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intent; and (7) absent enumerated exceptions, the liability from
which relief is sought is attributable to an item of the
nonrequesting spouse. Respondent here concedes that petitioner
meets these seven conditions.
Rev. Proc. 2003-61, sec. 4.02, 2003-2 C.B. at 298, then
gives three circumstances under which, if all are satisfied, the
IRS “ordinarily will grant relief” with respect to underpayments
on joint returns. The first of these elements requires that, on
the date of the request for relief, the requesting spouse be no
longer married to, be legally separated from, or not have been a
member of the same household as the nonrequesting spouse at any
time during the preceding 12-month period. Id. sec. 4.02(1)(a),
2003-2 C.B. at 298. The death of Dr. Banderas in November of
1999 preceded petitioner’s request by more than 12 months, and
this element therefore raises no barrier. The remaining two
elements, however, which address knowledge and economic hardship,
are at the crux of the instant controversy.
The second, or knowledge, element requires that:
On the date the requesting spouse signed the joint
return, the requesting spouse had no knowledge or
reason to know that the nonrequesting spouse would not
pay the income tax liability. The requesting spouse
must establish that it was reasonable for the
requesting spouse to believe that the nonrequesting
spouse would pay the reported income tax liability. If
a requesting spouse would otherwise qualify for relief
under this section, except for the fact that the
requesting spouse’s lack of knowledge or reason to know
relates only to a portion of the unpaid income tax
liability, then the requesting spouse may receive
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