Leonard W. Harbin, and Bernice Nalls, Intervenor v. Commissioner
137 T.C. 93
| Tax Ct. | 2011Background
- Harbin petitions for relief from joint and several liability under Sec. 6015 after Final Notice of Determination denying relief for 1999 and 2000.
- Intervenor (former spouse) gambling losses were the source of the deficiencies; petitioner prepared returns and sought relief.
- Prior deficiency case (docket 10774–04) resolved via stipulated decision; relief under Sec. 6015 not raised then; final on June 19, 2005.
- Attorney Caldwell represented both petitioner and intervenor in the prior proceeding and in divorce; confessed conflict of interest not disclosed or waived.
- Petitioner sought relief under Sec. 6015; respondent asserted res judicata/6015(g)(2) bar; court later held petitioner did not participate meaningfully in the prior proceeding, allowing relief under Sec. 6015(b).
- The court ultimately granted relief to petitioner under Sec. 6015(b) and noted no need to analyze Sec. 6015(c) or (f).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether res judicata bars relief under Sec. 6015(g)(2). | Harbin did not meaningfully participate; res judicata should not bar. | Res judicata applies if final judgment on same year and issue reached. | Not barred by res judicata; proceeding allowed relief under Sec. 6015(b). |
| Whether petitioner meaningfully participated in the prior deficiency proceeding. | Petitioner lacked exclusive control; relied on intervenor; conflicts of interest. | Petitioner participated via filing, signings, and involvement through counsel. | Petitioner did not participate meaningfully; however, relief under Sec. 6015(b) still warranted in this case. |
| Whether petitioner is entitled to relief under Sec. 6015(b), (c) or (f). | Petitioner qualifies for relief based on intervenor’s disallowed gambling losses. | Sec. 6015(g)(2) barred relief; need for separate analysis. | Petitioner entitled to relief under Sec. 6015(b). |
| Whether the prior conflict of interest affected petitioner’s ability to seek relief. | Conflict prevented proper pursuit of relief opportunity. | Conflict existed, but does not alone bar relief if requirements met. | Conflict undermined representation but did not prevent Sec. 6015(b) relief in this case. |
Key Cases Cited
- Commissioner v. Sunnen, 333 U.S. 595 (U.S. 1948) (res judicata and finality principles in tax contexts; final judgments bind on litigable issues)
- Gustafson v. Commissioner, 97 T.C. 85 (T.C. 1991) (res judicata and year-by-year application; relief decisions tied to prior proceedings)
- Vetrano v. Commissioner, 116 T.C. 272 (T.C. 2001) (meaningful participation standard for Sec. 6015(g)(2))
- Deihl v. Commissioner, 134 T.C. 156 (T.C. 2010) (scope of meaningful participation and applicability of Sec. 6015(g)(2))
- Thurner v. Commissioner, 121 T.C. 43 (T.C. 2003) (factors indicating meaningful participation in prior proceeding)