Equitable Relief Partially Granted

The Tax Court held that a taxpayer was entitled to equitable relief under IRC [section] 6015(f) for her husband's half of the additional 2002 and 2003 federal income tax liabilities reported on court-ordered amended joint tax returns, since she had no reason to believe her ex-husband would not pay his share of the tax liability However, the court held equitable relief was not available for her 50% share of the additional tax, since it was not reasonable for her to assume that her ex-husband would also pay her share. Each spouse is jointly and severally liable for any tax liability reported on a joint return. IRC [section] 6015(f) allows a spouse to be relieved of this liability if, under the facts and circumstances, it is inequitable to hold that spouse liable. If the spouse satisfies seven threshold conditions listed in section 4.01 of Revenue Procedure 2003-61, 2003-2 CB 296, the IRS will generally grant relief if the spouse (1) is divorced from, separated from or has not been a member of the same household as the former or separated spouse at any time during the 12 months prior to the date of the request, (2) had no knowledge or reason to know that the other spouse would not pay the tax liability when the return was signed, and (3) would suffer economic hardship if no relief is granted. Ira taxpayer fails any of the three tests, equitable relief may still be granted under a facts-and-circumstances test by weighing factors that include the requesting spouse's marital status, economic situation and whether the other spouse is obligated by a court decree to pay the tax liability The IRS will also consider whether the requesting spouse received a significant benefit from the item causing the deficiency, attempted to comply with tax laws in later years and knew or had reason to know the other spouse would not pay the liability Two more factors will weigh for relief if present but not against it if absent: if the requesting spouse was in poor mental or physical health when the return was signed or had been abused by the other spouse. The latter factor can mitigate a requesting spouse's knowledge or reason to know of a tax liability [GRAPHIC OMITTED] Linda Bruen and Michael Bruen were married in 1978; however, after marital problems began in 1999 and 2000, the couple filed for divorce in September 2003 and received a final divorce in February 2004. For tax years 2002 and 2003, Mrs. and Mr. Bruen filed separate tax returns; she paid the balance due on her returns, but he did not. In 2005, the Probate and Family Court of Massachusetts entered an amended judgment related to the divorce that divided the family home and other marital assets between the ex-spouses. …