Taxpayer not entitled to innocent spouse relief.

• Author: Beavers, James A.
• Position: 2013 Tax Court memorandum decision in Buchanan v. Commissioner

The Tax Court held that a taxpayer was not entitled to innocent spouse relief for an understatement of tax that was attributable to Social Security income of her husband that the couple did not report on their joint return.

Background

Bessie Buchanan married Wayne Buchanan in 1975, but they also started living apart in 1975. However, they remained married and were not legally separated during the tax year at issue. Mr. Buchanan suffered a stroke and was moved into a nursing home sometime before the 2007 tax year. The stroke left him immobile and with limited speaking ability. Mrs. Buchanan visited Mr. Buchanan, sometimes purchased small gifts for him, and assisted with his care.

Mrs. Buchanan did not pay for any of Mr. Buchanan's support. Mr. Buchanan received Social Security income, which was assigned directly to the nursing home for his care and maintenance. Mrs. Buchanan was unaware of the amount of Social Security income Mr. Buchanan was receiving, but she was aware that she did not support Mr. Buchanan and that his benefits paid the nursing home expenses.

Mrs. Buchanan elected head-of-household filing status on her federal income tax returns for several years before 2006. For 2006, she asked her tax return preparer whether she could claim Mr. Buchanan as a dependent. The preparer told her she could, but used mar-ried-filing-jointly status on her 2006 federal income tax return instead of having her claim Mr. Buchanan as a dependent. After the tax return preparer completed the return, Mrs. Buchanan took it to Mr. Buchanan at the nursing home and asked him to sign it. Mr. Buchanan signed the return, and Mrs. Buchanan filed it. The couple repeated the process in 2007. The joint returns for 2006 and 2007 did not include Mr. Buchanan's Social Security income.

In 2009, the IRS sent Mrs. Buchanan a notice of deficiency for the 2007 tax year, which determined a deficiency in tax based on Mr. Buchanan's Social Security income. Mrs. Buchanan responded to the notice by submitting a Form 8857, Request for Innocent Spouse Relief, on Dec. 28, 2009, seeking relief from joint and several liability under Sec. 6015. The IRS refused Mrs. Buchanan's request, and she appealed. In 2010 the IRS issued a final determination denying her appeal under Sees. 6015(b), (c), and (f). Mrs. Buchanan petitioned the Tax Court to review the IRS's determination.

The Tax Court's Decision

The Tax Court held that Mrs. Buchanan was not entitled to any of the three forms of...