No innocent-spouse equitable relief is available for years where a closing agreement left no deficiency, understatement, or unpaid tax, only penalties and interest

Plain-English summary

Section 6015(f) can give a spouse who filed a joint return equitable relief from joint tax liability, but only in certain circumstances. This short Chief Counsel email advises that for two of the years at issue, no relief is available because they are non-qualified. Under proposed Treas. Reg. § 1.6015-4(a), equitable relief requires a joint return with a determined understatement or deficiency, or an unpaid tax. Here a closing agreement left no deficiency, understatement, or unpaid tax for those years, only assessed penalties and interest, which cannot independently support relief because relief from penalties and interest still depends on an analysis of an underlying tax. With no underlying tax to analyze, there can be no relief. The email distinguishes Boyle v. Commissioner, where the taxpayer's liabilities remained unpaid, unlike here.

Ruling snapshot

• Question: Can a requesting spouse get equitable relief under section 6015(f) for years where a closing agreement left only penalties and interest but no deficiency, understatement, or unpaid tax?
• Outcome: Advice given (no relief; those years are non-qualified)
• Key authorities: IRC § 6015(f); Prop. Treas. Reg. § 1.6015-4(a); Boyle v. Commissioner, T.C. Memo. 2016-87

Full text (IRS public release)

ID: CCA_2020011709541644
UILC: 6015.00-00

Number: 202141006
Release Date: 10/15/2021
From:
Sent: Friday, January 17, 2020 9:54:16 AM
To:
Cc:
Bcc:
Subject: RE: Question for the TECHs

In the case below, tax years ------- and ------- ARE non-qualified. Proposed Regulation sec 1.6015-4(a) allows a requesting spouse to seek equitable relief if the spouse "file[d] a joint return for which an understatement or deficiency (as defined by § 1.6015-1(h)(7) and (8)) was determined or for which there was unpaid tax (as defined by § 1.6015-1(h)(6))...." Here, based on the closing agreement, there was no deficiency, understatement, or unpaid tax for tax years ------- and -------. There are assessed penalties and interest, but those cannot independently be considered for relief. Where the underlying tax is not challenged, any equitable relief to penalties and interest is still based on an analysis of the underlying tax. Here, there is no tax to analyze, so there can be no relief to the penalties and interest.

The representative cites to Boyle v. Commissioner, T.C. Memo. 2016-87. In Boyle, the taxpayer's liabilities for the year in issue "remained unpaid" as of the time of trial. The taxpayer "sought relief under section 6015(f) from the additions to tax for the failure to file and to pay and the interest assessed for 2003; he d[id] not seek relief from the underpayment itself." The lack of an underlying assessment in this case makes it distinguishable.

Please let me know if you require any additional information or documents.

Signed,