In Uncategorized on 09/29/2022 at 15:55

The question that bedeviled the Minihans in their innocent spouse joust takes a different form in Stephen H. Collins, T. C. Sum Op. 2022-20, filed 9/29/22.

Steve also wants a refund, but not of proceeds levied from a joint account. Rather, the local domestic relations court increased Steve’s support payments to reimburse loved-once for half of the unpaid tax on the State pension draw she took, from which Steve never got any benefit. Loved-once paid the tax to IRS.

Loved-once intervened when Steve sought innocent spousery, but Judge Elizabeth Crewson Paris tossed loved-once for nonprosecution. IRS folded on Steve’s Section 6015(c) apportioned relief claim, denied both 6015(b) all-the-way and 6015(f) equitable, and Steve’s OK with that.

But Steve wants a refund of the one-half of the tax on the State pension draw.

No, says Judge Paris.

“Even assuming arguendo that petitioner is eligible for relief under section 6015(b) or (f),  he would not be entitled to a refund because he did not remit any tax payments to respondent with respect to the understatement. Before any taxpayer may be allowed a refund or credit, there must be a determination that the taxpayer made an overpayment. Minihan v. Commissioner, 138 T.C. 1, 8 (2012); Cutler v. Commissioner, T.C. Memo.  2013-119, at *27. A taxpayer makes an overpayment if he remits funds to the Secretary in excess of the tax for which he is liable. Jones v. Liberty Glass Co., 332 U.S. 524, 531 (1947); Minihan, 138 T.C. at 9. To prove that he has made an overpayment, the requesting spouse must establish that he (and not the nonrequesting spouse) provided the funds for the overpayment, and that the payments were not made with the joint return and were not joint payments or payments that the nonrequesting spouse made. Minihan, 138 T.C. at 9 (and cases cited thereat); Cutler, T.C. Memo. 2013-119, at *28; see also Rev. Proc. 2013-34, § 4.04, 2013-43 I.R.B. 397, 403.” T. C. Sum. Op. 2022-20, at p. 5.

For Minihan, see my blogpost “Whose Money Is It, Anyway?” 1/11/12.

Once again, when family law meets tax law, the result is a muddle. Had Steve paid half directly to IRS, he could claim his refund, as the understatement was entirely loved-once’s doing. But either divorce counsel were unaware, or the Stark County (OH) Domestic Relations Court was not advised, that their reimbursement maneuver cost Steve more than it should have done.


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