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Since petitioner agrees that she would not suffer economic
hardship, as that term is defined in section 301.6343-1(b)(4)(i),
Proced. & Admin. Regs., if she were required to pay the joint tax
liability, the Court finds that this factor weighs against
relief.
3. Knowledge or Reason To Know
The IRS will also consider whether the requesting spouse did
not know or had no reason to know that the nonelecting spouse
would not pay the liability. Rev. Proc. 2003-61, sec.
4.03(2)(a)(iii)(A), 2003-2 C.B. at 298. In the case of a
properly reported but unpaid liability, the relevant knowledge is
whether the taxpayer knew or had reason to know when the return
was signed that the tax would not be paid. See Washington v.
Commissioner, supra at 151; see also Feldman v. Commissioner,
T.C. Memo. 2003-201, affd. 152 Fed. Appx. 622 (9th Cir. 2005).
The Court has found for respondent on this factor.
Therefore, this factor weighs against relief. See Beatty v.
Commissioner, T.C. Memo. 2007-167 (applying Rev. Proc. 2003-61
and finding that knowledge or reason to know weighs against
relief); Fox v. Commissioner, T.C. Memo. 2006-22 (same); cf. Levy
v. Commissioner, T.C. Memo. 2005-92 (applying Rev. Proc. 2000-15
and stating that lack of knowledge weighs in favor of relief
while knowledge or reason to know weighs against relief).
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Last modified: March 27, 2008