Arsdalen v. Comm'r of Internal Revenue , 1195–04.

• Decision Date: 22 July 2004
• Docket Number: No. 1195–04.,1195–04.
• Parties: Diana VAN ARSDALEN, f.k.a. Diana Murray, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
• Court: U.S. Tax Court

123 T.C. 135

123 T.C. No. 7

Diana VAN ARSDALEN, f.k.a. Diana Murray, Petitioner

v.COMMISSIONER OF INTERNAL REVENUE, Respondent

No. 1195–04.

United States Tax Court.

July 22, 2004.

Jack Barry Schiffman, for petitioner.

Emly B. Berndt, for respondent.

OPINION

DAWSON, J.

P filed with the Court a petition for determination of relief from joint and several liability on a joint return. R issued to P's former spouse (M) a notice of filing petition and right to intervene (the notice). See Rule 325, Tax Court Rules of Practice and Procedure. P filed with the Court a motion to strike the notice insofar as the notice stated that M would be permitted to intervene solely to challenge P's entitlement to relief under sec. 6015, I.R.C. M lodged with the Court a notice of intervention which stated that M intended to support P's claim for relief under sec. 6015(f), I.R.C. R opposed P's motion to strike.

Held: Neither sec. 6015, I.R.C., nor Rule 325, Tax Court Rules of Practice and Procedure, precludes a nonelecting spouse from intervening in a proceeding before the Court for the purpose of supporting the electing spouse's claim for relief.

Held, further: P's motion to strike will be granted in that the restrictive language in R's notice is deemed stricken, and M's notice of intervention will be filed.

This case was assigned to Chief Special Trial Judge Peter J. Panuthos, pursuant to the provisions of section 7443A(b)(5) and Rules 180, 181, and 183. ¹ The Court agrees with and adopts the opinion of the Chief Special Trial Judge, which is set forth below.

OPINION OF THE SPECIAL TRIAL JUDGE

PANUTHOS, Chief J.

This matter is before the Court on petitioner's motion to strike. As explained in detail below, we shall grant petitioner's motion.

Background

Petitioner filed joint Federal income tax returns with her then husband, Stanley David Murray (Mr. Murray), for the taxable years 1992 to 1996.

On January 18, 2002, respondent issued to petitioner a notice of determination denying her claim for relief from joint and several liability for the taxable years 1992 to 1995. The notice stated that petitioner was denied relief under section 6015(f). On October 23, 2003, respondent issued to petitioner a notice of determination denying her claim for relief from joint and several liability for the taxable years 1992 to 1996. The notice stated that petitioner was denied relief under section 6015(b), (c), and (f). On January 21, 2004, petitioner filed with the Court a petition for determination of relief from joint and several liability on a joint return challenging respondent's notice of determination dated October 23, 2003.²

On March 8, 2004, respondent filed with the Court a notice of filing petition and right to intervene (the notice). The notice stated that respondent had informed Mr. Murray of the filing of the petition and of his right to intervene in the case. The notice stated in pertinent part: “Under T.C. Rule 325(b), Stanley D. Murray has a right to intervene in this matter for the sole purpose of challenging petitioner's entitlement to relief from joint and several liability.”

On March 15, 2004, petitioner filed a Motion to strike the notice on the ground that respondent “misinterprets and/or misconstrues Tax Court Rule 325(b)” insofar as the notice stated that Mr. Murray would be permitted to intervene in the case for the sole purpose of challenging petitioner's entitlement to relief from joint and several liability.³

On April 1, 2004, Mr. Murray lodged with the Court a notice of intervention. In the notice of intervention, Mr. Murray stated that he “seeks to intervene for the sole purpose of offering evidence in support of the Petitioner's right and entitlement to equitable relief under IRC section 6015(f) and will not be offering any evidence to challenge Petitioner's right to equitable relief under IRC section 6015(f).”

This matter was called for hearing at the Court's motions session held in Washington, D.C. Counsel for respondent appeared at the hearing and offered argument in opposition to petitioner's Motion to strike. Although no appearance was entered by or on behalf of petitioner at the hearing, petitioner filed with the Court a written statement pursuant to Rule 50(c).

Discussion

Section 6013(d)(3) provides that if a husband and wife file a joint Federal income tax return, “the tax shall be computed on the aggregate income and the liability with respect to the tax shall be joint and several.” However, section 6015(a) provides that, notwithstanding section 6013(d)(3), an individual who has made a joint return may elect to seek relief from joint and several liability arising from that return. See Cheshire v. Commissioner, 115 T.C. 183, 188–189, 2000 WL 1227132 (2000), affd. 282 F.3d 326 (5th Cir.2002).

Congress vested the Tax Court with jurisdiction to review the Commissioner's denial of a taxpayer's election to claim relief from joint and several liability on a joint return under specified circumstances. See King v. Commissioner, 115 T.C. 118, 121–122, 2000 WL 1131914 (2000); Corson v. Commissioner, 114 T.C. 354, 363–364, 2000 WL 637480 (2000). A taxpayer may seek relief from joint and several liability on a joint return by raising the matter as an affirmative defense in a petition for redetermination invoking the Court's deficiency jurisdiction under section 6213(a). See Butler v. Commissioner, 114 T.C. 276, 287–289, 2000 WL 502841 (2000). In addition, a taxpayer may file a so-called stand-alone petition seeking relief from joint and several liability on a joint return where the Commissioner has issued a final determination denying the taxpayer's claim for such relief or the Commissioner has failed to rule on the taxpayer's claim within 6 months of its filing. See sec. 6015(e)(1); Mora v. Commissioner, 117 T.C. 279, 2001 WL 1607291 (2001); Fernandez v. Commissioner, 114 T.C. 324, 329, 2000 WL 565108 (2000). Finally, a taxpayer may request relief from joint and several liability on a joint return in a petition for review of a lien or levy action. See secs. 6320(c), 6330(c) (2)(A)(i). The petition in this case was filed as a stand-alone petition.

Section 6015(e)(4) provides that the nonelecting or “other spouse” is entitled to notice of a stand-alone proceeding involving a claim for relief under section 6015. The section provides in pertinent part that the “Tax Court shall establish rules which provide the individual filing a joint return but not making the election * * * with adequate notice and an opportunity to become a party to a proceeding”.

Before adopting formal Rules as directed in section 6015(e)(4), we addressed the scope of a nonelecting spouse's right to intervene in a section 6015 case in both Corson v. Commissioner, supra, and King v. Commissioner, supra. We will briefly summarize those Opinions before proceeding with our analysis.

In Corson the taxpayers filed with the Court a joint petition for redetermination challenging a joint notice of deficiency for the taxable year 1981. After obtaining separate counsel, the electing spouse filed an amendment to the petition asserting her entitlement to relief from joint and several liability under former section 6013(e). After both taxpayers entered into separate stipulations with the Commissioner conceding a specific tax deficiency and the application of increased interest under section 6621(c), the Commissioner entered into a further stipulation with the electing spouse granting her relief from joint and several liability under section 6015(c). Upon learning of the second stipulation, the nonelecting spouse declined to execute a stipulated decision for submission to the Court, prompting the Commissioner to file a motion for entry of decision. In denying the Commissioner's motion, the Court stated:

Section 6015(e)(1) is structured so that administrative consideration (or failure to rule) will precede any court action when innocent spouse status is raised in a stand-alone petition. Section 6015(g)(2), in turn, contemplates an opportunity for the nonelecting spouse to participate at the administrative level. Section 6015(e)(4) then speaks of a similar chance for participation should the matter move from an administrative to a judicial forum. Hence, as a general premise, we believe that these subsections, when read together, reveal a concern on the part of the lawmakers with fairness to the nonelecting spouse and with providing him or her an opportunity to be heard on innocent spouse issues. Presumably, the purpose of affording to the nonelecting spouse an opportunity to be heard first in administrative proceedings and then in judicial proceedings is to ensure that innocent spouse relief is granted on the merits after taking into account all relevant evidence. After all, easing the standards for obtaining relief is not equivalent to giving relief where unwarranted. [ Corson v. Commissioner, supra at 365.]

Although we did not attempt to determine “the precise contours of the rights granted to a nonelecting spouse under section 6015(e),” our denial of the Commissioner's motion for entry of decision had the effect of allowing the nonelecting spouse his day in Court. Id .

In King v. Commissioner, supra, the Court described the circumstances under which a nonelecting spouse would be permitted to intervene in respect of an electing spouse's claim for relief under section 6015. In King, the Commissioner issued separate notices of deficiency to the taxpayers, but only the electing spouse filed a petition for redetermination with the Court. The sole issue raised in the electing spouse's petition was her claim for relief from joint and several liability under former section 6013(e). While the case was pending, Congress repealed former section 6013(e) and enacted section 6015. Thereafter, the Commissioner filed with the Court a report stating that the Commissioner concluded that the electing spouse qualified for relief under section 6015(b). The report...