An eight-year-late innocent spouse petition didn’t inspire sympathy from the IRS, the Tax Court, or an appellate court because the subject spouse had many opportunities to raise the issue up to the time of trial.

Judge Joseph H. Gale granted summary judgment January 24 to the IRS, finding that the petitioner wasn’t entitled to innocent spouse relief under the doctrine of res judicata in Rawat v. Commissioner.

Kiran Rawat’s belated request for innocent spouse relief followed years of litigation during which she had multiple opportunities and encouragement to pursue such relief.

Rawat worked as a registered nurse earning as much as $300,000 per year. Her husband, Raghvendra Singh, operated a nurse staffing business.

Rawat and Singh filed joint federal returns for 1998, 1999, 2001, and 2002 and received deficiency notices for those years. They filed separately for 2000.

The IRS issued Rawat and Singh deficiency notices and civil fraud penalties under section 6663(a) for 1998, 1999, 2001, and 2002. Most of the disallowances were claimed deductions for Singh’s nurse staffing business. They filed a joint petition with the Tax Court in 2009 seeking a redetermination.

Rawat was uncooperative when the IRS attempted to contact her regarding innocent spouse relief before trial. Rawat testified that the couple were married but had been legally separated since 2005. She also testified that Singh sometimes paid his employees in cash and had bought cars for some.

The 2000 tax year was subsequently added to the petition but only as to Singh.

The court determined the couple were jointly and severally liable for the subject tax years. The innocent spouse issue wasn’t raised until a post-trial motion.

The couple appealed to the Ninth Circuit, which affirmed the Tax Court’s decision. The appellate court declined to hear the innocent spouse argument because it wasn’t raised until after trial.

New Request

On July 8, 2017, Rawat finally initiated an attempt for... To Read More Please Subscribe to NovaTax.