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This condition is not met. Mr. & Mrs. Beatty are not
divorced or separated. They lived together during the
years under consideration and are still living to-
gether. Mrs. Beatty filed delinquent returns with her
husband in November of 2001.
Payment of the tax liabilities would cause hardship
Economic hardship is defined as: the payment of the
tax would make it impossible to meet your basic living
expenses for housing, clothing, food, transportation
medical etc. Reasonable belief that tax would be paid.
Mr. Beatty is self-employed, yearly household income
fluctuates to some extent. Current expense information
was gathered from an interview as well as from a check
spread performed using 2000 bank records. Income
information was derived from tax returns filed for
2001. (The most recent return filed) Comparison of
monthly household income to monthly basic living ex-
penses indicates that the Beattys are having financial
difficulties. This is also evident from the bankrupt-
cies that have been filed. The question is not whether
hardship exists, but whether a hardship will be created
if innocent spouse relief is not granted. In this
case, hardship already exists and will continue to
exist whether or not relief is granted to Mrs. Beatty.
The two still live in the same household so even if
[she] is relieved, Mr. Beatty’s liability will impact
on the family’s ability to pay personal living ex-
penses. This condition is not met.
Attribution
Mrs. Beatty’s attorney states that having heard the
stern warning from the court that if returns were not
filed her husband would go to jail, Mrs. Beatty signed
whatever was placed in front of her. She contends that
this caused Mrs. Beatty to do something she wouldn’t
ordinarily have done. The liability is solely attrib-
utable to Mr. Beatty’s income and Mrs. Beatty did not
receive a significant benefit from the unpaid taxes
beyond that of minimal living expenses. The underpay-
ments of tax are attributed to Mr. Beatty. The tax-
payer alone did not have sufficient income to require
her to file a return. The tax liabilities rest solely
with Mr. Beatty for failure to file timely returns and
to pay his income tax annually.
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Last modified: November 10, 2007