In a recent posting, the Tax Court’s decision in Pullins v. Commissioner of Internal Revenue was discussed. Last week, the Tax Court again ruled in favor of the taxpayer and held that Treasury Regulation 1.6015-5(b)(1) is invalid.
The case in point on this go-round with the 2-year limitation on filing innocent spouse relief was Maudi v. Commissioner of Internal Revenue. As in the Pullins case, the taxpayer had failed to file for innocent spouse relief within 2 years after the first collection effort brought by the IRS, and so the IRS denied her relief based on Treasury Regulation 1.6015-5(b)(1), which imposes a 2-year limitation on such requests for relief.
The only problem is that the 2-year limitation in the Treasury Regulation is not found in the statutory provision dealing with equitable relief under Section 6015 of the Internal Revenue Code. Attempting to graft the 2-year limitation from other provisions of Section 6015 onto the section dealing with equitable relief, the Treasury Department has issued the regulation in question that imposes the 2-year deadline.
Although the IRS follows the regulation routinely and, thus, denies the requested innocent spouse relief across the board, the Tax Court is having none of it. Just as in the Pullins case, the Tax Court has found in favor of granting innocent spouse relief to the taxpayer even though her claim came after the 2-year regulatory deadline.
The Tax Court was able to take this position in Maudi because an appeal from this case will go to the 9th Circuit Court of Appeals, rather than to one of the two Circuit Courts that have overruled the Tax Court on this issue, the 3rd Circuit in Mannella, which is found at 631 F.3d 115, or the 7th Circuit in Lantz, which is found at 607 F.3d 479.
This issue merits watching as the two Circuit Court opinions in opposition to the Tax Court are recent cases, Lantz from 2010 and Mannella from earlier this year. Other Tax Court cases are on appeal in other Circuits, so it is possible that a split will develop among the Circuits, leading to a possible determination by the United States Supreme Court.