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Economic Hardship
The IRS will also take into consideration whether the
requesting spouse will suffer economic hardship if the relief is
not granted. Rev. Proc. 2003-61, sec. 4.03(2)(a)(ii), 2003-2
C.B. at 298. Generally, economic hardship exists if collection
of the tax liability will cause a taxpayer to be unable to pay
reasonable, basic living expenses. See Butner v. Commissioner,
T.C. Memo. 2007-136. Petitioner must prove that the expenses
qualify and that they are reasonable. See Monsour v.
Commissioner, T.C. Memo. 2004-190.
At trial, petitioner testified that she cannot afford to pay
the liabilities. Petitioner’s Form 12510 shows that her monthly
expenses ($2,860) exceed her net wages ($2,344) by $516.
Petitioner’s Forms 12509 state that her current income barely
allows her to stay ahead of her bills, and because of increases
in rent and utilities, it will be “very difficult if not
impossible to meet the IRS demands.” In a document attached to
her Form 12510, petitioner stated: “I cannot take on this burden
myself and I am trying to figure out how I’m going to make it
with just one income”.
To the extent that there are determination letters in the
record, the letters fail to set forth the IRS’s conclusions with
respect to this factor. Respondent did not raise any issue as to
this factor at trial.
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Last modified: March 27, 2008