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the Appeals Office’s failure to grant such relief would not
“create” economic hardship, since economic “hardship already
exists and will continue to exist whether or not relief is
granted to Mrs. Beatty.” We reject as unfounded the rationale
stated by the Appeals Office for its conclusion that the economic
hardship factor weighed against granting petitioner relief under
section 6015(f). The Appeals Office implicitly acknowledged in
the notice of determination that payment of the unpaid liabili-
ties for the years at issue would cause even greater economic
hardship than already existed.7 We find that the economic hard-
ship factor weighs in favor of granting petitioner relief under
section 6015(f).
With respect to the knowledge or reason to know factor set
forth in section 4.03(2)(a)(iii) of Revenue Procedure 2003-61,
petitioner argues that she did not know and had no reason to know
that Mr. Beatty would not pay the tax shown due in each of the
respective joint returns for the years at issue and that there-
fore that factor weighs in favor of granting her relief under
7Additional facts not presented to the Appeals Office but
presented to the Court further support what the Appeals Office
implicitly acknowledged. For example, on Dec. 29, 2004,
petitioner and Mr. Beatty refinanced the mortgage loan on the
house in which they resided. On or about Jan. 4, 2005,
petitioner and Mr. Beatty used $151,423.56 of the funds that they
received from that refinancing to pay their unpaid liabilities
for 1998 and 1999. After the refinancing of the mortgage loan on
their house, petitioner and Mr. Beatty had no equity in that
house and were required to make a monthly mortgage payment of
$3,400 on that refinanced loan.
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