## Facts

- Valarie Nadine Hafner Stephenson and Sean Stephenson married in 1991; she did not finish high school and had documented learning difficulties.
- During the marriage, Mr. Stephenson subjected petitioner to escalating verbal and physical abuse, including threats with a firearm when she tried to leave.
- Mr. Stephenson controlled the couple’s finances, restricted petitioner’s access to mail and financial records, and procured her signature on documents by directing where to sign and responding to questions with threats or belittlement.
- The couple filed a joint 1999 federal income tax return reporting $214,711 of taxable income and $77,865 of tax due, with minimal withholding and no payment remitted with the return.
- From 2004 through 2006, the couple made payments toward the 1999 liability; petitioner wrote some checks at Mr. Stephenson’s direction.
- Petitioner separated from Mr. Stephenson in 2007 and later learned the 1999 joint liability remained unpaid.
- A divorce decree required Mr. Stephenson to pay spousal maintenance and to pay any outstanding federal tax liability incurred by joint filing.
- Petitioner sought relief from joint and several liability; the IRS denied the request. The parties agreed she did not qualify under I.R.C. § 6015(b) or (c), leaving only equitable relief under § 6015(f).

## Issues

1. Whether petitioner was entitled to equitable relief from joint and several liability for the 1999 tax year under I.R.C. § 6015(f).
2. Whether petitioner’s request for § 6015(f) relief was timely and, if timely, how the relevant administrative factors applied to the facts.

## Decision

- The Tax Court held petitioner’s request for § 6015(f) relief was not time-barred.
- The Tax Court granted equitable relief from joint and several liability for the 1999 tax year.
- The court found abuse and financial control materially affected petitioner’s ability to know of, question, or influence the nonpayment of the reported tax.
- The court treated petitioner’s signature on the return and later check-writing as insufficient to defeat relief given the coercive circumstances.
- The court gave weight to petitioner’s post-separation financial condition and the divorce decree’s allocation of responsibility to Mr. Stephenson.

## Legal Principles

- Equitable relief under I.R.C. § 6015(f) may be granted when relief is unavailable under § 6015(b) or (c) and, considering all facts and circumstances, it would be inequitable to hold the requesting spouse liable for an unpaid joint tax.
- The § 6015(f) analysis is fact-intensive and considers nonexclusive administrative factors (including marital status, hardship, knowledge or reason to know, legal obligation, significant benefit, later compliance, and health), with abuse and financial control relevant to multiple factors.
- Abuse and financial domination can mitigate the “knowledge or reason to know” factor and reduce the weight ordinarily given to a requesting spouse’s signature on a return or participation in payments.
- A divorce decree assigning the tax obligation to the nonrequesting spouse does not bind the government but is a significant equitable consideration in the § 6015(f) determination.
- Economic hardship to the requesting spouse is a substantial factor supporting equitable relief.

## Conclusion

The Tax Court concluded that petitioner timely sought relief and that, considering the abuse, financial control, allocation of responsibility in the divorce decree, and petitioner’s financial condition after separation, it was inequitable to hold her jointly and severally liable for the unpaid 1999 tax; equitable relief under I.R.C. § 6015(f) was granted.


Stephenson v. Comm’r, T.C. Memo. 2011-16 (2011)