- 9 -
The third criterion under section 4.02 of Rev. Proc. 2003-61
is that the requesting spouse will suffer economic hardship if
relief is not granted. Economic hardship for these purposes is
defined as the inability to pay reasonable basic living expenses
if the requesting spouse is held liable for the tax owed. See
sec. 301.6343-1(b)(4), Proced. & Admin. Regs. The ability to pay
reasonable basic living expenses is determined by considering the
following nonexclusive factors: The taxpayer’s age; employment
status; ability to earn; number of dependents; expenses for food,
clothing, housing, and transportation; and any extraordinary
circumstances. Id.
The Appeals officer assigned to petitioner’s case computed
petitioner’s gross monthly income and living expenses and
concluded that her income exceeded her expenses and that holding
her accountable for the tax owed would not result in economic
hardship. The Appeals officer did not include petitioner’s
health care costs in calculating her monthly expenses because
petitioner presented no evidence on this matter at her meeting
with the officer. Petitioner presented at trial a log of out-of-
pocket medical expenses paid by petitioner in recent years.
According to the log, petitioner incurred approximately $400 in
out-of-pocket medical expenses in 2006. Petitioner testified at
trial that she earned gross wages of approximately $51,000 in
2006. In the computation performed in February 2006, the Appeals
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: March 27, 2008