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On a joint Federal income tax return for 2000, petitioner
and Ms. Peet reported a tax due of $19,869. The tax was not paid
at the time the return was filed. Despite their recent divorce,
petitioner and Ms. Peet decided to file an income tax return
jointly for taxable year 2001. On the joint return for 2001,
they reported a tax due of $5,850. This tax was also not paid at
the time the return was filed.
Petitioner filed a Form 8857, Request for Innocent Spouse
Relief, on June 5, 2002, requesting relief from joint and several
liability for the tax associated with income earned by Ms. Peet
during the years at issue, 2000 and 2001. Petitioner alleges
that Ms. Peet handled their financial affairs, prepared the 2000
tax return, and stole the money that he had set aside to pay the
tax liability for that year.2 Petitioner entered into an
installment agreement to pay the tax liability for 2000 as soon
as he learned from respondent sometime in June 2001 that Ms. Peet
had not, as she had represented to petitioner, paid the liability
in full. Petitioner further alleges that the terms of the
divorce decree and Ms. Peet’s theft rendered him unable to pay
2Petitioner received $39,826 from the sale of stock in 2000,
and he deposited the proceeds of the sale into a money market
account. In the weeks prior to the filing of the joint income
tax return for 2000, Ms. Peet transferred all of the money in the
aforementioned account and an unspecified sum from the couple’s
joint checking account to a private account in her name. She
told petitioner that the money missing from these accounts had
been used to satisfy, among other things, the tax liability for
2000.
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