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1. Requesting Spouse’s Legal Obligation Factor
Petitioner and Levy’s marital settlement agreement placed
the legal obligation to pay the unpaid 1991 through 1999 tax
liabilities exclusively on Levy. Respondent notes, however, that
Rev. Proc. 2000-15, sec. 4.03(1)(3), 2000-1 C.B. at 449, provides
that this will not be a factor weighing in favor of relief if
petitioner knew or had reason to know, at the time the divorce
agreement was entered, that Levy would not pay the tax
liabilities. Respondent argues:
During June of 2001, respondent levied real estate
commissions the petitioner earned. * * *
The petitioner filed her request for innocent
spouse relief on June 11, 2001. * * *
Approximately ten months later, on April 12, 2002,
petitioner entered into a Marital Settlement Agreement
with [Levy]. * * *
It would be incredible for the petitioner to argue
that she had no reason to know that [Levy] would not
honor the terms of the Marital Settlement Agreement
considering [Levy’s] history of noncompliance with the
requirements of Federal tax law. Moreover, the fact
that petitioner continued to pursue I.R.C. sec. 6015
relief even after the Marital Settlement Agreement
obligated [Levy] to pay the delinquent taxes supports a
finding that petitioner knew [Levy] would not honor the
terms of that agreement. Indeed, any doubts the
petitioner may have had about [Levy] complying with the
terms of the Marital Settlement Agreement were resolved
by August, 2002, at which time [Levy] filed for
bankruptcy.
We reject respondent’s argument that petitioner knew or had
reason to know that Levy would not pay the 1991 through 1999 tax
liabilities at the time they entered their marital settlement
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