As the probably-fictional law student pronounced it, res judicata features in Crystal R. Vettel, T. C. Memo. 2025-110, filed 10/22/25. Crystal’s husband was a self-made millionaire who wound up stashing another million in a Swiss bank account, titled in a Belize corporation, at the suggestion of said Swiss bank. He never told Crystal, a high school graduate, and never told IRS. Of course, FUBAR blew the gaff, hubby opted into and then out of OVDI, and hired trusty attorney, who petitioned the SND that followed the opt-out.

Trusty attorney did represent both hubby and Crystal. Though trusty attorney and trusty CPA considered innocent spousery for Crystal and even drafted a Form 8857, when IRS offered them what they thought was a good deal, they dropped innocent spousery to grab a quick stiped decision, on which Crystal signed off.

Now Crystal wants innocent spousery, but IRS raises the stiped decision. A decision in a case precludes anything raised or that could have been raised. For innocent spousery, Section 6015(g)(2) gives an out: if either innocent spousery wasn’t an issue or Crystal didn’t “meaningfully participate“ in the litigation, no claim or issue preclusion.

Judge Elizabeth Crewson Paris checks the boxes.

“While the Court accepts petitioner’s claim that she was unaware of the existence of the [Swiss stash] account or of the details of Mr. Vettel’s international business dealings when the returns were filed, it is clear from the record that, by the time the Vettels initiated the deficiency case, Mr. Vettel had made petitioner aware of the matter, and she kept herself informed of the progression of the case. Nothing in the record suggests that information was withheld during the deficiency proceeding or that she was denied a voice in the decision-making process.

“Furthermore petitioner did participate directly, as well. She personally signed the proposed stipulated decision…stipulating the deficiency and penalty amounts for the years at issue. That decision was entered by the Court…. Petitioner does not contend, nor is there any evidence to suggest, that she was coerced into signing that document or that she did not understand its effect.” T. C. Memo. 2025-110, at p. 10.

Taishoff says the dual representation of Crystal and spouse would raise an issue. Judge Paris doesn’t say whether Crystal signed a conflict letter (if the conflict is waivable at all) or was made aware of the conflict. Participation through one’s counsel is meaningful participation.

“There is nothing in the record to indicate that she was denied access to information about the ongoing case, that Mr. Vettel or their counsel sought to exclude her from the decision-making process, or that her counsel acted against her interests. Rather, through the advocacy of her counsel, petitioner avoided liability for the section 6662(a) penalties for tax years 2006, 2007, 2008, 2009, and 2010. Indeed, the evidence shows that petitioner was typically included on emails discussing the case, and petitioner admitted that she reviewed the draft Form 8857 while the deficiency case was ongoing.” T. C. Memo. 2025-110, at p. 12.

I want to circle back to the conflict here. Crystal admittedly had only a high school diploma; her business experience was working as a bank teller and a receptionist at a dermatologist’s office, interrupted by about ten years as a stay-at-home Mom, T. C. Memo. 2025-110, at p. 2. Spouse was an international highroller. Crystal may have been shown all the documents, but how much did she understand? Being cc’d on emails is all very well, but it doesn’t help if they’re written in unintelligible legal gibberish. And if spouse is writing the check for their high-priced counsel, they’ll both want to be sure that Crystal is in as deep as spouse. Note that as of trial Crystal and spouse were still married (idem.); given their relative economic situations, I’m not surprised. I’m not as sure as Judge Paris how material was Crystal’s participation, although I didn’t see the witnesses or hear their testimony. Maybe Crystal is a lot more hip, and shows it on the stand, than her CV would indicate. Still, I wonder. Especially at counsel rushing to make the deal that IRS offered at the cost of throwing Crystal’s innocent spousery overboard; I know second-guessing other lawyers’ strategy is our profession’s second-favorite indoor sport, but is it true in FUBAR settlements that “first money, best money”? Readers, what do you think?