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section 4.02(1) of the revenue procedure provides that equitable
relief will ordinarily be granted if all of the following
elements are satisfied:
(a) At the time relief is requested, the
requesting spouse * * * has not been a member of the
same household as the nonrequesting spouse at any time
during the 12-month period ending on the date relief
was requested;
(b) At the time the return was signed, the
requesting spouse had no knowledge or reason to know
that the tax would not be paid. The requesting spouse
must establish that it was reasonable for the
requesting spouse to believe that the nonrequesting
spouse would pay the reported liability. * * *; and
(c) The requesting spouse will suffer economic
hardship if relief is not granted. For purposes of
this section, the determination of whether a requesting
spouse will suffer economic hardship will be made by
the Commissioner or the Commissioner’s delegate, and
will be based on rules similar to those provided in
section 301.6343-1(b)(4) of the Regulations on
Procedure and Administration. [Rev. Proc. 2000-15, sec.
4.02(1), 2000-1 C.B. at 448]
Respondent concedes that petitioner lived apart from
intervenor during the 12-month period preceding the date of her
request for equitable relief and that petitioner will suffer
economic hardship if relief is not granted.
A. Knowledge or Reason To Know
The relevant knowledge in the case of a reported but unpaid
liability is whether when the return was signed, the taxpayer
knew or had reason to know “that the tax would not be paid.” Id.
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Last modified: May 25, 2011