Opinion
18761-18
02-22-2023
KAREN A. SMITH, PETITIONER AND DARYL G. SMITH, INTERVENOR, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Mark V. Holmes Judge
This case arises from a notice of determination in which the Commissioner denied innocent-spouse relief to petitioner for tax year 2014. Respondent and intervenor opposed relief. But there have been two developments that have taken this case out of the mine run. The first is intervenor's bankruptcy, which includes a large property in Oklahoma against which the IRS has a lien to pay the contested tax debt. The second is that a state court has allocated the unpaid 2014 tax debt to intervenor.
Petitioner moved to continue the case because she thinks that the Oklahoma property has enough equity in it to fully pay the tax debt when, as appears likely, it is sold. She acknowledges that without a trial of her request for innocent-spouse relief that tax debt will remain joint but notes that the sale of that property and payment of the tax debt will make this case moot. Respondent sees the logic of what she says, and is amenable to waiting for the sale to go through.
Intervenor, however, wants to go to trial on the innocent-spouse claim. We can't see how this is reasonable - even if he wins, the liability remains joint under federal law, but petitioner would just to state court to enforce its decree in her favor that made the debt intervenor's. If the Oklahoma land sale goes through, then the debt is paid out of property allocated by the divorce decree to intervenor, so the same result would be reached more efficiently.
This makes it reasonable that it be
ORDERED that petitioner's February 3, 2023 motion for continuance is granted in that this case is stricken from the Court's March 6, 2023 trial calendar for Dallas, Texas. It is also
ORDERED that this division of the Court retains jurisdiction. The Court will monitor the bankruptcy docket and contact the parties when necessary.