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6. Knowledge or Reason To Know
a. Background
In determining whether a taxpayer in an underpayment case
qualifies for equitable relief under section 6015(f), respondent
considers whether the requesting spouse knew or had reason to
know that the reported liability would be unpaid. This factor
favors relief if the taxpayer reasonably believed when the return
was filed that the liability would be paid by the taxpayer’s
spouse. See Wiest v. Commissioner, T.C. Memo. 2003-91 (the
taxpayer reasonably believed taxes owed would be paid by spouse).
Respondent determined and contends that petitioner knew or had
reason to believe that the tax would not be paid. We disagree
for reasons stated next.
b. The Offer-in-Compromise
Respondent contends that an offer-in-compromise submitted to
respondent in 1993 by intervenor gave petitioner reason to know
the taxes were not being paid. We disagree. The offer-in-
compromise is not in the record, and there is nothing to support
respondent’s contention that petitioner knew about it. We
conclude that petitioner did not know that intervenor filed an
offer-in-compromise in 1993.
c. Petitioner and Intervenor’s Tax Returns
Respondent contends the fact that petitioner signed and
filed balance due returns shows that she did not reasonably
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