In Uncategorized on 10/15/2019 at 16:32

Habibe Kruja, Petitioner, and Ermir Kruja, Intervenor, 2019 T. C. Memo. 136, filed 10/15/19, leave unanswered the question to what extent burden of proof shifts, when IRS reverses course, allows innocent spousery to petitioner when formerly denying, and intervenor resists.

Judge Buch doesn’t want to sort it out for us.

“Our Court has not answered and we leave open the question of whether the burden of proof shifts to the intervenor when the Commissioner concedes that a taxpayer is entitled to relief and an intervenor opposes relief. Because we would decide this case the same way regardless of which party bears the burden, we do not need to decide who bears the burden.” 2019 T. C. Memo. 136, at p. 14. (Footnote omitted).

But Ermir has only the Michael Corleone gambit to play. He never put anything in the administrative record about how Habibe knew Ermir was playing games with unreported income and dubious deductions.

IRS did want to stick Ermir with 100% of the unreported State income tax refunds, but Judge Buch limits the hit to 50%.

“In the absence of clear and convincing evidence supporting a different allocation, an erroneous item of income is generally allocated 50% to each spouse.  Mr. and Ms. Kruja owned the State tax refunds jointly and there is no evidence in the administrative record, or adduced at trial, to support an allocation other than 50% to each spouse.  Accordingly, the State tax refunds are properly allocated 50% each to Mr. and Ms. Kruja.” 2019 T. C. Memo. 136, at pp. 14-15. (Footnote omitted).

But maybe Habibe knew about the refunds.

“The Commissioner contends that Ms. Kruja had actual knowledge of the unreported State tax refunds.  Although the Krujas’ bank account statements indicate receipt of State tax refunds from Arizona, the record is insufficient to establish that Ms. Kruja had actual knowledge of the unreported State tax refunds.” 2019 T. C. Memo. 136, at p. 15.

And once again the self-represented gets the short end.

“Ms. Kruja generally requested relief under section 6015 but did not provide arguments regarding relief under section 6015(b) or equitable relief under section 6015(f).  As a result, Ms. Kruja is not alternatively eligible for relief for the State tax refunds or the employee business expenses under subsections (b) and (f).” 2019 T. C. Memo. 136, at p. 15.

Since I don’t know how much is at issue, or the parties’ finances, I can’t say that a LITC would have been able to help Habibe, but it would have been worth a try.

And the Section 6662 chops have to be apportioned with the items of the spouse who generated same. So Habibe gets hit for her share of the State income tax refund and the chops appurtenant thereto.


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