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IRS changes procedures for equitable innocent spouse cases.

The Tax Court recently held that it lacks jurisdiction under Sec. 6015(e) to review the Service's Sec. 6015(f) determinations in cases in which a deficiency has not been determined against the taxpayer (Billings, 127 TC No. 2 (7/25/06)); for a discussion, see News Notes, "Innocent Spouse Relief," TTA, October 2006, p. 568. In light of this decision, the IRS subsequently issued this notice, which provides that such cases should not be settled; instead, a motion to dismiss should be filed. This notice supersedes Chief Counsel

Notice N(35)000-338 (6/5/00), which provided that the Service's Sec. 6015(f) determinations are reviewable by any court.


Generally, married taxpayers who file joint Federal income tax returns are jointly and severally liable for the tax under Sec. 6013(d). Sec. 6015 provides procedures for seeking relief from joint and several liability, and is commonly referred to as "innocent spouse relief" Sec. 6015(f) authorizes the IRS to prescribe procedures for providing "equitable relief" when it would be inequitable to hold one individual liable for any unpaid tax or deficiency relating to a joint return. Under Sec. 6015(e), however, the Tax Court only has jurisdiction "[i]n the case of an individual against whom a deficiency has been asserted."

The filing of a petition in response to a final notice of determination under Sec. 6015(f) or after the claim has been pending for six months is often referred to as a "stand-alone" proceeding, because jurisdiction is predicated on Sec. 6015(e) and not deficiency jurisdiction under Sec. 6213. The only issue pending in a stand-alone case is whether the requesting spouse is entitled to relief from joint and several liability. In Billings, the Tax Court held that it lacks jurisdiction in stand-alone cases when the IRS has not determined a deficiency.

Two recent appellate court decisions are in accord with Billings--Ewing, 439 F3d 1009 (9th Cir. 2006), pet. for reh'g en banc den. (8/10/06), and Bartman, 446 F3d 785 (8th Cir. 2006), pet. for reh'g en banc den. (8/3/06). In holding that the Tax Court had no jurisdiction to hear the case in Ewing, the Ninth Circuit vacated the lower court's decision, and thus nullified its holdings that the taxpayer was entitled to relief and that the Tax Court could consider evidence outside the administrative record when reviewing the Service's determination under Sec. 6015(f).

Procedures for Sec. 6015(f) Stand-Alone Cases

Under the notice, the new procedures should be followed in Tax Court stand-alone cases in which the IRS has not determined a deficiency. Because these cases can now be dismissed on jurisdictional grounds, Sec. 6015(f) stand-alone cases in which the Service has not determined a deficiency should not be settled. Instead, motions to dismiss for lack of jurisdiction should be filed.

Noncalendared cases: In all noncalendared Sec. 6015(0 stand-alone cases without a deficiency determination, a motion to dismiss for lack of jurisdiction should be filed. The motion should be filed in lieu of the answer, if required, and the notice of petition and right to intervene on the nonrequesting spouse, which is normally required under Tax Court Rule 325, should not be served until the Tax Court rules on the motion to dismiss; see Chief Counsel Directives Manual,

Calendared cases: A motion to dismiss should be filed in all Sec. 6015(f) stand-alone cases in which the IRS has not determined a deficiency, even if the case has been fully or partially briefed or submitted. In addition, it may be necessary for the Service to file a motion for continuance while the motion to dismiss is pending once the case is calendared.

Multiple tax years: For cases involving multiple tax years in which the IRS has determined a deficiency for one or more of the tax years at issue, but not for all of the tax years at issue, the procedures outlined above should be followed only for the tax years in which no deficiency has been determined. CHIEF COUNSEL NOTICE CC 2006-020 (8/25/06)

David O'Driscoll, J.D., LL.M.
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Author:O'Driscoll, David
Publication:The Tax Adviser
Date:Nov 1, 2006
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