “taxpayer’s last
known address”. In contrast, sec. 6213 counts the 90-day filing
period from the date the notice of deficiency was mailed with no
reference to the date the notice was mailed to the taxpayer’s
last known address.
- 26 -
date written on the petition.15 This date, upon which respondent
relies, was 88 days after respondent mailed the notice of
determination and only 2 days prior to the last day for filing a
petition.
Petitioner initiated and has diligently pursued relief from
joint liability. There is no evidence that petitioner let the
notice languish or otherwise failed to take responsible steps to
contest respondent’s determination in this Court. Therefore, on
the basis of the evidence in the record, we find that the delay
caused by the improperly addressed notice was prejudicial to
petitioner’s ability to timely, by January 29, 2001, file her
petition.
IV. Conclusion
We hold that the petition in the instant case was timely
under section 6015(e)(1)(A) and that we have jurisdiction to
determine the appropriate relief available to petitioner under
15
In Sicker v. Commissioner, 815 F.2d 1400 (11th Cir. 1987),
revg. and remanding an Order of this Court, the petition was
dated 8 days prior to the expiration of the 90-day filing period
but postmarked 1 day after expiration of the 90-day period. The
court held that receipt of a notice of deficiency with only 8
days remaining in the filing period was not sufficient time to
permit the taxpayer to file a petition. Id. at 1401 (holding
that, as a matter of law, 8 days cannot be considered ample time
in which to petition for redetermination).
- 27 -
section 6015(f) for the underpayment of tax shown on petitioner’s
joint return.
An appropriate order will be
issued denying respondent’s
motion to dismiss for lack of
jurisdiction.
Reviewed by the Court.
WELLS, COHEN, SWIFT, GERBER, HALPERN, BEGHE, CHIECHI, and
GALE, JJ., agree with this majority opinion.
THORNTON, J., dissents.
- 28 -
LARO, J., dissenting: In order to seize jurisdiction over
this case, the majority today takes the Court a step away from
long-established principles of statutory construction by refusing
to apply the plain meaning of the statute enacted by Congress.
The issues at hand could and should have been resolved merely by
applying the obvious plain meaning of the statute and following
recent precedent. Instead, the majority opts to rewrite the
statute to achieve a practical and result-oriented decision. In
so doing, the majority abandons and cuts the mooring of strict
construction, disregards precedent, and sends the Court drifting
without reliable navigation hoping to find refuge in a practical
result.
I have nothing against practical decisions. Courts should
strive to arrive at real world results. But it is Congress that
is empowered by our Constitution to legislate, and it is neither
the responsibility nor the province of this (or any other) Court
to create law deliberately and audaciously while disregarding a
specific statutory scheme that Congress has prescribed.
Practical results have virtue when they occur in the context of
conventional statutory construction. Result-oriented decisions
such as the one reached by the majority, on the other hand,
disregard plain Congressional intent and encroach on the
responsibility of the legislature. To state the obvious, there
is abundant authority to dictate that a plain meaning
interpretation of the statutory text is required absent
- 29 -
ambiguity. See discussion infra. The plain meaning of the
statutory text at issue is not ambiguous.
My disagreement with the majority opinion focuses primarily
on the opinion’s misapplication of section 6015(e), the
provisions of which I consider to be a clear statutory mandate
from Congress. Section 6015(e) empowers the Court to review a
taxpayer’s stand-alone petition challenging the Commissioner’s
determination as to the taxpayer’s administrative claim for
relief from joint liability under section 6015. Section 6015(e)
provides in relevant part:
SEC. 6015(e). Petition for Review by Tax Court.--
(1) In general.--In the case of an individual
against whom a deficiency has been asserted and who
elects to have subsection (b) or (c) apply–
(A) In general.--In addition to any
other remedy provided by law, 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 * * * [timely]
I parse the quoted text of section 6015(e) into the separate
statements which Congress has carefully chosen to prescribe under
the heading “Petition for Review by Tax Court”. The plain
reading of each of these statements establishes the prerequisite
to the Court’s obtaining jurisdiction in the case of a stand-
alone petition. The majority reads these statements differently,
in fact, declining to apply many of the statements in order to
- 30 -
reach a conclusion that the majority considers more practical
than the plain meaning application that the text demands. As
explained by the majority, some of these statements either do not
apply to a finding that the Court has jurisdiction over this case
or are statutory surplusage. Although in the latter regard the
majority is careful not to use the term “surplusage”, the
majority declines to apply part of the statements asserting that
the language therein must apply in all cases. Such reasoning is
akin to labeling the parts surplusage.
I summarize a plain reading of the separate statements and
the majority’s reading of these statements as follows:
Statutory Text A Plain Reading Majority’s Reading
In the case of
an individual
In order to In order to
acquire jurisdiction acquire jurisdiction
under section under section
6015(e), the Court 6015(e), the Court
must find that the must find that the
petitioning taxpayer petitioning taxpayer
is an individual. is an individual.
against whom a
deficiency has been In order to In order to
asserted acquire jurisdiction acquire jurisdiction
under section under section
6015(e), the Court 6015(e), the Court
must find that the never need find that
Commissioner has the Commissioner has
asserted a asserted a
deficiency against deficiency against
the petitioning the petitioning
individual. individual. This
language is not a
jurisdictional
requirement. When
an individual
- 31 -
petitions the Court
under section
6015(e), the Court
may always decide
whether the
individual qualifies
for relief under
section 6015 as to
either a deficiency
or an underpayment.
and
who elects to have
subsection (b) or In order to In order to
(c) apply acquire jurisdiction acquire jurisdiction
under section under section
6015(e), the Court 6015(e), the Court
must find that the never need find that
petitioning the petitioning
individual made an individual made an
election under election under
subsection (b) or subsection (b) or
(c). As this Court (c). This language
stated in Fernandez is surplusage in
v. Commissioner, that the
114 T.C. 324, 331 Commissioner must
(2000), “before an always, including
individual may where the individual
petition this court has requested only
for review of equitable relief
innocent spouse under section
relief, including 6015(f), treat the
relief under individual’s request
subsection (f), such as an election under
individual must make subsection (b) and
an election under (c). This treatment
subsections (b) ipso facto meets the
and/or (c).” requirement of this
(Emphasis added.) language.
* * * the
individual may In order to In order to
petition the Tax acquire jurisdiction acquire jurisdiction
Court (and the Tax under section under section
Court shall have 6015(e), the Court 6015(e), the Court
jurisdiction) must find that the never need find that
petitioning the petitioning
individual is the individual is the
same individual individual against
- 32 -
against whom a whom a deficiency is
deficiency was asserted or who made
asserted and who an election under
made the election subsection (b) or
under subsection (b) (c). The Court has
or (c). The jurisdiction
“individual” whenever an
referenced in this individual petitions
language is the same the Court under
“individual” section 6015(e) to
described in the decide any claim for
prefatory language relief under section
in section 6015. The
6015(e)(1). “individual” who may
petition the Court
is not necessarily
the same
“individual”
described in the
prefatory language
in section
6015(e)(1).
to determine the When the The phrase “under
appropriate relief individual described this section” means
available to the in the prefatory that the Court may
individual under language in section decide the
this section if such 6015(e)(1) files a appropriate relief
petition is filed * timely petition with as to any
* * [timely]. the Court under petitioning
section 6015(e), and individual who files
the Court therefore a timely petition
has jurisdiction, under section
the Court may decide 6015(e).
that the individual
is entitled to any
form of relief under
section 6015.
As I see it, the controlling fact in this case is that
petitioner requested from the Commissioner solely equitable
relief under section 6015(f).1 The majority sees it differently.
1
As discussed infra, Congress provided in sec. 6015 three
(continued...)
- 33 -
The majority concludes that the Court has jurisdiction over this
case because, they find, the Commissioner (1) treated
petitioner’s request solely for equitable relief as a request for
all three types of relief under section 6015 and (2) considered
whether petitioner qualified for any of those types of relief.
The majority understands that the so-found Commissioner’s
treatment of petitioner’s request is dictated by the
1
(...continued)
distinct types of relief from joint liability, the first in sec.
6015(b), the second in sec. 6015(c), and the third in sec.
6015(f). Congress referred to these respective types of relief
as modified innocent spouse relief contained in the House bill,
the separate liability election contained in the Senate
amendment, and equitable relief contained in the conference
agreement. The majority makes no mention of the distinction that
Congress drew between these three types of relief, a distinction
which, as discussed herein, has been recognized not only by
Congress, but by the Joint Committee of Taxation and the Treasury
Department as well. As I read the majority opinion, the Court’s
jurisdiction to decide this case involving solely equitable
relief is found in the fact that the Senate amendment gave the
Court jurisdiction over all forms of relief set forth in the
amendment and “The Senate amendment * * * [included] an
‘Equitable Relief’ provision similar to what is now contained in
section 6015(f)”. Majority op. p. 11. I disagree with the
majority that the Senate amendment gave the Court jurisdiction
over a claim for equitable relief under sec. 6015(f) in the case
of a stand-alone petition. The Senate’s equitable relief
provision was never adopted by the conferees. The mere fact that
the Senate amendment may have been “similar” to the conferees’
equitable relief provision, an assertion made by the majority but
to which I disagree (but for the fact that both provisions are
called “equitable relief”), does not mean that the conferees
intended that their equitable relief provision, which was not
contained in either the House bill or the Senate amendment, would
follow the jurisdictional rules set forth in the Senate
amendment. The equitable relief provision contained in sec.
6015(f) arose in conference, and the conferees never provided
that the Court would have jurisdiction as to that provision in
the case of a stand-alone petition.
- 34 -
Commissioner’s belief that the “Commissioner must first examine
both subsections (b) and (c) to determine whether relief is
available under those subsections before determining whether
relief is available under section 6015(f)”. Majority op. p. 6.
The majority’s understanding of the Commissioner’s belief is
at odds with the Treasury Department’s formation of procedural
rules by which the Commissioner must process requests for relief
under section 6015. Specifically, following the Commissioner’s
consideration of petitioner’s request, the Treasury Department
issued proposed regulations interpreting section 6015 to the
contrary of the majority’s finding that the Commissioner treated
petitioner’s request solely for equitable relief as a claim for
all three types of relief under section 6015.2 The proposed
regulations provide inconsistently with the majority’s
understanding that the Commissioner will not consider whether a
taxpayer requesting relief solely under section 6015(f) qualifies
for relief under section 6015(b) or (c). See sec. 1.6015-
1(a)(2), Proposed Income Tax Regs., 66 Fed. Reg. 3894 (Jan. 17,
2001) (“If a requesting spouse seeks relief only under § 1.6015-4
[equitable relief], the Secretary may not grant relief under
2
I understand that proposed regulations are not binding on
this Court. Canterbury v. Commissioner, 99 T.C. 223, 246 n.18
(1992). In the instant setting, however, the referenced proposed
regulations speak loudly as to the Commissioner’s “belief” as to
the forms of relief that he will consider when a taxpayer such as
petitioner requests under sec. 6015 solely equitable relief.
- 35 -
§1.6015-2 [modified innocent spouse relief] or § 1.6015-3 [the
separate liability election].”); see also Notice of Proposed
Rulemaking, 66 Fed. Reg. 3891 (Jan. 17, 2001) (“If a spouse
requests relief under section 6015(f) alone, relief will only be
considered under that section.” (Emphasis added.)). Although
the majority recognizes that the Treasury Department has issued
proposed regulations under section 6015, the majority makes no
reference to the Secretary’s interpretation of section 6015 as
set forth in this portion of the proposed regulations. This
portion, if finalized as proposed, will stab the heart of the
majority’s reasoning that:
in every case where the taxpayer submits a request to
the Commissioner for relief under section 6015, and
such request includes a claim for relief under section
6015(f), the Commissioner must first examine both
subsections (b) and (c) to determine whether relief is
available under those subsections before determining
whether relief is available under section 6015(f).
[Majority op. p. 6.]
In another recent case, Lunsford v. Commissioner, 117 T.C.
183, 191 (2001) (Laro, J., dissenting), I dissented to the
Court’s similar refusal to recognize what I believed was a
legislative mandate that taxpayers be afforded face-to-face
collection due process (CDP) hearings upon all proper requests.
That mandate had been recognized by the U.S. Department of
Justice, the Internal Revenue Service (IRS) Office of Chief
Counsel, and the IRS Office of Appeals. The Court’s
interpretation contrary to my belief was later eroded by the
- 36 -
Treasury Department’s release of final regulations under section
6330, providing in relevant part that a taxpayer may demand a
face-to-face CDP hearing. Sec. 301.6330-1(d)(2), Q&A-D6 and D7,
Proced. & Admin. Regs. In contrast to the majority, the Treasury
Department has apparently recognized here that the Commissioner’s
assertion of a deficiency and the taxpayer’s making of an
affirmative election under section 6015(b) or (c) are both
prerequisites to relief under those subsections and that the
failure to meet either prerequisite forecloses any need to “first
examine both subsections (b) and (c) to determine whether relief
is available under those subsections”. See also Fernandez v.
Commissioner, 114 T.C. 324, 331 (2000), whereat the Court stated:
“we conclude, before an individual may petition this court for
review of innocent spouse relief, including relief under
subsection (f), such individual must make an election under
subsections (b) and/or (c).”
This Court is not a Court of unlimited jurisdiction. To the
contrary, this Court is a legislatively created (Article I) Court
that must acquire jurisdiction directly from Congress. Freytag
v. Commissioner, 501 U.S. 868, 870 (1991); David Dung Le, M.D.,
Inc. v. Commissioner, 114 T.C. 268, 269 (2000), affd. 22 Fed.
Appx. 837 (9th Cir. 2001); see also sec. 7442. When the Court
lacks jurisdiction over an issue, the Court does not have the
power to decide it. Ins. Corp. of Ir., Ltd. v. Compagnie des
- 37 -
Bauxites de Guinee, 456 U.S. 694, 702 (1982); Williams v. Secy.
of Navy, 787 F.2d 552, 557 (Fed. Cir. 1986); Brown v.
Commissioner, 78 T.C. 215, 217-218 (1982). The Court may not
acquire jurisdiction upon the consent of the parties, California
v. LaRue, 409 U.S. 109, 112 n.3 (1972), or through some equitable
principle such as estoppel, Am. Fire & Cas. Co. v. Finn, 341 U.S.
6, 17-18 (1951); Flight Attendants Against UAL Offset v.
Commissioner, 165 F.3d 572, 578 (7th Cir. 1999). The Court’s
decision as to an issue over which it does not have jurisdiction
is void, Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583
(1999); Steel Co. v. Citizens for Better Envt., 523 U.S. 83,
101-102 (1998), and may be challenged at any time, including upon
appeal, Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de
Guinee, supra at 702.
Congress added section 6015 to the Code as part of the
Internal Revenue Service Restructuring and Reform Act of 1998
(RRA 1998), Pub. L. 105-206, sec. 3201, 112 Stat. 685, 734, in
order to expand the relief available to taxpayers from joint and
several liability (joint liability) on a joint return. S. Rept.
105-174, at 55 (1998), 1998-3 C.B. 591; H. Rept. 105-364 (Part I)
at 61 (1997), 1998-3 C.B. 433. Each spouse who files a joint
Federal income tax return is generally responsible for the
accuracy of that return and is subject to joint liability for tax
deficiencies stemming therefrom. Sec. 6013(d)(3). Such is the
- 38 -
case even when only one of the spouses earned the wages or income
shown on the return. Congress believed that relief from joint
liability was difficult to obtain under the law that preceded the
RRA 1998; i.e., former section 6013(e). Congress recognized that
joint liability may be unjust in certain circumstances. Cheshire
v. Commissioner, 282 F.3d 326, 331 (2002), affg. 115 T.C. 183(2000).
Through section 6015, Congress authorized relief from joint
liability in three distinct cases. Id. First, section 6015(b)
relieves an individual of joint liability when he or she meets
the five requirements set forth in section 6015(b)(1). Relief
under section 6015(b)(1), which is similar to the relief
available under former section 6013(e) and to which the conferees
referred as modified (or sometimes expanded) “innocent spouse
relief”,3 H. Conf. Rept. 105-599, at 251, 254 (1998), 1998-3 C.B.
3The congressional committee members used the shorthand
“innocent spouse” to refer to an individual who qualified for
relief from joint liability under former sec. 6013(e) and, in the
case of the conferees and the House committee members, under its
successor, sec. 6015(b). E.g., H. Conf. Rept. 105-599, at 249,
251 (1998), 1998-3 C.B. 1003, 1005; S. Rept. 105-174, at 55-56
(1998), 1998-3 C.B. 591-592; H. Rept. 105-364 (Part I) at 61-62
(1997), 1998-3 C.B. 433-434. Although former sec. 6013(e) did
not actually use that term, the courts and at least one previous
legislative committee did. The term “innocent spouse” was
apparently spawned in Spanos v. United States, 212 F. Supp. 861(D. Md. 1963), affd. in part, revd. in part, and remanded 323
F.2d 108 (4th Cir. 1963). There, the court described a taxpayer
who had filed a joint return with her husband as an “innocent
spouse” after noting that the taxpayer at hand “had no income of
her own and * * * was innocent of her husband’s fraudulent
(continued...)
- 39 -
1005, 1008, requires an affirmative election by the taxpayer,
sec. 6015(a)(1), and the presence of a deficiency, e.g., sec.
6015(b)(1)(B) (joint return must contain an “understatement of
tax”); sec. 6015(b)(1)(D) (factfinder must conclude as a
prerequisite to modified innocent spouse relief that it is
“inequitable to hold the other [petitioning spouse] individual
liable for the deficiency in tax for such taxable year
attributable to such understatement”). Second, section 6015(c)
allows certain individuals to elect to limit their personal
liability to the amount that was “properly allocable” to them.
Sec. 6015(c)(1)(A). In order to qualify for this second type of
relief, which was not available under former section 6013(e) and
to which the conferees referred as the “separate liability
election”, H. Conf. Rept. 105-599, supra at 251, 1998-3 C.B. at
1005, the taxpayers who filed the joint return must be no longer
married, or be legally separated, or have been living apart for a
3
(...continued)
failure to file a federal income tax return for the taxable year
1955 when it was due.” Id. at 862, 864. This Court and the
Court of Appeals for the Sixth Circuit later repeated the term
while passing on the joint liability of a taxpayer who had filed
a joint return with her spouse. E.g., Huelsman v. Commissioner,
416 F.2d 477, 479 (6th Cir. 1969), remanding T.C. Memo. 1968-95;
Wenker v. Commissioner, T.C. Memo. 1966-240. The term also
appears in the legislative history accompanying the enactment of
former sec. 6013(e), S. Rept. 91-1537 (1970), 1971-1 C.B. 606,
and many subsequent court opinions discussing the former section,
e.g., United States v. Mitchell, 403 U.S. 190, 206 (1971);
Feldman v. Commissioner, 20 F.3d 1128 (11th Cir. 1994), affg.
T.C. Memo. 1993-17; Kroh v. Commissioner, 98 T.C. 383 (1992)
(Court reviewed).
- 40 -
12-month period. Sec. 6015(c)(3)(A)(i). Relief under section
6015(c), like relief under section 6015(b), requires an
affirmative election by the taxpayer, sec. 6015(a)(2), and the
presence of a deficiency, e.g., sec. 6015(c)(1) (an individual
who makes the separate liability election is liable for a
“deficiency which is assessed with respect to the [joint] return
* * * [in an amount not to exceed] the portion of such deficiency
properly allocable to the individual”). Third, section 6015(f)
authorizes the Secretary to grant equitable relief from joint
liability when neither of the first two types of relief is
available. Relief under section 6015(f), which the conferees
referred to as “equitable relief”, H. Conf. Rept. 105-599, supra
at 251, 1998-3 C.B. at 1005, was not available under former
section 6013(e). In contrast with the other two types of relief,
equitable relief does not require the presence of a deficiency.
Petitioner’s petition to this Court is a “stand alone”
petition, Fernandez v. Commissioner, 114 T.C. 324, 329 (2000),
that was filed under section 6015(e)(1) seeking only equitable
relief under section 6015(f). By virtue of the fact that her
1995 joint return did not generate a deficiency, petitioner does
not qualify for, nor has she ever sought, modified innocent
spouse relief or the separate liability election under section
6015(b) and (c), respectively. This case is the first instance
where this Court has decided whether section 6015(e) allows the
- 41 -
Court to determine whether a taxpayer in a nondeficiency case4 is
entitled to equitable relief under section 6015(f). The Court
has previously held that the Court has jurisdiction to decide a
claim for equitable relief under section 6015(f) when the Court
has jurisdiction over the proceedings by virtue of another
specific grant of authority. E.g., Fernandez v. Commissioner,
supra (Court decided claim for equitable relief under section
6015(f) in a proceeding subject to the Court’s jurisdiction under
section 6015(e)(1) to review the Commissioner’s determination as
to a claim under section 6015(b) and (c)); Butler v.
Commissioner, 114 T.C. 276 (2000) (Court decided claim for
equitable relief under section 6015(f) in a proceeding subject to
the Court’s jurisdiction under section 6213(a) to redetermine a
deficiency).
In order to decide the Court’s jurisdiction in this case, I
set my focus on the text of section 6015(e)(1) while bearing in
mind the text of the statute as a whole and the statutory scheme
crafted by Congress for relief from joint liability. FDA v.
Brown & Williamson Tobacco Corp., 529 U.S. 120, 132-133 (2000).
I construe the relevant text with reference to its legislative
4
I use the term “nondeficiency case” to refer to a case
such as this where the Commissioner has not determined a
deficiency against the taxpayer, the taxpayer has never filed
with the Commissioner an election for relief under section
6015(b) or (c), and the taxpayer petitions the Court seeking
solely equitable relief as to an underpayment of tax.
- 42 -
history primarily to learn the purpose of the statute and, if
necessary, to resolve any ambiguity in the words prescribed in
the text. Landgraf v. USI Film Prods., 511 U.S. 244 (1994);
United States v. Am. Trucking Associations, Inc., 310 U.S. 534,
543-544 (1940); Allen v. Commissioner, 118 T.C. 1, 7 (2002). I
apply the plain meaning of the words prescribed in the text
unless I find that a word’s plain meaning is inescapably
ambiguous. Commissioner v. Soliman, 506 U.S. 168, 174 (1993);
Garcia v. United States, 469 U.S. 70, 76 n.3 (1984); Venture
Funding, Ltd. v. Commissioner, 110 T.C. 236, 241-242 (1998),
affd. without published opinion 198 F.3d 248 (6th Cir. 1999); see
also Ex parte Collett, 337 U.S. 55 (1949). I understand that the
Court’s “task is to give effect to the will of Congress, and
where its will has been expressed in reasonably plain terms,
‘that language must ordinarily be regarded as conclusive.’”
Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570 (1982)
(quoting Consumer Prod. Safety Commn. v. GTE Sylvania, Inc., 447
U.S. 102, 108 (1980)). I “presume that a legislature says in a
statute what it means and means in a statute what it says there.”
Conn. Natl. Bank v. Germain, 503 U.S. 249, 253-254 (1992).5
5
Whereas the majority opinion recognizes similar rules of
statutory construction, it does so only as to its interpretation
of the 2001 amendment, majority op. pp. 14-15, choosing to rest
its analysis primarily on this Court’s decisions in Fernandez v.
Commissioner, 114 T.C. 324 (2000), and Butler v. Commissioner,
114 T.C. 276 (2000). In contrast with the case here, however,
(continued...)
- 43 -
I am unable to find in section 6015(e)(1) any grant of
jurisdiction to the Court to decide in a nondeficiency case a
request for equitable relief under section 6015(f). Section
6015(e)(1) provides in plain terms that the Court’s jurisdiction
rests upon (1) the assertion of a deficiency against a taxpayer,
(2) the taxpayer’s making of an election under section 6015(b) or
(c),6 and (3) the taxpayer’s timely petitioning the Court to
determine the appropriate relief under section 6015. Absent a
finding that all of these requirements have been met, I conclude
that the Court lacks the requisite jurisdiction to decide a claim
for equitable relief under section 6015(f). When, on the other
hand, all of these requirements are met, I conclude that the
Court is empowered by section 6015(e)(1)(A) “to determine the
appropriate relief available to the individual under this section
[section 6015]”.7 That relief could include, where applicable,
5
(...continued)
neither of those two cases involved an election made solely under
section 6015(f) or, more importantly, required that the Court
look solely to sec. 6015(e) for its jurisdiction.
6
As to this second element, the statute provides explicitly
that the Court’s jurisdiction attaches only to those cases where
“an individual * * * elects to have subsection (b) or (c) apply”.
Sec. 6015(e)(1). Thus, even were the Commissioner to treat a
taxpayer who did not make such an election as one who did, a
treatment which as mentioned supra the Treasury Department’s
proposed regulations forbid, that treatment, contrary to the
majority’s thinking, would not be enough to meet this second
element.
7
I read the phrase “under this section” in light of the
(continued...)
- 44 -
modified innocent spouse relief, the separate liability election,
and equitable relief.
The majority opinion rests primarily on the fact that the
Court has held previously in Fernandez v. Commissioner, supra,
and Butler v. Commissioner, supra, that the Court has
jurisdiction to decide a claim for relief under section 6015(f).
As I read the majority’s opinion, those decisions compel the
conclusion that we have jurisdiction in this case. I disagree.
The cases of Fernandez v. Commissioner, supra, and Butler v.
Commissioner, supra, are factually distinguishable from the
setting at hand.8 Although it is true that both of those cases
7
(...continued)
text of the statute as a whole and the statutory scheme crafted
by Congress for relief from joint liability. See FDA v. Brown &
Williamson Tobacco Corp., 529 U.S. 120, 132-133 (2000). I
conclude that the phrase does not empower the Court to consider
granting to any individual any form of relief available under
sec. 6015 simply because the individual petitions the Court for
relief from joint liability. Instead, in a stand alone
proceeding such as this, Congress has allowed the Court to
provide relief under sec. 6015 only to an individual described in
sec. 6015(e)(1). I construe Congress’s use of the term “the
individual” in sec. 6015(e)(1)(A) to refer only to those
individuals described in sec. 6015(e)(1); i.e., “an individual
against [1] whom a deficiency has been asserted and [2] who
elects to have subsection (b) or (c) apply”.
8
I also note that the version of sec. 6015(e)(1) that the
Court applied in Fernandez v. Commissioner, supra, and Butler v.
Commissioner, supra, has since been amended by inserting after
“individual”, the words “against whom a deficiency has been
asserted and”. Consolidated Appropriations Act, 2001 (CAA),
Pub. L. 106-554, app. G, sec. 313(a)(3)(A), 114 Stat. 2763A-641
(2000). That amendment is applicable to this case in that it
“shall take effect on the date of the enactment of this Act”
(continued...)
- 45 -
required the Court’s consideration of a section 6015(f) claim for
equitable relief, the fact of the matter is that neither case
arose in a nondeficiency setting. The taxpayer in Butler v.
Commissioner, supra, raised the section 6015(f) issue as an
affirmative defense in a deficiency proceeding. Accord Estate of
Wenner v. Commissioner, 116 T.C. 284 (2001) (taxpayer raised
qualification under sec. 6015 as an affirmative defense in an
interest abatement proceeding). The taxpayer in Fernandez v.
Commissioner, supra, raised the section 6015(f) issue in
connection with an election under section 6015(b) and (c) for
relief from a deficiency. Petitioner, by contrast, has never had
a deficiency for the relevant year and has never made an
election. Petitioner simply asks the Court to grant her
equitable relief from an underpayment of the tax reported on her
return.
Although the legislative history to a statute is secondary
when the Court can apply the plain meaning of unambiguous
statutory text, I recognize that unequivocal evidence of a clear
legislative intent may sometimes override a plain meaning
interpretation and lead to a different result. Consumer Prod.
Safety Commn. v. GTE Sylvania, Inc., supra at 108; see also Allen
v. Commissioner, 118 T.C. 1, 17 (2002). Here, the legislative
8
(...continued)
(Dec. 21, 2000). CAA app. G, sec. 313(f), 114 Stat. 2763A-643.
- 46 -
history of section 6015 supports my conclusion and conflicts with
the majority’s conclusion.
Section 6015 finds its roots in the House. The House
Committee on Ways and Means was concerned with the adequacy of
then-present law on relief from joint liability for tax,
interest, and penalties in that the relief was afforded only to
individuals who qualified as innocent spouses. The committee
viewed the law as “inadequate” in that “it is inappropriate to
limit innocent spouse relief only to the most egregious cases
where the understatement is large and the tax position taken is
grossly erroneous.” H. Rept. 105-364 (Part 1), supra at 61,
1998-3 C.B. at 433. The committee believed that “partial
innocent spouse relief should be considered in appropriate
circumstances, * * * that all taxpayers should have access to the
Tax Court in resolving disputes concerning their status as an
innocent spouse * * * [and] that taxpayers need to be better
informed of their right to apply for innocent spouse relief in
appropriate cases”. Id. The House bill made “innocent spouse
status easier to obtain.” Id. The House committee report
explains the relevant parts of the House bill as follows:
The bill eliminates all of the understatement
thresholds and requires only that the understatement of
tax be attributable to an erroneous (and not just a
grossly, erroneous) item of the other spouse.
The bill provides that innocent spouse relief may
be provided on an apportioned basis. That is, the
spouse may be relieved of liability as an innocent
- 47 -
spouse to the extent the liability is attributable to
the portion of an understatement of tax which such
spouse did not know of and had no reason to know of.
The bill specifically provides that the Tax Court
has jurisdiction to review any denial (or failure to
rule) by the Secretary regarding an application for
innocent spouse relief. * * * [Id.]
The House bill then passed to the Senate. As was true in
the case of the House committee, the Senate Committee on Finance
viewed the then-present law on relief from joint liability for
tax, interest, and penalties as “inadequate”. S. Rept. 105-174,
supra at 55, 1998-3 C.B. at 591. The Senate committee believed,
however, that an approach different from that taken by the House
was necessary to address this concern. The Senate committee
believed that “a system based on separate liabilities will
provide better protection for innocent spouses than the current
system * * *[,] that an electing spouse’s liability should be
satisfied by the payment of the tax attributable to that spouse’s
income and that an election to limit a spouse’s liability to that
amount is appropriate.” Id. at 55, 1998-3 C.B. at 591. The
Senate Committee on Finance explained in its report that the
relevant parts of the Senate amendment were as follows:
The bill modifies the innocent spouse provisions
to permit a spouse to elect to limit his or her
liability for unpaid taxes on a joint return to the
spouse’s separate liability amount. In the case of a
deficiency arising from a joint return, a spouse would
be liable only to the extent items giving rise to the
deficiency are allocable to the spouse. * * *
* * * * * * *
- 48 -
The Tax Court has jurisdiction of disputes arising
from the separate liability election. For example, a
spouse who makes the separate liability election may
petition the Tax Court to determine the limits on
liability applicable under this provision. * * *
* * * * * * *
The separate liability election also applies in
situations where the tax shown on a joint return is not
paid with the return. In this case, the amount
determined under the separate liability election equals
the amount that would have been reported by the
electing spouse on a separate return. [Id. at 56-59,
1998-3 C.B. at 592-595.]
The different approaches passed by the Senate and the House
as to relief from joint liability were reconciled in conference
with the conferees adopting both the modified innocent spouse
relief provided in the House bill and the separate liability
election provided in the Senate amendment. The conferees also
agreed upon an additional form of relief that was not found in
either the House bill or the Senate amendment. The conference
agreement provided that an individual who did not qualify for
modified innocent spouse relief or the separate liability
election could still qualify for equitable relief in appropriate
situations prescribed by the Secretary. The conference report
explains the relevant parts of the conference agreement as
follows:
In general
The conference agreement follows the Senate
amendment with respect to deficiencies of a taxpayer
who is no longer married to, is legally separated from,
or has been living apart for at least 12 months from
- 49 -
the person with whom the taxpayer originally filed the
joint return. The conference agreement also includes
the provision in the House bill expanding the
circumstances in which innocent spouse relief is
available. Taxpayers, whether or not eligible to make
the separate liability election, may be granted
innocent spouse relief where appropriate. In addition,
the conference agreement authorizes the Secretary to
provide equitable relief in appropriate situations.
The conference agreement follows the House bill and the
Senate amendment in establishing jurisdiction in the
Tax Court over disputes arising in this area.
Deficiencies of certain taxpayers
The conference agreement follows the Senate
amendment with respect to deficiencies of a taxpayer
who, at the time of election, is no longer married to,
is legally separated from, or has been living apart for
at least 12 months from the person with whom the
taxpayer originally filed the joint return. Such
taxpayers may elect to limit their liability for any
deficiency limited to the portion of the deficiency
that is attributable to items allocable to the
taxpayer.
* * * * * * *
Other deficiencies
The conference agreement also includes the
provision in the House bill modifying innocent spouse
relief. Taxpayers who do not make the separate
liability election may be eligible for innocent spouse
relief. * * *
Other circumstances, including tax shown on a return
but not paid
The conference agreement does not include the
portion of the Senate amendment that could provide
relief in situations where tax was shown on a joint
return, but not paid with the return. The conferees
intend that the Secretary will consider using the grant
of authority to provide equitable relief in appropriate
situations to avoid the inequitable treatment of
spouses in such situations. * * *
- 50 -
The conferees do not intend to limit the use of
the Secretary’s authority to provide equitable relief
to situations where tax is shown on a return but not
paid. The conferees intend that such authority be used
where, taking into account all the facts and
circumstances, it is inequitable to hold an individual
liable for all or part of any unpaid tax or deficiency
arising from a joint return. The conferees intend that
relief be available where there is both an
understatement and an underpayment of tax.
Procedural rules
The conference agreement follows the House bill
and the Senate amendment with respect to procedural
rules, including the jurisdiction of the Tax Court to
review matters relating to this provision. * * *
Effective date
The conference agreement follows the Senate
amendment. The separate liability election, expanded
innocent spouse relief and authority to provide
equitable relief all apply to liabilities for tax
arising after the date of enactment, as well as any
liability for tax arising on or before the date of
enactment that remains unpaid on the date of enactment.
* * * [H. Conf. Rept. 105-599, supra at 251-255,
1998-3 C.B. at 1005-1009; footnote omitted.]
In sum, the conference report highlights that Congress
intended that three distinct types of relief from joint liability
be available under section 6015; namely, the modified innocent
spouse relief provided in the House bill, the separate liability
election provided in the Senate amendment, and the equitable
relief provided in the conference agreement.9 The conference
report also highlights that the Court’s jurisdiction to review
9
The proposed income tax regulations under sec. 6015 also
highlight this point. See 66 Fed. Reg. 3888 (Jan. 17, 2001).
- 51 -
those types of relief is limited to the jurisdictional powers
granted to the Court in the House bill and in the Senate
amendment. Because neither of those documents empowered the
Court to decide a matter stemming from a petition requesting
equitable relief under section 6015(f), I consider it only
natural to conclude that section 6015 also does not contain that
jurisdiction in a nondeficiency case. To be sure, the fact that
the conferees’ equitable relief provision was not a part of
either the House bill or the Senate amendment negates the
majority’s conclusion that the Court’s jurisdiction to review a
claim for equitable relief under section 6015(f) is found in both
the House bill and in the Senate amendment.
I find additional support for my conclusion in the general
explanation of the RRA 1998 as set forth in the Staff of Joint
Comm. on Taxation, General Explanation of Tax Legislation Enacted
in 1998 (J. Comm. Print 1998), 1998-4 C.B. 543. Although that
general explanation is not part of the RRA 1998’s legislative
history, see Estate of Hutchinson v. Commissioner, 765 F.2d 665,
669-670 (7th Cir. 1985), affg. T.C. Memo. 1984-55; Condor Intl.,
Inc. v. Commissioner, 98 T.C. 203, 227 (1992), I respect it as a
document that was prepared in connection with the legislative
process by individuals who were intimately involved in that
process. Estate of Wallace v. Commissioner, 965 F.2d 1038,
1050-1051 n.15 (11th Cir. 1992), affg. 95 T.C. 525 (1990). My
- 52 -
respect for the joint committee’s understanding of a statute is
greatest where, as here, the understanding is fully supported by
corroboration in the legislative history. Estate of Hutchinson
v. Commissioner, supra at 669-670; Zinniel v. Commissioner,
89 T.C. 357, 367 (1987), affd. 883 F.2d 1350 (7th Cir. 1989).
Cf. Allen v. Commissioner, supra at 15 (joint committee’s
explanation of certain provisions of the alternative minimum tax
regime were entitled to little respect given the lack of
corroboration in the legislative history). Consistent with my
understanding of the jurisdictional issue, the joint committee
recognized in its report that section 6015 provides taxpayers
with three possible types of relief from joint liability; i.e.,
modified innocent spouse relief, the separate liability election,
and equitable relief. Moreover, like me, the joint committee
understood that this Court is empowered to decide in a stand-
alone petition as an independent action only the first two types
of relief. In order to decide a claim to equitable relief,
therefore, the joint committee’s explanation indicates that the
Court must otherwise have jurisdiction over the underlying case
by virtue of another grant of authority; e.g., by way of the
petition in Butler v. Commissioner, 114 T.C. at 288 (2000), to
redetermine a deficiency under section 6213(a), or by way of the
petition in Fernandez v. Commissioner, 114 T.C. 324 (2000), to
- 53 -
review a claim under section 6015(b) and (c) for relief from a
deficiency.
The most recent amendment to section 6015(e)(1) also is
relevant to my conclusion. Through the Consolidated
Appropriations Act, 2001 (CAA), Pub. L. 106-554, app. G, sec.
313(a)(3)(A), 114 Stat. 2763A-641 (2000), Congress made a
technical correction to section 6015(e)(1) by inserting after the
word “individual”, the phrase “against whom a deficiency has been
asserted and”. This technical correction was made in conference,
with no counterpart in either the House or the Senate. The
conference report reinforces a plain reading of the inserted
phrase to require the determination of a deficiency as a
prerequisite to the Court’s jurisdiction under section
6015(e)(1). The report enunciates that the main focus of the
statute is on relief from deficiencies and that the equitable
relief from underpayments of tax is a narrowly tailored provision
that is not subject to the same avenues of judicial (Tax Court)
review.10 The conference report states:
10
In fact, the Court’s inability to entertain a claim for
equitable relief under sec. 6015(f) in a nondeficiency case
parallels the Court’s jurisdiction to decide a taxpayer’s income
tax liability under sec. 6213(a). See Hannan v. Commissioner,
52 T.C. 787, 791 (1969). Given the firmly established terrain as
to the Court’s jurisdiction to decide income tax liabilities in
general, I do not find it surprising that Congress chose through
sec. 6015(e)(1) not to give the Court jurisdiction to decide a
claim for equitable relief under sec. 6015(f), absent the
Commissioner’s determination of a deficiency.
- 54 -
Timing of request for relief.--Confusion currently
exists as to the appropriate point at which a request
for innocent spouse relief should be made by the
taxpayer and considered by the IRS. Some have read the
statute to prohibit consideration by the IRS of
requests for relief until after an assessment has been
made, i.e., after the examination has been concluded,
and if challenged, judicially determined. Others have
read the statute to permit claims for relief from
deficiencies to be made upon the filing of the return
before any preliminary determination as to whether a
deficiency exists or whether the return will be
examined. The consideration of innocent spouse relief
requires that the IRS focus on the particular items
causing a deficiency; until such items are identified,
the IRS cannot consider these claims. Congress did not
intend that taxpayers be prohibited from seeking
innocent spouse relief until after an assessment has
been made; Congress intended the proper time to raise
and have the IRS consider a claim to be at the same
point where a deficiency is being considered and
asserted by the IRS. This is the least disruptive for
both the taxpayer and the IRS since it allows both to
focus on the innocent spouse issue while also focusing
on the items that might cause a deficiency. It also
permits every issue, including the innocent spouse
issue, to be resolved in single administrative and
judicial process. The bill clarifies the intended time
by permitting the election under (b) and (c) to be made
at any point after a deficiency has been asserted by
the IRS. A deficiency is considered to have been
asserted by the IRS at the time the IRS states that
additional taxes may be owed. Most commonly, this
occurs during the Examination process. It does not
require an assessment to have been made, nor does it
require the exhaustion of administrative remedies in
order for a taxpayer to be permitted to request
innocent spouse relief. [H. Conf. Rept. 106-1004, at
386-387 (2001); emphasis added.]
For the foregoing reasons, I dissent.
WHALEN and FOLEY, JJ., agree with this dissenting opinion.