In Uncategorized on 10/03/2017 at 23:48

What happens if you don’t? Ask Eric Alan Harris, 2017 T. C. Sum. Op. 77, filed 10/3/17. Or better still, don’t; read STJ Panuthos’ opinion.

Mrs Eric Alan Harris did their taxes (MFJ, of course), didn’t withhold or pay ES for four (count ‘em, four) years, tried three IAs but got bounced each time for not paying ES in the next year, and entered into an OIC. IRS bought the OIC, and Mrs Eric Alan Harris walks.

Eric Alan is left holding the cliché. Or as STJ Panuthos puts it, “For reasons unclear from the record, petitioner was not included as an applicant on Mrs. Harris’ Form 656 or the addendum despite the fact that she included the 2012 joint income tax liability in her offers.” 2017 T. C. Sum. Op. 77, at p. 7.

Eric Alan wants out for 2012, the last year in the stack, and seeks Section 6015 relief after IRS bounces his OIC of zero, as he claims he was let out along with Mrs Eric Alan Harris on her OIC. He claims his income and expenses were included in the numbers Mrs Eric Alan Harris included in her OIC application.

Section 6015(f) inequity is all that is left to Eric Alan, as the unpaid tax results from tax self-reported on a joint return.

Eric Alan meets the first seven hurdles. Eric Alan is still married to Mrs Eric Alan Harris, wherefore streamlining is a nonstarter.

As for equity, Mrs Eric Alan Harris had an unbroken four-year record of not paying the taxes due. Eric Alan knew this and knew she was seeking an OIC. Eric Alan claims hardship, but has plenty of assets. The rest of the factors don’t help Eric Alan.

But Eric Alan claims that someone at the IRS suggested adding 2012 to the other years, and settling everything at once. Even so, Eric Alan never signed aboard, and joint return means joint and several liability. Discharge of one co-obligor doesn’t let the other off the hook.

“Considering the circumstances of Mrs. Harris’ OIC, we are not persuaded that petitioner is entitled to relief under section 6015(f). Petitioner testified that Mrs. Harris prepared the Form 656 and the addendum herself, with no IRS employee present. It is not fully clear why petitioner was not included as an applicant on Mrs. Harris’ Form 656 and addendum, but he has not asserted, nor is there any evidence of, fraud or deceit on the part of Mrs. Harris or the IRS. It is also not clear the extent to which petitioner was involved in Mrs. Harris’ preparation of her Form 656 and addendum; for example, it is not clear whether petitioner reviewed either document before its submission to the IRS.

“The Court further notes that under ‘Offer Terms’ on page 4 of the Form 656 signed and submitted by Mrs. Harris, the terms listed for an OIC include the following:

I am submitting an offer as an individual for a joint liability * * * I understand if the liability sought to be compromised is the joint and individual liability of myself and my co-obligor(s) and I am submitting this offer to compromise my individual liability only, then if this offer is accepted, it does not release or discharge my co- obligor(s) from liability. The United States still reserves all rights of collection against the co-obligor(s).” 2017 T. C. Sum. Op.77, at pp. 19-20.

But STJ Panuthos is not hard of heart. “We are not unsympathetic to petitioner’s plight; however, we are bound by the statute as written and the accompanying regulations when consistent therewith. The simple facts are that petitioner elected to file a joint 2012 Form 1040 with Mrs. Harris, and he was not a party to Mrs. Harris’ OIC. Accordingly, we sustain respondent’s determination.” 2017 T. C. Sum. Op. 77, at p. 21. (Citations and footnote omitted.)

Here’s the omitted footnote. “It appears that petitioner did not realize the implications of electing joint filing status for 2012 combined with the failure to include himself as an applicant on Mrs. Harris’ Form 656 and addendum. Petitioner testified that he and Mrs. Harris elected joint filing status for their 2012 Form 1040 because it was ‘appropriate to our end of the year end status.’ Mrs. Harris did not testify, and some of the circumstances surrounding the OIC, including the specific advice she received from IRS employees while preparing her Form 656 and addendum, are unclear. It certainly would have been reasonable and appropriate for the IRS to advise Mrs. Harris of the possible consequences of submitting an OIC without petitioner as an applicant when a joint return was filed for 2012. See IRS Publication 1, Your Rights as a Taxpayer; I.R.S. News Release IR-2014-72 (June 10, 2014).” 2017 T. C. Sum. Op. 77, at p. 21.

Judge, who knows what, if anything, the IRS told Mrs Eric Alan Harris? And if they had given her legal advice, what if she never told Eric Alan, for reasons best known to herself? Or even if she had, remember poor Maria Sanchez? What, no? Then see my blogpost “‘I’m From the Government, and I’m Here to Help’ – Part Deux,” 3/19/15. I repeat my comment therefrom: “Listening to an IRS RA can be hazardous to your tax health.”


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