*** NINTH CIRCUIT OPINION*** -- Innocent Spouse Relief -- Appeal -- Other Spouse's Standing
A man lacks standing to appeal a tax court determination that his ex-wife was entitled to "innocent spouse" relief, even though the 1998 IRS Restructuring and Reform Act grants a non-requesting spouse the right to participate in innocent spouse relief proceedings, the U.S. Court of Appeals for the Ninth Circuit decided Dec. 23.
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During their marriage, the couple had taken passthrough depreciation deductions attributable to limited partnership interests in equipment leasing ventures similar to those found to be improper tax shelters in other cases. The Internal Revenue Service subsequently issued a notice of deficiency for the amount of the deductions claimed. After the couple divorced, the ex-wife filed for "innocent spouse" relief pursuant to Internal Revenue Code § 6015, maintaining that the deficiencies were solely attributable to her ex-husband. The commissioner granted her request, relieving her of liability. The man objected, but the tax court agreed that the ex-wife was entitled to innocent spouse relief. The man appealed.
Writing for the Ninth Circuit, Judge A. Wallace Tashima ruled that because the man had failed to show any redressable injury, he lacked standing to appeal. Tashima noted that in Estate of Ravetti v. United States, 37 F.3d 1393, 20 FLR 1580 (9th Cir. 1994), the Ninth Circuit held that a non-requesting spouse (i.e., the spouse not seeking innocent spouse relief) did not have standing to challenge a tax court determination that his spouse was entitled to relief. In the Internal Revenue Service Restructuring and Reform Act of 1998, however, Congress amended IRC § 6015 to grant non-requesting spouses the right to receive notice of, and participate in, innocent spouse determination proceedings. Tashima said that the question here, therefore, was what bearing, if any, the 1998 act had on the right of a non-requesting spouse to appeal the grant of § 6015 relief to the requesting spouse. As in Ravetti, the tax court's grant of relief to the ex-wife did not cause the man redressable injury, Tashima explained, because his personal tax liability remains unchanged and in fact the only harm would be to the IRS by depriving it of an additional source from which to recover. He thus dismissed the appeal, holding that absent a showing of some concrete harm, the mere grant to a non-requesting spouse of participation rights in § 6015 proceedings in the tax court is not sufficient to confer standing to appeal.
