- 10 -
(1) Knew or had reason to know at the time that she signed the
return that the liability reported on the joint return for 1995
would not be paid; and (2) has not demonstrated that she will
suffer economic hardship if relief is not granted.
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.
sec. 4.02(1)(b). Accordingly, we must consider whether, “taking
into account all the facts and circumstances”, petitioner knew or
had reason to know that her former spouse would not pay the taxes
on his self-employment income shown as due on the tax return for
the taxable year in issue. See sec. 6015(f)(1).
Petitioner contends that she had no knowledge that the
unpaid 1995 joint tax liability would not be paid by her former
spouse. Petitioner did know that there was income tax due for
the taxable year in issue when she signed the tax return.
However, petitioner testified that her former spouse had a
pattern of “filing late, paying late, but having payment
agreements with the IRS.” Petitioner further testified that when
she signed the 1995 joint return “there was no reason for me to
think otherwise at that time that the [1995] taxes would not be
paid in a similar fashion, that we would get an installment
agreement and that that would be how those taxes would be paid.”
Having observed petitioner’s demeanor at trial, we find her
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011