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Section 6015(g)(2) was originally enacted as section 6015(e)(3)(B) by RRA 1998 sec. 3201(a), and, as mentioned above, became effective as to any liability for tax that remained unpaid as of the date of enactment of that Act, July 22, 1998. See RRA 1998 sec. 3201(g)(1). As originally enacted, this provision was expressly applicable only to decisions of this Court. See former sec. 6015(e)(3)(B), as enacted by RRA 1998. In considering technical amendments to RRA 1998, Congress wanted to make it clear that a petition for review by the Tax Court, as provided by section 6015(e), sometimes referred to as a stand-alone proceeding, was not the exclusive procedure for review of issues involving section 6015 but was an additional avenue "by which innocent spouse relief could be considered." See H. Conf. Rept. 106– 1033, at 1023 (2000). To effectuate that intent, Congress deleted the reference to the Tax Court in the above res judicata provision so that it would apply to a final decision of any court, and Congress moved the provision from subsection (e) of section 6015, which applies only to the Tax Court, to subsection (g). See Consolidated Appropriations Act, 2001, Pub. L. 106-554, sec. 1(a)(7), 114 Stat. 2763 (hereinafter referred to as Consolidated Appropriations Act, 2001). This amendment to RRA 1998 became effective on December 21, 2000. See id. sec. 313(f), 114 Stat. 2763A-643.

In discussing the proper time to elect relief under section 6015, the conference report that accompanied the Consolidated Appropriations Act, 2001, states as follows:

Congress did not intend that taxpayers be prohibited from seeking innocent spouse relief until after an assessment has been made; Congress intended the proper time to raise and have the IRS consider a claim to be at the same point where a deficiency is being considered and asserted by the IRS. This is the least disruptive for both the taxpayer and the IRS since it allows both to focus on the innocent spouse issue while also focusing on the items that might cause a deficiency. It also permits every issue, including the innocent spouse issue, to be resolved in single administrative and judicial process. The bill clarifies the intended time by permitting the election under (b) and (c) to be made at any point after a deficiency has been asserted by the IRS. [H. Conf. Rept. 106–1033, supra at 1023; emphasis supplied.]

Thus, Congress expressed the view that taxpayers should be limited to a single administrative and judicial process to resolve issues under section 6015.

Before section 6015(g)(2) and its predecessor were enacted, if a court decision had become final as to a particular taxable year, the taxpayer could be barred under the doctrine of res judicata from seeking relief from joint and several liability in a later proceeding for the same taxable year. See, e.g., United States v. Bryant, 15 F.3d 756, 758 (8th Cir. 1994); United States v. Shanbaum, 10 F.3d 305, 313-314 (5th Cir. 1994); United States v. Helmick, 58 AFTR 2d 86-5280, 86-1 USTC par. 9450 (M.D. Pa. 1986). See generally Commissioner v. Sunnen, 333 U.S. 591 (1948). This was true whether or not relief from joint and several liability had been an issue in the prior court proceeding. See United States v. Shanbaum, supra. Section 6015(g)(2) and its predecessor change the result that obtained under prior law by permitting an individual who had not participated meaningfully in the prior court proceeding to elect relief under section 6015(b) or (c), as long as the individual's qualification for relief under section 6015(b) or (c) was not an issue in the prior court proceeding.

Petitioners raised Mrs. Vetrano's qualification for relief under both section 6015(b) and (c) as an issue in this proceeding. Section 6015(g)(2) governs the effect that a final decision in this case will have on a later election by Mrs. Vetrano under section 6015(b) or (c). We have no authority to override section 6015(g)(2) or vary its terms. Thus, we have no authority to grant Mrs. Vetrano's request for leave to withdraw her election under section 6015 as an issue in this case "without prejudice". Accordingly, we consider Mrs. Vetrano's election of relief from joint and several liability under section 6015. Moreover, the concerns about judicial economy as expressed by Congress in the legislative history, the Consolidated Appropriations Act, 2001, quoted above, and fairness to the parties support our reaching the issue on the merits.

In making her election under section 6015, Mrs. Vetrano did not limit the election to subsection (b) or (c). We shall treat it as an election under both subsections. The second issue in this Supplemental Opinion is whether Mrs. Vetrano is eligible for relief under section 6015(b). Section 6015(b) is applicable to all joint filers who elect relief under that subsection and who establish that they meet the four other requirements set forth therein. The other requirements are

similar to the requirements that were prescribed by former section 6013(e). See Butler v. Commissioner, 114 T.C. at 283. One of those requirements is that the individual seeking relief under section 6015(b) establish "that in signing the return he or she did not know, and had no reason to know" that there was an understatement attributable to the erroneous items of the other spouse. Sec. 6015(b)(1)(C); see Cheshire v. Commissioner, 115 T.C. 183, 192-193 (2000). Notwithstanding the individual's knowledge or reason to know of some part of the understatement, section 6015(b)(2) permits the individual to qualify for relief as to the remainder of the understatement, if the individual establishes that in signing the return he or she did not know, and had no reason to know, the extent of the understatement. See sec. 6015(b). In that case, the individual will be relieved of liability for tax "to the extent that such liability is attributable to the portion of such understatement of which such individual did not know and had no reason to know." Sec. 6015(b)(2).

We agree with respondent that the record of this case demonstrates that Mrs. Vetrano knew of the portion of the understatement that is attributable to the payments received from BMAP. Petitioners admitted that "petitioner-wife was aware of all the payments that BMAP made to petitioner-husband." As to the remainder of the understatement, petitioners failed to introduce any evidence to show that Mrs. Vetrano did not know and had no reason to know of the unreported payment from Camden City Probation. Therefore, we agree with respondent that Mrs. Vetrano is not eligible for relief under section 6015(b) as to any part of the understatement.

As to relief under section 6015(c), the third issue in this Supplemental Opinion, section 6015(c)(3)(A) imposes certain conditions for eligibility to elect relief under that subsection. To meet the first such condition, the taxpayer must prove that he or she is no longer married to, or is legally separated from, the person with whom the joint return was made, or must prove that he or she was not a member of the same household with such individual during the 12-month period ending on the date the election is filed. See sec. 6015(c)(3)(A)(i).

As to this first condition for electing relief under section 6015(c), petitioners' posttrial brief states as follows:

Pursuant to § 6015(c)(3)(A)(i)(I), Mrs. Vetrano is 'legally separated from' Mr. Vetrano. Attached as exhibit 'B' is a copy of the divorce complaint which was filed against her husband in the Camden County Superior Court on August 7, 1998.

The complaint for divorce attached as exhibit B to petitioners' brief purports to have been filed in the State court 12 days before the date on which petitioners' posttrial brief was filed in this Court. There is no evidence that Mrs. Vetrano was divorced from Mr. Vetrano or became legally separated from him during that 12-day period. Furthermore, petitioners do not allege that Mrs. Vetrano was not a member of the same household as Mr. Vetrano during the 12-month period ending on the date of her election under section 6015(c). In this regard, we note that, according to the complaint for divorce, Mrs. Vetrano sought a divorce on the grounds of extreme cruelty, pursuant to N.J. Stat. Ann. sec. 2A:34–2(c) (West 2000). She did not seek divorce on the grounds of separation for a period of at least 18 or more consecutive months, a separate ground for divorce under the New Jersey divorce statute. See N.J. Stat. Ann. sec. 2A:34-2(d) (West 2000).

The language of section 6015(c)(3)(A)(i) makes it clear that this eligibility requirement must be met as of the date the election is filed. Section 6015(c)(3)(A)(i)(I) states that the electing spouse must be divorced or legally separated "at the time such election is filed", and section 6015(c)(3)(A)(i)(II) states that the electing spouse must not have been a member of the same household with the nonelecting spouse “during the 12-month period ending on the date such election is filed". If the taxpayer does not meet one of those requirements as of the date of the election, then the taxpayer is not eligible to elect relief under section 6015(c). See sec. 6015(c)(3)(A)(i). In that event, it would appear that the taxpayer must file a second election when he or she meets the requirements of section 6015(c)(3)(A)(i).

There is no basis in the record of this case for the statement in petitioners' posttrial brief that Mrs. Vetrano was legally separated from Mr. Vetrano at the time petitioner's posttrial brief was filed and her election under section 6015(c) was made. Furthermore, there is no evidence to show that Mrs. Vetrano was no longer married to Mr. Vetrano on the date of her election, nor is there evidence to show that she had not been a member of the same household as Mr.

Vetrano during the 12-month period ending on the date of her election. Therefore, we agree with respondent that, as of the date on which Mrs. Vetrano filed her election under section 6015(c): "She was not eligible to make the election." It is unnecessary for us to consider the other points raised in respondent's reply brief regarding Mrs. Vetrano's election under section 6015(c).

As noted above, in response to the Court's order giving the parties 30 days in which to request further trial, respondent alleges that petitioners were divorced after the date on which petitioners filed their posttrial brief, and, as of that later date, Mrs. Vetrano met the requirement of section 6015(c)(3)(A)(i)(I) and was eligible to elect under 6015(c). Respondent argues that the Court should permit the parties to present evidence concerning the date of Mrs. Vetrano's divorce because: "Even if the initial claim could not be decided on the basis that it was premature, this new evidence would cure that problem."

We agree with respondent that if Mrs. Vetrano became eligible to elect relief under section 6015(c) after the date of the first election, then she could make a second election under section 6015(c) and place the issue of her eligibility for relief under section 6015(c) before the Court in these proceedings. We have given her ample opportunity to do that. However, the election under section 6015(c) is Mrs. Vetrano's to make, and she has made it clear that she does not seek to make a second election. See sec. 6015(a)(2). We suspect that Mrs. Vetrano did not make a second election because there would be little to gain from a second election. In Vetrano I, we found that some part of the underpayment for 1993 was due to Mrs. Vetrano's fraud based on the fact that "she was aware of the payments received from BMAP during 1993, and she played an important part in converting the checks received from BMAP to cash." Were we to reach the merits of Mrs. Vetrano's election under section 6015(c), we, no doubt, would find her election invalid as to the payments from BMAP because she had "actual knowledge" of those payments. See sec. 6015(c)(3)(C). Having failed to make a second election during these proceedings, if Mrs. Vetrano attempts to make an election under section 6015(c) after the decision in this case becomes final, then the effect of the Court's deci

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