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filed by Mr. Scott. She had no knowledge that tax was shown as
owed on the return and did not know or have reason to know that
Mr. Scott would not pay the tax. Petitioner did not know that
Mr. Scott had stopped paying the taxes with the returns until he
filed for bankruptcy in 1995. She did not know that Mr. Scott
was frequenting prostitutes.
Petitioner signed the 1994 and 1995 returns after Mr. Scott
filed for bankruptcy. During the bankruptcy proceedings, when
petitioner first learned that Mr. Scott had failed to pay the
taxes, she suggested to him that they try to arrange installment
payments to pay their Federal taxes. Mr. Scott told her that the
payment of the taxes was his responsibility and he would handle
it. When she signed the 1995 and 1996, returns she could not be
sure that he would or would not pay the taxes; she did not know
or have reason to know that he would not pay the taxes shown as
owed on those returns, and she did not know or have reason to
know that he would pay those taxes.
Consequently, the knowledge or reason to know factor favors
granting relief for 1990, 1991, 1992, and 1993 and is neutral for
1994 and 1995.
5. Nonrequesting Spouse’s Legal Obligation
This is a factor in favor of the requesting spouse where the
nonrequesting spouse has a legal obligation pursuant to a divorce
decree or an agreement to pay the outstanding tax liability and
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Last modified: November 10, 2007