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(b) 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.
* * *
(c) The requesting spouse will suffer economic
hardship if the Service does not grant relief. * * *
Petitioner and Mr. Parker were separated at the time
petitioner filed her request for relief. The parties dispute
only whether petitioner had knowledge or reason to know that Mr.
Parker would not pay the reported tax liability and whether
petitioner would suffer economic hardship if relief were not
granted.
2. Knowledge or reason to know
This element is satisfied if the requesting spouse did not
know or have reason to know when she signed the return that the
taxes would not be paid. Rev. Proc. 2003-61, sec. 4.02(1)(b).
Accordingly, petitioner must establish that it was reasonable for
her to believe that Mr. Parker would pay the reported liability.
Petitioner was aware of the reported tax liability when she
signed the return. Petitioner also admitted that at the time she
signed the return she did not know whether Mr. Parker would pay
the outstanding balance and that no funds were available at that
time to pay the liability. Petitioner was aware that Mr. Parker
intended to file a petition in bankruptcy.
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Last modified: November 10, 2007