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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
� 301.6343-1(b)(4) of the Regulations on Procedure and
Administration [the third element].
Respondent concedes that petitioner satisfied the first element
because Mr. George was deceased at the time petitioner requested
relief. The parties, however, dispute whether petitioner
satisfied the second and third elements.
The second element is satisfied if the requesting spouse did
not know or have reason to know when the requesting spouse signed
the returns that the taxes would not be paid. Accordingly,
petitioner must establish that it was reasonable for her to
believe that Mr. George would pay the reported liability.
Petitioner contends that she did not know or have reason to
know when she signed the returns in 2000 that the taxes would not
be paid because she believed that Mr. George had settled the tax
liability prior to his death. Petitioner further contends that
she believed that, even if Mr. George did not make the tax
payments as he had claimed, losses related to Mr. George’s
business venture of building and selling single-family homes
might have offset any taxable income. Because Mr. George’s
records were incomplete, petitioner contends that she had no way
of knowing the extent of any such losses.
Although petitioner signed the tax returns in 2000 with each
return showing an amount due, petitioner cites Wiest v.
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Last modified: May 25, 2011