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Treasury Tells Pelosi 'There's Nothing We Can Do'

MAY 18, 1999

Treasury Tells Pelosi 'There's Nothing We Can Do'

DATED MAY 18, 1999
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=============== SUMMARY ===============

 

In response to a letter from Rep. Nancy Pelosi, D-Calif., objecting to the Justice Department's practice of collecting one spouse's premarital tax liabilities by pursuing the community property assets of both spouses, Treasury has asserted that sections 66(f) and 6015(f) don't authorize it to grant equitable relief to the innocent spouse. Under those sections, it explains, Treasury may only relieve an individual of a tax for which he or she is liable. As the innocent spouse isn't liable for the premarital taxes, Treasury says, relief under those provisions isn't authorized. Moreover, it adds, whether equitable relief is appropriate depends on the facts and circumstances of the particular situation.

 

=============== FULL TEXT ===============

 

May 18, 1999

 

 

The Honorable Nancy Pelosi

 

U.S. House of Representatives

 

Washington, D.C. 20515

 

 

Dear Ms. Pelosi:

 

 

[1] Thank you for your letter of February 22, 1999 to Secretary Rubin in which you request that the Treasury Department and the Internal Revenue Service consider granting equitable relief under sections 66(c) and 6015(f) of the Internal Revenue Code in cases where California community property and debtor-creditor laws allow the Internal Revenue Service to collect the pre-marital tax liability of one spouse by pursuing the community property assets of both spouses.

[2] As you note in the letter, certain of the innocent spouse provisions enacted by the Internal Revenue Service Restructuring and Reform Act of 1998 (sections 6015(f) and 66(c)) authorize the Secretary to relieve an individual of a tax liability where, taking into account all the facts and circumstances, it is inequitable to hold the individual liable for the tax. We appreciate your bringing to our attention that California community property and debtor- creditor laws may create inequities in certain cases. However, because sections 6015(f) and 66(c) only authorize the Secretary to relieve an individual of a tax for which he or she is liable, it is not clear that granting equitable relief in the situation you describe is within the scope of the Secretary's authority. In addition, whether equitable relief is warranted is heavily dependent on the facts and circumstances of a particular situation. In formulating guidance and responding to taxpayer inquiries, we will, however, evaluate carefully any potentially inequitable situations that are brought to our attention.

[3] Should you have further questions, please do not hesitate to contact me.

Sincerely,

 

 

Donald C. Lubick

 

Assistant Secretary

 

(Tax Policy)
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