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Tax Court had no jurisdiction over nonrequesting spouse's petition.

A and his former spouse, E, owed a series of outstanding tax liabilities jointly and severally for various joint filings during their marriage. Their divorce decree incorporated the following term from the separation agreement:

All existing [joint debts] of the husband and wife shall remain the joint obligations of the husband and wife. The major joint debts of the parties are past due income taxes ... Should either party become unable to pay, the other party shall be, as a matter of law, required to pay all remaining unpaid taxes.

However, in apparent defiance of this agreement, E filed Forth 8857, Request For Innocent Spouse Relief, petitioning for relief front her joint and several liability for tax years 1990-1994. The IRS notified A of E's filing, took submissions from him and spoke with him on the phone; however, he was not given an opportunity to present his position in person. The IRS granted E relief for tax years 1991-1994 under Sec. 6015(f).

The IRS credited E's contention, disputed by A, that A and E had a subsequent agreement that she would pay off the state tax debts and he was to pay the Federal tax debts. A (the nonelecting spouse) filed a Tax Court petition appealing the IRS's determination. The Tax Court dismissed A's petition for lack of jurisdiction (Maier, 119 TC 267 (2002)); an appeal to the Second Circuit followed. At no time has the IRS issued a deficiency notice.


The narrow question is whether Sec. 6015 provides the Tax Court with jurisdiction over a nonelecting spouse's petition for review of a Sec. 6015(f) ruling favorable to the electing spouse. Sec. 6015(e), titled "Petition for review by Tax Court," states: "In the case of an individual ... who elects to have [innocent spouse provisions] apply[,] ... the individual may petition the Tax Court (and the Tax Court shall have jurisdiction) to determine the appropriate relief available ..." Nowhere iii Sec. 6015, or ally other Congressional act, is the Tax Court given jurisdiction over petitions for review filed by nonelecting spouses.

Sec. 6015(e)(4), titled, "Notice to other spouse," states,"[t]he 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...." This provision plainly contemplates a preexisting proceeding to trigger the notice and related rights of the nonelecting spouse. Sec. 6015(h) confirms the same conclusion, authorizing and instructing the Secretary to "prescribe such regulations as are necessary to carry out the provisions of this section, including ... regulations providing the opportunity for an individual to have notice of, and an opportunity to participate in, any administrative proceeding with respect to an election made ... by the other individual filing the joint return" (See. 6015(h)(2)). Read together, Sec. 6015(e) and (h)(2) provide that the nonelecting spouse has a right to intervene in a proceeding properly before the Tax Court, while the nonelecting spouse only has a right in participate before the agency; in either case, notice must be provided. But nowhere in Sec. 6015 is the Tax Court conferred with the jurisdiction (if" it did not have it already, through its deficiency jurisdiction) to hear a nonelecting spouse's petition for review of the IRS's innocent spouse determination.

Tax Court precedent cannot be read to alter this statutory scheme. In Corson, 114 TC 354 (2000), King, 115 TC 118 (2000) and Hale Exemption Trust, TC Memo 2001-89, jurisdiction was already conferred on the Tax Court by a petition for a deficiency redetermination. In Hale Exemption Trust, the Tax Court stated,"[t]he jurisdictional predicate giving rise to the issue of section 6015 relief should not determine the rights of the nonelecting spouse to participate ha the judicial review of the Commissioner's determinations"; see also Corson, 114 TC 354 ("Principally, we believe that the interests of justice would be ill served if the rights of the nonelecting spouse were to differ according to the procedural posture in which the issue of relief under section 6015 is brought before the Court. Identical issues before a single tribunal should receive similar treatment.").The Tax Court in these cases, however, was not interpreting the scope of the jurisdiction conferred by Sec. 6015; it was instead concerned with the participatory rights of nonelecting spouses ill deficiency cases in which the Tax Court unquestionably had jurisdiction. To the extent that any Tax Court dicta contradicts this ruling, the Second Circuit owes "no deference to the Tax Court's statutory interpretations, its relationship to us being that of a district court to a court of appeals, not that of an administrative agency to a court of appeals" (Madison Recycling Assocs., 295 F3d 280 (2d Cir. 2002)).

In sum, Sec. 6015 does not independently giant the Tax Court jurisdiction over a nonelecting spouse's petition to review the agency's innocent spouse determinations. A legislative remedy may be indicated in this area and there may be a flaw in the controlling statutory provisions; see Shepard and McMahon, Jr., "Recent Developments in Federal Income Taxation: The Year 2002" (6 Fl. Tax Rev. 81,177 (2003)). However, it is not the judicial role to fix it. Thus, the Tax Court's dismissal of appellant's petition for review for lack of subject matter jurisdiction is affirmed.

REFLECTIONS: The Second Circuit stated that it is not entirely clear that the Tax Court would even have jurisdiction over an electing spouse's petition for review of an adverse determination under Sec. 6015(f), despite such ridings in Gwendolyn A. Ewing, 118 TC 494 (2002), Michael B. Butler, 114 TC 276 (2000) and Diane Fernandez, 114 TC 324 (2000); see also Mercedes Flores, 51 Fed Cl 49, 51, n. 1 (2001); Kathryn Cheshire, 282 F3d 326 (5th Cir. 2002); and Herbert L. Mitchell, 292 F3d 800 (DC Cir. 2002). The Service allows an administrative appeal to both the requesting and nonrequesting spouse; see Taylor, "Administrative Appeal Rights" in Innocent Spouse Cases," TTA, October 2003,p. 634.

JOHN MAIER III, 2D CIR., 2/26/04
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Author:Maier, John
Publication:The Tax Adviser
Date:May 1, 2004
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