Two-Year Limitations Valid on ‘Innocent Spouse’ Relief
Published: June 20, 2011
A wife legally separated from her husband waited too long to contest her liability on their joint tax return, and the 4th Circuit reverses a Tax Court decision that invalidated the IRS regulation that imposes a two-year statute of limitations on equitable relief for an “innocent spouse.”
The IRS first began collection efforts for a tax deficiency against husband Robert Jones. When he defaulted, the IRS began efforts to collect the deficiency from both Robert and his wife Octavia Jones. More than two years after the IRS first began its collection activities, Octavia Jones requested innocent spouse relief under IRC § 6015(f). While the IRS agreed Octavia would otherwise qualify for such relief, it denied relief because she made her request more than two years after the IRS began its collection efforts, and Regulation § 1.6015-5(b)(1) precludes relief where the applicant requests relief more than two years after the IRS initiates collection activities.
On Octavia’s petition to the Tax Court, that court ruled that the regulation was invalid for the reasons it had given earlier in Lantz v. Comm’r, 132 T.C. 131 (2009). The court granted Octavia relief from all tax liability in excess of $450. The Commissioner of Internal Revenue appealed.
Under Chevron USA Inc. v. Natural Resources Defense Council Inc., 467 U.S. 837 (1984), we conclude that IRC § 6015 is ambiguous with regard to any limitations period applicable to § 6015(f) and that the regulation, § 1.6015-5(b)(1), fixing a two-year limitations period within which to request relief under § 6015(f), constitutes a permissible interpretation of the statute.
In finding the regulation valid, we join the 3rd and 7th Circuits, the only other courts of appeals to have considered the issue. We do not consider the wife’s argument that she should be relieved from her late request for relief under the doctrine of equitable tolling, as she did not raise this issue before the Tax Court.
Because we conclude the regulation is valid, we reverse the judgment of the Tax Court and remand for further proceedings.
Reversed and remanded.
Jones v. Comm’r of Internal Revenue (Niemeyer) No. 10-1985, June 13, 2011; USTC; Teresa E. McLaughlin, USDOJ, for appellant; Timothy L. Jacobs for appellee. VLW 011-2-110, 13 pp.