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she was not entitled to any form of may allow equitable relief to a taxpayer when she made her decision justified
innocent-spouse relief for the TFRP who does not qualify under Sec. 6015(b) lowering the amount Chavis could pay, a
liability, and that the IRS’s sustaining or Sec. 6015(c) if, “taking into account lower amount would not have altered the
the collection action was not an abuse all the facts and circumstances, it is SO’s determination that Chavis was not
of discretion. inequitable to hold the individual liable entitled to CNC status.
Challenge of underlying liability: for any unpaid tax or any deficiency (or Regarding a withdrawal of the
A taxpayer may challenge an underlying any portion of either).” NFTL, a taxpayer is only entitled to
tax liability in a CDP case only if he or The Tax Court concluded that Sec. that relief if four conditions set out in
she did not receive any statutory notice 6015(f), like Secs. 6015(b) and 6015(c), Sec. 6323(j) are met. The conditions
of deficiency for the liability or did not only applies to joint income tax liabilities. are (1) the filing of the notice was
otherwise have an opportunity to dispute In Rev. Proc. 2013-34, the IRS set out premature or otherwise not in accordance
the liability. Under the regulations and the procedures governing equitable relief, with IRS administrative procedures;
Tax Court precedent, a taxpayer has the and the court stated that these procedures (2) the taxpayer has entered into an
opportunity to dispute a TFRP liability confirmed that Sec. 6015(f) only applies installment agreement with the IRS;
by filing an appeal with the IRS when he to joint income tax liabilities. The court (3) the withdrawal of the notice will
or she receives a Letter 1153. found further support for its position facilitate collection of the tax liability; or
The evidence showed that the IRS in Regs. Sec. 1.6015-1(a)(1)(iii), which (4) the withdrawal of the notice would
had sent Chavis a Letter 1153 regarding states that Sec. 6015(f) only applies to be in the best interest of the taxpayer
the TFRP liability at issue and that she “joint and several liability for Federal (as determined by the national taxpayer
had received the letter. Chavis admitted income tax” and H.R. Rep’t No. 105-599, advocate) and the United States. The
she received the letter. The letter 105th Cong., 2d Sess., 254 (1998), which court found that two of these conditions
informed her that she could appeal the states that Sec. 6015(f) applies only to did not apply in Chavis’s case and that
proposed TFRP assessment and how “any unpaid tax or deficiency arising from she did not establish that the other two
to do so, but Chavis did not appeal it. a joint return.” Thus, although a TFRP were met. Thus, it was not an abuse of
Therefore, the court found that she had liability is a form of “unpaid tax,” since discretion to deny the withdrawal of
a previous opportunity to dispute her the liability did not arise from a joint the NFTL.
TFRP liability and was not entitled return, the court concluded that Chavis
to challenge it in her CDP hearing or was also not entitled to relief under Sec. Reflections
advance a challenge in the Tax Court. 6015(f). If Chavis’s various statements regarding
Innocent-spouse relief: In Abuse of discretion — collection her involvement with Oasys are true,
considering Chavis’s request for innocent- alternatives: Chavis proposed two it is possible that if she had properly
spouse relief, the Tax Court first turned collection alternatives. The first was challenged her status as a responsible
to the innocent-spouse relief provisions having her account placed in CNC status. person under Sec. 6672, she might not
under Secs. 6015(b) and 6015(c), which The second was the withdrawal of her have been held liable for a TFRP for
both by their terms only allow relief to NFTL. The Tax Court held that the Oasys’s unpaid payroll taxes, despite
be granted from liabilities shown or that IRS SO did not abuse her discretion by the fact that she was an officer of the
should have been shown on a joint federal denying these forms of relief. corporation. However, she chose not to
income tax return. The court found that To be entitled to CNC status respond when she received the Letter
Chavis’s TFRP liabilities were not shown taxpayers must demonstrate that, on the 1153, and it cost her dearly.
on a joint federal income tax return and basis of their assets, equity, income, and Chavis, 158 T.C. No. 8 (2022) ■
did not result from the filing of such a expenses, they have no apparent ability
return. Instead, the court determined that to make payments on the outstanding
her TFRP liabilities resulted from her tax liability. The SO determined that
failure, as an officer of Oasys, to ensure Chavis could pay $1,685 per month,
that the payroll taxes that the company so she was not entitled to CNC status. Contributor
collected from its workers were properly Chavis argued for various reasons that
James A. Beavers, CPA, CGMA,
paid over to Treasury. Thus, Chavis was the SO’s calculation of the amount she
J.D., LL.M., is The Tax Adviser’s tax
not eligible for innocent-spouse relief could pay was incorrect. However, the
technical content manager. For more
under Sec. 6015(b) or 6015(c). court rejected all of her complaints about
information about this column, contact
The Tax Court then considered Sec. the SO’s work and found that even if
thetaxadviser@aicpa.org.
6015(f). Under this provision, the IRS information that the SO did not have
www.thetaxadviser.com September 2022 45