In the case of Carol D. Gomez v. Commissioner, Docket No. 3339-24S, the Tax Court addressed a taxpayer’s request for relief from joint and several liability for a tax deficiency arising from a joint return. The Court’s decision, rendered orally by Special Trial Judge Diana L. Leyden on December 11, 2024, provides a detailed analysis of the facts, the taxpayer’s arguments, and the relevant legal authorities. The Court ultimately concluded that Ms. Gomez was not entitled to relief under any of the provisions of I.R.C. § 6015.

Facts of the Case

The petitioner, Carol D. Gomez, resided in California at the time she filed her petition. She and her husband filed a joint federal income tax return for the 2014 tax year. Ms. Gomez prepared the return using tax software, and both she and her husband reviewed it before filing. The return reported IRA distributions of $6,000 with a taxable amount of zero, and pensions and annuities of $103,174 with a taxable amount of $555. The return reflected a total tax of $2,801, withholdings of $30,608, and a refund of $27,807, which the couple received.

In July 2017, the IRS audited the 2014 return and determined that the couple owed an additional $24,414 in tax due to the retirement distributions, as well as an accuracy-related penalty under I.R.C. § 6662. The IRS later waived the penalty. Ms. Gomez and her husband entered into an installment agreement in December 2017, making payments from February 2018 through May 2019. Several income tax refunds from the couple’s joint returns for 2017, 2019, and 2020 were applied to the outstanding 2014 liability, with the first offset occurring in April 2018.

Ms. Gomez and her husband have been living apart since June 11, 2012. Her husband filed for bankruptcy protection in May 2019. On November 15, 2022, Ms. Gomez filed Form 8857, requesting relief from joint and several liability for the 2014 tax year, which the IRS treated as a request for relief under I.R.C. § 6015(b), (c), and (f). In her Form 8857, she answered "no" to questions about fear, danger, or abuse from her husband. Ms. Gomez is a 22-year veteran but testified that she has not been diagnosed with PTSD due to her service.

Taxpayer’s Arguments for Relief

Ms. Gomez sought relief from joint and several liability under three provisions of I.R.C. § 6015:

Innocent Spouse Relief under I.R.C. § 6015(b): This provision allows a spouse to be relieved of liability if certain conditions are met, such as not knowing about an erroneous item on the return.
Separation of Liability Relief under I.R.C. § 6015(c): This provision permits a spouse to limit their liability to the portion of the deficiency attributable to them.
Equitable Relief under I.R.C. § 6015(f): This provision allows the IRS to grant relief if it is inequitable to hold a spouse liable, considering all the facts and circumstances.

Ms. Gomez argued that she should not be held liable for the additional tax owed from the retirement distributions because her husband made the withdrawals, she did not receive a significant benefit from the funds, and that she was not aware that the distributions were not fully taxable.

Tax Court’s Analysis

The Tax Court first addressed the timeliness of Ms. Gomez’s claim under I.R.C. § 6015(b) and (c). The Court noted that claims for relief under these sections must be made within two years of the IRS’s first collection activity against the requesting spouse. "Collection activities" include an offset of a tax overpayment. In this case, the IRS offset an overpayment from the couple’s 2017 return against the 2014 liability sometime in April 2018. Because Ms. Gomez filed her request for relief in November 2022, more than two years after the 2018 offset, her claim under I.R.C. § 6015(b) and (c) was untimely. The Tax Court cited Campbell v. Commissioner, 121 T.C. 290, 292-93 (2003), to support its interpretation that an offset is considered a collection activity under section 6015. The Court also cited Treas. Reg. § 1.6015-5(b)(2)(i), as support for its conclusion.

Turning to Ms. Gomez’s claim for equitable relief under I.R.C. § 6015(f), the Court applied the factors outlined in Rev. Proc. 2013-34. The revenue procedure provides seven nonexclusive factors to be considered when determining whether to grant equitable relief. The court also cited Pullins v. Commissioner, 136 T.C. 432, 448 (2011) and Kellam v. Commissioner, T.C. Memo. 2013-186, to support the assertion that no one factor is determinative. These factors include:

Marital Status: The Court found this factor weighed in favor of relief, as Ms. Gomez has been separated from her husband since 2012.
Economic Hardship: This factor weighed against relief because Ms. Gomez indicated on her Form 8857 that her income exceeded her expenses.
Knowledge or Reason to Know: The Court found this factor weighed against relief because Ms. Gomez knew that her husband had withdrawn the retirement funds, and she reported those amounts on the 2014 joint return.
Legal Obligation to Pay the Outstanding Liability: The Court deemed this factor neutral, as there was no indication that the couple had determined who had the obligation to pay the outstanding tax liability, particularly since the husband’s bankruptcy was not completed.
Significant Benefit: This factor weighed in favor of relief as Ms. Gomez testified that her husband had pawned her truck to pay his gambling debts and the Court concluded that she did not receive a significant benefit from the withdrawn retirement funds.
Compliance with the Tax Laws: The Court found this factor weighed in favor of relief as Ms. Gomez has filed her returns and there was no indication of future liabilities.
Mental or Physical Health: This factor was neutral, as Ms. Gomez stated that she did not suffer from PTSD and did not report abuse or other health problems on her Form 8857. While she testified that she was scared of loan sharks seeking to collect her husband’s debts, the Court found that she lived far enough from her husband so that this risk did not appear to be an issue.

The Court emphasized that the factor of knowledge is a key consideration when determining whether equitable relief should be granted. The Court found it significant that Ms. Gomez was aware of the retirement distributions, reported them on the tax return, and that there was no evidence that she was abused or feared any harm from her husband when reporting this information.

Ultimate Findings

The Tax Court concluded that Ms. Gomez was not entitled to relief from joint and several liability for the 2014 tax year under I.R.C. § 6015(b), (c), or (f). The Court entered a decision for the Commissioner. The court’s oral findings of fact and opinion were rendered at the conclusion of the trial held remotely on December 11, 2024. The court noted that its oral findings of fact and opinion should not be relied on as precedent in any other case and that its findings were made pursuant to I.R.C. Section 7459(b) and Tax Court Rule 152.

Prepared with assistance from NotebookLM.