Innocent spouse relief.

In Billings, 127 TC No. 2 (7/25/06), the Tax Court ruled that it lacked jurisdiction to review a husband's equitable innocent spouse claim for relief under Sec. 6015(f) from liability arising from his wife's failure to report income she admittedly embezzled from her employer. The IRS had not asserted a deficiency against him, which is a prerequisite for Tax Court review under Sec. 6015(e). The Service had denied the husband's request for relief for failing to establish that he believed the tax liability was paid or going to be paid at the time he signed an amended return reporting the embezzled funds. That return showed an increase in tax that neither the taxpayer nor his wife expected to be able to pay.

Disposition: The Tax Court, in finding that it lacked jurisdiction over nondeficiency stand-alone petitions, overruled its holding in Ewing, 122 TC 32 (2004). A separate concurring opinion stated that the court in Ewing disregarded the obvious plain reading of Sec. 6015(e)(1) and that Congress allowed a court to review a petition seeking equitable relief only when the (1) IRS has asserted a deficiency against the individual; (2) individual has affirmatively elected to have Sec. 6015(b) or (c) apply; and (3) taxpayer has timely petitioned to determine the appropriate relief.

A dissent stated that the phrase "against whom a deficiency has been asserted" is ambiguous and that the court should have considered the legislative history.

Lesli S. Laffie, J.D., LL.M.