T .C . Memo . 2009- :40
UNITED STATES TAX COUR T
JAMES A . HAIGH, Petit'oner v .
COMMISSIONER OF INTERNAL REVS UE, Responden t
Docket No . 16461-07 . tiled June 15 ., 2009 .
James A . Haigh, pro se .
Henry N . Carriger , for respondent .
MEMORANDUM FINDINGS OF FACT AND OPINIO N
CHIECHI, Judge : Respondent . determined a deficiency of
$1,473 in petitioner's Federal income t~x (tax) for his taxabl e year 2004 .
JUN 15
2009 The issues for decision for petitioner's taxable year 200 4 are :1
(1) Is petitioner entitled to married filing separately filing status? We hold that he is not .
(2) Is petitioner entitled to certain itemized deductions in excess of those claimed in the tax return that he filed with Shirley R . Haigh? We hold that he is not .
(3) Is the distribution that Shirley R . Haigh received during 2004 from her individual retirement account subject to the additional tax under section 72(t)2 that respondent determined ? We hold that it is .
(4) Does petitioner have total and taxable Social Security benefits in the respective amounts that respondent determined ? We hold that he does .
(5) Is petitioner entitled to relief under section 6015? We hold .that he is not .
'In addition to the issues for decision for petitioner's taxable year 2004 that are listed below in the text, there are other questions relating to certain determinations in the notice for . that year that 'are computational in that their resolution flows automatically from our resolution of certain of the issues that we address herein .
FINDINGS OF FA C
Some of the facts have been stipulated and are so found . At the time petitioner filed the Petition in this case, he resided in Iowa .
Petitioner is a licensed professional engineer who at times not disclosed by the record specialized in consulting on issues relating to environmental engineering and environmental law and regulation . At times not disclosed by he record, petitioner also spent a total of five years as a licensed financial advisor who performed consulting work for certain small business development corporations and their respective wners . In that role, petitioner aided minorities and women who wanted to establish small businesses by, inter alia, helpin them (1)- create th e entities through which to conduct their respective businesses, (2) obtain loans, (3) establish accounting systems, including cost accounting systems, and (4) instal appropriate accounting and tax computer software . Petitioner id not prepare tax returns for his clients as part of the services that he performed as a licensed financial advisor .
In 1984, petitioner was involved i an automobile accident and suffered a broken neck . Beginning round 2000 petitioner became a patient at a pain clinic to which he was referred by certain, staff at the Mayo Clinic . He h s been taking certain prescription medication s I in order to, alleviate the pain associated with the neck injury that he suffered .-in 1984 . . On .November 27,1 2004, petitioner married Shirley R . :'jHaig h (Ms . Haigh) . (We shall refer to petitioner and Ms . Haigh as the Haighs, ;' .) Before their marriage, petitioner and Ms . Haigh executed,a prenuptial agreement (prenuptial-agreement) that ;Frequired, inter alia that they file joint tax returns during thei r marriage unless i t was- financially advantageous , and both, partie s .agreed, to file separate tax returns . .
In 2004, before petitioner and Ms . Haigh married and before she was 59-1/2 years old, Ms .'Haigh received a distribution . o f r o $13,977 .12 (IRA distribution) from her individual retirement account ., The Hartford Life . Insurance Co . (Hartford)repbrted that IRA distribution 'in Form 1099-R, Distributions From liPen sions,,'Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance ContractsP'etc . (Ms . Haigh's Form 1099-R), that i t issued to Ms . Haigh,for her taxable year 2004 .
During 2004, petitioner received Social Security benefits totaling $18,986 .201', from the Social Security Administration I(SSA) . The SSA reported that total amount of benefits in Form :SSA-1099, Social Security Benefit Statement (Form SSA-10199), that it issued to petitioner for .'his taxable year 2004 . Petitioner prepared his personal and business tax returns . "
including Form 1040, U .S . Individual Income Tax Return, that he 5 -prepared for Ms . Haigh and himself and that the Haighs timely filed for their taxable year 2004 (2004 joint return) . Before petitioner prepared that return, Ms . Haigh gave him Ms . Haigh's Form 1099-R in which'Hartford reported he $13,977 .12 IRA distribution that she received during 2004 . When petitioner was preparing the 2004 joint return, he kne that Ms . Haigh had received the IRA distribution in 2004 before she was 59-1/2,years old and that that so-called early distribution was subject to an additional tax .
In the 2004 joint return, the Haig s"(1) included in income, inter alia, Ms . Haigh's $13,977 .12 IRA distribution, (2) showed total and taxable Social Security benefits of $18,437 and $2,788 .13, respectively, adjusted gross income of $54,972 .01, taxable income of $29,867 .61, and total tax of $3,766, an d (3) claimed total tax payments of $5,91 .40and a refund due of $2,144 .40 . In the 2004 joint return, t' e Haighs did~not repor t any additional tax imposed by section 7 ?(t) (10-percent additional tax) with respect to Ms . Haigh's IRA distribution . 3 On March 21, 2005, respondent issu d Notice CP-16 to the Haighs .4 In that notice, respondent in ormed the Haighs tha t 'Line 59 of the 2004 joint return is titled "Additional tax on IRAs, other qualified retirement plans, etc . "
'Internal Revenue Manual pt . 3 .14 . .6 .12 .6 and 3 .14 .1 .6 .12 .6 .5 (Jan . 1, 2009) provides that Notice CP-16 is used to notify a taxpayer who has filed a to return in which the .
(continued . . .) .
6 -they had incorrectly calculated the amount of taxable Social Security benefits shown in the 2004 joint return (petitioner's'' computational error) ; and that respondent had corrected that error . Respondent's correction of petitioner's computational error resulted in respective increases of (1) $12,883 in the adjusted gross . income, (2) $13,852 in the taxable income, and (3) $2,078 in the total tax that the Haighs showed in that return . . As a result of the adjustments in NoticeCP-16, respondent reduced the refund claimed in the 2004 joint return by . $2,078 . to $66 .40 and applied that refund to an outstanding tax liability for the taxable year 2003 . 5 On January 29, 2007, respondent issued Notice CP-2000 to the Haighs .6 In that notice, respondent proposed the following three adjustments to the Haighs' 2004 joint return : (1) a 10-percent additional tax of $1,398 with respect to the IRA distribution that Ms . Haigh received in 2004, (2) an increase of $549,t o 4 ( . . . continued) i . 1 , taxpayer claimed a refund that (1) the taxpayer made one or more mathematical . errors, in that return, (2) the Commissioner ;,of Internal Revenue (Commissioner) corrected those mathematical errors and (3) the}Commissioner applied any corrected-refund amount to offset other liabilities of the taxpayer .
petitioner's total Social Security bene its,' and (3) an increase of $467 to petitioner's taxable Social ecurity benefits . ' At no time before February 25, 200 Haigh divorced or legally separated . 0 petitioner and Ms . Haigh began living a were petitioner and Ms .
February 24, 2007 , art . On or about Marc h 6, 2007, Ms . Haigh initiated a proceeding for divorce in the Iowa District Court, Woodbury County . That roceeding was still pending at the time of the trial in this case .
On February 24, 2007, petitioner sent a letter to respondent
.(petitioner's February 24, 2007 letter) to which he attached completed Form 12507, Innocent Spouse Statement (petitioner's Form 12507) . In petitioner's Form 12507, petitioner indicated that when he was preparing the 2004 joi t return Ms . Haigh showed him a document indicating that she had aid a penalty on her IRA distribution . . In that form, petitioner also indicated that when he questioned Ms . Haigh about that document she "refused t o On May 22, 2007, Ms . Haigh sent to respondent completed Form . 12508, Questionnaire for Non-Requesting Spouse (Ms . Haigh's Form 12508) . In that form, Ms . Haigh indicated that petitioner had prepared the 2004 joint return and that she gave him her "W-2s and other documentation" before petitio er prepared that return . Ms . Haigh also indicated in Ms . Haigh's Form 12508 that "H e [petitioner] asked about the withdrawal [the IRA distribution] . I gave him , 'the statement from the bank . I told him I paid a penalty but did not know for sure about a tax consequence . " Respondent assigned an examiner (respondent's examiner) to review petitioner's request for relief tinder section 6015 . After . reviewing that request, respondent's ex miner-prepared a workpaper dated June 8, 2007 (examiner' workpaper) . The examiner's workpaper stated, inter alia : "Rs [requesting spouse, here petitioner] had actual knowledge o the income [the IRA distribution], he prepared the return, ailed his duty of inquiry, no hardship or abuse, equitable to hold liable" . Respondent's examiner denied petit loner's request for relief under section 6015(b) and (c) . The exa iner' .s workpaper stated, inter alia :
1O( . .
.continued)
issued on Jan . 29, 2007 .
Taxpayers are currently divorced, widowed, legally separated, or they lived apart prior to the clai m Solely attributable to the NRS [nonrequesting spouse] Erroneous items : . 10% penalty on early pensio n withdrawal * RS had full actual knowledg e Explanation : income was reported on return, did not claim the 10% penalty on back of 1040, line 59 [Reproduced literally . ]
Respondent's examiner also denied petitioner's request for relief under section 6015(f) . The examiner's workpaper stated, inter alia :
Tier II factors :
Taxpayers are currently divorced, widowed, For legally separated, or they had been member s of separate households prior to the claim for at least 12 consecutive month s No economic hardship Against Explanation : rio info given, he rec's ove r $1,000 a month in SS [Social Security]
No marital abus e
No poor mental or physical health
No legal obligation establishe d
Knowledge :
Background :
RS .- . unknown NRS - unk n
Involvement :
RS - separate bank accounts NRS -Lifestyle changes : unknow n NRS's elusiveness : none, RS prepared the returns Duty to inquire : he prepared the return , he knew about the pension withdrawal, NRS wthd the income before they were married, but she gave the 1099 to RS, the income was' reported was no t Living arrangements : married 11-27-20 RS had knowledge or reason to know Explanation : income was reporte d on the return, did not claim line 59 o 104 0 No significant benefit gained Made a good faith effort to comply with the tax law s Explanation : has not filed 2006, but his only income is S S Unique circumstances : non e Not meeting Tier II factors-deny Tier II consideration : Based on equitable ble for t actual kn or abus e On June 19, 2007, respondent's Cin innocent spouse operation (CCISO) sen t (CCISO's June . 19, 2007 letter) . 11 In th petitioner that it had denied his claim 6015 .
On June 25, 2007, Ms . Haigh paid t a bond against the deficiency that resp 2004 notice and interest as provided by Around October 1, 2007, respondent appl against that deficiency and that intere claim , he above facts it i s to hold the RS liae balance . [H]a d wledge, no hardshi p innati centralize d petitioner Letter 3661 C t letter, CCISO notified for relief under sectio n respondent $1,726 .61 as ndent determined in the law as of that date .
ed that bond as a payment On July 6, 200 7 . , petitioner sent to respondent a letter (petitioner's July 6, 2007 protest) in which he protested the denial of .relief under section 6015 in CCISO's June 19, 2007 letter . In petitioner's July 6, 2007 protest, petitioner also asserted that the deficiency that respondent determined in the 2004 notice was wrong because respondent determined in that notice that during 2004 the Haighs received more gross income than they in fact received, which caused respondent's determination of petitioner's taxable Social Security benefits to be incorrect . In petitioner's July 6, 2007 protest, petitioner restated his request that respondent allow him to file an amended return for his taxable year 2004 in order to elect married filing separately status .
On January 15, 2008, respondent assigned an Appeals officer in respondent's Appeals Office (respondent's Appeals officer) to consider petitioner's July 6, 2007 protest . Respondent's Appeals officer sent three letters to petitioner, dated January 16 , Is January 17, and February 4, 2008, respectively . In the letter dated January 16, 2008, respondent's Appeals officer explained t o petitioner that respondent is not allowed under section 6015 to compute petitioner's tax liability for his taxable year 2004 as if his, filing status were married filing separately and that relief under that section requires respondent to allocate th e i deficiency determined in the 2004 notice based upon the items shown in the 200 .4 joint return . In the respective letters date d January 17 and February 4, 2008, respondent's Appeals office r , respondent's determina- explained to petitioner the propriety o tion in the 2004 notice that-petitioner' benefits are $16,138 .
On February 11, 2008, respondent's petitioner another letter (February 11, s taxable Social Securit y Appeals officer sent t o 2008 letter) . In tha t letter, respondent's Appeals officer ag4in explained the propriety of respondent's determination with taxable Social Security benefits . In t letter, respondent's Appeals officer al espect to petitioner's e February 11, 200 8 o informed petitioner :
I disagree with your request to sp it the case into two married filing separate cases . I isagree with allowing an [sic] innocent spouse reti e You made the decision to file join ly, I don't find you meet the criteria to qualify for i nocent spouse relief and the liability has been paid .
Let me know in one week if you wil . agree . If not, will forward your case for trial p eparation .
In an Appeals Transmittal and Case .
22, 2008 (February 22, 2008 transmittal Appeals officer prepared, respondent's Memo-INNSP dated February memo) that respondent's ppeals officer set fort h his conclusions with respect to the positions that petitioner took in petitioner's July 6, 2007 protest . With respect to petitioner's position that respondent e red in determining in the 2004 notice that petitioner's taxable S cial Security benefits are $16,138, respondent's Appeals officer concluded in the February 22, 2008 transmittal memo : .
.The petitioning . husband didn't agree to the computation of the taxable social security, which was computational and mostly taxed [sic] by mathematical error prose-, dures . * * * There should be no disagreement in this case, but the petitioner wasi~unwilling or unable to understand the computations of the taxable social security income, and still maintains that he should be [sic] a refund from the original return .
With respect to petitioner's position that he is entitled to a g relief under section 6015(b), respondent's Appeals officer concluded in the February 22, 2008 transmittal memo : E A~ In my examination of the facts of the case, I find a joint return [w]as fi led, the error on the return was not attributable to erroneous items of the other ;i spouse , the requesting spouse may not have known about the error but should have known of the error when the income was reported , I find it equitable to hold the requester liable , and the claim was timely filed from a the [sic] issued notice of deficiency .
With respect to petitioner's position that he is entitled to
.relief under section 6015(c), respondent's Appeals officer concluded in the February 22, 2008 transmittal memo : If the petitioning husband can meet his burden of proof that he is not :iequally liable, the portion of the liability attributable to the early withdrawal penalty could be shifted to his ex spouse . There is no need to . shift that .liability since the other spouse has paid in full .
lu With respect to petitioner's posi t relief under section 6015(f), responden concluded in the February 22, 2008 tran Under (f) there are factors that c mine if equitable relief exists .
a) There is no marital status can have relief .
b) Is there . no economic hards ers, even though questionable in bankruptcy ?
c) There are no indications o d) I believe the facts are cl the workpapers that the taxpa tance and did not know of the the deficiencies for the othe e) Neither spouse has the leg income tax liability of the o joint liability provisions .
f) The liability is attributa set out above .
In response the criteria under (f) , are not separated and working on a know if they have been separated 1 cent spouse relief . There is no h amount has been paid . Abuse is no .spouses should have been aware of no other final legal action to det spouse should pay the liability, b other spouse has already paid . If liability, the ; penalty portion cou the other spouse by computations , In summary , I don ' t find the petit cient criteria for innocent spouse is irrelevant since the tax has be literally .]
OPINION
Petitioner has the burden of esta b nations in the 2004 notice are wrong .
ip for the taxpaywith Jeff allegedl y abuse ., ar in the details of er kept their dis issues that created spouse .
1 obligation . to the her outside IR S I find the spouse divorce, so I don't ng enough for innordship and .th e an issue . Bot h he issues . There i s rmine if either t as stated, the we had to split th e d be attributable to ut it has been paid .
1!
16 -Helverina , . 290 U . S .j111 , 115 (1933) . Petitioner also bears the burden of proof with respect to the new issues that he is raising, including his claim under section 6015 . 12 See Rule 142(a) . Claimed Right To File an Amended Retur n It is petitioner ' s position that although Ms . Haigh and h e filed the 2004 joint return, he is entitled to file an amende d return for his taxable year 2004 in order to (1) change his married filing jointly status in the .2004 joint return to marrie d filing separately status, (2) correct erroneous determinations that respondent made in the 2004 notice, and (3) claim itemized deductions in excess of those claimed in the 2004 joint return . What petitioner apparently fails to understand is that we have jurisdiction to redetermine in a trial . de novo13 a deficiency for a taxable year properly before us . See secs . 6213(a) and 6214(a) ; O'Dwyer v . Commissioner , 266 F .2d 575, 580 (4th Cir . 1959), affg . 28 T .C . 698 (1957) . We may redetermine the correct amount of a deficiency for a taxable year properly before us even though the amount so redetermined is greater, or less, than the amount of the deficiency that the Commissioner determined fo r . , that year . See sec 6214(a) . , :In redetermining the correc t -~17 -,amount of a deficiency for a taxable year properly before us,'we may consider any issue that a party pro erly raises, including issues relating to the determinations i a notice of deficiency, alleged errors of the taxpayer in a tax return, filing status, and relief under section 6015 . See, e . c . :, Powerstein v . Commissioner , 99 T .C . 466, 472-473 (1992) ; Na tel v . Co mm issioner, 85 T .C . 527, 533 (1985) . We reject petitioner's position that he is entitled to file an amended return for is taxable year 2004 . Claimed Married Filing Separately Statu ~ It is petitioner's position that h is entitled to married filing separately status for his taxabl year 2004 .19 In support of that position, petitioner argues that the 2004 joint return is void because he signed that return unde duress .
Section 6013(a) permits a husband and wife to file jointly 'a single tax return (joint return)
. Wher spouses elect to -file a joint return for a taxable year, which petitioner and Ms . Haigh did for their taxable year 2004, they are required to compute their tax for the taxable year on the aggregate income of both spouses, and the liability for that tax is joint and several . See sec . 6013(d)(3) . Where spouses, li e petitioner and Ms . Haigh, filed a joint return with respec to a taxable year , "We have rejected petitioner's position that he is entitled to file an amended . return for his taxab e year 2004 in order, inter alia, to elect married filing sep rately status .
neither spouse may thereafter elect married filing separately status for that taxable year where, as is true here, the .time for filing the tax return of either spouse has expired . See . Ladde n v . Commissioner , 38 ;,T . C . 530, 534 (1962) ; sec . 1 .6013-1(a)(1) , Income-,Tax Regs . However, a joint return for a taxable year that is signed under duress is not a joint return for that year for purposes of sectionyk60,13, and the spouse who signed the joint return under duress will not be held jointly and severally liabl e for any deficiency in tax that the . Commissioner determines . See Stanley v . Commissioner , `81 , T .C . 634, 637-638,(1983) ; see . E 1 .6013-4(d), Income Tax Regs .
In order to prove that a taxpayer signed a joint return under duress, the taxpayer must show (1) that the taxpayer was unable to resist the demands of the taxpayer's spouse to,sign the joint return and (2), thatothe taxpayer would not have signed the joint return absent the constraint that the taxpayer's spouse applied to the taxpayer's will . Stanley v . Commissioner , supra at 638 . The determination of whether the taxpayer signed a joint . return under duress ;is dependent on the facts and is measured b y a wholly .subjectivestandard . Id .
We have found that petitioner prepared, and timely file d with Ms . Haigh, the :2004 joint return . On the record before us , we find that petitioner has . failed to carry his burden of establishing that Ms . Haigh demanded that he sign that return ; let 19 -alone that'she made demands that he was unable to resist . that record, we find that petitioner ha, failed to carry his burden of establishing that he signed the 2004 joint return under duress .'5 In further support of his position that he is entitled-for his taxable year 2004 to married filing separately status, . petitioner argues that the 2004 joint return is void by operation of the law of the State of Iowa .(Iowa law) and that respondent violated the 10th Amendment (10thAmendment) to the United States Constitution (Constitution) when respon ent refused to allow petitioner to file an amended return fo his taxable year 2004 in order to elect married filing separatel status . As we understand petitioner's argument, (1) Iowa 1 w required him to sign all documents . needed in order to enforc the prenuptial agreement, Iowa Code Ann . sec . 596 .4 (West 2C01) ; (2) he signed the 2004 joint return in accordance with that law and the terms o f the prenuptial agreement ; (3) Ms . Haigh . violated Iowa law and breached the prenuptial agreement when he refused to sign certain documents relating to the Haigh ' taxable year 2004 ;
(4) because of that breach the provision of the prenuptia l 20 -agreement requiring ,petitioner and Ms . Haigh to .file a joint tax return was made inoperable by Iowa law and therefore the 2004, joint return is void ; and (5) respondent's refusal to allow him to file an amended tax return for his taxable year 2004 in orde r to elect married filing separately status fails to give effect to the Iowa law that petitioner, asserts rendered the 2004 join t "return ; void .
The 10th Amendment to the Constitution provides : "Th e powers"not delegated to the United States by the Constitution, nor prohibited by it to the 'States, are reserved to the States respectively, or to'~the people ." Assuming arguendo that petitioner's assertiohsi'with respect to the meaning and effect of Iowa law were correct, we conclude that respondent's . actions did not violate the 10th Amendment to the Constitution . the record before us, we find that petitioner has faile d to carry his burden .of establishing that he is entitled for .his taxable year 2004 to married filing separately status . Claimed Itemized Deductions .
It is petitioner's . position that he is entitled for his taxable year 2004 to certain . itemized deductions in excess of those that the Haighs claimed in the 2004 joint return . Before . II considering whether'Ilpetitioner is entitled to any such additiona l itemized deductions' ; we address petitioner's claim that respondent violated his right to due process under the 14th Amendment (Due Process Clause) to the Constitutior when respondent refused to .allow him to file an amended rEturn for his taxable year 2004 .
The Due Process Clause applies to the actions of State governments . Respondent is an officer f the Federal Government and is therefore not subject to that amendment . Respondent is subject to the Fifth Amendment to the Constitution (Fifth Amendment) . That amendment provides in pertinent part : "No person shall be * * * deprived of life, libert , or property, withou t due .process of law" . We shall construe the Due Process Clause as a claim unde r In support of his argument under i t petitioner asserts : (1) 'Respondent mad in the 2004 notice by determining that received more gross income than they i n (2) because of an oversight the Haigh s joint return all of the itemized deduct entitled (Haighs' additional itemized d attempted to file Form 1040X, Amended U Return, jointly with Ms . Haigh for the in order to correct respondent's errone 2004 notice and the Haighs' error in n o additional itemized deductions, but M that form ; and (4) respondent's refusal petitioner's claim under the Fifth Amendment .
e Fifth Amendment , erroneous determinations uring 2004 the Haighs fact received ;
d not claim in the 200 4 ons to which they are ductions) ; (3)' . petitioner S . Individual Income Tax aighs' taxable year 2004 us determinations in th e claiming the Haighs' Haigh refused to sign to allow him-to file an 22 -amended . return for his taxable year-2004 in order to correct the Haighs' failure to claim the Haighs' additional itemizedideductions and respondent's erroneous determinations in the 200 4 notice :prevents him'jfrom "defending himself from unjust point an d severa l claims" .
We have rejected Petitioner's ,claim that he is entitled t o file an i that respondent did'not-violate petitioner's rights under th e Fifth ; Amendment .
We turn now to whether petitioner is entitled for hi s taxable year 2004 t' certain itemized deductions in excess of, those that . the Haighs claimed in the 2004 joint return . ."'[Petiioner' presented no,j~evidence in support of hi s is entitled to any before , us, we find such additional deductions .
that petitioner position that he On the recor d has failed to carr y of establishing that he isentitled for his taxable certain itemized deductions in excess of those tha t claimed in the 2004] joint return .
Claimed Errors in the 2004 Notic e
The parties stipulated :
his burde n year1j2004 to the Haigh s "Petitioner and respondent !
;, ;agre e that the proposed adjustments in tax liability included in the notice of deficiency are correct .", Petitioner also testifie d that those determinations are correct . Petitioner claims, .that there are errors in the 2004 notice . it amended retu'rnl,for his taxable year 2004 . We conclud e nonetheless 23 -We turn first to respondent's deter notice that during 2004 petitioner recei Social Security benefits . of $18,986 and We have found, and petitioner admits, t the 2004 joint return total Social Secu $18,437 . We have found, and petitioner $18,986 .20 in total Social Security ben SSA in Form SSA-1099 that .it issued to year 2004 .' On the record before us, we determination that during 2004 petition total Social Security benefits .
The portion'of a taxpayer's tota l that is taxable is determined under minations in the 2004 ved total and taxable $16,138, respectively .
at the Haighs reported i n ity benefits of only admits, that he received fits as reported by the etitioner for his taxable sustain respondent' s r received $18,986 16 o f ocial Security benefit s section 86 . On the recor d before us, we find that petitioner ha s of showing error in respondent's deter m that $16,138 of the $18,986 of the tota that he received during 2004 is taxable On that record, we sustain that determ i We turn next to respondent's deter ailed to carry his burden nation in the 2004 notic e Social Security benefits Social Security benefits .
ation .
ination in the 200 4 notice to impose the additional tax and r,section 72(t) with respect to Ms . Haigh's IRA distribution Section 72(t)(1) provides :
- 2 .4 -SEC . 72 . ANNUITIES ; CERTAIN PROCEEDS OF ENDOWMENT AND LIFE INSURANCE CONTRACTS .
(t) 10-Percent Additional Tax on Early Distributions from Qualified Retirement Plans .--(1) Imposition of additional-tax .--If any, taxpayer receives any amount from a qualified retirement plan (as defined in section 4974(c)), the taxpayer's tax under . this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includible in gross income .
Section 72(t)(2) provides certain exceptions to the 10percent additional tax imposed by section 72(t)(1) . Petitioner admits that Ms . Haigh's IRA distribution is subject to the 10percent additional tax under section 72(t) . Petitioner also admits that the Haighs were required to report that additional tax in the 2004 joint return . On the record before us, we sustain respondent's determination to impose the 10-percent additional tax under section 72(t) with respect to Ms . Haigh' s , I ' IRA distribution .
Claimed Relief Under Section 601 5
It is petitioner's position that he is entitled to relie f under section 6015 for the portion of the deficiency that respondent determined in the 2004 notice that is attributable to th e it 10-percent additional tax with respect to Ms . Haigh's IRA distribution . Before considering that position, we shall address tw o constitutional claims that petitioner raises .11
As we understand it, petitioner cla' ims that responden t violated (1) his right to confront witnesses under the ConfrontaI tion Clause of the Sixth Amendment to t .e Constitution (Confrontation Clause) and (2) the Due'Process ause .17 In support o f those claims, petitioner argues : (1) Respondent was required , but failed, to provide him with a copy df Ms . Haigh's Form 12508 ; . (2) respondent was required, but failed, to allow him to respond to the information contained in Ms . Hai h's Form 12508 ;'an d (3) respondent failed to produce Ms . Haigh as a witness at the trial in this case, thereby denying him the opportunity to confront and cross-examine her .
With respect to petitioner's claim under the Confrontation
Clause, that clause provides in pertinent part : "In all criminal prosecutions, the accused shall enjoy the right * * * to be confronted with the witnesses against him" . The Confrontation Clause applies only to criminal prosecutions .- See United States v . Ray , 530 F .3d 666, 668 (8th Cir, . 200E) . This case is not a criminal prosecution . We conclude that respondent did not violate any rights of petitioner under he Confrontation Clause .
"For the reasons stated above, we hall treat petitioner's claim under the Due Process Clause as a claim under the Fifth Amendment . -26 .-With respect to petitioner's claim under the Fifth Amendment,18 .that claim, inter alia, rests upon erroneous factua l premises . Petitioner's claim under the Fifth Amendment assume s that . respondent had!obligations .to (1) provide him with th e information that Ms!! Haigh sent to respondent and (2) .call Ms . Haigh as a witness : ;-at the trial in this case . Section 160156(a)(1), Income Taxj :Regs ., provides in pertinent part : 'Upon th e request of either spouse, the Internal Revenue Service will share with one spouse the ;j :information submitted by the other spouse" . Petitioner could have requested a copy of Ms . Haigh's Form 12508 . He did not . Petitioner also could have subpoenaed Ms . Haigh as . a witness at the trial in this case . . See Rule 147 . He did not . conclude that respondent did .not violate petitioner's rights under the Fifth Amendment . "
We turn now to"petitioner's position that he is entitled t o relief ; under section 6015(b), (c), or (f) with respect to the portion of the deficiency attributable to the 10-percent additional tax imposed with respect to Ms . Haigh's IRA distribution .
Section 6015(b) provides in pertinent part :
SEC . 6015 . RELIEF FROM JOINT AND
JOINT RETURN .
(b) Procedures For Relief Fronj ble to All Joint Filers .--(1) In general .--Under pr by the Secretary, if--(A) a joint return hl taxable year ;
(B) on such return statement of tax attribu items of 1 individual fi turn ;
(C) the other indiv' joint return establishes return he or she did not reason-to know, that the statement ;
(D) taking into acc and circumstances, it is the other individual lia ciency in tax for such t able to such understatem EVERAL LIABILITY ON Liability Applicaocedures prescribed as been made for a here is an underable to erroneous ing the joint redual filing the that in signing the know, and had n o e was such underunt all the facts inequitable to hold he for the defixable year attributnt ; an d (E) the other indivdual elects (in such form as the Secretary may prescribe) the benefits of this subsection not later than the date which is 2 year after the date the Secretary has begun coll ction activities with respect to the individual making th e election , then the other individual sha 1 be relieved of liability for tax (including interest, penalties, and other amounts) for such taxable year to the extent such liability is attributable to suc h understatement .
- 2 8 Section 6015(b)(3) provides : "For purposes of this subsec tion, the term `understatement' has the meaning given to such term by section 6662(d) (2) (A) ." Section 6662(d) (2) (A) provides : SEC . 6662 . IMPOSITION OF ACCURACY-RELATED PENALTY ON UNDERPAYMENTS .
(d) Substantial Understatment of Income Tax .--(2) Understatement .--(A) In general .--For purposes of paragraph (1), the term "understatment" means the excess of--(i) the amount of the tax required to be shown on the return for the tax-.,able year, ove r (ii) the amount of'the tax imposed .which is shown on the return, reduced by any rebate (within the meaning of section 6211(b)(2)) . Section 6015(b)(1) is similar to former sectio n 6013(e)(1) .20 We may look at cases interpreting sectio n 6013(e)(1) for guidance when analyzing parallel provisions of I section 6015 . See Jonson v . Co mm issioner , 118 T .C . 106, 11 9 (2002), affd . 353 F .3d 1181 (10th Cir . 2003) . The failure by a l i spouse requesting relief (requesting spouse) under sectio n 6015(b) to satisfy any of the requirements of that sectio n I r prevents that spouse from qualifying fo :
Commissioner , 119 T .C . 306, 313 (2002), (6th Cir . 2004) .
We shall address only whether petit ments of section 6015(b)(1)(C) . That i of that question resolves the question entitled to relief under section 6015(b)
the deficiency attributable to the 10-p imposed with respect to Ms . Haigh's IR A In section ing the support of his position that he 6015(b)(1)(C), petitioner argue such relief . Alt v . :
affd . 101 Fed . Appx . 3 4 ioner meets the requirebecause our resolution f whether petitioner i s regarding the portion of rcent additional tax distribution .
meets the requirements o f that when he was preparthat Ms . Haigh ha d 2004 joint return he did not kn w failed to pay the 10-percent additional tax with respect to th e IRA distribution that she received in 2004 . What petitioner may, or may not, have known regarding whethe~ Ms, . Haigh paid that additional tax is not material to our d termining whether petitioner knew or had reason to know of th understatment of tax shown in the 2004 joint return . See sec . 6015(b)(1)(C) . The Haighs were required to report the 10-p rcent additional tax in the 2004 joint return, regardless of wh ther Ms . Haigh had already paid it . We have found : (1) P titioner prepared the 2004 joint return ; (2) in that return t le Haighs included in income Ms . Haigh's $13,977 .12 IRA distr bution ; (3) when peti-- 3 0 tioner was preparing that return he -knew (a) that Ms . Haigh received the IRA distribution in 2004 before she was 59-1/2 years old and (b) that that distribution was subject to the 10-percent additional tax ; and . ; ;(4) the Haighs=did not report in the 200 4 joint return the l0percent additional tax with respect to Ms . Haigh's IRA distribution .
On the record before us, we find that petitioner had actua l knowledge of the understatement of tax attributable to the 10percent additional tax with respect to : Ms . Haigh's IRA distribution . On that record, we .-further'find that petitioner has failed to carry his burdenjof establishing that he satisfies sectio n 6015 (b) (1) (C) .
On the record before us, we find that petitioner has failed to carry his burden of establishing that he is entitled to relief under . section 6015(b) for . his taxable year 2004 . Section 6015(c )
Section 6015(c) provides in pertinent part :
SEC . 6015 . RELIEF FROM . JOINT AND SEVERAL LIABILITY ON
JOINT RETURN .
b (c) Procedures To Limit Liability for Taxpayers No Longer Marriedllor Taxpayers Legally Separated or Not Living Together .--(1) In general .--Except as provided in this subsection, if an individual who has made a joint return for any taxable year elects the application of this subsection ; the individual's liability for any deficiency which is assessed with respect to the return shall not exceed t deficiency properly allocable under subsection (d) .
* (3) Election .--(i) In general .-only be eligible to tion of .this subse c (I) at the t filed, such ind married to, or from, the indiv individual file which the elec t .(II) such i n member of the s individual with turn was filed the 12-month pe date such elec t ments of section 6015(c)(3)(A) . That of that question resolves the questio n entitled to relief under section 6015(c the deficiency attributable to the 10-p respect to Ms . Haigh's IRA distributio n We have found : (1) On February 24 respondent petitioner's February 24, 20 attached petitioner's Form 12507 ;'(2) r -An individual shall elect the applicaion if--me such election i s vidual is no longer s legally separated dual with whom suc h the joint return to on relates ; o r ividual was not a me household as the whom such joint ret any time during iod ending on the on is filed .
ioner meets the requirebecause our resolution whether petitioner i s regarding the portion of rcent additional tax with2007, petitioner sent to 7 letter to which he spondent treated the receipt . of that letter and that - ~~ 3 2 Form 12507 as the filing!1b y petitioner of Form 885 .7 , began an Request for Innocent Spouse Relief, an d investigation to determin e relief under section 6015 ; (3) at no whether he was eligible fo r time before February 25 , or legally ' epa- 2007, were petitioner and, Ms . Haigh divorce d rated, and (4) on Februaryg`24 , 2007, petitioner and Ms . Haigh began to live apart, see sec . 6015(c) (3) (A) (i) (I I )4 . On the record before us, we find tha t petitioner does notll satisfy section 6015 ( c)(3)(A) . I E see sec . 6015 (c) (3) (A) (i) (I) ;
the record .before us,,we find that petitioner islorno t entitled to relief under section 6015(c) for his taxable' :Eyea r 2004 .
Section 6015(f) provides :
SEC . 6015 . REZ~IE"F FROM JOINT AND SEVERAL LIABILITY IO N
JOINT RETURN .
(f) Equitable Relief .--Under .procedures prescribe d by the Secretary, 1 .f--(1) taking into account all the facts and circumstances, it is inequitable to hold the individual .liable for any unpaid tax or any deficienc y o t f i h ( r any p r on o e t er) ; an d (2) relief is not available to such individual under subsection (b) or (c), ! . t the Secretary may relieve such individual of suc h liability . , As directed bylsection 6015(f), the Commissioner ha's prescribed procedures in Rev . Proc . 2003-61, 2003-2 C .B . 296 (Reve-nue Procedure-2003-61) that are to be used in determining whethe r it would be inequitable to find the re q part or all of the deficiency in questic dure lists seven threshold conditions (t which must be satisfied before the Comm :
request for relief under section 6015(f)
sec . 4 .01, 2003-2 C .B . at 297 . RespondE conditions are satisfied .in'the instan t Where, as here, the requesting spot old conditions, Revenue Procedure 2003-E ing factors that are to be considered it spouse is entitled to relief under sect :
the requesting spouse is separated or d nonrequesting spouse (marital status fa( requesting spouse would suffer economic .
relief (economic hardship factor) ; (3) .c spouse knew or had reason to know of the deficiency (knowledge factor) ; (4) whet]
spouse has a legal obligation to pay the ity pursuant to a divorce decree or agr( factor) ; (5) whether the requesting spot benefit from the item giving rise to th, benefit factor) ; (6) whether the reques good faith effort to comply with tax la, esting spouse liable for n . That revenue procehreshold conditions )
ssioner will consider a Rev .-Pros . 2003-61, nt concedes that those case .
se satisfies,the thresh1 sets forth the followdetermining whether tha t on 6015(f) : (1) Whether vorced from th e tor) ; (2) whether the hardship if riot granted fhether the requestin g item giving rise to the er the nonrequesting outstanding tax liabil-:ement (legal obligation zse received a significant deficiency (significant ing spouse has made a s for the 'taxable years following the taxable year . to which the request for such . ;, relief 'relates (compliance factor) . See Rev . Proc . 2003-61, sec . 4 .03(2)(a), 2003-2 C .B . at 298 .
Other . factors that may be considered under Revenue Procedure 2003-61 are (1) whether the nonrequesting spouse abused the requesting spouse (abuse factor) and (2) whether the requesting spouse was in .poor mental or physical health (mental or physical health factor) at the time he or she signed the tax return !(return) or at the time he or she requested-relief . Rev . Proc . 2003-61, sec . 4 .03(2)(b), 2003-2 C .B . at 299 . Where (1) .the nonrequesting spouse abused the requesting spouse or (2) the requesting spouse was in poor mental or physical health at the time he or she signed the .return or at the time he or she requested relief, the abuse factor or the mental or physical health factor, as the case may be, will be taken into account . Id . However, where (1) the nonrequesting spouse did not abuse the requesting spouse or (2) the requesting spouse was not in poor mental or physical health at the time he or she signed the return or at the time he or she requested relief, the abuse factor or the mental or physical health factor, as the case may be will not be taken into account . Id .
d i In making our determination under section 6015(f), we shall consider the factors set forth in Revenue Procedure 2003 ; ;61 and . any other relevant factors . No single factor is to be determina-35 -tive in any particular case , and all fa and weighed appropriately .
With respect to the marital status that on February 24, 2007, petitioner a apart .21 On the record before us, we f Ms . Haigh were separated at the time p e under section 6015(f) .
With respect to the economic hard s
210n or about Mar . 6 , 2007, Ms . Hai for divorce in the Iowa District Court , record before us, we find that petitioner has failed to carry his burden of establishing the amount of his basic living expenses . On that record, we also find .that petitioner has failed to carry his burden of establishing that he would be unable to pay his basic living expenses if he were required to pay the portion of the deficiency determined in the 2004 notice that is attributable to the 10-percent additional tax with respect to Ms . Haigh's IRA I distribution .23 On the record before us, we find that petitioner has failed to carry his burden of establishing that he would suffer economic hardship if not granted . relief under sectio n 6015 (f )
22( . . .continued)
professional organization, or child care payments which allow the taxpayer to be gainfully employed) ;
(C) The cost of living in the geographic area in which the taxpayer resides . ;
(D) The amount of property exempt from levyil, which is available to pay the taxpayer' s expenses ; (E) Any extraordinary circumstances such as special education expenses , a medical catastrophe, or natural disaster ; an d (F) Any other factor that the taxpayer claims bears on economic hardship and brings to the attention of the director .
With respect to the knowledge fact r, we have found : (1) Petitioner prepared the 2004 joint eturn ; (2) in that retur n the Haighs included in income Ms . Haigh's $13,977 .12 . . IRA distribution ; (3) when he was preparing the 2 04 joint'return petitioner knew (a) that Ms . Haigh received the IRA distribution i n 2004 before she 'was age 59-1/2 years of and (b) that that distribution was subject to the 10-percent additional tax ; and (4) the Haighs did not report in the 20C14 joint return the 10percent additional tax with respect to Is . Haigh's IRA distribution . On the record before us, we find that petitioner ha d actual knowledge (1) that the IRA distr bution that Ms . Haigh . ! ears old was includibl e in income and (2) that that distributioi was subject-to the 10percent . additional tax . With respect to the legal obligati before us, we find that petitioner has of establishing that there is any'agre e Ms . Haigh has a legal obligation to-pay liability that she and petitioner incu r With respect to the significant be does not dispute that petitioner did no normal support from Ms . Haigh's IRA dis ailed to carry his burden ent that provides tha t any outstanding tax ed while married .
efit factor, responden t receive a benefit beyond ribution . Normal suppor t is not a significant benefit . Flynn v .ICommissioner 93 T .C . 355, 367 ( 1989) .
With respect to the compliance factor, respondent does not dispute that petitioner has made a good faith effort to comply with the tax laws for taxable years after 2004 .
With respect to the abuse factor, we have found : (1) In
1984 petitioner .was, ;involved in an automobile accident and suffered a broken neck ; (2) beginning around 2000 he became a patient at a pain clinic to which he was referred by certain staff at the Mayo Clinic ; and (3) he takes certain prescription medications in order to alleviate the pain associated with the neck injury that he suffered in 1984 . Petitioner testified that, because of the pain medications . that he takes, stressful situations can be disorienting and difficult for him . Petitioner asserts that Ms . Haigh abused him by intentionally creating stressful situations that could cause him to become disoriented . On the record before us, we find that petitioner has failed . t o carry his burden : of ; establishing that Ms . Haigh abused him . With respect to the mental or physical health factor, a s discussed above, we,Ghave found : (1) In 1984 petitioner wa s involved in an automobile accident and suffered a broken neck ; + , (2) beginning around 2000 he became a patient at a . pain clinic to hich he was referred by certain staff at the Mayo Clinic ;,an d (3) heltakes certain prescription medications in order tp alleviate the pain associated with the neck injury that he suffered i n 1984 . On the record before us, we find that petitioner had 39 -health issues at the time he signed the the time he requested relief under sect .' 2004 joint return'and a t on 6015 . However, w e have also found : (1) Petitioner prepared the .2004 joint return ; and (2) when he was preparing that return he knew (a) that the IRA distribution that Ms . Haigh receive in 2004 before she was 59-1/2 years old was includible in inco e and (b) that that distribution was subject to the 10-perc nt additional tax . On the record before us, we find that petitioner has failed to carry his . burden of establishing that his health issues impeded his ability to meet his tax obligations whe he filed the 2004 joint return and when he requested relief and r section 6015(f) .2 4 With respect to any other factors that are relevant to our determination of whether petitioner is entitled to relief under section 6015(f), we have found : (1) On June 25, 2007, Ms . Haigh paid to respondent $1,726 .61 as a bond against the deficiency that respondent determined in the 2004 notice and interest as provided by law as of that date ; and (2) around October 1, 2007, respondent applied that bond as a payme t against that deficiency and that interest .
Based upon our examination of the ntire record .before us, we find that petitioner has failed to carry his burden of establishing that it would be inequitable to hold him liable for the portion of the deficiency determined in the 2004 notice that i s 40 -attributable to theiJ10-percent additional tax with respect to Ms . Haigh's IRA distribution .
On the record before us, we find that petitioner has failed to carry his burden~of establishing that he is entitled to relie f under section 6015(f) .
We have considered all of,the contentions and arguments of the parties that are not discussed herein, and we find them to be ithout merit, irrelevant, and/or moot .25 To reflect the foregoing, Decision will be entere d for respondent .