Maria Isabel Goode, Petitioner, and James T. Goode, Jr., Intervenor, 2021 T. C. Sum. Op. 34, filed 9/23/21 had an on-again, off-again marriage that ended in divorce. Maria Isabel had a similar relationship with the U S gov’t, working with JT for DoD in NM and AZ, before moving to FL when JT fell ill. Maria Isabel and JT each took loans from the Federal savings plan for retirees, known as the Thrift Savings Plan (TSP). This was supposed to pay living expenses for selves and kids while they found jobs in FL, but FL civilian life didn’t pay like Uncle Sam.

They ultimately defaulted on the loans and got 1099-Rs, hitting them for $35K in tax after withholdings. JT’s mom prepared their joint return, and Maria Isabel knew neither JT nor she could pay. When they finally divorced, the decree said each owed half the debt. IRS and Maria Isabel now stip that 78.5% of whatever is now unpaid is her obligation.

Meantime, Maria Isabel, having shucked JT, rejoins Uncle Sam and has a six-figure salary.

Maria Isabel wants innocent spousery, but has no hardship. The protective order she got against JT was years after the tax liability was incurred, and no evidence of abuse before that.

But ultimately, whatever a mosey through the seven factors of Rev. Proc.  2013-34 may yield, it comes down to what Maria Isabel knew when she signed the return that gave rise to the liability.

Judge Vasquez: “In evaluating the relevant factors we conclude that the knowledge factor weighs too heavily against relief for petitioner. The … tax liability attributable to intervenor partially arose from defaulted TSP loans to which petitioner had consented. She knew the liability would not be paid when she signed the return. Given these facts, we find that it would not be inequitable to hold her responsible for the underpayment….” 2021 T. C. Sum. Op. 34, at p. 18.