                                              SUZANNE PULLINS, PETITIONER v. COMMISSIONER                                       OF
                                                     INTERNAL REVENUE, RESPONDENT
                                                        Docket No. 23793–08.                           Filed May 5, 2011.

                                                  P filed joint tax returns with her husband—timely for tax
                                               year 1999 and untimely (in October 2004) for 2002 and 2003.
                                               Each return showed a balance due that was not paid when
                                               the return was filed. P signed the returns but did not review
                                               or question them. She knew or should have known that the
                                               taxes reported on them were not fully paid, but she did not
                                               know that her former husband had omitted income from one
                                               of the returns. She received no specific benefit from the non-
                                               payment of the taxes. In 2003 the IRS issued a levy notice to
                                               P for 1999. P and her former husband separated in late 2004.
                                               In 2005 the IRS issued levy notices for 2002 and 2003. There-
                                               after, P divorced her former husband, and the State court
                                               allocated all of the couple’s tax debts to him and awarded him
                                               proceeds from the sale of their jointly owned house, from
                                               which proceeds he could have paid the liabilities. P requested
                                               ‘‘innocent spouse’’ relief from the IRS on April 22, 2008 (more
                                               than 2 years after the IRS’s collection activity began), and the
                                               IRS denied the requested relief. P petitioned this Court for
                                               relief, and by the time of trial she was disabled as a result
                                               of complications from surgery. This case would be appealed to
                                               the U.S. Court of Appeals for the Eighth Circuit. Held: We
                                               will follow our holding in Lantz v. Commissioner, 132 T.C. 131
                                               (2009), revd. 607 F.3d 479 (7th Cir. 2010)—i.e., that the 2-
                                               year deadline imposed by 26 C.F.R. sec. 1.6015–5(b)(1),
                                               Income Tax Regs., is invalid—notwithstanding the contrary
                                               decisions by the U.S. Courts of Appeals for the Seventh Cir-
                                               cuit in Lantz and for the Third Circuit in Mannella v.
                                               Commissioner, 631 F.3d 115 (3d Cir. 2011), revg. 132 T.C. 196
                                               (2009). Held, further, P is entitled to relief from joint and sev-
                                               eral liability under I.R.C. sec. 6015(f).

                                      432




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                                      (432)                         PULLINS v. COMMISSIONER                                           433


                                           Kathryn J. Sedo, for petitioner.
                                           Lisa R. Woods, for respondent.
                                        GUSTAFSON, Judge: Petitioner Suzanne Pullins requested
                                      section 6015 ‘‘innocent spouse’’ relief from joint liability for
                                      income taxes for tax years 1999, 2002, and 2003. 1 The
                                      Internal Revenue Service (IRS) denied Ms. Pullins’s request
                                      because she did not request relief within two years of the
                                      IRS’s first collection activity against her. The IRS then
                                      reevaluated Ms. Pullins’s request on the merits and again
                                      determined that she was not entitled to relief. Ms. Pullins
                                      petitioned this Court, and the issue for decision is whether
                                      she is entitled to relief from joint liability under section 6015.
                                      We hold that she is.

                                                                          FINDINGS OF FACT

                                        At the time she filed the petition, Ms. Pullins lived in Min-
                                      nesota.
                                      Ms. Pullins’s marriage and finances
                                        Ms. Pullins completed high school. She and Curtis Shirek
                                      married in 1984. Both Mr. Shirek and Ms. Pullins wrote
                                      checks from their joint bank account to pay family bills.
                                      However, Mr. Shirek dominated the relationship, made the
                                      decisions for the family, and determined when any bills
                                      would be paid.
                                        For each year in issue, Mr. Shirek worked in construction.
                                      Ms. Pullins was not involved in Mr. Shirek’s construction
                                      activity. Some or all of Mr. Shirek’s earnings were reported
                                      on Forms 1099–MISC, Miscellaneous Income. Mr. Shirek did
                                      not make quarterly prepayments of income tax.
                                        In 1999 Ms. Pullins did not work outside the home, but in
                                      2002 and 2003 she performed secretarial work because her
                                      family needed the income. Ms. Pullins earned wages of
                                      $19,902 in 2002 and $13,055 in 2003, and her employer with-
                                      held from her wages Federal income tax of $937 in 2002 and
                                      $550 in 2003. Ms. Pullins’s income tax was underwithheld in


                                        1 Unless otherwise indicated, all citations of sections refer to the Internal Revenue Code of

                                      1986 (26 U.S.C.), as amended.




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                                      434                136 UNITED STATES TAX COURT REPORTS                                           (432)


                                      2002 by $719, as she acknowledges, 2 and it was overwith-
                                      held in 2003 by $22. 3
                                      The tax returns and assessments at issue
                                         For all three years at issue, Mr. Shirek employed a return
                                      preparer to prepare the couple’s joint Federal income tax
                                      returns. Ms. Pullins’s wage income was reported on the 2002
                                      and 2003 returns.
                                         In general, Mr. Shirek’s construction income was reported
                                      on Schedules C, Profit or Loss From Business, attached to
                                      their returns. Mr. Shirek reported net income from his
                                      construction activity of $58,760 for 1999, $85,333 for 2002,
                                      and $51,624 for 2003. He also earned and reported $961 in
                                      wages in 1999. However, for 1999 he omitted $10,374 in
                                      income that was reported on a Form 1099–MISC.
                                         Ms. Pullins signed each of the returns, but she did not
                                      review the returns or question Mr. Shirek about any items
                                      on the returns or any documents used to prepare the returns.
                                      She did not sign the returns under duress. When Ms. Pullins
                                      signed the 1999 return, she did not know about the omission
                                      of Mr. Shirek’s income.
                                         Ms. Pullins and Mr. Shirek filed joint Federal income tax
                                      returns for the years in issue as follows:

                                                                                                                Payment made
                                                Year               Date filed          Balance due 1             with return

                                                1999           Oct. 18, 2000                $12,823                    $150
                                                2002           Oct. 12, 2004                 25,811                     -0-

                                         2 Ms. Pullins computes her individual liability by using married-filing-separately status and

                                      using the standard deduction. Respondent has not disputed her arithmetic but uses a different
                                      method: Respondent takes the liability for those years as reported (i.e., using married filing
                                      jointly status) and allocates that liability between the spouses according to the amount of the
                                      income attributable to each. On that basis respondent computes that Ms. Pullins’s income tax
                                      was underwithheld in both years—i.e., by $3,395 in 2002 and $940 in 2003. Ms. Pullins has
                                      not disputed respondent’s arithmetic but disagrees with his method. Our use of Ms. Pullins’s
                                      method is explained below in part II.C.1.a.
                                         3 Ms. Pullins’s income tax on her wages was overwithheld by $22 in 2003. On her administra-

                                      tive request for relief submitted in April 2008 she requested a refund for this year, which would
                                      be made (if at all) from the only payment shown on the 2003 transcript in the record—i.e., with-
                                      held tax deemed paid in April 2004. However, even if we otherwise had authority to determine
                                      an overpayment, Ms. Pullins’s request was submitted too late for her to obtain such relief.
                                      Under section 6511(a), a refund claim must be filed ‘‘within 3 years from the time the return
                                      was filed’’ (i.e., within three years after October 2004) or ‘‘within * * * 2 years from the time
                                      the tax was paid’’ (i.e., within two years after April 2004). The April 2008 request for relief was
                                      too late by either of these measures.




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                                      (432)                          PULLINS v. COMMISSIONER                                            435


                                                                                                                Payment made
                                                Year               Date filed          Balance due 1             with return
                                                2003           Oct. 12, 2004                  13,188                     -0-
                                               1 The balance due reflects the amount that Ms. Pullins and Mr.
                                             Shirek reported as owed on their returns after accounting for
                                             withholding and estimated tax payments.

                                        The IRS assessed the tax due for 1999 (as reported on the
                                      return) in December 2000 and imposed an addition to tax for
                                      failure to timely pay the tax due. The IRS eventually learned
                                      about the missing income and in August 2002 assessed
                                      $3,430 of additional tax attributable to it.
                                      The IRS’s collection efforts
                                         On November 1, 2000 (before the assessment of the addi-
                                      tional tax), Mr. Shirek and Ms. Pullins entered into an
                                      installment agreement to pay the 1999 tax liability. In 2000
                                      and 2001 Ms. Pullins wrote checks on the joint bank account
                                      as payments toward the 1999 liability. The IRS applied
                                      refunds from tax years 2000 and 2001 toward the 1999
                                      liability. In November 2003 the IRS terminated the install-
                                      ment agreement after Mr. Shirek and Ms. Pullins defaulted
                                      on the agreement. On November 15, 2003, the IRS sent
                                      notices of intent to levy to each of Ms. Pullins and Mr. Shirek
                                      for tax year 1999.
                                         On November 29, 2004, after receiving the untimely
                                      returns for 2002 and 2003, the IRS assessed the amounts
                                      reported as tax due and imposed additions to tax for failure
                                      to timely pay and for late filing. 4 On April 5 and 7, 2005
                                      (after Ms. Pullins filed for divorce, as discussed below), the
                                      IRS sent notices of intent to levy to both Ms. Pullins and Mr.
                                      Shirek for tax years 2002 and 2003.
                                      The dissolution of the marriage
                                        Ms. Pullins and Mr. Shirek separated in late 2004, and
                                      Mr. Shirek moved out of the family home in December
                                      2004—i.e., after they had filed their 2002 and 2003 returns.
                                      Ms. Pullins filed for divorce in February 2005. While the
                                        4 The IRS did not impose a late filing addition to tax for 1999, apparently because it consid-

                                      ered the 1999 return timely filed on extension. The due dates, on extension, for 2002 and 2003
                                      were October 15, 2003, and August 15, 2004, respectively. The October 12, 2004, filing date was
                                      well after those due dates.




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                                      436                136 UNITED STATES TAX COURT REPORTS                                          (432)


                                      divorce was pending, Ms. Pullins and Mr. Shirek sold the
                                      family home. The California State court granted Ms. Pullins
                                      the divorce in September 2005 and held that Mr. Shirek was
                                      responsible for paying the 1999, 2002, and 2003 tax debts.
                                      The divorce judgment awarded each spouse $125,227 from
                                      the sale of the marital home and also awarded each spouse
                                      certain items of property.
                                      Finances, remarriage, and tax compliance in subsequent years
                                         Ms. Pullins earned $23,634 in 2004 and $18,216 in 2005.
                                      Her tax returns for those years were due after she filed for
                                      divorce; but she did not timely file tax returns for those
                                      years, and the record does not reflect when or whether she
                                      filed a return for 2006.
                                         For her 2007 return, Ms. Pullins submitted a $25 payment
                                      when she requested an extension of time to file (around the
                                      time that she requested innocent spouse relief for 1999, 2002,
                                      and 2003). She received an extension for her 2007 return
                                      until October 15, 2008. Ms. Pullins filed the 2007 return on
                                      October 22, 2008, reporting total tax of $2,485, withholding
                                      credits of $2,082, and tax due of $403. She paid $25 toward
                                      that liability when she filed the return. The IRS assessed the
                                      tax shown and imposed a failure-to-timely-pay addition to
                                      tax. Ms. Pullins made additional payments in 2009 toward
                                      her 2007 liability.
                                         Ms. Pullins remarried in 2007. She stopped working in
                                      October 2008 and as a result of complications from surgery
                                      is now disabled. At the time of trial she was receiving
                                      monthly long-term disability insurance payments of $1,700.
                                      Shortly before trial she qualified for monthly Social Security
                                      disability benefits of $791. Those benefits will reduce her
                                      insurance payment, and she expects her total monthly dis-
                                      ability income to be $2,091 while the insurance payments
                                      continue. Ms. Pullins expects her disability to be permanent,
                                      and this expectation is reasonable.
                                      Request for relief
                                        On April 22, 2008, Ms. Pullins filed a Form 8857, Request
                                      for Innocent Spouse Relief, with the IRS to request relief
                                      under section 6015. On the Form 8857 she did not indicate




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                                      (432)                         PULLINS v. COMMISSIONER                                           437


                                      that she had been abused, and she did not allege any mental
                                      or physical health problems.
                                        Ms. Pullins submitted her request roughly four and a half
                                      years after the IRS issued the November 2003 levy notice for
                                      tax year 1999 and slightly more than three years after the
                                      April 2005 levy notices for tax years 2002 and 2003.
                                                                                  OPINION

                                      I. Joint and several liability and section 6015 relief generally
                                         Section 6013(d)(3) provides that when taxpayers file a joint
                                      return, the tax is computed on their aggregate income, and
                                      their liability to pay the tax shown on the return or found
                                      to be owing is joint and several. See also 26 C.F.R. sec.
                                      1.6013–4(b), Income Tax Regs. That is, each spouse is liable
                                      for the entire joint tax liability.
                                         Section 6015 provides three types of relief from joint and
                                      several liability: (1) full or apportioned relief under section
                                      6015(b); (2) proportionate relief for divorced or separated tax-
                                      payers under section 6015(c); and (3) equitable relief under
                                      section 6015(f) when relief is unavailable under either section
                                      6015(b) or (c).
                                         Subsections (b) and (c) both include explicit time limits for
                                      requesting relief. Absent a request’s being submitted within
                                      two years of the first collection action against the requesting
                                      taxpayer, the statute bars relief under either subsection. Sec.
                                      6015(b)(1)(E), (c)(3)(B). Ms. Pullins requested relief under
                                      section 6015 more than two years after the IRS began collec-
                                      tion action against her. Therefore she is not entitled to relief
                                      under subsection (b) or (c). 5
                                         In section 6015(f) Congress did not impose a time limit for
                                      requesting relief. However, by regulation the IRS purported to
                                      impose a two-year time limit. See 26 C.F.R. sec. 1.6015–
                                         5 The tax returns in issue all report tax due, but Ms. Pullins and Mr. Shirek did not pay the

                                      tax with the returns. Thus, they had underpayments for each year in issue. Pursuant to section
                                      6015(b)(1)(B), relief under section 6015(b) is available only for an ‘‘understatement’’, not an un-
                                      derpayment; and pursuant to section 6015(c)(1), relief under section 6015(c) is available only for
                                      a ‘‘deficiency’’, not an underpayment. See Washington v. Commissioner, 120 T.C. 137, 146–147
                                      (2003). Section 6015(f) is broader and permits relief from ‘‘any unpaid tax or any deficiency (or
                                      any portion of either)’’. Thus, even if she had requested relief within two years, Ms. Pullins’s
                                      only possible avenue for relief for the underpayments is under section 6015(f). See Hopkins v.
                                      Commissioner, 121 T.C. 73, 88 (2003). For 1999 Mr. Shirek omitted $10,374 of income, and that
                                      omission results in an understatement of tax. Although section 6015(b) and (c) may provide re-
                                      lief from understatements, due to the late request for relief, only section 6015(f) may provide
                                      relief in this case, even for the liability resulting from this unreported income.




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                                      5(b)(1). As is discussed briefly below, we have held that regu-
                                      lation to be invalid.
                                      II. Equitable relief under section 6015(f)
                                           A. Statutory text
                                           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 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, section 6015(f) may offer relief from joint and several
                                      liability, provided that the taxpayer shows that it is inequi-
                                      table to hold her liable upon consideration of all the facts and
                                      circumstances.
                                           B. Procedure and burden of proof
                                         Congress provided this Court express authority to review
                                      the IRS’s denial of equitable relief under section 6015(f),
                                      granting jurisdiction ‘‘to determine the appropriate relief
                                      available to the individual under this section’’. Sec.
                                      6015(e)(1). We conduct a trial de novo when determining
                                      whether a taxpayer is entitled to relief under section 6015(f),
                                      and we may consider evidence outside the administrative
                                      record. Porter v. Commissioner (Porter I), 130 T.C. 115, 117
                                      (2008). We employ a de novo standard of review, rather than
                                      reviewing for abuse of discretion; and the requesting spouse
                                      bears the burden of proving that she is entitled to equitable
                                      relief under section 6015(f). Porter v. Commissioner (Porter
                                      II), 132 T.C. 203, 210 (2009).
                                           C. Factors for evaluating equitable relief: Revenue Proce-
                                              dure 2003–61
                                        In accord with the statutory provision that relief is to be
                                      granted under section 6015(f) following ‘‘procedures pre-
                                      scribed by the Secretary,’’ the IRS has issued revenue proce-
                                      dures to guide its employees in determining whether a tax-
                                      payer is entitled to relief from joint and several liability. See




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                                      (432)                            PULLINS v. COMMISSIONER                                           439


                                      Rev. Proc. 2003–61, 2003–2 C.B. 296, modifying and super-
                                      seding Rev. Proc. 2000–15, 2000–1 C.B. 447. Revenue Proce-
                                      dure 2003–61, supra, lists the factors that IRS employees
                                      should consider, and the Court consults those same factors
                                      when reviewing the IRS’s denial of relief. See Washington v.
                                      Commissioner, 120 T.C. 137, 147–152 (2003).
                                         Revenue Procedure 2003–61, supra, provides a three-step
                                      analysis for IRS personnel to follow in evaluating requests for
                                      relief: Section 4.01 lists seven threshold conditions that must
                                      be met before the IRS will grant any relief; section 4.02 lists
                                      circumstances in which the IRS will ordinarily grant relief as
                                      to liabilities that were reported on a return (the underpay-
                                      ments at issue in this case); and section 4.03 sets out eight
                                      non-exclusive factors that the IRS will consider in deter-
                                      mining whether equitable relief should be granted. See Rev.
                                      Proc. 2003–61, 2003–2 C.B. at 297–298.
                                            1. Section 4.01: Threshold conditions
                                        The threshold conditions of section 4.01 of Revenue Proce-
                                      dure 2003–61 are:
                                        (1) The requesting spouse filed a joint return for the taxable year for
                                      which he or she seeks relief.
                                        (2) Relief is not available to the requesting spouse under section 6015(b)
                                      or (c).
                                        (3) The requesting spouse applies for relief no later than two years after
                                      the date of the Service’s first collection activity after July 22, 1998, with
                                      respect to the requesting spouse. * * * [6]
                                        (4) No assets were transferred between the spouses as part of a fraudu-
                                      lent scheme by the spouses.
                                        (5) The nonrequesting spouse did not transfer disqualified assets to the
                                      requesting spouse. * * *
                                        (6) The requesting spouse did not file or fail to file the return with
                                      fraudulent intent.
                                        (7) The income tax liability from which the requesting spouse seeks
                                      relief is attributable to an item of the individual with whom the requesting
                                      spouse filed the joint return * * * [absent certain enumerated exceptions.]

                                        The IRS admits that, in large part, Ms. Pullins satisfies
                                      these requirements: She filed joint returns for the years in
                                      issue; she is not eligible for relief under section 6015(b) or (c);
                                      there is no evidence of fraudulent asset transfers; there is no
                                      evidence of disqualified asset transfers; Ms. Pullins did not
                                           6 See   part II.C.1.b below, discussing the two-year requirement.




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                                      file the returns with any fraudulent intent; and considering
                                      that Ms. Pullins did not work in 1999 and that Mr. Shirek’s
                                      income dwarfed Ms. Pullins’s income in 2002 and 2003, it is
                                      clear that most of the underpayments result from omissions
                                      of Mr. Shirek’s construction income. Thus, Ms. Pullins has
                                      largely satisfied the threshold conditions of section 4.01 of
                                      Revenue Procedure 2003–61. Two exceptions merit discus-
                                      sion:
                                           a. Tax attributable to Ms. Pullins
                                         The exception to her satisfaction of these conditions is her
                                      2002 underwithholding of $719; and to the extent of that
                                      underwithholding, she did not meet the seventh threshold
                                      condition and we do not grant relief. As we stated above, for
                                      purposes of determining the extent of her liability for or over-
                                      payment of tax on her own income, we use Ms. Pullins’s com-
                                      putation on the basis of married-filing-separately status,
                                      rather than the IRS’s computation that made a pro rata
                                      allocation of the reported liability (based on married-filing-
                                      jointly status). To reckon the amount of tax liability that Ms.
                                      Pullins should have to pay because it is fairly attributable to
                                      her, we think that on the facts of this case it is reasonable
                                      to figure Ms. Pullins’s tax liability separately. The IRS’s
                                      method assumes a joint liability and then attributes to her
                                      a pro rata share of the joint liability, but the purpose of sec-
                                      tion 6015 is to grant relief from joint liability. Under the IRS’s
                                      method, if we found Ms. Pullins to be otherwise entitled to
                                      section 6015 relief, we would nonetheless leave her liable for
                                      a portion of the joint liability. 7 Our aim here, however, is to
                                      figure Ms. Pullins’s own liability apart from joint liability
                                      and then ensure that we do not excuse her from paying her
                                      own liability. To accomplish that aim, a determination of her
                                      separate liability, 8 rather than an allocation of the joint
                                      liability, is most reasonable here.
                                         7 For example, the joint liabilities include self-employment tax on Mr. Shirek’s construction

                                      income, which tax accounts for 45 percent of the joint Federal income tax the IRS assessed for
                                      2002. The IRS’s pro rata approach would allocate a proportionate share of that self-employment
                                      tax to Ms. Pullins, even though the self-employment tax is calculated on Mr. Shirek’s income
                                      alone, see 26 C.F.R. sec. 1.6017–1(b)(1), and became Ms. Pullins’s liability only because she filed
                                      jointly with Mr. Shirek, see 26 C.F.R. sec. 1.6017–1(b)(2).
                                         8 As an analogy, see 26 C.F.R. sec. 1.6013–4(d) (to allocate liability where a supposedly joint

                                      return was signed under duress, ‘‘The return is adjusted to reflect only the tax liability of the
                                      individual who voluntarily signed the return, and the liability is determined at the applicable
                                      rates in section 1(d) for married individuals filing separate returns’’ (emphasis added)).




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                                      (432)                         PULLINS v. COMMISSIONER                                           441


                                           b. Requesting relief more than two years after the IRS’s first
                                              collection activity
                                         The third threshold condition of section 4.01 of Revenue
                                      Procedure 2003–61 states a deadline that the IRS promul-
                                      gated by regulation in 26 C.F.R. section 1.6015–5(b)(1). That
                                      regulation purports to impose a two-year deadline on
                                      requests for relief under section 6015(f), and Ms. Pullins did
                                      not meet that deadline. 9 In Lantz v. Commissioner, 132 T.C.
                                      131 (2009), revd. 607 F.3d 479 (7th Cir. 2010), we held that
                                      the two-year deadline imposed by the regulation is an invalid
                                      interpretation of section 6015(f). After the U.S. Court of
                                      Appeals for the Seventh Circuit reversed Lantz, we reconsid-
                                      ered the matter but did not change our position. See Hall v.
                                      Commissioner, 135 T.C. 374 (2010). The U.S. Court of
                                      Appeals for the Third Circuit has recently held the two-year
                                      deadline to be valid, see Mannella v. Commissioner, 631 F.3d
                                      115 (3d Cir. 2011), revg. 132 T.C. 196 (2009), but for the rea-
                                      sons we have previously expressed, we respectfully disagree.
                                      The court to which an appeal would lie in this case—the
                                      Court of Appeals for the Eighth Circuit—has not addressed
                                      this issue, and we therefore follow our holding in Lantz and
                                      treat the IRS’s two-year deadline as invalid.
                                         In Mayo Found. for Med. Educ. & Research v. United
                                      States, 562 U.S. ll, ll, 131 S. Ct. 704, 713 (2011), the
                                      Supreme Court recently clarified that the standard by which
                                      the validity of regulations will be measured—with regard to
                                      tax matters as well as other matters, and with regard to
                                      ‘‘general authority’’ regulations as well as ‘‘specific grant of
                                      authority’’ regulations—is the two-step standard of Chevron
                                      U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837
                                      (1984).
                                         However, Mayo prompts no reconsideration of our holding
                                      in Lantz that the regulation at issue here is invalid. When
                                         9 Ms. Pullins explained that she did not request relief because she thought she did not need

                                      it, since the State court had ordered her husband to pay the taxes. Although given an oppor-
                                      tunity to do so at trial, the IRS made no contention that it suffered any prejudice as a result
                                      of the timing of her request or that Ms. Pullins was culpable for her delay in submitting her
                                      request more than two years after the collection notices. Given our position on the invalidity
                                      of the regulation’s two-year deadline, Ms. Pullins did not contend that, and we therefore do not
                                      address whether, the regulation’s two-year deadline is subject to equitable tolling. Cf. Mannella
                                      v. Commissioner, 631 F.3d 115 (3d Cir. 2011) (remanding to consider whether equitable tolling
                                      applies), revg. 132 T.C. 196 (2009); Hall v. Commissioner, 135 T.C. 374, 387 n.5 (2010) (Wells,
                                      J., concurring) (‘‘such a period of limitations would be subject to the ‘doctrine’ of equitable toll-
                                      ing’’).




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                                      442                136 UNITED STATES TAX COURT REPORTS                                          (432)


                                      we decided Lantz, we used the now-mandated Chevron
                                      standard:
                                      Following Golsen v. Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985
                                      (10th Cir. 1971), we apply the law of the Court of Appeals to which an
                                      appeal in the case would normally lie. Section 1.6015–5, Income Tax Regs.,
                                      was issued under both a general grant of authority under section 7805 and
                                      a specific grant of authority under section 6015(h). T.D. 9003, 2002–2 C.B.
                                      294. The U.S. Court of Appeals for the Seventh Circuit has held that regu-
                                      lations issued under general or specific authority of the IRS to promulgate
                                      necessary rules are entitled to Chevron deference. * * * Accordingly, we
                                      will follow the Chevron standard in this analysis. [Lantz v. Commissioner,
                                      supra at 137; fn. ref. omitted.]

                                      Thus, in Lantz we held the two-year deadline invalid under
                                      the Chevron standard, and consequently we follow Lantz
                                      (and Mayo and Chevron) today.
                                           2. Section 4.02: Circumstances ordinarily allowing relief
                                        Section 4.02 of Revenue Procedure 2003–61 provides three
                                      conditions that, if satisfied, will ordinarily qualify a
                                      requesting spouse for relief by the IRS from liability for an
                                      underpayment of a properly reported liability. The conditions
                                      are:
                                         (a) On the date of the request for relief, the requesting spouse is no
                                      longer married to, or is legally separated from, the nonrequesting spouse,
                                      or has not been a member of the same household as the nonrequesting
                                      spouse at any time during the 12-month period ending on the date of the
                                      request for relief.
                                         (b) On the date the requesting spouse signed the joint return, the
                                      requesting spouse had no knowledge or reason to know that the non-
                                      requesting spouse would not pay the income tax liability. The requesting
                                      spouse must establish that it was reasonable for the requesting spouse to
                                      believe that the nonrequesting spouse would pay the reported income tax
                                      liability. * * *
                                         (c) The requesting spouse will suffer economic hardship if the Service
                                      does not grant relief. For purposes of this revenue procedure, the Service
                                      will base its determination of whether the requesting spouse will suffer
                                      economic hardship on rules similar to those provided in Treas. Reg. §
                                      301.6343–1(b)(4). * * *
                                         [Rev. Proc. 2003–61, sec. 4.02(1), 2003–2 C.B. at 298.]

                                      Ms. Pullins meets only one of these three conditions, as we
                                      now show.




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                                      (432)                         PULLINS v. COMMISSIONER                                           443


                                           a. Married, separated, or divorced
                                        Mr. Shirek moved out in December 2004, and he and Ms.
                                      Pullins were divorced in 2005. She filed her request for relief
                                      in 2008. Ms. Pullins clearly satisfies the first condition.
                                           b. Knowledge or reason to know
                                         Ms. Pullins argues that she did not know of the unpaid
                                      liabilities when the returns were filed in October 2000 and
                                      October 2004—first because she had no knowledge of any
                                      unpaid tax liability on the returns and second because she
                                      reasonably believed that Mr. Shirek would pay any taxes
                                      due. Neither of these arguments is persuasive.
                                           (1) Knowledge of the liabilities
                                         As to her alleged ignorance of the liabilities, Ms. Pullins
                                      testified that she did not notice the amounts of tax shown as
                                      due on the returns (but not paid with the returns) when she
                                      signed them; and she claims that she was unaware that any
                                      amount of tax was due. She explained that she was ignorant
                                      of any tax liability until she filed for divorce in February
                                      2005.
                                         However, Ms. Pullins did not explain why she wrote checks
                                      to the IRS from the couple’s bank account in 2000 and 2001—
                                      with memo lines specifically referring to tax year 1999—to
                                      make partial payments toward the 1999 tax liability if she
                                      did not know that she and her husband had a problem with
                                      unpaid taxes. Her joining Mr. Shirek in entering into an
                                      installment agreement in November 2000 further dem-
                                      onstrates her awareness of their outstanding liabilities. On
                                      these facts, we find her contention that she did not know
                                      about the couple’s tax liabilities until she filed for divorce in
                                      2005 is not credible.
                                         Ms. Pullins asserted that she signed the returns without
                                      reviewing them because she trusted Mr. Shirek. We recog-
                                      nize that many taxpayers trust their spouse to prepare and
                                      file their tax returns and pay their taxes, but we note that
                                         The rate of tax applied against a given amount of income generally is
                                      lower when the income is reported on a joint return than when a husband
                                      and wife file separate returns. The price which the law exacts for this
                                      privilege is that taxpayers who file a joint return are jointly and severally
                                      liable for the amount of tax due, see 26 U.S.C. § 6013(d)(3) (1982), regard-




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                                      444                136 UNITED STATES TAX COURT REPORTS                                          (432)


                                      less of the source of income reported and notwithstanding the fact that one
                                      spouse may be less informed about the contents of the return. See
                                      Sonnenborn v. Commissioner, 57 T.C. 373, 381 (1971); 26 U.S.C. §
                                      6013(d)(3) (1982). [Stevens v. Commissioner, 872 F.2d 1499, 1503 (11th Cir.
                                      1989), affg. T.C. Memo. 1988–63.]

                                        A taxpayer may not obtain the benefits of joint filing
                                      status but then obtain relief from joint and several liability
                                      by ignoring or avoiding facts fully disclosed on a return she
                                      signed. Hayman v. Commissioner, 992 F.2d 1256, 1262 (2d
                                      Cir. 1993) (taxpayer who claims to have signed returns with-
                                      out reading them is nevertheless charged with constructive
                                      knowledge of their contents), affg. T.C. Memo. 1992–228. We
                                      impute to a taxpayer knowledge of what she could have
                                      gleaned from the tax returns she signed, if she had taken the
                                      time to review them. Porter v. Commissioner, 132 T.C. at
                                      211–212. Accordingly, Ms. Pullins is chargeable with knowl-
                                      edge of the liabilities that were reported on the returns she
                                      signed. 10
                                           (2) Knowledge that her husband would not pay the liabi-
                                               lities
                                         In evaluating whether a requesting spouse knew or had
                                      reason to know her nonrequesting spouse would not pay the
                                      tax liability, the IRS considers the level of education attained
                                      by the requesting spouse, any evasiveness or deceit by the
                                      nonrequesting spouse, how involved the requesting spouse
                                      was in the activity generating the income tax liability, the
                                      requesting spouse’s involvement in financial matters of the
                                      household, her business or financial expertise, and any lavish
                                      or unusual expenditures compared to past spending levels.
                                      Rev. Proc. 2003–61, sec. 4.03(2)(a)(iii)(C), 2003–2 C.B. at 298.
                                         There is no evidence of lavish or increased spending in
                                      1999, and by 2002 the family finances were sufficiently tight
                                      that Ms. Pullins had started working to help make ends
                                      meet. Ms. Pullins had access to the couple’s joint checking
                                      account, but she explained that Mr. Shirek controlled the
                                      finances and made the decisions for the family. Ms. Pullins
                                        10 The foregoing discussion addresses only the liabilities that were actually reported on the

                                      returns that Ms. Pullins signed—i.e., the great bulk of the liabilities. For purposes of the anal-
                                      ysis under Rev. Proc. 2003–61, sec. 4.02(1)(b), 2003–2 C.B. 296, 298, that discussion is adequate.
                                      As to the $3,430 of tax for 1999 that is attributable to the construction income that Mr. Shirek
                                      omitted from the return, see infra pt. II.C.3.a.(3).




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                                      (432)                         PULLINS v. COMMISSIONER                                           445


                                      was not involved in Mr. Shirek’s construction activity, which
                                      generated most of the income for the family. There is no evi-
                                      dence of deceit in the record, but Ms. Pullins did allege in a
                                      statement attached to her request for relief that she had filed
                                      for divorce when she learned that Mr. Shirek was keeping
                                      money from her. Ms. Pullins completed high school and does
                                      not claim sophisticated business or financial knowledge or
                                      expertise.
                                         Ms. Pullins testified that she never had reason to question
                                      Mr. Shirek about payment of taxes. However, she made pay-
                                      ments toward the 1999 liabilities and entered into the
                                      installment agreement, and by 2002 they needed more
                                      income and she had to start working to help support the
                                      family; so it is clear that she was aware of their financial
                                      problems. The question is whether the requesting spouse
                                      knew the taxes would be paid on time or reasonably
                                      promptly after the returns were filed. Schepers v. Commis-
                                      sioner, T.C. Memo. 2010–80. The partial payment submitted
                                      with the 1999 return and the subsequent installment agree-
                                      ment demonstrate slow and perhaps reluctant payment—of
                                      which Ms. Pullins was fully aware. The application of
                                      refunds from the couple’s 2000 and 2001 returns toward the
                                      1999 liability provided her further information about Mr.
                                      Shirek’s tax payments. We do not find that when she signed
                                      the returns she reasonably believed that Mr. Shirek would
                                      promptly pay the liabilities shown on the returns.
                                         The California court that granted Ms. Pullins’s divorce
                                      from Mr. Shirek allocated the outstanding tax liabilities to
                                      Mr. Shirek. The court also ordered the couple to split the
                                      $250,454 gain from the sale of their marital home. Thus, Mr.
                                      Shirek had the means to pay the 1999, 2002, and 2003 Fed-
                                      eral income tax liabilities in September 2005 when the court
                                      filed the judgment of dissolution and awarded him $125,227
                                      of the proceeds from the sale of the home. Accordingly, when
                                      the court issued the divorce decree, it was reasonable for Ms.
                                      Pullins to expect Mr. Shirek to obey the court and pay the
                                      tax debts. However, it is her knowledge or reason to know at
                                      the time she signed the tax returns that is critical to this
                                      inquiry; and under the circumstances she had reason to
                                      doubt, when she signed the returns, that Mr. Shirek would
                                      pay the liabilities.




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                                      446                136 UNITED STATES TAX COURT REPORTS                                          (432)


                                           c. Economic hardship
                                        The IRS evaluates a requesting spouse’s claim of economic
                                      hardship by considering any information offered by the indi-
                                      vidual that is relevant to the determination, including her
                                      income, assets and liabilities, age, ability to earn, responsi-
                                      bility for dependents, the amounts reasonably necessary for
                                      basic living expenses, the allowable living expenses for her
                                      geographic area, and other factors. See Wiener v. Commis-
                                      sioner, T.C. Memo. 2008–230; 26 C.F.R. sec. 301.6343–
                                      1(b)(4)(ii), Proced. & Admin. Regs. (incorporated into Rev.
                                      Proc. 2003–61 by its sec. 4.02(1)(c)). It is clear that Ms.
                                      Pullins is disabled. At trial Ms. Pullins was manifestly in
                                      pain, short of breath, and uncomfortable sitting or standing
                                      for long periods. Her disability plainly compromises her
                                      ability to earn and is properly taken into account in deter-
                                      mining whether she faces economic hardship. However, her
                                      disability is not the only factor to be considered, and two
                                      other considerations prevent the conclusion that she has
                                      established economic hardship:
                                           (1) Economic facts at the time of trial
                                         Ms. Pullins testified that she receives long-term disability
                                      insurance payments (which may terminate on some unspec-
                                      ified future date), that she expected she would soon begin
                                      receiving Social Security disability benefit payments, that
                                      her monthly disability income would be $2,091, and that she
                                      expects her disability to be permanent. She further testified
                                      that she has commenced divorce proceedings against her
                                      second husband and expected to move out of his house when
                                      her Social Security disability benefit payments commence.
                                      She argues that, when she is on her own, her disability pay-
                                      ments will be insufficient to cover her expenses.
                                         A hypothetical hardship is insufficient to justify relief; a
                                      taxpayer must demonstrate that imposing joint and several
                                      liability is ‘‘inequitable in present terms’’, Von Kalinowski v.
                                      Commissioner, T.C. Memo. 2001–21, and poses a present eco-
                                      nomic hardship. When evaluating economic hardship, the
                                      Office of Appeals necessarily views the requesting spouse’s
                                      financial situation as of the hearing date; but we properly
                                      consider the evidence presented at the de novo trial, see
                                      Porter I, and we consequently evaluate her financial situa-




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                                      (432)                         PULLINS v. COMMISSIONER                                           447


                                      tion and prospects as of that time, see Nihiser v. Commis-
                                      sioner, T.C. Memo. 2008–135, 95 T.C.M. (CCH) 1531, 1538
                                      (2008) (‘‘we should * * * look at the evidence presented at
                                      trial, and the state of her finances at that time. * * * But
                                      we must also consider * * * [petitioner’s] future ability to
                                      earn her current salary and pay her basic living expenses’’).
                                         As of the date of trial, Ms. Pullins continued to live with
                                      Mr. Pullins—her second husband—and he apparently paid
                                      her expenses. While her disability payments are admittedly
                                      modest, as long as she and Mr. Pullins continue to live
                                      together—i.e., on the facts at the time of trial—their house-
                                      hold apparently has a monthly budget surplus and some
                                      ability to pay the tax debt. Moreover, Ms. Pullins did not
                                      introduce any evidence of what her expenses might be if she
                                      moves from the home she has shared with Mr. Pullins. Thus,
                                      she presented virtually no detail to substantiate her claim of
                                      economic hardship, whether in her current circumstance with
                                      her husband or in an anticipated future on her own.
                                           (2) Assets on hand
                                         Ms. Pullins did not offer any evidence at trial 11 to show
                                      whether she had any assets. 12 This evidentiary gap is espe-
                                      cially significant because in 2005 she received $125,227 of
                                      the proceeds of the sale of her previous marital home. She
                                      testified that she used part of those proceeds for living
                                      expenses, to purchase a car, and to relocate from California
                                      to Minnesota. However, she did not state whether she still
                                      had any of those funds as of the date of trial.
                                         Ms. Pullins has the burden of proof, and on this record she
                                      has not proved that she will suffer economic hardship if relief
                                      is not granted.
                                         11 Similarly, when Ms. Pullins submitted her request for relief to the IRS in April 2008, she

                                      did not show her assets. The reason for that omission may be that the then-current version of
                                      Form 8857, Request for Innocent Spouse Relief, as revised in June 2007, did not specifically re-
                                      quire disclosure of a requesting spouse’s assets. The subsequent version of Form 8857 as revised
                                      in September 2010 includes an additional section that asks: ‘‘Tell us about your assets. Your
                                      assets are your money and property. Property includes real estate, motor vehicles, stocks, bonds,
                                      and other property that you own. Tell us the amount of cash you have on hand and in your
                                      bank accounts. Also give a description of each item of property, the fair market value of each
                                      item, and the balance of any outstanding loans you used to acquire each item.’’
                                         12 When a taxpayer fails to produce evidence in her possession which, if true, would be favor-

                                      able, we may presume that the evidence, if produced, would favor the opposing party. Wichita
                                      Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1165 (1946), affd. 162 F.2d 513 (10th Cir.
                                      1947).




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                                      448                136 UNITED STATES TAX COURT REPORTS                                          (432)


                                           3. Alternative facts-and-circumstances test
                                        Where, as here, the requesting spouse satisfies the
                                      threshold conditions of Revenue Procedure 2003–61, section
                                      4.01, but fails to qualify for relief under section 4.02, she
                                      may nevertheless obtain relief under the facts and cir-
                                      cumstances test of section 4.03. The IRS considers a nonexclu-
                                      sive list of factors to determine whether ‘‘taking into account
                                      all the facts and circumstances, it is inequitable to hold the
                                      requesting spouse liable’’: (1) whether the requesting spouse
                                      is separated or divorced from the nonrequesting spouse; (2)
                                      whether the requesting spouse would suffer economic hard-
                                      ship if not granted relief; (3) whether, in the case of an
                                      underpayment, the requesting spouse knew or had reason to
                                      know that the other spouse would not pay the liability, and,
                                      in the case of a deficiency, whether the requesting spouse did
                                      not know and had no reason to know of the item giving rise
                                      to the deficiency; (4) whether the nonrequesting spouse had
                                      a legal obligation to pay the outstanding tax liability pursu-
                                      ant to a divorce decree or agreement; (5) whether the
                                      requesting spouse received a significant benefit from the
                                      unpaid income tax liability or the item giving rise to the defi-
                                      ciency; and (6) whether the requesting spouse has made a
                                      good faith effort to comply with the tax laws for the taxable
                                      years following the years for which she requests relief. Id.
                                      sec. 4.03(2), 2003–2 C.B. at 298–299.
                                        Other factors that may indicate relief is appropriate when
                                      present but that will not weigh against granting relief when
                                      absent are: (i) whether the nonrequesting spouse abused the
                                      requesting spouse and (ii) whether the requesting spouse was
                                      in poor mental or physical health at the time she signed the
                                      tax return or when she requested relief. Id. sec. 4.03(2)(b),
                                      2003–2 C.B. at 299.
                                        We analyze all relevant facts and circumstances, with all
                                      factors considered and appropriately weighted and no single
                                      factor determinative, in determining whether it is inequi-
                                      table to hold a taxpayer liable for a joint tax liability. See
                                      Porter II, 132 T.C. at 214.




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                                      (432)                         PULLINS v. COMMISSIONER                                           449


                                           a. Applying the facts and circumstances factors
                                           (1) Marital status
                                        Ms. Pullins had divorced Mr. Shirek when she requested
                                      innocent spouse relief. This factor weighs in favor of relief.
                                           (2) Economic hardship
                                         Generally, economic hardship exists when collection of the
                                      tax liability will render the taxpayer unable to meet basic
                                      living expenses. 26 C.F.R. sec. 301.6343–1(b)(4)(i). As dis-
                                      cussed above in part II.C.2.c., Ms. Pullins failed to make a
                                      convincing showing of economic hardship. She failed to make
                                      an accounting of her assets, and it appears that as long as
                                      she lives with her second husband, she has some income
                                      available to pay toward her tax liability; consequently, she
                                      has not proved economic hardship. However, Ms. Pullins is
                                      disabled, and the marriage on which her support currently
                                      depends was, at the time of the trial, evidently at risk of dis-
                                      solution. Balancing her inability to work and the modest dis-
                                      ability income she will receive against the lack of evidence on
                                      assets and expenses, we find this factor to weigh only mod-
                                      erately against granting relief.
                                           (3) Knowledge or reason to know
                                        Ms. Pullins actually knew about (or is imputed with knowl-
                                      edge about) the liabilities reported on the returns she signed,
                                      and she did not have a reasonable belief that Mr. Shirek
                                      would reasonably promptly pay those liabilities. See supra
                                      pt. II.C.2.b.
                                        However, in the case of a deficiency, the question is
                                      whether the requesting spouse did not know and had no rea-
                                      son to know of the item giving rise to the deficiency—in this
                                      case, the $10,374 of construction income that Mr. Shirek
                                      omitted in 1999 (which generated an additional tax liability
                                      of $3,430). Ms. Pullins did not know of that omission and,
                                      given her non-involvement in his construction business, she
                                      could not reasonably be expected to have known. This was
                                      not an instance in which a husband failed altogether to
                                      report income from a business that his wife knew about;
                                      rather, here the husband reported about 85 percent of the
                                      income. As to the unreported portion of the liability (i.e., the




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                                      450                136 UNITED STATES TAX COURT REPORTS                                          (432)


                                      deficiency), Ms. Pullins lacked knowledge, and to the extent
                                      of $3,430 of the joint liability this factor weighs in favor of
                                      granting relief.
                                        As to the underpayments, however, as noted Ms. Pullins
                                      has not proved that she did not know and had no reason to
                                      know, when she signed the returns at issue, that Mr. Shirek
                                      would not pay the tax liabilities reflected there. For most of
                                      the liability, therefore, this factor weighs against granting
                                      relief.
                                           (4) Nonrequesting spouse’s legal obligation
                                         The California court’s August 2005 judgment ordered Mr.
                                      Shirek to pay the 1999, 2002, and 2003 Federal income tax
                                      and California Franchise Tax Board liabilities, and it also
                                      ordered him to appear on behalf of Ms. Pullins, defend her,
                                      and hold her harmless from those debts. Moreover, Mr.
                                      Shirek had the means to pay the Federal income taxes after
                                      the divorce, given that the property distribution awarded
                                      $125,227 to each spouse from the sale of the marital resi-
                                      dence. We are not bound (by collateral estoppel or otherwise)
                                      to the determination of a State family court, and that court
                                      does not have the power to adjust a spouse’s Federal tax
                                      liabilities. However, when evaluating what is equitable in
                                      this instance under section 6015(f), we will assign consider-
                                      able weight to the determination of the State court which
                                      placed the responsibility for satisfying the tax debts on Mr.
                                      Shirek.
                                         Revenue Procedure 2003–61, sec. 4.03(2)(a)(iv), 2003–2
                                      C.B. at 298, provides that the nonrequesting spouse’s legal
                                      obligation ‘‘will not weigh in favor of relief if the requesting
                                      spouse knew or had reason to know, when entering into the
                                      divorce decree or agreement, that the nonrequesting spouse
                                      would not pay the income tax liability.’’ Considering the cir-
                                      cumstances that existed at the time of the divorce (as
                                      opposed to the time she signed the returns, see supra part
                                      II.C.2.b.), the record does not contain any evidence indicating
                                      that Ms. Pullins had any reason to expect that Mr. Shirek
                                      would ignore the family court order and fail to pay the tax
                                      debts. Accordingly, this factor clearly weighs in favor of
                                      granting Ms. Pullins relief.




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                                      (432)                         PULLINS v. COMMISSIONER                                           451


                                           (5) Significant benefit
                                         The significant benefit factor examines whether the
                                      requesting spouse directly or indirectly received ‘‘significant
                                      benefit (beyond normal support) from the unpaid income tax
                                      liability’’. Rev. Proc. 2003–61, sec. 4.03(2)(a)(v), 2003–2 C.B.
                                      at 299 (referencing 26 C.F.R. section 1.6015–2(d)). Ms.
                                      Pullins did share in the benefit of Mr. Shirek’s income for the
                                      years in issue; but there is nothing in the record to indicate
                                      that, during her marriage to Mr. Shirek, Ms. Pullins received
                                      any specific or extraordinary benefit from their nonpayment
                                      of their tax liabilities. The IRS points to their acquisition of
                                      ‘‘waverunners, a golf cart and a camper/trailer’’; but while it
                                      is certainly true that a family should not buy such items
                                      rather than pay their taxes, we think these items do not rise
                                      to a level that implicates significant benefit to Ms. Pullins.
                                         More difficult to evaluate is the IRS’s contention that Ms.
                                      Pullins benefited from the nonpayment of taxes by her
                                      receipt of increased proceeds from the equity in the marital
                                      home. The IRS observes:
                                      Upon her divorce from Mr. Shirek, Petitioner received $125,000.00 from
                                      the sale of the marital home. * * * Had Petitioner and Mr. Shirek used
                                      the equity of $250,000 in their home to pay their tax liabilities at the time
                                      they were due, the money Petitioner would have received from the sale of
                                      the marital home would have been significantly less. See George v.
                                      Commissioner, T.C. Memo. 2004–261. In George, the Court found that the
                                      requesting spouse received a significant benefit when she received pension
                                      and life insurance funds after the death of the nonrequesting spouse. The
                                      Court noted these funds could have been used during the nonrequesting
                                      spouse’s lifetime to pay the tax liabilities and the requesting spouse would
                                      have received a reduced amount of money. Consequently, the requesting
                                      spouse received a significant benefit from the nonpayment of the taxes. Id.
                                      Likewise, Petitioner would have received far less money during her divorce
                                      had the tax liabilities been paid when due.

                                      It is true that the proceeds to be distributed to the spouses
                                      in the divorce proceedings would have been reduced if the
                                      couple had used the equity in the marital home to pay their
                                      tax debts. However, two considerations defeat the contention
                                      that this resulted in significant benefit to Ms. Pullins:
                                        First, George v. Commissioner, T.C. Memo. 2004–261,
                                      involved not proceeds from the sale of a marital home but
                                      pension and life insurance funds. Unlike the funds in George,
                                      here the equity interest in the home was created by the fam-




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                                      452                136 UNITED STATES TAX COURT REPORTS                                          (432)


                                      ily’s mortgage payments—i.e., one of its routine living
                                      expenditures. By definition, significant benefit is ‘‘beyond
                                      normal support’’. Rev. Proc. 2003–61, sec. 4.03(2)(a)(v). Mort-
                                      gage payments on a middle-class home constitute normal
                                      support that is not considered to generate ‘‘significant ben-
                                      efit’’. It is therefore difficult to explain how, before the prop-
                                      erty distribution in the divorce, any significant benefit could
                                      arise from the equity interest that is simply the result of
                                      those mortgage payments.
                                         Second, Ms. Pullins’s first opportunity to drawn down
                                      equity from the home to pay the taxes was when the house
                                      was sold and the proceeds were distributed in the divorce
                                      proceedings. It does not appear—and we cannot assume—
                                      that nonpayment of the taxes at that time actually benefited
                                      her or (to put it differently) that payment of the taxes at the
                                      time of the distribution would have reduced her share of the
                                      distribution. The divorce court awarded Mr. Shirek half (i.e.,
                                      $125,227) of the proceeds and ordered him to pay the taxes
                                      unilaterally; thus, the court evidently intended that Ms.
                                      Pullins receive $125,227 not reduced by tax payments. If
                                      instead Ms. Pullins and Mr. Shirek had agreed that the
                                      taxes would be paid directly from the proceeds, then on the
                                      basis of everything we know, it is altogether likely that the
                                      court would have awarded Ms. Pullins $125,227 and given
                                      Mr. Shirek only the remainder. If that is true, then Ms.
                                      Pullins did not benefit from the nonpayment of the taxes at
                                      that time but rather suffered the detriment, not intended by
                                      the divorce court, of having her share of the proceeds remain
                                      at risk of IRS collection.
                                         Under the circumstances of this case, we find that Ms.
                                      Pullins did not realize significant benefit from the non-
                                      payment of the taxes. Accordingly, this factor weighs in favor
                                      of granting relief.
                                           (6) Compliance with Federal tax laws
                                        Where the requesting spouse has made a good-faith effort
                                      to comply with Federal tax laws in years following the years
                                      for which she requests relief, this compliance can weigh in
                                      favor of relief. Ms. Pullins testified that she mailed tax
                                      returns for tax years 2004 and 2005 with filing status of
                                      married filing separate and single, respectively. She asserted




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                                      (432)                         PULLINS v. COMMISSIONER                                           453


                                      that she mailed those returns the Saturday before trial in
                                      September 2009. As of the date of trial, the IRS had no record
                                      of receiving the returns, and Ms. Pullins offered no evidence
                                      of their filing. The record does not clearly reflect whether or
                                      when Ms. Pullins filed a Federal income tax return for
                                      2006—or whether she had an obligation to file for 2006. She
                                      requested an extension of time to file her 2007 return, and
                                      it was due on October 15, 2008. She filed the return one
                                      week late, with a balance due, and she paid that balance,
                                      plus interest and additions to tax, by February 24, 2009.
                                         Ms. Pullins asserts that her mailing her 2004 and 2005
                                      Federal income tax returns the weekend before trial in Sep-
                                      tember 2009 shows that she was in compliance with her tax
                                      filing obligations at the time of trial. Those returns both
                                      claim an overpayment and request a refund. However, she
                                      filed each of those returns several years after they were due
                                      and on the eve of trial. We cannot say that she has proved
                                      that she made a good-faith effort to comply with Federal
                                      income tax laws in the years following the years in issue.
                                      Accordingly, this factor weighs against granting relief.
                                           (7) Abuse
                                         At trial Ms. Pullins testified that Mr. Shirek became an
                                      abusive alcoholic at the end of their marriage. She still
                                      trusted him when they signed the 2002 and 2003 returns in
                                      October 2004, but he moved out of the family home in
                                      December 2004, and she filed for divorce in February 2005.
                                      Ms. Pullins did not inform the IRS before trial that she suf-
                                      fered abuse at Mr. Shirek’s hands. On the contrary, in her
                                      April 2008 request for relief on Form 8857, she explicitly
                                      answered ‘‘No’’ to question 10: ‘‘Were you a victim of spousal
                                      abuse or domestic violence during any of the tax years you
                                      want relief?’’
                                         At trial, however, Ms. Pullins alleged that Mr. Shirek
                                      emotionally abused her during the marriage. When ques-
                                      tioned about her ‘‘No’’ answer on Form 8857, she explained
                                      that she made a simple mistake and checked the wrong box.
                                      However, the following additional instructions accompany
                                      the ‘‘Yes’’ box:
                                      Attach a statement to explain the situation and when it started. Provide
                                      photocopies of any documentation, such as police reports, a restraining




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                                      454                136 UNITED STATES TAX COURT REPORTS                                          (432)


                                      order, a doctor’s report or letter, or a notarized statement from someone
                                      who was aware of the situation.

                                      Ms. Pullins did not describe or document any alleged abuse
                                      in an attachment to her Form 8857; and she did not explain
                                      why, if she mistakenly checked ‘‘No’’, she did not follow the
                                      ‘‘Yes’’ instructions and do so. 13
                                         Ms. Pullins has not introduced any evidence to corroborate
                                      her testimony—contradicted by her Form 8857—that she suf-
                                      fered abuse from Mr. Shirek. Accordingly, we do not find that
                                      she proved abuse. This factor does not weigh in favor of
                                      relief—and it also does not weigh against granting relief. See
                                      Rev. Proc. 2003–61, sec. 4.03(2)(b), 2003–2 C.B. at 299.
                                           (8) Mental or physical health
                                        There is no evidence that Ms. Pullins was ill when she
                                      signed the returns in issue or when she requested relief in
                                      April of 2008. See id. sec. 4.03(2)(b)(ii). This factor ordinarily
                                      would not weigh in favor of or against granting relief in the
                                      IRS’s analysis. See id. sec. 4.03(2)(b). However, having
                                      observed Ms. Pullins at trial in September 2009, we conclude
                                      that she is now disabled and unable to work and earn income
                                      and that she may be permanently so. We find that her obvi-
                                      ously impaired health at the time of the trial de novo is rel-
                                      evant, and we conclude that this factor weighs in favor of
                                      granting relief.
                                           b. Weighing the facts and circumstances
                                         This is a close case. Three factors favor retained liability:
                                      Ms. Pullins’s failure to prove economic hardship, her lack of
                                      a reasonable expectation that Mr. Shirek would pay the
                                      liabilities when she signed the returns, and her failure to
                                      timely file her returns and pay her taxes since the years in
                                      issue. However, four factors favor relief—Ms. Pullins’s
                                      divorce from Mr. Shirek, Mr. Shirek’s legal obligation to pay
                                      the tax liabilities, Ms. Pullins lack of significant benefit from
                                      the nonpayment, and Ms. Pullins’s poor health—and a fifth
                                         13 Ms. Pullins explained that she did not allege abuse during her divorce proceedings because

                                      she wanted the divorce to proceed quickly so that she could get out of the marriage. This ration-
                                      ale may be perfectly logical for the divorce proceedings and may explain why the California fam-
                                      ily court judgment does not discuss abuse. Thus, we do not rely on that judgment to prove or
                                      disprove abuse. However, she completed Form 8857 in April 2008, long after the divorce pro-
                                      ceedings had concluded.




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                                      (432)                         PULLINS v. COMMISSIONER                                           455


                                      favors relief as to the 1999 deficiency, i.e., her lack of knowl-
                                      edge of Mr. Shirek’s unreported income. Especially weighty
                                      here is the fact that the divorce court—with the family’s cir-
                                      cumstances set out before it in greater detail than was pos-
                                      sible in our tax case—determined that Mr. Shirek should pay
                                      the taxes, placed proceeds in his hands sufficient to do so,
                                      and allocated resources to Ms. Pullins on the assumption
                                      that he would do so and she would not have to.
                                         Accordingly, after considering and weighing all the factors,
                                      we find that with the exception of her underwithholding of
                                      $719 of her own liability in 2002, it would be inequitable to
                                      hold Ms. Pullins liable for the 1999, 2002, and 2003 tax
                                      liabilities.
                                         To reflect the foregoing,
                                                                          An appropriate decision will be entered.

                                                                               f




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