Although we do not condone her inconsistency, we find it is
merely puffery in an attempt to obtain new employment and of no significance
here.”
There is a word one rarely sees in tax cases: puffery.
Puffery is an exaggeration. It approaches a lie but stops
short, and presumably no “reasonable” person would believe what is being said or
take it literally. The distinction matters if one’s puffery can be used against
them as a statement of fact.
Let’s look at the Robinson case.
Mr Robinson had a lawn care business. Beverly Robinson
had a job at Georgia Pacific, but in 2007 she started working at the lawn care business.
She did the billing. She was also listed on the business checking account, but
she never wrote checks.
She must have been the face of the business through,
as for 2007 through 2009 most of the Forms 1099 to the business were sent in
her name.
In 2010 the marriage went south. Mr Robinson moved
out, and Beverly’s dad chipped-in to pay the mortgage on her house. Needless to
say, she was not working at the company with all that going on.
In 2011 they filed a joint tax return for 2010. The
return showed tax due of approximately $43 grand. She must have separated hard
from the business, as no Forms 1099 were issued to her; all the Forms 1099 were
issued to him.
COMMENT: I do not understand filing a joint tax return with someone you are likely to divorce. In Beverly’s defense, though, she did not realize that she had an option. They hired a tax preparer (likely because of the business), but the preparer never explained that the option to file separately existed.
In 2011 she was telling the IRS that they could not
pay the 2010 tax debt. She also asked about innocent spouse status.
In 2012 they file a joint 2011 tax return. She was
working again at another Georgia Pacific facility and had tax withholdings. The
IRS took her withholdings and applied them to the 2010 tax year.
COMMENT: That is how it works.
In 2013 Beverly needed to find a new job. She uploaded
her resume on a jobseeker website. She listed her Georgia Pacific gig. She also
listed Robinson Lawn Care and embellished her duties, especially glossing over
the fact that she no longer worked there.
In 2013 Mr Robinson somehow forced his way back into
her house. She called the police and was told that they could not evict him
since the two were still married.
In October, 2013 she filed a petition for dissolution
of marriage.
About time. The year before Mr Robinson had fathered a
child with another woman. In 2013 he started paying her child support.
The divorce became final in 2014. Mr Robinson agreed to
assume the 2010 tax due.
Riiiight.
In 2015 she files for innocent spouse because of that
2010 tax debt and the IRS continuing to take her refunds.
The IRS turned down her request.
One of the requirements is that the tax liability for
which the spouse is seeking relief belong to the “nonrequesting” spouse. In
this case, the nonrequesting spouse was Mr Robinson.
He testified that he had moved out of the house in
2013. Oh, he also remembered Beverly working in the business in 2010.
Not good.
The IRS looked at certain Florida registrations that
showed her name through 2014.
They also pointed out that she was a signatory on the
business checking account.
Then they looked at her resume on that jobseeker
website.
The Court was having none of it.
As for Mr Robinson:
Throughout the trial Mr. Robinson’s testimony was relatively
inconsistent, and we give it little value.”
As for the registrations:
Although petitioner is listed as the registered owner of
Robinson Lawn Care from December 1998 to December 2014, we find the reason for
her filing the fictitious name--that her former husband worked during the
day--is a sufficient explanation for why she is listed instead of Mr. Robinson.
Moreover, she did not sign any State filings in 2010 or thereafter.
As for the checking account:
Similarly we find that petitioner’s name on the business
account is not persuasive support for respondent’s position as Mr. Robinson had
control of that account and she never wrote checks on it.
The Court pointed out that none of the 2010 Forms 1099
were made out to her, in clear contrast to prior tax years.
We saw above the Court’s comment on her puffery.
It was clear who the Court believed – and did not
believe.
The Court decided that she was entitled to innocent
spouse relief.
She cut it close, though.
Our case this time was Beverly Robinson v
Commissioner of Internal Revenue T.C. Memo 2020-134.
