Frances L. Rogers, Petitioner-Appellant,
Commissioner of internal revenue, Respondent-Appellee.
October 29, 2018
from the United States Tax Court. No. 15306-15 - Kathleen
Bauer, Easterbrook, and Scudder, Circuit Judges.
Scudder, Circuit Judge.
married couple's choice to file a joint federal income
tax return results in both individuals assuming full
liability for any owed tax. Frances Rogers and her husband
John did so for 2004. When the Internal Revenue Service
subsequently found the return deficient, the Rogerses pushed
back, ultimately took the IRS to trial, and lost. Frances
Rogers, a former teacher with an MBA, doctorate, and law
degree, attended the trial. Three years later, and facing a
substantial tax deficiency and related penalties, Mrs. Rogers
sought so-called innocent spouse relief under the Internal
Revenue Code. The Tax Court rejected the claim, finding that
Mrs. Rogers's meaningful participation in the trial
precluded her from after-the-fact seeking to avoid
responsibility for those liabilities.
brought its concerns with the 2004 tax return to the
Rogerses' attention through the issuance of a notice of
deficiency in December 2009. The notice informed them that
they owed an additional $488, 177 in income taxes and
underreporting penalties of $138, 732. Mrs. Rogers and her
husband responded by challenging the Service's position
in Tax Court.
a trial ensued to resolve the disputed tax liability. John
Rogers, a Harvard-educated tax lawyer, represented himself
and his wife at trial. For her part, and although not
testifying at trial or otherwise presenting oral argument,
Frances Rogers attended the entire trial and sat at the table
reserved for taxpayer petitioners.
2014 the Tax Court ruled in the IRS's favor and ordered
the Rogerses to pay an income tax deficiency of $207, 942 and
related penalties of $77, 868. Congress has made that
liability joint and several. See 26 U.S.C. § 6013(d). On
appeal we affirmed the Tax Court's decision. See
Rogers v. Comm'r, No. 15-3678, slip op. (7th
Cir. Nov. 3, 2016). At no point during the proceedings in the
Tax Court did Mrs. Rogers (or her husband as her counsel)
raise an innocent spouse claim under 26 U.S.C. § 6015.
2015-three years after the trial that ended with the adverse
ruling-Mrs. Rogers petitioned the Tax Court for innocent
spouse relief under 26 U.S.C. § 6015(b) and (f). But
Congress has chosen to permit such relief only if the
petitioner has not "participated meaningfully in [the]
prior pro-ceeding"-here the 2012 trial. Id. at
§ 6015(g)(2). In this way, Congress has implemented a
variation of res judicata applicable to claims for
innocent spouse relief pursued after a prior proceeding has
reached finality and resolved a taxpayer's liability.
the Internal Revenue Code does not delineate what constitutes
meaningful participation for purposes of innocent spouse
relief, courts evaluate the totality of circumstances to
measure the extent of a taxpayer's involvement and
engagement in the prior proceeding. See Haag v.
Shulman, 683 F.3d 26, 31 (1st Cir. 2012). Whether Mrs.
Rogers meaningfully participated in the 2012 trial is a
question of fact, which we review for clear error. See
Freda v. Comm'r, 656 F.3d 570, 573 (7th Cir.
Court held that Mrs. Rogers failed to carry her burden of
demonstrating she qualified for innocent spouse relief. The
bottom line for the Tax Court was that Mrs. Rogers's
contention that she lacked knowledge of business and
financial matters, including complex tax matters, and
otherwise did not understand what transpired during the 2012
trial lacked credibility. Section 6015(g)(2), the Tax Court
reasoned, does not afford innocent spouse relief to
individuals who feign ignorance or choose to remain willfully
blind to their own tax predicament. Nor, the Tax Court
underscored, did Congress intend to afford such relief to
someone like Mrs. Rogers who had every opportunity to raise
her claim during the 2012 trial.
appeal Mrs. Rogers contends that a disclosure violation by
the IRS should have precluded the Tax Court from considering
the Commissioner's argument that she was barred from
seeking innocent spouse relief. As Mrs. Rogers would have it,
the IRS was bound under provisions in its Internal Revenue
Manual to notify her before the 2012 trial of her right to
request innocent spouse relief. That it failed to do so, she
contends, means that the Tax Court should not have permitted
the Service to invoke the meaningful participation bar in
cannot agree. Even assuming that Mrs. Rogers could establish
that she did not receive a particular disclosure, she has
identified no authority that a disclosure shortcoming
precluded the Service from taking the position that she was
not entitled to innocent spouse relief. See Mater of
Carlson, 126 F.3d 915, 922 (7th Cir. 1997) (explaining
that the "procedures in the Internal Revenue Manual are
intended to aid in the internal administration of the IRS;
they do not confer rights on taxpayers"). This argument
need not detain us further.
Rogers's position on the merits fares no better. In
reviewing her petition for innocent spouse relief, the Tax
Court found substantial portions of her testimony to defy
reality and lack ...