Tax Ct. did not abuse its discretion in denying petitioner-taxpayer’s request for equitable relief under 26 USC section 6015(c) as “innocent spouse,” where IRS had assessed tax deficiencies and accuracy related-penalties based on 2011 tax return that did not reflect inclusion of funds that had been embezzled by petitioner’s spouse, and where petitioner at time of his submission of 2011 tax return had been aware of spouse’s arrest and conviction for said embezzlement, as well as restitution order. Fact that Tax Ct. had found that six other factors under tax regulation relevant to innocent spouse determination were either favorable or neutral to petitioner did not require different result, since nothing precludes Tax Ct. from assigning more weight to petitioner’s knowledge of embezzled funds than other factors, if such conclusion is supported by totality of facts. Ct. acknowledged that it might have decided case differently had it been charged with making innocent spouse determination in first instance.
Federal 7th Circuit Court
Civil Court
Income Tax