Relief from Joint and Several Liability_Fed Reg

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Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Proposed Rules

supporting the views and suggestions
presented are particularly helpful in
developing reasoned regulatory
decisions on the proposal. Comments
are specifically invited on the overall
regulatory, aeronautical, economic,
environmental, and energy-related
aspects of the proposal. Communications should identify the airspace
docket number and be submitted in
triplicate to the address listed above.
Commenters wishing the FAA to
acknowledge receipt of their comments
on this notice must submit with the
comments a self-addressed, stamped
postcard on which the following
statement is made: ‘‘Comments to
Airspace Docket No. 00–AWP–12.’’ The
postcard will be date/time stamped and
returned to the commenter. All
communications received on or before
the specified closing date for comments
will be considered before taking action
on the proposed rule. The proposal
contained in this notice may be changed
in light of comments received. All
comments submitted will be available
for examination in the Airspace Branch,
Air Traffic Division, 15000 Aviation
Boulevard, Lawndale, California 90261,
both before and after the closing date for
comments. A report summarizing each
substantive public contact with FAA
personnel concerned with this
rulemaking will be filed in the docket.

paragraph 6005 of FAA Order 7400.9H
dated September 1, 2000, and effective
September 16, 2000, which is
incorporated by reference in 14 CFR
71.1. The Class E airspace designation
listed in this document would be
published subsequently in this Order.
The FAA has determined that this
proposed regulation only involves an
established body of technical
regulations for which frequent and
routine amendments are necessary to
keep them operationally current.
Therefore, this proposed regulation—(1)
is not a ‘‘significant regulatory action’’
under Executive Order 12866; (2) is not
a ‘‘significant rule’’ under DOT
Regulatory Policies and Procedures (44
FR 11034; February 26, 1979); and (3)
does not warrant preparation of a
Regulatory Evaluation as the anticipated
impact is so minimal. Since this is a
routine matter that will only affect air
traffic procedures and air navigation, it
is certified that this proposed rule
would not have a significant economic
impact on a substantial number of small
entities under the criteria of the
Regulatory Flexibility Act.

Availability of NPRM
Any person may obtain a copy of this
Notice of Proposed Rulemaking (NPRM)
by submitting a request to the Federal
Aviation Administration, Airspace
Branch, 15000 Aviation Boulevard,
Lawndale, California 90261.
Communications must identify the
notice number of this NPRM. Persons
interested in being placed on a mailing
list for future NPRM’s should also
request a copy of Advisory Circular No.
11–2A, which describes the application
procedures.

In consideration of the foregoing, the
Federal Aviation Administration
proposed to amend 14 CFR part 71 as
follows:

The Proposal
The FAA is considering an
amendment to 14 CFR part 71 by
modifying the Class E airspace area at
Molokai, HI. The development of an
RNAV (GPS)–B SIAP at Kaunakakai/
Molokai Airport has made this proposal
necessary. Additional controlled
airspace extending upward from 700
feet above the surface is needed to
contain aircraft executing the RNAV
(GPS)–B SIAP to Kaunakakai/Molokai
Airport. The intended effect of this
proposal is to provide adequate
controlled airspace for aircraft executing
the RNAV (GPS)–B SIAP at Kaunakakai/
Molokai Airport, Kaunakakai, HI. Class
E airspace designations are published in

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List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference,
Navigation (air).
The Proposed Amendment

PART 71—DESIGNATION OF CLASS A,
CLASS B, CLASS C, CLASS D, AND
CLASS E AIRSPACE AREAS; ROUTES;
AND REPORTING POINTS
1. The authority citation for 14 CFR
part 71 continues to read as follows:
Authority: 49 U.S.C. 106(g), 40103, 40113,
40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–
1963 Comp., p. 389.
§ 71.1

[Amended]

2. The incorporation by reference in
14 CFR 71.1 of the Federal Aviation
Administration Order 7400.9H,
Airspace Designations and Reporting
Points, dated September 1, 2000, and
effective September 16, 2000, is
amended as follows:
Paragraph 6005 Class E airspace areas
extending upward from 700 feet or more
above the surface of the earth.

*

*

*

*

*

AWP HI E5 Molokai, HI [Revised]
Kaunakakai/Molokai Airport, HI
(Lat. 21°09′11″N., long. 157°05′47″W
Molokai VORTAC
(Lat. 21°08′17″N., long. 157°10′03″W

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That airspace extending upward from 700
feet above the surface within a 6.8-mile
radius of the Kaunakakai/Molokai Airport
and within 1.8 miles each side of the Molokai
VORTAC 268° radial, extending from the 6.8mile radius of Kaunkakai/Molokai Airport to
4.3 miles west of the Molokai VORTAC.

*

*

*

*

*

Issued in Los Angeles, California, on
December 27, 2000.
John Clancy,
Manager, Air Traffic Division, Western-Pacific
Region.
[FR Doc. 01–1277 Filed 1–16–01; 8:45 am]
BILLING CODE 4910–13–M

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–106446–98]
RIN 1545–AW64

Relief From Joint and Several Liability
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking.
SUMMARY: This document contains
proposed regulations relating to relief
from joint and several liability under
section 6015 of the Internal Revenue
Code. The regulations reflect changes in
the law made by the IRS Restructuring
and Reform Act of 1998. The regulations
provide guidance to married individuals
filing joint returns who may seek relief
from joint and several liability. This
document also provides notice of a
public hearing on these proposed
regulations.
DATES: Written or electronically
generated comments and requests to
speak (with outlines of oral comments)
at the public hearing scheduled for May
30, 2001, must be received by April 27,
2001.
ADDRESSES: Send submissions to:
CC:M&SP:RU (REG–106446–98), room
5228, Internal Revenue Service, POB
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be hand
delivered Monday through Friday
between the hours of 8 a.m. and 5 p.m.
to: CC:M&SP:RU (REG–106446–98),
Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue,
NW., Washington, DC. Alternatively,
taxpayers may submit comments
electronically via the Internet by
selecting the ‘‘Tax Regs’’ option on the
IRS Home Page, or by submitting
comments directly to the IRS Internet
site at http://www.irs.gov/tax_regs/
regslist.html.

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Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Proposed Rules
FOR FURTHER INFORMATION CONTACT:
Concerning the proposed regulations,
Bridget E. Finkenaur, 202–622–4940;
concerning submissions of comments,
the hearing and/or to be placed on the
building access list to attend the
hearing, Guy Traynor, 202–622–7190
(not toll-free numbers).
SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act
The collection of information
contained in this notice of proposed
rulemaking has been submitted to the
Office of Management and Budget for
review in accordance with the
Paperwork Reduction Act of 1995 (44
U.S.C. 3507). Comments on the
collection of information should be sent
to the Office of Management and
Budget, Attn: Desk Officer for the
Department of the Treasury, Office of
Information and Regulatory Affairs,
Washington, DC 20503, with copies to
the Internal Revenue Service, Attn: IRS
Reports Clearance Officer,
W:CAR:MP:FP:S:O, Washington, DC
20224. Comments on the collection of
information should be received by
March 19, 2001. Comments are
specifically requested concerning:
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Internal Revenue Service, including
whether the information will have
practical utility;
The accuracy of the estimated burden
associated with the proposed collection
of information (see below);
How the quality, utility, and clarity of
the information to be collected may be
enhanced;
How the burden of complying with
the proposed collection of information
may be minimized, including through
the application of automated collection
techniques or other forms of information
technology; and
Estimates of capital or start-up costs
and costs of operation, maintenance,
and purchase of services to provide
information.
The collection of information in this
proposed regulation is in § 1.6015–5.
Individuals may request relief from joint
and several liability by timely filing
Form 8857, ‘‘Request for Innocent
Spouse Relief (And Separation of
Liability and Equitable Relief),’’ or a
written statement that contains the
information required on Form 8857, that
is signed under penalties of perjury.
This collection of information is
required in order for an individual to
request relief from joint and several
liability. This information will be used
to carry out the internal revenue laws.
The likely respondents are individuals.

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The reporting burden contained in
§ 1.6015–5 is reflected in the burden of
Form 8857. The estimated burden is:
learning about the law or the form, 17
min.; preparing the form, 17 min.; and
copying, assembling, and sending the
form to the IRS, 20 min. The reporting
burden contained in § 1.6015–5 for the
statement signed under penalties of
perjury is estimated as: learning about
the law, 20 min.; preparing the
statement signed under penalties of
perjury, 30 min.; and copying,
assembling, and sending the statement
to the IRS, 20 min.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a valid control
number assigned by the Office of
Management and Budget.
Books or records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.
Background
Section 6013(d)(3) provides that
spouses who file a joint Federal income
tax return are jointly and severally liable
for liabilities with respect to tax arising
from that return. The term tax includes
additions to tax, penalties, and interest.
See sections 6665(a)(2) and 6601(e)(1).
Joint and several liability allows the IRS
to collect the entire liability from either
spouse signing the joint return, without
regard to whom the items of income,
deduction, credit, or basis that gave rise
to the liability are attributable. Before
the enactment of the Internal Revenue
Service Restructuring and Reform Act of
1998, Public Law 105–206 (112 Stat.
685) (1998) (RRA), section 6013(e)
provided the only relief from joint and
several liability, and it only applied in
very limited circumstances.
Section 3201 of the RRA repealed
section 6013(e) and replaced it with
section 6015. Section 6015 applies to
liabilities that arise after July 22, 1998,
and liabilities that arose prior to July 22,
1998, which remained unpaid as of that
date. The provisions of section 6015
expand the relief available to spouses or
former spouses who wish to be relieved
from all or a portion of the joint and
several liability arising from a joint
individual Federal income tax return.
Section 6015 makes the requirements
for relief from joint and several liability,
formerly in section 6013(e), less
restrictive (section 6015(b)), and adds
two other relief provisions. One
provision, section 6015(c), permits the

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3889

allocation of a deficiency between
certain estranged spouses or former
spouses in proportion to their respective
erroneous items or in accordance with
other allocation rules. The other
provision, section 6015(f), gives the
Secretary equitable discretion to grant
relief from joint and several liability.
The three relief provisions have
different eligibility requirements and
provide different types of relief.
This document contains proposed
amendments to the Income Tax
Regulations (26 CFR part 1) that are
necessary to carry out the provisions of
section 6015. The proposed regulations
provide detailed guidance on the three
types of relief from joint and several
liability under section 6015.
Explanation of Provisions
In General
To qualify for relief from joint and
several liability, a requesting spouse (as
defined in the regulations) must elect
the application of section 6015(b) or
6015(c), or request equitable relief under
section 6015(f), within 2 years of the
first collection activity after July 22,
1998, with respect to the requesting
spouse. Relief under section 6015 is
only available for income taxes required
under Subtitle A (including selfemployment taxes). Relief is not
available for other taxes reported on a
taxpayer’s income tax return (e.g.,
domestic services employment taxes
under section 3510).
The proposed regulations define
several terms, some of which are unique
to specific provisions, and others of
which are generally applicable to
section 6015. One generally applicable
term is an item. An item is generally
defined as that which is required to be
separately reported on an individual
income tax return. However, amounts
received from investments that are
required to be separately reported on an
individual income tax return and that
are from the same source are aggregated
and treated as one item. For example,
assume an individual receives $700 in
dividends and $1,000 in interest from X
Co. Although dividends and interest are
required to be separately reported on the
individual’s income tax return, they are
considered one item for purposes of
section 6015 because the dividends and
interest are both from X Co. Items
include, but are not limited to, gross
income, deductions, credits, and basis.
An erroneous item is defined as any
item resulting in an understatement or
deficiency in tax to the extent such item
is omitted from, or improperly reported
(including improperly characterized)
on, an individual income tax return.

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Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Proposed Rules

Innocent Spouse Relief Under Section
6015(b)
In enacting section 6015, Congress
focused, in part, on the limitations of
section 6013(e). H.R. Conf. Rep. No. 599,
105th Cong., 2d Sess. 249 (1998). Thus,
certain limitations under section 6013(e)
have been eliminated in section 6015.
For example, section 6013(e) required
that there be a substantial
understatement attributable to a grossly
erroneous item, whereas section 6015(b)
only requires that there be an
understatement of an erroneous item.
Another difference is that, unlike
section 6013(e), section 6015(b)
expressly provides for partial relief if a
requesting spouse did not know, and
had no reason to know, of only a portion
of the understatement. One procedural
difference is that a requesting spouse
must now elect the application of
section 6015(b).
Otherwise, section 6015(b) provides
the same type of relief as was available
under section 6013(e). In addition, as
with section 6013(e), if a requesting
spouse qualifies for relief under section
6015(b), refunds are available for
amounts that the requesting spouse paid
toward the liability for which relief was
granted. Much of the language in section
6015(b) is identical to that of section
6013(e). Accordingly, the case law
interpreting this language under section
6013(e) will be applied in interpreting
the same language under section
6015(b).
The proposed regulations define
understatement by reference to section
6662(d)(2)(A). Consistent with the
interpretation of section 6013(e), the
proposed regulations also clarify that
‘‘knowledge or reason to know’’ of an
understatement exists only when either
the requesting spouse actually knew of
the erroneous item giving rise to the
understatement, or a reasonable person
in similar circumstances would have
known of the item.
Allocation of Deficiency Under Section
6015(c)
Section 6015(c) is one of the new
relief provisions added by section 3201
of the RRA. Section 6015(c) basically
provides relief for an estranged or
former spouse by allowing the
requesting spouse to elect to limit the
requesting spouse’s liability for a
deficiency to the portion of the
deficiency allocated to the requesting
spouse. As with section 6015(b), the
relief under section 6015(c) must be
elected. Unlike section 6015(b), refunds
are not available under section 6015(c).
Of the three relief provisions in
section 6015, section 6015(c) comes

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closest to being a mechanical test.
Unlike the other two relief provisions,
section 6015(c) does not require a
determination that it would be
inequitable to hold the requesting
spouse liable in order for the requesting
spouse to obtain relief. Several objective
tests apply to determine whether a
requesting spouse qualifies for relief.
Among the requirements for relief under
section 6015(c) is the requirement that
the requesting spouse be divorced,
widowed, or legally separated, or not
have been a member of the same
household as the nonrequesting spouse
at any time during the 12-month period
ending on the date an election for relief
is filed. The proposed regulations
provide rules for determining whether
spouses are members of the same
household in particular situations.
Relief under section 6015(c) is not
available for the portion of a deficiency
attributable to an erroneous item of the
nonrequesting spouse if the Secretary
demonstrates that the requesting spouse
had actual knowledge of that item at the
time the requesting spouse signed the
joint return. If the requesting spouse had
actual knowledge of only a portion of
the erroneous item, partial relief may be
available for the amount of the
deficiency attributable to the portion of
the item of which the requesting spouse
did not have actual knowledge. Reason
to know of an erroneous item or a
portion thereof is not sufficient to
disqualify a requesting spouse from
relief under section 6015(c). Hence, it
may be easier to qualify for relief under
this provision than under section
6015(b).
Knowledge of an item means
knowledge of the receipt or expenditure.
It does not mean knowledge of the
proper tax treatment of the item or how
(or whether) it was actually reported on
the return. This knowledge standard is
consistent with the knowledge standard
adopted by the United States Tax Court
and other courts. See Cheshire v.
Commissioner, 115 T.C. No. 15 (August
30, 2000) (knowledge requirement
under section 6015(c) does not require
requesting spouse to possess knowledge
of the tax consequences arising from the
erroneous item or that the item reported
on the return is incorrect; rather the
statute requires only a showing that the
requesting spouse actually knew of the
erroneous item); Wiksell v.
Commissioner, 215 F.3d 1335 (9th Cir.
2000) (knowledge inquiry in section
6015(c) focuses on whether the taxpayer
had knowledge of the erroneous item,
not the tax consequences of that item).
Also, under the proposed regulations, a
requesting spouse could have actual
knowledge of an erroneous item without

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necessarily knowing its source. Thus, if
W knew that H received $1,000 of
interest income, W would have actual
knowledge of that item even if W
thought that the interest was taxexempt, or even if W did not know from
whom the interest was received.
Similarly, W would have actual
knowledge of the item even if W had
thought (incorrectly) that H had
included the interest income on the
return. A requesting spouse’s failure to
review a completed joint return will not
negate a demonstration by the Secretary
that the requesting spouse had actual
knowledge of an item.
To demonstrate that a requesting
spouse had actual knowledge of an
erroneous item, the Secretary may rely
upon all of the facts and circumstances.
One relevant factor is whether the
requesting spouse made an effort to be
shielded from liability by deliberately
avoiding learning about an item.
Another relevant factor is whether the
requesting spouse had an ownership
interest in the property that gave rise to
the item. The proposed regulations
provide that joint ownership is a factor
supporting a finding that the requesting
spouse had actual knowledge of an
erroneous item.
The proposed regulations also provide
that the portion of the deficiency for
which the requesting spouse remains
liable is increased (up to the entire
amount of the deficiency) by the value
of any disqualified assets transferred to
the requesting spouse by the
nonrequesting spouse. Disqualified
assets are defined as those assets
transferred for the principal purpose of
avoidance of tax or payment of tax. Any
assets transferred during the period
beginning 12 months before the mailing
date of the first letter of proposed
deficiency and continuing to the present
are presumed to be disqualified assets.
However, the requesting spouse can
rebut the presumption by showing that
the principal purpose of the transfer was
not the avoidance of tax or payment of
tax. In addition, the presumption does
not apply to transfers of assets pursuant
to a divorce or separate maintenance or
child support agreement. The IRS and
Treasury Department are particularly
interested in receiving comments on
whether there should be a de minimis
exception to the presumption, and if so,
the appropriate amount for such an
exception.
If a requesting spouse qualifies to
elect the application of section 6015(c),
section 6015(d) generally provides that
erroneous items are allocated between
the spouses as if they had filed separate
returns. In addition, section 6015(g)
directs the Secretary to establish

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Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Proposed Rules
alternative methods of allocating
erroneous items, other than the method
in section 6015(d). Under the proposed
regulations, erroneous income items are
generally allocated to the spouse who
earned the income or who owned the
investment or business producing the
income. If both spouses had an
ownership interest in an investment or
business, an erroneous income item
from that investment or business is
allocated between them in proportion to
their respective ownership interests.
Erroneous business or investment
deductions are generally allocated to the
spouse who owned the business or
investment. If both spouses had an
ownership in the business or
investment, an erroneous deduction
related to that business or investment is
allocated between them in proportion to
their respective ownership interests.
Personal deductions are generally
allocated 50% to each spouse, unless
the evidence shows that a different
allocation is appropriate.
Section 6015(d) also provides rules
for allocating a deficiency. Under the
proposed regulations, a portion of the
deficiency is allocated under the
‘‘proportionate allocation method,’’ that
is, in proportion to each spouse’s share
of erroneous items. The proposed
regulations provide additional rules
regarding the allocation of other
portions of the deficiency. First, any
portion of the deficiency attributable to
certain disallowed credits and taxes
(other than income tax and alternative
minimum tax) is allocated entirely to
one spouse or the other. Second, any
portion of the deficiency attributable to
the liability of the child of the
requesting or nonrequesting spouse is
allocated under special rules. Third, any
portion of the deficiency attributable to
the alternative minimum tax under
section 55 is allocated between the
spouses in proportion to their
individual shares of the total alternative
minimum taxable income as defined
under section 55(b)(2). Fourth, any
portion of the deficiency attributable to
accuracy-related penalties under section
6662 and fraud penalties under section
6663 is allocated to the spouse to whom
the item giving rise to the penalty is
allocable.
The proposed regulations provide one
alternative allocation method, which
must be used in place of the general
allocation method when there are
erroneous items taxed at different rates.
This method ensures that the allocation
of the liability is not skewed, for
example, when the deficiency items
consist of ordinary income items and
capital gains.

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Equitable Relief Under Section 6015(f)
Section 6015(f) is the other new relief
provision that was added by section
3201 of the RRA. Section 6015(f)
authorizes the Secretary to grant
equitable relief from joint and several
liability to requesting spouses who do
not qualify for relief under section
6015(b) or 6015(c). The proposed
regulations provide that the Secretary
has the discretion to grant equitable
relief and that the discretion may be
exercised if it would be inequitable to
hold the requesting spouse jointly and
severally liable. Equitable relief is only
available to requesting spouses who fail
to qualify for relief under sections
6015(b) and 6015(c). However, section
6015(f) may not be used to circumvent
the ‘‘no refund’’ rule of section 6015(c).
Therefore, equitable relief under section
6015(f) is not available to refund
liabilities already paid, for which the
requesting spouse would otherwise
qualify for relief under section 6015(c).
Section 6015(f) directs the Secretary
to prescribe procedures regarding when
equitable relief may be granted. These
proposed regulations provide general
information on section 6015(f) and refer
individuals seeking more detailed
guidance to the relevant revenue
rulings, revenue procedures, or other
published guidance issued on this topic.
The detailed guidance on section
6015(f) is currently provided in Revenue
Procedure 2000–15 (2000–5 I.R.B. 447).
Other Considerations
In addition to the three types of relief
from joint and several liability, section
6015 has many provisions that are
relevant when a requesting spouse
elects relief under section 6015(b) or
6015(c), or requests relief under section
6015(f). The proposed regulations
provide detailed guidance on these
other provisions:
1. Types of Relief Considered
There are certain statutory
consequences to electing the application
of section 6015(b) or section 6015(c)
(e.g., suspension of the statute of
limitations on collection). Therefore, the
IRS will not automatically consider
such relief unless the requesting spouse
affirmatively elects the application of at
least one of those sections. If a spouse
requests relief under section 6015(f)
alone, relief will only be considered
under that section. However, if a
requesting spouse elects the application
of either section 6015(b) or 6015(c), the
IRS will automatically consider whether
the requesting spouse qualifies for relief
under the other relief provisions of
section 6015.

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2. Time and Manner of Requesting
Relief
Relief under section 6015 must be
elected or requested within two years
from the first collection activity (as
defined in the proposed regulations)
after July 22, 1998, against the
requesting spouse with respect to the
joint and several liability. In addition,
relief may be elected or requested before
the commencement of collection
activity. However, the election may not
be made, nor may relief be requested,
before the taxpayer receives a
notification of an audit or a letter or
notice from the Secretary indicating that
there may be an outstanding liability
with regard to the joint return. The
proposed regulations provide that the
Secretary will not consider premature
claims.
3. Determinations
The proposed regulations provide that
a requesting spouse generally only
receives one final determination of relief
under section 6015. However, a second
election under section 6015(c) may be
considered, and a final determination
may be rendered on that election, if, at
the time of the second election, but not
at the time of the first election, the
requesting spouse is divorced, legally
separated, widowed, or has not been a
member of the same household as the
nonrequesting spouse at any time
during the 12-month period ending on
the date the election was filed.
4. Community Property
Under section 6015 and the proposed
regulations, the operation of community
property law is not considered in
determining to which spouse an
erroneous item is allocable.
5. Duress
The proposed regulations amend
§ 1.6013–4 to clarify that if a spouse
asserts and establishes that he or she
signed a joint return under duress, then
the return is not a joint return, and he
or she is not jointly and severally liable
for the liability arising from that return.
Therefore, in such a case, relief from
joint and several liability under section
6015 is not necessary and inapplicable.
Highlighted Issues
These proposed regulations contain
detailed guidance on the three types of
relief available under section 6015, as
well as the other provisions contained
in section 6015. Although public
comment is sought on all of the issues
in the proposed regulations, the IRS and
Treasury Department are particularly
interested in receiving comments on the
issues highlighted below. These issues

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Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Proposed Rules

present the most challenge in
administering section 6015(c).
1. Knowledge: The contrasting
standards of the relief provisions are
most evident in the respective
knowledge limitations. Under section
6015(b), relief is not available unless the
requesting spouse demonstrates that he
or she had no knowledge or reason to
know of the item giving rise to the
understatement at the time the joint
return was signed. In contrast, section
6015(c) provides that, assuming all of
the qualifications are met, relief is
available unless the Secretary
demonstrates that the requesting spouse
had actual knowledge of the item giving
rise to the deficiency. Actual knowledge
cannot be inferred from the requesting
spouse’s reason to know of the
erroneous item. The Secretary bears the
burden of proof with respect to the
knowledge limitation of section 6015(c).
In contrast, the requesting spouse bears
the burden of proof with respect to the
knowledge and reason to know
limitations of section 6015(b). The IRS
and Treasury Department are
specifically seeking comments on the
definition of item, because it is
knowledge of an item that will
disqualify a requesting spouse from
receiving relief under sections 6015(b)
and 6015(c).
2. Alternative Allocation Methods:
Section 6015(g)(1) directs the Secretary
to prescribe regulations providing
alternative allocation methods, and the
proposed regulations provide one that is
discussed above. The proposed
regulations also provide that additional
alternative allocation methods may be
provided in subsequent guidance. The
IRS and Treasury Department are
specifically interested in receiving
comments about the alternative
allocation method provided in the
proposed regulations, and any other
allocation methods that should be
considered.
3. Interests of the Nonrequesting
Spouse: It is anticipated that relief
under section 6015 will be granted more
frequently than it was under section
6013(e). Accordingly, section 6015
provides safeguards to protect
nonrequesting spouses from erroneous
determinations granting relief to their
respective requesting spouses. The
proposed regulations provide that the
Secretary must give a nonrequesting
spouse notice that the requesting spouse
filed a claim for relief and an
opportunity to participate in the
determination of whether relief is
appropriate.
In fashioning these safeguards, the
IRS and Treasury Department are
attempting to balance the rights and

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interests of both the requesting spouse
and the nonrequesting spouse. A spouse
who signs a joint return is jointly and
severally liable for the entire liability,
and the Secretary may collect the entire
liability from either spouse. Therefore, a
determination that one spouse is
relieved of joint and several liability
may have no legal effect on the amount
of the other spouse’s liability. However,
a nonrequesting spouse does have a
practical interest in the outcome of an
innocent spouse determination because
if the requesting spouse is relieved of
liability, the IRS’s only recourse is to
collect that liability from the
nonrequesting spouse. The IRS and
Treasury Department recognize that
Congress intended that the IRS take into
account the nonrequesting spouse’s
views when it makes a determination of
relief. See H.R. Conf. Rep. No. 599,
105th Cong., 2d Sess. 251, 255 (1998).
In addition, information provided by a
nonrequesting spouse is helpful in
many cases to determine the appropriate
amount of relief, if any.
Under the proposed regulations, a
nonrequesting spouse will have an
opportunity to participate in any
administrative or judicial determination
of relief. At the administrative level, the
nonrequesting spouse may submit
information relevant to the
determination to the IRS employee
making the determination. In addition,
if the requesting spouse files a petition
with the Tax Court, the nonrequesting
spouse will be notified, and have an
opportunity to become a party to the
proceeding. See Interim Tax Court Rule
325.
Nonetheless, the IRS and Treasury
Department recognize that some spouses
may be reluctant to apply for relief from
joint and several liability, or submit
information regarding the other spouse’s
request for relief, due to privacy
concerns or for fear of the other spouse’s
reprisal. To address this concern, the
proposed regulations provide that, at the
request of one spouse, the Secretary will
omit from shared documents any
information (e.g., new name, address,
employer) that would reasonably
identify that spouse’s location.
Special Analyses
It has been determined that these
regulations are not a significant
regulatory action as defined in
Executive Order 12866. Therefore, a
regulatory assessment is not required. It
has also been determined that section
553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply
to the regulations, and because the
regulations do not impose a collection
of information on small entities, the

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Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Pursuant to
section 7805(f), this notice of proposed
rulemaking will be submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on its impact on small businesses.
Comments and Public Hearing
Before the regulations are adopted as
final regulations, consideration will be
given to any written and electronic
comments that are submitted timely to
the IRS. The IRS and Treasury
Department specifically request
comments on the clarity of the proposed
regulations, on how the proposed
regulations can be made easier to
understand, and on the highlighted
issues. All comments will be available
for public inspection and copying.
A public hearing has been scheduled
for May 30, 2001, at 10 a.m., in the IRS
Auditorium (7th Floor), Internal
Revenue Building, 1111 Constitution
Avenue, NW., Washington, DC. Due to
building security procedures, visitors
must enter at the 10th Street entrance,
located between Constitution and
Pennsylvania Avenues, NW. In
addition, all visitors will not be
admitted beyond the immediate
entrance area more than 15 minutes
before the hearing starts. For
information about having your name
placed on the building access list to
attend the hearing, see the FOR FURTHER
INFORMATION CONTACT section of this
preamble.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing.
Persons who wish to present oral
comments at the hearing must submit
written comments and an outline of the
topics to be discussed at the time to be
devoted to each topic (signed original
and eight (8) copies) by April 27, 2001.
A period of 10 minutes will be
allotted to each person for making
comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receiving outlines has
passed. Copies of the agenda will be
available free of charge at the hearing.
Drafting Information
The principal author of the
regulations is Bridget E. Finkenaur of
the Office of Associate Chief Counsel,
Procedure and Administration
(Administrative Provisions and Judicial
Practice Division). However, other
personnel from the IRS and Treasury
Department participated in the
development of the regulations.

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Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Proposed Rules
(2) Example.
(g) Definitions.
(1) Requesting spouse.
(2) Nonrequesting spouse.
(3) Item.
(4) Erroneous item.
(5) Election or request.
(h) Transferee liability.
(1) In general.
(2) Example.

List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is
proposed to be amended as follows:

(4) Examples.
(5) Premature requests for relief.
(c) Effect of a final administrative
determination.

PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding the
following entries in numerical order to
read as follows:
Authority: 26 U.S.C. 7805 * * *
§ 1.6015–1 also issued under 26 U.S.C.
6015(g).
§ 1.6015–2 also issued under 26 U.S.C.
6015(g).
§ 1.6015–3 also issued under 26 U.S.C.
6015(g).
§ 1.6015–4 also issued under 26 U.S.C.
6015(g).
§ 1.6015–5 also issued under 26 U.S.C.
6015(g).
§ 1.6015–6 also issued under 26 U.S.C.
6015(g).
§ 1.6015–7 also issued under 26 U.S.C.
6015(g).
§ 1.6015–8 also issued under 26 U.S.C.
6015(g).
§ 1.6015–9 also issued under 26 U.S.C.
6015(g). * * *

Par. 2. In § 1.6013–4, paragraph (d) is
added to read as follows:
§ 1.6013–4

Applicable rules.

*

*
*
*
*
(d) Return signed under duress. If an
individual asserts and establishes that
he or she signed a return under legal
duress, the return is not a joint return.
The individual who signed such return
under duress is not jointly and severally
liable for the tax shown on the return or
any deficiency in tax with respect to the
return. The return is adjusted to reflect
only the tax liability of the individual
who voluntarily signed the return, and
the liability is determined at the
applicable rates in section 1(d). Section
6212 applies to the assessment of any
deficiency in tax on such return.
Par. 3. Sections 1.6015–0 through
1.6015–9 are added to read as follows:
§ 1.6015–0

Table of contents.

This section lists captions contained
in §§ 1.6015–1 through 1.6015–9.
§ 1.6015–1 Relief from joint and several
liability on a joint return.
(a) In general.
(b) Duress.
(c) Prior closing agreement or offer in
compromise.
(d) Fraudulent scheme.
(e) Res judicata and collateral estoppel.
(f) Community property laws.
(1) In general.

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§ 1.6015–2 Relief from liability applicable
to all qualifying joint filers.
(a) In general.
(b) Understatement.
(c) Knowledge or reason to know.
(d) Inequity.
(e) Partial relief.
(1) In general.
(2) Example.
§ 1.6015–3 Allocation of liability for
individuals who are no longer married, are
legally separated, or are not members of the
same household.
(a) Election to allocate liability.
(b) Definitions.
(1) Divorced.
(2) Legally separated.
(3) Not members of the same household.
(i) Temporary absences.
(ii) Separate dwellings.
(c) Limitations.
(1) No refunds.
(2) Actual knowledge.
(3) Disqualified asset transfers.
(i) In general.
(ii) Disqualified asset defined.
(iii) Presumption.
(4) Examples.
(d) Allocation.
(1) In general.
(2) Allocation of erroneous items.
(i) Benefit on the return.
(ii) Fraud.
(iii) Erroneous items of income.
(iv) Erroneous deduction items.
(3) Burden of proof.
(4) General allocation method.
(i) Proportionate allocation.
(ii) Separate treatment items.
(iii) Child’s liability.
(iv) Allocation of certain items.
(A) Alternative minimum tax.
(B) Accuracy-related and fraud penalties.
(5) Examples.
(6) Alternative allocation methods.
(i) Allocation based on applicable tax rates.
(ii) Allocation methods provided in
subsequent published guidance.
(iii) Example.
§ 1.6015–4

Equitable relief.

§ 1.6015–5 Time and manner for
requesting relief.

(a) Requesting relief.
(b) Time period for filing a request for
relief.
(1) In general.
(2) Definitions.
(i) Collection activity.
(ii) Date of levy or seizure.
(3) Requests for relief made before
commencement of collection activity.

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§ 1.6015–6 Nonrequesting spouse’s notice
and opportunity to participate in
administrative proceedings.
(a) In general.
(b) Information submitted.
(c) Effect of opportunity to participate.
§ 1.6015–7 Tax Court review.
(a) In general.
(b) Time period for petitioning the Tax
Court.
(c) Restrictions on collection and
suspension of the running of the period of
limitations.

(1) Restrictions on collection under
§ 1.6015–2 or 1.6015–3.
(2) Suspension of the running of the
period of limitations.
(i) Relief under § 1.6015–2 or 1.6015–
3.
(ii) Relief under § 1.6015–4.
(3) Definitions.
(i) Levy.
(ii) Proceedings in court.
(iii) Assessment to which the election
relates.
§ 1.6015–8

Applicable liabilities.

(a) In general.
(b) Liabilities paid on or before July 22,
1998.
(c) Examples.
§ 1.6015–9

Effective date.

§ 1.6015–1 Relief from joint and several
liability on a joint return.

(a) In general. (1) An individual who
qualifies and elects under section 6013
to file a joint Federal income tax return
with another individual is jointly and
severally liable for the joint Federal
income tax liabilities for that year.
However, a spouse or former spouse
may be relieved of joint and several
liability for any Federal income tax, selfemployment tax, penalties, additions to
tax, and interest for that year under the
following three relief provisions:
(i) Innocent spouse relief under
§ 1.6015–2.
(ii) Allocation of deficiency under
§ 1.6015–3.
(iii) Equitable relief under § 1.6015–4.
(2) A requesting spouse may submit a
single claim electing relief under both or
either §§ 1.6015–2 and 1.6015–3, and
requesting relief under § 1.6015–4.
However, equitable relief under
§ 1.6015–4 is available only to a
requesting spouse who fails to qualify
for relief under §§ 1.6015–2 and 1.6015–
3. If a requesting spouse elects the
application of either § 1.6015–2 or
1.6015–3, the Secretary may consider

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Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Proposed Rules

whether relief is appropriate under the
other elective provision and, to the
extent relief is unavailable under either,
under § 1.6015–4. If a requesting spouse
seeks relief only under § 1.6015–4, the
Secretary may not grant relief under
§ 1.6015–2 or 1.6015–3. A requesting
spouse must affirmatively elect the
application of § 1.6015–2 or 1.6015–3 in
order for the Secretary to grant relief
under one of those sections.
(3) Relief is not available for liabilities
that are required to be reported on a
joint Federal income tax return but are
not income taxes imposed under
Subtitle A of the Internal Revenue Code
(e.g., domestic service employment
taxes under section 3510).
(b) Duress. For rules relating to the
treatment of returns signed under
duress, see § 1.6013–4(d).
(c) Prior closing agreement or offer in
compromise. A requesting spouse is not
entitled to relief from joint and several
liability under § 1.6015–2, § 1.6015–3,
or § 1.6015–4 for any tax year for which
the requesting spouse has entered into
a closing agreement (other than an
agreement entered into pursuant to
section 6224(c) relating to partnership
items) with the Commissioner that
disposes of the same liability that is the
subject of the claim for relief. In
addition, a requesting spouse is not
entitled to relief from joint and several
liability under § 1.6015–2, § 1.6015–3,
or § 1.6015–4 for any tax year for which
the requesting spouse has entered into
an offer in compromise with the
Commissioner. For rules relating to the
effect of closing agreements and offers
in compromise, see sections 7121 and
7122, and the regulations thereunder.
(d) Fraudulent scheme. If the
Secretary establishes that a spouse
transferred assets to the other spouse as
part of a fraudulent scheme, relief is not
available under section 6015, and
section 6013(d)(3) applies to the return.
(e) Res judicata and collateral
estoppel. A requesting spouse is not
entitled to relief from joint and several
liability under § 1.6015–2 or 1.6015–3
for any tax year for which a court of
competent jurisdiction has rendered a
final determination on the requesting
spouse’s tax liability if the requesting
spouse materially participated in the
proceeding. A requesting spouse has not
materially participated in a prior
proceeding if, due to the effective date
of section 6015, relief under section
6015 was not available in that
proceeding. However, any final
determinations made by a court of
competent jurisdiction regarding issues
relevant to § 1.6015–2, § 1.6015–3, or
§ 1.6015–4 are conclusive and may not
be reconsidered, provided the

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requesting spouse materially
participated in the prior court
proceeding.
(f) Community property laws—(1) In
general. In determining whether relief is
available under § 1.6015–2, § 1.6015–3,
or § 1.6015–4, items of income, credits,
and deductions are generally allocated
to the spouses without regard to the
operation of community property laws.
An erroneous item is attributed to the
individual whose activities gave rise to
such item. See § 1.6015–3(d)(2).
(2) Example. The following example
illustrates the rule of this paragraph (f):
Example. (i) H and W are married and have
lived in State A (a community property state)
since 1987. On April 15, 2003, H and W file
a joint Federal income tax return for the 2002
taxable year. In August 2005, the Internal
Revenue Service proposes a $17,000
deficiency with respect to the 2002 joint
return. A portion of the deficiency is
attributable to $20,000 of H’s unreported
interest income from his individual bank
account, the remainder of the deficiency is
attributable to $30,000 of W’s disallowed
business expense deductions. Under the laws
of State A, H and W each own 1⁄2 of all
income earned and property acquired during
the marriage.
(ii) In November 2005, H and W divorce
and W timely elects to allocate the
deficiency. Even though the laws of State A
provide that 1⁄2 of the interest income is W’s,
for purposes of relief under this section, the
$20,000 unreported interest income is
allocable to H, and the $30,000 disallowed
deduction is allocable to W. The community
property laws of State A are not considered
in allocating items for this purpose.

(g) Definitions—(1) Requesting
spouse. A requesting spouse is an
individual who filed a joint return and
elects relief from Federal income tax
liability arising from that return under
§ 1.6015–2 or § 1.6015–3, or requests
relief from Federal income tax liability
arising from that return under § 1.6015–
4.
(2) Nonrequesting spouse. A
nonrequesting spouse is the individual
with whom the requesting spouse filed
the joint return for the year for which
relief from liability is sought.
(3) Item. An item is that which is
required to be separately listed on an
individual income tax return or any
required attachments, subject to one
exception: Amounts received from
investments that are required to be
separately reported on an individual
income tax return and that are from the
same source are aggregated and treated
as a single item. Items include, but are
not limited to, gross income,
deductions, credits, and basis.
(4) Erroneous item. An erroneous item
is any item resulting in an
understatement or deficiency in tax to

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the extent that such item is omitted
from, or improperly reported (including
improperly characterized) on an
individual income tax return. For
example, unreported income from an
investment asset resulting in an
understatement or deficiency in tax is
an erroneous item. Similarly, ordinary
income that is improperly reported as
capital gain resulting in an
understatement or deficiency in tax is
also an erroneous item. An erroneous
item is also an improperly reported item
that affects the liability on other returns
(e.g., an improper net operating loss that
is carried back to a prior year’s return).
(5) Election or request. A qualifying
election under § 1.6015–2 or § 1.6015–3,
or request under § 1.6015–4, is the first
timely claim for relief from joint and
several liability for the tax year for
which relief is sought. A qualifying
election also includes a requesting
spouse’s second election to seek relief
from joint and several liability for the
same tax year under § 1.6015–3 when
the additional qualifications of
paragraph (g)(5) (i) and (ii) of this
section are met—
(i) The requesting spouse did not
qualify for relief under § 1.6015–3 when
the Internal Revenue Service considered
the first election because the
qualifications of § 1.6015–3(a) were not
satisfied; and
(ii) At the time of the second election,
the qualifications for relief under
§ 1.6015–3(a) are satisfied.
(h) Transferee liability—(1) In general.
The relief provisions of section 6015 do
not negate liability that arises under the
operation of other laws. Therefore, a
requesting spouse who is relieved of
joint and several liability under
§ 1.6015–2, § 1.6015–3, or § 1.6015–4
may nevertheless remain liable for the
unpaid tax (including additions to tax,
penalties, and interest) to the extent
provided by Federal or state transferee
liability or property laws. For the rules
regarding the liability of transferees, see
sections 6901 through 6904 and the
regulations thereunder. In addition, the
requesting spouse’s property may be
subject to collection under Federal or
state property laws.
(2) Example. The following example
illustrates the rule of this paragraph (h):
Example. H and W timely file their 1998
joint income tax return on April 15, 1999. H
dies in March 2000, and the executor of H’s
estate transfers all of the estate’s assets to W.
In July 2001, the Internal Revenue Service
assesses a deficiency for the 1998 return. The
items giving rise to the deficiency are
attributable to H. W is relieved of the liability
under § 6015, and H’s estate remains solely
liable. The Internal Revenue Service may
seek to collect the deficiency from W to the

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extent permitted under Federal or state
transferee liability or property laws.
§ 1.6015–2 Relief from liability applicable
to all qualifying joint filers.

(a) In general. A requesting spouse
may be relieved of joint and several
liability for tax (including additions to
tax, penalties, and interest) from an
understatement for a taxable year under
this section if the requesting spouse
elects the application of this section in
accordance with §§ 1.6015–1(g)(5) and
1.6015–5, and—
(1) A joint return was filed for the
taxable year;
(2) On the return there is an
understatement attributable to
erroneous items of the nonrequesting
spouse;
(3) The requesting spouse establishes
that in signing the return he or she did
not know and had no reason to know of
the item giving rise to the
understatement; and
(4) It is inequitable to hold the
requesting spouse liable for the
deficiency attributable to the
understatement.
(b) Understatement. The term
understatement has the meaning given
to such term by section 6662(d)(2)(A)
and the regulations thereunder.
(c) Knowledge or reason to know. A
requesting spouse has knowledge or
reason to know of an erroneous item if
he or she either actually knew of the
item giving rise to the understatement,
or if a reasonable person in similar
circumstances would have known of the
item giving rise to the understatement.
For rules relating to a requesting
spouse’s actual knowledge, see
§ 1.6015–3(c)(2). All of the facts and
circumstances are considered in
determining whether a requesting
spouse had reason to know of an
erroneous item. The facts and
circumstances that are considered
include, but are not limited to, the
nature of the item and the amount of the
item relative to other items; the couple’s
financial situation; the requesting
spouse’s educational background and
business experience; the extent of the
requesting spouse’s participation in the
activity that resulted in the erroneous
item; whether the requesting spouse
failed to inquire, at or before the time
the return was signed, about items on
the return or omitted from the return
that a reasonable person would
question; and whether the erroneous
item represented a departure from a
recurring pattern reflected in prior
years’ returns (e.g., omitted income from
an investment regularly reported on
prior years’ returns).

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(d) Inequity. All of the facts and
circumstances are considered in
determining whether it is inequitable to
hold a requesting spouse jointly and
severally liable for an understatement.
One relevant factor for this purpose is
whether the requesting spouse
significantly benefitted, directly or
indirectly, from the understatement. A
significant benefit is any benefit in
excess of normal support. Evidence of
direct or indirect benefit may consist of
transfers of property or rights to
property, including transfers that may
be received several years after the year
of the understatement. Thus, for
example, if a requesting spouse receives
property (including life insurance
proceeds) from the nonrequesting
spouse that is traceable to items omitted
from gross income that are attributable
to the nonrequesting spouse, the
requesting spouse will be considered to
have received significant benefit from
those items. Other factors that may also
be taken into account include the fact
that the nonrequesting spouse has not
fulfilled support obligations to the
requesting spouse or the fact that the
spouses have been divorced, legally
separated, or not been members of the
same household for at least the 12
months directly preceding the election.
For more information on factors relevant
to determining whether it is inequitable
to hold a requesting spouse liable, see
Rev. Proc. 2000–15 (2000–5 I.R.B. 447),
or guidance subsequently published by
the Secretary as described in § 1.6015–
4(c).
(e) Partial relief—(1) In general. If a
requesting spouse had no knowledge or
reason to know of only a portion of an
erroneous item, the requesting spouse
may be relieved of the liability
attributable to that portion of that item,
if all other requirements are met with
respect to that portion.
(2) Example. The following example
illustrates the rules of this paragraph (e):
Example. H and W are married and file
their 2004 joint income tax return in March
2005. In April 2006, H is convicted of
embezzling $2 million from his employer
during 2004. H kept all of his embezzlement
income in an individual bank account, and
he used most of the funds to support his
gambling habit. However, each month during
2004, H transferred $10,000 from the
individual account to H and W’s joint bank
account. W paid the household expenses
using this joint account, and regularly
received the bank statements relating to the
account. W had no knowledge or reason to
know of H’s embezzling activities. However,
W did have knowledge and reason to know
of $120,000 of the $2 million of H’s
embezzlement income at the time she signed
the joint return because that amount passed
through the couple’s joint bank account.

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Therefore, W may be relieved of the liability
arising from $1,880,000 of the unreported
embezzlement income, but she may not be
relieved of the liability for the deficiency
arising from $120,000 of the unreported
embezzlement income of which she knew
and had reason to know.
§ 1.6015–3 Allocation of deficiency for
individuals who are no longer married, are
legally separated, or are not members of the
same household.

(a) Election to allocate deficiency. A
requesting spouse may elect to allocate
a deficiency if, as defined in paragraph
(b) of this section, the requesting spouse
is divorced, widowed, or legally
separated, or has not been a member of
the same household as the
nonrequesting spouse at any time
during the 12-month period ending on
the date an election for relief is filed.
Subject to the restrictions of paragraph
(c) of this section, an eligible requesting
spouse who elects the application of
this section in accordance with
§§ 1.6015–1(g)(5) and 1.6015–5
generally may be relieved of joint and
several liability for the portion of any
deficiency that is allocated to the
nonrequesting spouse pursuant to the
allocation methods set forth in
paragraph (d) of this section. Relief may
be available to both spouses filing the
joint return if each spouse is eligible for
and elects the application of this
section.
(b) Definitions—(1) Divorced. A
requesting spouse is divorced if the
requesting spouse has a divorce decree
that is recognized in the jurisdiction in
which the requesting spouse resides.
(2) Legally separated. A requesting
spouse is legally separated if the
separation is recognized under the laws
of the jurisdiction in which the
requesting spouse resides.
(3) Not members of the same
household—(i) Temporary absences. A
requesting spouse and a nonrequesting
spouse are considered members of the
same household during either spouse’s
temporary absences from the household
if it is reasonable to assume that the
absent spouse will return to the
household, and the household or a
substantially equivalent household is
maintained in anticipation of such
return. Examples of temporary absences
may include, but are not limited to,
absence due to incarceration,
hospitalization, business travel,
vacation travel, military service, or
education away from home.
(ii) Separate dwellings. A husband
and wife who reside in the same
dwelling are considered members of the
same household. However, a husband
and wife who reside in two separate

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dwellings, whether or not part of the
same structure, are not considered
members of the same household unless
one is temporarily absent from the
other’s household within the meaning of
paragraph (b)(3)(i) of this section.
(c) Limitations—(1) No refunds. Relief
under this section is only available for
unpaid liabilities resulting from
understatements of liability. Refunds are
not authorized under this section.
(2) Actual knowledge. (i) If the
Secretary demonstrates that the
requesting spouse had actual knowledge
at the time the return was signed of an
erroneous item that is allocable to the
nonrequesting spouse, the election to
allocate the deficiency attributable to
that item is invalid, and the requesting
spouse remains liable for the portion of
the deficiency attributable to that item.
For example, assume W received $5,000
of dividend income from her investment
in X Co. but did not report it on the joint
return. H knew that W received $5,000
of dividend income from X Co. that
year. H had actual knowledge of the
erroneous item (i.e., $5,000 of
unreported dividend income from X
Co.), and no relief is available under this
section for the deficiency attributable to
the dividend income from X Co. If a
requesting spouse had actual knowledge
of only a portion of an erroneous item,
then relief is not available for that
portion of the erroneous item. For
example, if H knew that W received
$1,000 of dividend income and did not
know that W received an additional
$4,000 of dividend income, relief would
not be available for the portion of the
deficiency attributable to the $1,000 of
dividend income of which H had actual
knowledge. A requesting spouse’s actual
knowledge of the proper tax treatment
of an item is not relevant for purposes
of demonstrating that the requesting
spouse had actual knowledge of an
erroneous item. For example, assume H
did not know W’s dividend income
from X Co. was taxable, but knew that
W received the dividend income. Relief
is not available under this provision. In
addition, a requesting spouse’s
knowledge of how an erroneous item
was treated on the tax return is not
relevant to a determination of whether
the requesting spouse had actual
knowledge of the item. For example,
assume that H knew of W’s dividend
income, but H failed to review the
completed return and did not know that
W omitted the dividend income from
the return. Relief is not available under
this provision.
(ii) Knowledge of the source of an
erroneous item is not sufficient to
establish actual knowledge. For
example, assume H knew that W owned

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X Co. stock, but H did not know that X
Co. paid dividends to W that year. H’s
knowledge of W’s ownership in X Co. is
not sufficient to establish that H had
actual knowledge of the dividend
income from X Co. In addition, a
requesting spouse’s actual knowledge
may not be inferred when the requesting
spouse merely had reason to know of
the erroneous item. Even if H’s
knowledge of W’s ownership interest in
X Co. indicates a reason to know of the
dividend income, actual knowledge of
such dividend income cannot be
inferred from H’s reason to know.
(iii) To demonstrate that a requesting
spouse had actual knowledge of an
erroneous item at the time the return
was signed, the Secretary may rely upon
all of the facts and circumstances. One
factor that may be relied upon in
demonstrating that a requesting spouse
had actual knowledge of an erroneous
item is whether the requesting spouse
made a deliberate effort to avoid
learning about the item in order to be
shielded from liability. This factor,
together with all other facts and
circumstances, may demonstrate that
the requesting spouse had actual
knowledge of the item. Another factor
that may be relied upon in
demonstrating that a requesting spouse
had actual knowledge of an erroneous
item is whether the requesting spouse
and the nonrequesting spouse jointly
owned the property that resulted in the
erroneous item. Joint ownership is a
factor supporting a finding that the
requesting spouse had actual knowledge
of an erroneous item. For purposes of
this paragraph, a requesting spouse will
not be considered to have had an
ownership interest in an item based
solely on the operation of community
property law. Rather, a requesting
spouse who resided in a community
property state at the time the return was
signed will be considered to have had
an ownership interest in an item only if
the requesting spouse’s name appeared
on the ownership documents, or there
otherwise is an indication that the
requesting spouse had a direct interest
in the item. For example, assume H and
W live in State A, a community property
state. After their marriage, H opens a
bank account in his name. Under the
operation of the community property
laws of state A, W owns 1⁄2 of the bank
account. However, W does not have an
ownership interest in the account for
purposes of this paragraph (c)(2)(iii)
because the account is not held in her
name and there is no other indication
that she has a direct interest in the item.
(3) Disqualified asset transfers—(i) In
general. The portion of the deficiency
for which a requesting spouse is liable

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is increased (up to the entire amount of
the deficiency) by the value of any
disqualified asset that was transferred to
the requesting spouse. For purposes of
this paragraph (c)(3), the value of a
disqualified asset is the fair market
value of the asset on the date of the
transfer.
(ii) Disqualified asset defined. A
disqualified asset is any property or
right to property that was transferred
from the nonrequesting spouse to the
requesting spouse if the principal
purpose of the transfer was the
avoidance of tax or payment of tax
(including additions to tax, penalties,
and interest).
(iii) Presumption. Any asset
transferred from the nonrequesting
spouse to the requesting spouse during
the 12-month period before the mailing
date of the first letter of proposed
deficiency (e.g., a 30-day letter or, if no
30-day letter is mailed, a notice of
deficiency) is presumed to be a
disqualified asset. The presumption also
applies to any asset that is transferred
from the nonrequesting spouse to the
requesting spouse after the mailing date
of the first letter of proposed deficiency.
However, the presumption does not
apply if the requesting spouse
establishes that the asset was transferred
pursuant to a divorce decree or separate
maintenance agreement. In addition, a
requesting spouse may rebut the
presumption by establishing that the
principal purpose of the transfer was
not the avoidance of tax or payment of
tax.
(4) Examples. The following examples
illustrate the rules in this paragraph (c):
Example 1. Actual knowledge of an
erroneous item. (i) H and W file their 2001
joint Federal income tax return on April 15,
2002. On the return, H and W report W’s selfemployment income, but they do not report
W’s self-employment tax on that income. In
August 2003, H and W receive a 30-day letter
from the Internal Revenue Service proposing
a deficiency with respect to W’s unreported
self-employment tax on the 2001 return. On
November 4, 2003, H, who otherwise
qualifies under paragraph (a) of this section,
files an election to allocate the deficiency to
W. The erroneous item is the selfemployment income, and it is allocable to W.
H knows that W earned income in 2001 as
a self-employed musician, but he does not
know that self-employment tax must be
reported on and paid with a joint return.
(ii) H’s election to allocate the deficiency
to W is invalid because, at the time H signed
the joint return, H had actual knowledge of
W’s self-employment income. The fact that H
was unaware of the tax consequences of that
income (i.e., that an individual is required to
pay self-employment tax on that income) is
not relevant.
Example 2. Actual knowledge not inferred
from a requesting spouse’s reason to know.

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(i) H has long been an avid gambler. H
supports his gambling habit and keeps all of
his gambling winnings in an individual bank
account, held solely in his name.
W knows about H’s gambling habit and
that he keeps a separate bank account, but
she does not know whether he has any
winnings because H does not tell her, and
she does not otherwise know of H’s bank
account transactions. H and W file their 2001
joint Federal income tax return on April 15,
2002. On October 31, 2003, H and W receive
a 30-day letter proposing a $100,000
deficiency relating to H’s unreported
gambling income. In February 2003, H and W
divorce, and in March 2004, W files an
election under section 6015(c) to allocate the
$100,000 deficiency to H.
(ii) While W may have had reason to know
of the gambling income because she knew of
H’s gambling habit and separate account, W
did not have actual knowledge of the
erroneous item (i.e., the gambling winnings).
The Internal Revenue Service may not infer
actual knowledge from W’s reason to know
of the income. Therefore, W’s election to
allocate the $100,000 deficiency to H is valid.
Example 3. Actual knowledge of return
reporting position. (i) H and W are legally
separated. In February 1999, W signs a blank
joint Federal income tax return for 1998 and
gives it to H to fill out. The return was timely
filed on April 15, 1999. In September 2001,
H and W receive a 30-day letter proposing a
deficiency relating to $100,000 of unreported
dividend income received by H with respect
to stock of ABC Co. owned by H. W knew
that H received the $100,000 dividend
payment in August 1998, but she did not
know whether H reported that payment on
the joint return.
(ii) On January 30, 2002, W files an
election to allocate the deficiency from the
1998 return to H. W claims she did not
review the completed joint return, and
therefore, she had no actual knowledge that
there was an understatement of the dividend
income. W’s election to allocate the
deficiency to H is invalid because she had
actual knowledge of the erroneous item
(dividend income from ABC Co.) at the time
she signed the return. The fact that W signed
a blank return is irrelevant. The result would
be the same if W had not reviewed the
completed return or if W had reviewed the
completed return and had not noticed that
the item was omitted.
(iii) Assume the same facts as in paragraph
(i) of this Example 3 except that, instead of
receiving $100,000 of unreported dividend
income, H received $50,000 of interest
income from ABC Co. during the year
(properly reported on the return) and $25,000
of dividend income from ABC Co. (omitted
from the return). W knew that H received
both dividend and interest income from ABC
Co. but did not know the total was greater
than $50,000. W’s election to allocate to H
the deficiency attributable to the omitted
dividend income is valid. Although interest
and dividend income are required to be
separately stated on a joint Federal income
tax return, they are one item in this case
because the dividend and interest income are
investment income received from the same
source (ABC Co.). The erroneous item is the

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total dividend and interest income from ABC
Co. W did not have actual knowledge of the
erroneous item (combined dividend and
interest income from ABC Co. greater than
$50,000). Therefore, her election to allocate
to H the deficiency attributable to the
erroneous item is valid.
Example 4. Actual knowledge of an
erroneous item of income. (i) H and W are
legally separated. In June 2004, a deficiency
is proposed with respect to H and W’s 2002
joint Federal income tax return that is
attributable to $30,000 of unreported income
from H’s plumbing business that should have
been reported on a Schedule C. No Schedule
C was attached to the return. At the time W
signed the return, W knew that H had a
plumbing business but did not know whether
H received any income from the business.
W’s election to allocate to H the deficiency
attributable to the $30,000 of unreported
plumbing income is valid.
(ii) Assume the same facts as in paragraph
(i) of this Example 4 except that, at the time
W signed the return, W knew that H received
$20,000 of plumbing income. W’s election to
allocate to H the deficiency attributable to the
$20,000 of unreported plumbing income (of
which W had actual knowledge) is invalid.
W’s election to allocate to H the deficiency
attributable to the $10,000 of unreported
plumbing income (of which W did not have
actual knowledge) is valid.
(iii) Assume the same facts as in paragraph
(i) of this Example 4 except that, at the time
W signed the return, W did not know the
exact amount of H’s plumbing income. W did
know, however, that H received at least
$8,000 of plumbing income. W’s election to
allocate to H the deficiency attributable to
$8,000 of unreported plumbing income (of
which W had actual knowledge) is invalid.
W’s election to allocate to H the deficiency
attributable to the remaining $22,000 of
unreported plumbing income (of which W
did not have actual knowledge) is valid.
(iv) Assume the same facts as in paragraph
(i) of this Example 4 except that H reported
$26,000 of plumbing income on the return
and omitted $4,000 of plumbing income from
the return. At the time W signed the return,
W knew that H was a plumber, but she did
not know that H earned more than $26,000
that year. W’s election to allocate to H the
deficiency attributable to the $4,000 of
unreported plumbing income is valid
because she did not have actual knowledge
that H received plumbing income in excess
of $26,000.
(v) Assume the same facts as in paragraph
(i) of this Example 4 except that H reported
only $20,000 of plumbing income on the
return and omitted $10,000 of plumbing
income from the return. At the time W signed
the return, W knew that H earned at least
$26,000 that year as a plumber. However, W
did not know that, in reality, H earned
$30,000 that year as a plumber. W’s election
to allocate to H the deficiency attributable to
the $6,000 of unreported plumbing income
(of which W had actual knowledge) is
invalid. W’s election to allocate to H the
deficiency attributable to the $4,000 of
unreported plumbing income (of which W
did not have actual knowledge) is valid.
Example 5. Actual knowledge of a
deduction that is an erroneous item. (i) H and

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3897

W are legally separated. In February 2005, a
deficiency is asserted with respect to their
2002 joint Federal income tax return. The
deficiency is attributable to a disallowed
$1,000 deduction for medical expenses H
claimed he incurred. At the time W signed
the return, W knew that H had not incurred
any medical expenses. W’s election to
allocate to H the deficiency attributable to the
disallowed medical expense deduction is
invalid because W had actual knowledge that
H had not incurred any medical expenses.
(ii) Assume the same facts as in paragraph
(i) of this Example 5 except that, at the time
W signed the return, W did not know
whether H had incurred any medical
expenses. W’s election to allocate to H the
deficiency attributable to the disallowed
medical expense deduction is valid because
she did not have actual knowledge that H
had not incurred any medical expenses.
(iii) Assume the same facts as in paragraph
(i) of this Example 5 except that the Internal
Revenue Service disallowed $400 of the
$1,000 medical expense deduction. At the
time W signed the return, W knew that H had
incurred some medical expenses but did not
know the exact amount. W’s election to
allocate to H the deficiency attributable to the
disallowed medical expense deduction is
valid because she did not have actual
knowledge that H had not incurred medical
expenses (in excess of the floor amount
under section 213(a)) of more than $600.
(iv) Assume the same facts as in paragraph
(i) of this Example 5 except that H claims a
medical expense deduction of $10,000 and
the Internal Revenue Service disallows
$9,600. At the time W signed the return, W
knew H had incurred some medical expenses
but did not know the exact amount. W also
knew that H incurred medical expenses (in
excess of the floor amount under section
213(a)) of no more than $1,000. W’s election
to allocate to H the deficiency attributable to
the portion of the overstated deduction of
which she had actual knowledge ($9,000) is
invalid. W’s election to allocate the
deficiency attributable to the portion of the
overstated deduction of which she had no
knowledge ($600) is valid.
Example 6. Disqualified asset presumption.
(i) H and W are divorced. In May 1999, W
transfers $20,000 to H, and in April 2000, H
and W receive a 30-day letter proposing a
$40,000 deficiency on their 1998 joint
Federal income tax return. The liability
remains unpaid, and in October 2000, H
elects to allocate the deficiency under this
section. Seventy-five percent of the net
amount of erroneous items are allocable to
W, and 25% of the net amount of erroneous
items are allocable to H.
(ii) In accordance with the proportionate
allocation method (see paragraph (d)(4) of
this section), H proposes that $30,000 of the
deficiency be allocated to W and $10,000 be
allocated to himself. H submits a signed
statement providing that the principal
purpose of the $20,000 transfer was not the
avoidance of tax or payment of tax, but he
does not submit any documentation
indicating the reason for the transfer. H has
not overcome the presumption that the
$20,000 was a disqualified asset. Therefore,
the portion of the deficiency for which H is

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liable ($10,000) is increased by the value of
the disqualified asset ($20,000). H is relieved
of liability for $10,000 of the $30,000
deficiency allocated to W, and remains
jointly and severally liable for the remaining
$30,000 of the deficiency (assuming that H
does not qualify for relief under any other
provision).
Example 7. Disqualified asset presumption
inapplicable. On May 1, 2001, H and W
receive a 30-day letter regarding a proposed
deficiency on their 1999 joint Federal income
tax return relating to unreported capital gain
from H’s sale of his investment in Z stock.
W had no actual knowledge of the stock sale.
The deficiency is assessed in November
2001, and in December 2001, H and W
divorce. According to the divorce decree, H
must transfer 1⁄2 of his interest in mutual
fund A to W. The transfer takes place in
February 2002. In August 2002, W elects to
allocate the deficiency to H. Although the
transfer of 1⁄2 of H’s interest in mutual fund
A took place after the 30-day letter was
mailed, the mutual fund interest is not
presumed to be a disqualified asset because
the transfer of H’s interest in the fund was
made pursuant to a divorce decree.

(d) Allocation—(1) In general. (i) An
election to allocate a deficiency limits
the requesting spouse’s liability to that
portion of the deficiency allocated to the
requesting spouse pursuant to this
section. Unless relieved of liability
under § 1.6015–2 or § 1.6015–4, the
requesting spouse remains liable for that
portion of the deficiency allocated to the
requesting spouse pursuant to this
section.
(ii) Only a requesting spouse may
receive relief. A nonrequesting spouse
who does not also elect relief under this
section remains liable for the entire
amount of the deficiency, unless the
nonrequesting spouse is relieved of
liability under § 1.6015–2 or § 1.6015–4.
If both spouses elect to allocate a
deficiency under this section, there may
be a portion of the deficiency that is not

allocable, for which both spouses
remain jointly and severally liable.
(2) Allocation of erroneous items. For
purposes of allocating a deficiency
under this section, erroneous items are
generally allocated to the spouses as if
separate returns were filed, subject to
the following four exceptions:
(i) Benefit on the return. An erroneous
item that would otherwise be allocated
to the nonrequesting spouse is allocated
to the requesting spouse to the extent
that the requesting spouse received a tax
benefit on the joint return.
(ii) Fraud. The Secretary may allocate
any item appropriately between the
spouses if the Secretary establishes that
the allocation is appropriate due to
fraud by one or both spouses.
(iii) Erroneous items of income.
Erroneous items of income are allocated
to the spouse who was the source of the
income. Wage income is allocated to the
spouse who performed the job
producing such wages. Items of business
or investment income are allocated to
the spouse who owned the business or
investment. If both spouses owned an
interest in the business or investment,
the erroneous item of income is
generally allocated between the spouses
in proportion to each spouse’s
ownership interest in the business or
investment, subject to the limitations of
paragraph (c) of this section. In the
absence of clear and convincing
evidence supporting a different
allocation, an erroneous income item
relating to an asset that the spouses
owned jointly is generally allocated
50% to each spouse, subject to the
limitations in paragraph (c) of this
section and the exceptions in paragraph
(d)(4) of this section. For information
regarding the effect of community

property laws, see § 1.6015–1(f) and
paragraph (c)(2)(iii) of this section.
(iv) Erroneous deduction items.
Erroneous deductions related to a
business or investment are allocated to
the spouse who owned the business or
investment. If both spouses owned an
interest in the business or investment,
an erroneous deduction item is
generally allocated between the spouses
in proportion to each spouse’s
ownership interest in the business or
investment. In the absence of clear and
convincing evidence supporting a
different allocation, an erroneous
deduction item relating to an asset that
the spouses owned jointly is generally
allocated 50% to each spouse, subject to
the limitations in paragraph (c) of this
section and the exceptions in paragraph
(d)(4) of this section. Personal deduction
items are also generally allocated 50%
to each spouse, unless the evidence
shows that a different allocation is
appropriate.
(3) Burden of proof. Except for
establishing actual knowledge under
paragraph (c)(2) of this section, the
requesting spouse must prove that all of
the qualifications for making an election
under this section are satisfied and that
none of the limitations (including the
limitation relating to transfers of
disqualified assets) apply. The
requesting spouse must also establish
the proper allocation of the erroneous
items.
(4) General allocation method—(i)
Proportionate allocation.
(A) The portion of a deficiency
allocable to a spouse is the amount that
bears the same ratio to the deficiency as
the net amount of erroneous items
allocable to the spouse bears to the net
amount of all erroneous items. This
calculation may be expressed as follows:

net amount of erroneous items
X
allocable to the spouse
=
deficiency net amount of all erroneous items
where X = the portion of the deficiency
allocable to the spouse. Thus,

net amount of erroneous items
allocable to the spouse
X = (deficiency) ×
net amount of all erroneous items
(B) The proportionate allocation
applies to any portion of the deficiency
other than—
(1) Any portion of the deficiency
attributable to erroneous items allocable
to the nonrequesting spouse of which

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the requesting spouse had actual
knowledge;
(2) Any portion of the deficiency
attributable to separate treatment items
(as defined in paragraph (d)(4)(ii) of this
section);

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(3) Any portion of the deficiency
relating to the liability of a child (as
defined in paragraph (d)(4)(iii) of this
section) of the requesting spouse or
nonrequesting spouse;

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(4) Any portion of the deficiency
attributable to alternative minimum tax
under section 55;
(5) Any portion of the deficiency
attributable to accuracy-related or fraud
penalties;
(6) Any portion of the deficiency
allocated pursuant to alternative
allocation methods authorized under
paragraph 6 of this section.
(ii) Separate treatment items. Any
portion of a deficiency that is
attributable to an item allocable solely
to one spouse and that results from the
disallowance of a credit, or a tax or an
addition to tax (other than tax imposed
by section 1 or section 55) that is
required to be included with a joint
return (a separate treatment item) is
allocated separately to that spouse.
Once the proportionate allocation is
made, the liability for the requesting
spouse’s separate treatment items is
added to the requesting spouse’s share
of the liability.
(iii) Child’s liability. Any portion of a
deficiency relating to the liability of a
child of the requesting and
nonrequesting spouse is generally
allocated jointly to both spouses.
However, if one of the spouses had sole
custody of the child for the entire tax
year for which the election relates, such
portion of the deficiency is allocated
solely to that spouse. For purposes of
this paragraph, a child does not include
the taxpayer’s stepson or stepdaughter,
unless such child was legally adopted
by the taxpayer. If the child is the child
of only one of the spouses, and the other

spouse had not legally adopted such
child, any portion of a deficiency
relating to the liability of such child is
allocated solely to the parent spouse.
(iv) Allocation of certain items—(A)
Alternative minimum tax. Any portion
of the deficiency attributable to
alternative minimum tax under section
55 is allocated between the spouses in
the same proportion as each spouse’s
share of the total alternative minimum
taxable income, as defined in section
55(b)(2).
(B) Accuracy-related and fraud
penalties. Any portion of the deficiency
attributable to accuracy-related or fraud
penalties under section 6662 or 6663 is
allocated to the spouse whose item
generated the penalty.
(5) Examples. The following examples
illustrate the rules of this paragraph (d).
In each example, assume that the
requesting spouse or spouses qualify to
elect to allocate the deficiency, that any
election is timely made, and that the
deficiency remains unpaid. In addition,
unless otherwise stated, assume that
neither spouse has actual knowledge of
the erroneous items allocable to the
other spouse. The examples are as
follows:
Example 1. Allocation of erroneous items.
(i) H and W file a 2003 joint Federal income
tax return on April 15, 2004. On April 28,
2006, a deficiency is assessed with respect to
their 2003 return. Three erroneous items give
rise to the deficiency—
(A) Unreported interest income, of which
W had actual knowledge, from H and W’s
joint bank account;

W’s items
$40,000 charitable deduction
$40,000 interest deduction
$80,000

(iii) The ratio of erroneous items allocable
to W to the total erroneous items is 2⁄3
($80,000/$120,000). W’s liability is limited to
$36,000 of the deficiency (2⁄3 of $54,000). The
Internal Revenue Service may collect up to
$36,000 from W and up to $54,000 from H
(the total amount collected, however, may
not exceed $54,000). If H also made an
election, there would be no remaining joint
and several liability, and the Internal
Revenue Service would collect $36,000 from
W and $18,000 from H.

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(B) A disallowed business expense
deduction on H’s Schedule C;
(C) A disallowed Lifetime Learning Credit
for W’s post-secondary education; and
(ii) H and W divorce in May 2006, and in
September 2006, W timely elects to allocate
the deficiency. The erroneous items are
allocable as follows:
(A) The interest income would be allocated
1⁄2 to H and 1⁄2 to W, except that W has actual
knowledge of it. Therefore, W’s election to
allocate the portion of the deficiency
attributable to this item is invalid, and W
remains jointly and severally liable for it.
(B) The business expense deduction is
allocable to H.
(C) The Lifetime Learning Credit is
allocable to W.
Example 2. Proportionate allocation. (i) W
and H timely file their 2001 joint Federal
income tax return on April 15, 2002. On
August 16, 2004, a $54,000 deficiency is
assessed with respect to their 2001 joint
return. H and W divorce on October 14, 2004,
and W timely elects to allocate the
deficiency. Five erroneous items give rise to
the deficiency—
(A) A disallowed $15,000 business
deduction allocable to H;
(B) $20,000 of unreported income allocable
to H;
(C) A disallowed $5,000 deduction for
educational expense allocable to H;
(D) A disallowed $40,000 charitable
contribution deduction allocable to W; and
(E) A disallowed $40,000 interest
deduction allocable to W.
(ii) In total, there are $120,000 worth of
erroneous items, of which $80,000 are
attributable to W and $40,000 are attributable
to H.

H’s items
$15,000 business deduction
$20,000 unreported income
$ 5,000 education deduction
$40,000

Example 3. Proportionate allocation with
joint erroneous item. (i) On September 4,
2001, W elects to allocate a $3,000 deficiency
for the 1998 tax year to H. Three erroneous
items give rise to the deficiency—
(A) Unreported interest in the amount of
$4,000 from a joint bank account;
(B) A disallowed deduction for business
expenses in the amount of $2,000 attributable
to H’s business; and
(C) Unreported wage income in the amount
of $6,000 attributable to W’s second job.

H’s items
$2,000 business deduction

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(ii) The erroneous items total $12,000.
Generally, income, deductions, or credits
from jointly held property that are erroneous
items are allocable 50% to each spouse.
However, in this case, both spouses had
actual knowledge of the unreported interest
income. Therefore, W’s election to allocate
the portion of the deficiency attributable to
this item is invalid, and W and H remain
jointly and severally liable for this portion.
Assume that this portion is $1,000. W may
allocate the remaining $2,000 of the
deficiency.

W’s items
$6,000 wage income

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Total allocable items: $8,000
(iii) The ratio of erroneous items allocable
to W to the total erroneous items is 3⁄4
($6,000/$8,000). W’s liability is limited to
$1,500 of the deficiency (3⁄4 of $2,000)
allocated to her. The Internal Revenue
Service may collect up to $2,500 from W (3⁄4
of the total allocated deficiency plus $1,000
of the deficiency attributable to the joint bank
account interest) and up to $3,000 from H
(the total amount collected, however, cannot
exceed $3,000).
(iv) Assume H also elects to allocate the
1998 deficiency. H is relieved of liability for
3⁄4 of the deficiency, which is allocated to W.
H’s relief totals $1,500 (3⁄4 of $2,000). H
remains liable for $1,500 of the deficiency (1⁄4

of the allocated deficiency plus $1,000 of the
deficiency attributable to the joint bank
account interest).
Example 4. Separate treatment items
(STIs). (i) On September 1, 2006, a $28,000
deficiency is assessed with respect to H and
W’s 2003 joint return. The deficiency is the
result of 4 erroneous items—
(A) A disallowed Lifetime Learning Credit
of $2,000 attributable to H;
(B) A disallowed business expense
deduction of $8,000 attributable to H;
(C) Unreported income of $24,000
attributable to W; and
(D) Unreported self-employment tax of
$14,000 attributable to W.

W’s share of allocable items
3 /4 ($24,000/$32,000)
(v) W’s liability for the portion of the
deficiency subject to proportionate allocation
is limited to $9,000 (3⁄4 of $12,000) and H’s

(vii) Therefore, W’s liability is limited to
$23,000 and H’s liability is limited to $5,000.
Example 5. Allocation of the alternative
minimum tax. (i) H and W file their 2004
joint Federal income tax return on April 15,
2005. During 2004, W’s total alternative
minimum taxable income was $120,000, and
H’s total alternative minimum taxable
income was $30,000. All of H’s income was
from his business and was reported on
Schedule C. Everything on the 2004 return
was properly reported, and there was no
alternative minimum tax liability. In 2005, H
experienced a net operating loss of $25,000
for regular tax purposes. H did not have a net
operating loss for alternative minimum tax
purposes. In February 2006, H and W file an
amended return for 2004 claiming the net
operating loss that was carried back from
2005. The loss is a proper deduction, but it
results in an alternative minimum tax
liability, which H and W do not report on the
amended return. In December 2007, a $5,500
deficiency is assessed on their 2004 joint
Federal income tax return resulting from the
unreported alternative minimum tax liability.
(ii) W and H divorce in January 2008, and
W elects to allocate the deficiency.
W’s AMT income for 2004: $120,000
H’s AMT income for 2004: $ 30,000
Total AMT income for 2004: $150,000
W’s share of AMT income for 2004: 4⁄5
($120,000/$150,000)
H’s share of AMT income for 2004: 1⁄5
($30,000/$150,000)
(iii) W’s liability is limited $4,400 (4⁄5 ×
$5,500). H remains liable for the entire
deficiency because he did not make an
election to allocate the deficiency.

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H’s share of allocable items
1/4 ($8,000/$32,000)

liability for such portion is limited to $3,000
(1⁄4 of $12,000).
(vi) After the proportionate allocation is
completed, the amount of the STIs is added

W’s share of total deficiency
$ 9,000 allocated deficiency
$14,000 self-employment tax
$23,000

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Fmt 4702

to each spouse’s allocated share of the
deficiency.

H’s share of total deficiency
$3,000 allocated deficiency
$2,000 Lifetime Learning Credit
$5,000

Example 6. Requesting spouse receives a
benefit on the joint return from the
nonrequesting spouse’s erroneous item. (i) In
2001, H earns gross income of $4,000 from
his business, and W earns $50,000 of wage
income. On their 2001 joint Federal income
tax return, H deducts $20,000 of business
expenses resulting in a net loss from his
business of $16,000. H and W divorce in
September 2002, and on May 22, 2003, a
$5,200 deficiency is assessed with respect to
their 2001 joint return. W elects to allocate
the deficiency. The deficiency on the joint
return results from a disallowance of all of
H’s $20,000 of deductions.
(ii) Since H used only $4,000 of the
disallowed deductions to offset gross income
from his business, W benefitted from the
other $16,000 of the disallowed deductions
used to offset her wage income. Therefore,
$4,000 of the disallowed deductions are
allocable to H and $16,000 of the disallowed
deductions are allocable to W. W’s liability
is limited to $3,900 (3⁄4 of $5,200). If H also
elected to allocate the deficiency, H’s
election to allocate the $3,900 of the
deficiency to W would be invalid because H
had actual knowledge of the erroneous items.
Example 7. Calculation of requesting
spouse’s benefit on the joint return when the
nonrequesting spouse’s erroneous item is
partially disallowed. Assume the same facts
as in example 7, except that H deducts
$18,000 for business expenses on the joint
return, of which $16,000 are disallowed.
Since H used only $2,000 of the $16,000
disallowed deductions to offset gross income
from his business, W received benefit on the
return from the other $14,000 of the

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(ii) H and W both elect to allocate the
deficiency.
(iii) The $2,000 Lifetime Learning Credit
and the $14,000 self-employment tax are STIs
totaling $16,000. The amount of erroneous
items included in computing the
proportionate allocation ratio is $32,000
($24,000 unreported income and $8,000
disallowed business expense deduction). The
amount of the deficiency subject to
proportionate allocation is reduced by the
amount of STIs ($28,000–$16,000 = $12,000).
(iv) Of the $32,000 of proportionate
allocation items, $24,000 is allocable to W,
and $8,000 is allocable to H.

Sfmt 4702

disallowed deductions used to offset her
wage income. Therefore, $2,000 of the
disallowed deductions are allocable to H and
$14,000 of the disallowed deductions are
allocable to W. W’s liability is limited to
$4,550 (7⁄8 of $5,200).

(6) Alternative allocation methods—
(i) Allocation based on applicable tax
rates. If a deficiency arises from two or
more erroneous items that are subject to
tax at different rates (e.g., ordinary
income and capital gain items), the
deficiency is allocated after first
separating the erroneous items into
categories according to their applicable
tax rate. After all erroneous items are
categorized, a separate allocation is
made with respect to each tax rate
category using the proportionate
allocation method of paragraph (d)(4) of
this section.
(ii) Allocation methods provided in
subsequent published guidance. The
Secretary may prescribe alternative
methods for allocating erroneous items
under section 6015(c) in subsequent
revenue rulings, revenue procedures, or
other appropriate guidance.
(iii) Example. The following example
illustrates the rules of this paragraph
(d)(6):
Example. Allocation based on applicable
tax rates. H and W timely file their 1998 joint
Federal income tax return. H and W divorce
in 1999. On July 13, 2001, a $5,100

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deficiency is assessed with respect to H and
W’s 1998 return. Of this deficiency, $2,000
results from unreported capital gain of $6,000
that is attributable to W and $4,000 of capital
gain that is attributable to H (both gains being
subject to tax at the 20% marginal rate). The
remaining $3,100 of the deficiency is
attributable to $10,000 of unreported
dividend income of H that is subject to tax
at a marginal rate of 31%. H and W both
timely elect to allocate the deficiency, and
qualify under this section to do so. There are
erroneous items subject to different tax rates;
thus, the alternative allocation method of this
paragraph (d)(6) applies. The three erroneous
items are first categorized according to their
applicable tax rates, then allocated. Of the
total amount of 20% tax rate items ($10,000),
60% is allocable to W and 40% is allocable
to H. Therefore, 60% of the $2,000 deficiency
attributable to these items (or $1,200) is
allocated to W. The remaining 40% of this
portion of the deficiency ($800) is allocated
to H. The only 31% tax rate item is allocable
to H. Accordingly, H is liable for $3,900 of
the deficiency ($800 + $3,100), and W is
liable for the remaining $1,200.
§ 1.6015–4

Equitable relief.

(a) A requesting spouse who files a
joint return for which a liability remains
unpaid and who does not qualify for full
relief under § 1.6015–2 or § 1.6015–3
may request equitable relief under this
section. The Internal Revenue Service
has the discretion to grant equitable
relief from joint and several liability to
a requesting spouse when, considering
all of the facts and circumstances, it
would be inequitable to hold the
requesting spouse jointly and severally
liable.
(b) This section may not be used to
circumvent the limitation of § 1.6015–
3(c)(1) (i.e., no refunds under § 1.6015–
3). Therefore, relief is not available
under this section to refund liabilities
already paid, for which the requesting
spouse would otherwise qualify for
relief under § 1.6015–3.
(c) The Secretary will provide the
criteria to be used in determining
whether it is inequitable to hold a
requesting spouse jointly and severally
liable under this section in revenue
rulings, revenue procedures, or other
published guidance.
§ 1.6015–5 Time and manner for
requesting relief.

(a) Requesting relief. To elect the
application of § 1.6015–2 or § 1.6015–3,
or to request equitable relief under
§ 1.6015–4, a requesting spouse must
file Form 8857, ‘‘Request for Innocent
Spouse Relief (And Separation of
Liability and Equitable Relief)’’; submit
a written statement containing the same
information required on Form 8857,
which is signed under penalties of
perjury; or submit information in the
manner as may be prescribed by the

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Secretary in relevant revenue rulings,
revenue procedures, or other published
guidance.
(b) Time period for filing a request for
relief—(1) In general. To elect the
application of § 1.6015–2 or § 1.6015–3,
or to request equitable relief under
§ 1.6015–4, a requesting spouse must
file Form 8857 or other similar
statement with the Internal Revenue
Service no later than two years from the
date of the first collection activity
against the requesting spouse after July
22, 1998, with respect to the joint tax
liability.
(2) Definitions—(i) Collection activity.
For purposes of this paragraph (b),
collection activity means an
administrative levy or seizure described
by section 6331 to obtain property of the
requesting spouse; an offset of an
overpayment of the requesting spouse
against a liability under section 6402;
the filing of a suit by the United States
against the requesting spouse for the
collection of the joint tax liability; or the
filing of a claim by the United States in
a court proceeding in which the
requesting spouse is a party or which
involves property of the requesting
spouse. Collection activity does not
include a notice of intent to levy under
sections 6330 and 6331(d); the filing of
a Notice of Federal Tax Lien; or a
demand for payment of tax. The term
property of the requesting spouse, for
purposes of this paragraph, means
property in which the requesting spouse
has an ownership interest (other than
solely through the operation of
community property laws), including
property owned jointly with the
nonrequesting spouse.
(ii) Date of levy or seizure. For
purposes of this paragraph (b), if
tangible personal property or real
property is seized and is to be sold, a
notice of seizure is required under
section 6335(a). The date of levy or
seizure is the date the notice of seizure
is given. For more information on the
rules regarding notice of seizure, see
section 6502(b) and the regulations
thereunder. For purposes of this
paragraph (b), if a levy is made on cash
or intangible personal property that will
not be sold, the date of levy or seizure
is the date the notice of levy is made.
For more information on the rules
regarding levy, see section 6331 and the
regulations thereunder. For purposes of
this paragraph (b), if a notice of levy is
served by mail, the date of levy or
seizure is the date of delivery of the
notice of levy to the person on whom
the levy is made. For more information
on notices of levy served by mail, see
§ 301.6331–1(c) of this chapter.

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3901

(3) Requests for relief made before
commencement of collection activity.
An election or request for relief may be
made before collection activity has
commenced. For example, an election or
request for relief may be made in
connection with an audit or
examination of the joint return, or
pursuant to the pre-levy collection due
process (CDP) hearing procedures
pursuant to sections 6320 and 6330. For
more information on the rules regarding
pre-levy collection due process, see
§§ 301.6320–1T(e)(1) and (2), and
301.6330–1T(e)(1) and (2) of this
chapter. However, no request for relief
may be made before the date specified
in paragraph (b)(5) of this section.
(4) Examples. The following examples
illustrate the rules of this paragraph (b):
Example 1. On January 11, 2000, a notice
of intent to levy is mailed to H and W
regarding their 1997 joint Federal income tax
liability. The Internal Revenue Service levies
on W’s employer on June 5, 2000. The
Internal Revenue Service levies on H’s
employer on July 10, 2000. W must elect or
request relief by June 5, 2002, which is two
years after the Internal Revenue Service
levied on her wages. H must elect or request
relief by July 10, 2002, which is two years
after the Internal Revenue Service levied on
his wages.
Example 2. The Internal Revenue Service
levies on W’s bank, in which W maintains a
savings account, to collect a joint liability for
1995 on January 12, 1998. The bank complies
with the levy, which only partially satisfies
the liability. The Internal Revenue Service
takes no other collection actions. On July 24,
2000, W elects relief with respect to the
unpaid portion of the 1995 liability. W’s
election is timely because the Internal
Revenue Service has not taken any collection
activity after July 22, 1998; therefore, the
two-year period has not commenced.
Example 3. Assume the same facts as in
Example 2, except that the Internal Revenue
Service delivers a second levy on the bank
on July 23, 1998. W’s election is untimely
because it is filed more than two years after
the first collection activity after July 22, 1998.
Example 4. H and W do not remit full
payment with their timely filed joint Federal
income tax return for the 1989 tax year. No
collection activity is taken after July 22, 1998,
until the United States files a suit against
both H and W to reduce the tax assessment
to judgment and to foreclose the tax lien on
their jointly held residence on July 1, 1999.
H elects relief on October 2, 2000. The
election is timely because it is made within
two years of the filing of a collection suit by
the United States against H.
Example 5. W files a Chapter 7 bankruptcy
petition on July 10, 2000. On September 5,
2000, the United States files a proof of claim
for her joint 1998 income tax liability. W
elects relief with respect to the 1998 liability
on August 20, 2002. The election is timely
because it is made within two years of the
date the United States filed the claim in W’s
bankruptcy case.

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(5) Premature requests for relief. The
Secretary will not consider premature
claims for relief under § 1.6015–2,
§ 1.6015–3, or § 1.6015–4. A premature
claim is a claim for relief that is filed for
a tax year prior to the receipt of a
notification of an audit or a letter or
notice from the Secretary indicating that
there may be an outstanding liability
with regard to that year. Such notices or
letters do not include notices issued
pursuant to section 6223 relating to
TEFRA partnership proceedings. A
premature claim is not considered an
election or request under § 1.6015–
1(g)(5).
(c) Effect of a final administrative
determination—(1) In general. A
requesting spouse is entitled to only one
final administrative determination of
relief under § 1.6015–1 for a given
assessment, unless the requesting
spouse properly submits a second
request for relief that is described in
§ 1.6015–1(g)(5).
(2) Example. The following example
illustrates the rule of this paragraph (c):
Example. In January 2001, W invests in tax
shelter P, and in February 2001, she starts her
own business selling crafts, from which she
earns $100,000 of net income for the year. H
and W file a joint return for tax year 2001,
on which they claim $20,000 in losses from
their investment in P, and they omit W’s selfemployment tax. In March 2003, the Internal
Revenue Service opens an audit under the
provisions of subchapter C of chapter 63 of
subtitle F of the Internal Revenue Code
(TEFRA partnership proceeding) and sends H
and W a notice under section 6223(a)(1). In
September 2003, the Internal Revenue
Service audits H and W’s 2001 joint return
regarding the omitted self-employment tax. H
may file a claim for relief from joint and
several liability for the self-employment tax
liability because he has received a
notification of an audit indicating that there
may be an outstanding liability on the joint
return. However, his claim for relief
regarding the TEFRA partnership proceeding
is premature under paragraph (b)(5) of this
section. H will have to wait until the Internal
Revenue Service sends him a notice of
computational adjustment or assesses the
liability from the TEFRA partnership
proceeding on H and W’s joint return before
he files a claim for relief with respect to any
such liability. The assessment relating to the
TEFRA partnership proceeding is separate
from the assessment for the self-employment
tax; therefore, H’s subsequent claim for relief
for the liability from the TEFRA partnership
proceeding is not precluded by his previous
claim for relief from the self-employment tax
liability under this paragraph (c).
§ 1.6015–6 Nonrequesting spouse’s notice
and opportunity to participate in
administrative proceedings.

(a) In general. (1) When the Secretary
receives an election under § 1.6015–2 or
§ 1.6015–3, or a request for relief under

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§ 1.6015–4, the Secretary must send a
notice to the nonrequesting spouse’s last
known address that informs the
nonrequesting spouse of the requesting
spouse’s claim for relief. The notice
must provide the nonrequesting spouse
with an opportunity to submit any
information that should be considered
in determining whether the requesting
spouse should be granted relief from
joint and several liability. A
nonrequesting spouse is not required to
submit information under this section.
The Secretary has the discretion to share
with one spouse any of the information
submitted by the other spouse. At the
request of one spouse, the Secretary will
omit from shared documents the
spouse’s new name, address, employer,
telephone number, and any other
information that would reasonably
indicate the other spouse’s location.
(2) The Secretary must notify the
nonrequesting spouse of the Secretary’s
final determination with respect to the
requesting spouse’s claim for relief
under section 6015. However, the
nonrequesting spouse is not permitted
to appeal such determination.
(b) Information submitted. The
Secretary will consider all of the
information (as relevant to each
particular relief provision) that the
nonrequesting spouse submits in
determining whether relief from joint
and several liability is appropriate,
including information relating to the
following—
(1) The legal status of the requesting
and nonrequesting spouses’ marriage;
(2) The extent of the requesting
spouse’s knowledge of the erroneous
items or underpayment;
(3) The extent of the requesting
spouse’s knowledge or participation in
the family business or financial affairs;
(4) The requesting spouse’s education
level;
(5) The extent to which the requesting
spouse benefitted from the erroneous
items;
(6) Any asset transfers between the
spouses;
(7) Any indication of fraud on the part
of either spouse;
(8) Whether it would be inequitable,
within the meaning of §§ 1.6015–2(d)
and 1.6015–4(b), to hold the requesting
spouse jointly and severally liable for
the outstanding liability;
(9) The allocation or ownership of
items giving rise to the deficiency; and
(10) Anything else that may be
relevant to the determination of whether
relief from joint and several liability
should be granted.
(c) Effect of opportunity to participate.
The failure to submit information
pursuant to paragraph (b) of this section

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does not affect the nonrequesting
spouse’s ability to seek relief from joint
and several liability for the same tax
year. However, information that the
nonrequesting spouse submits pursuant
to paragraph (b) of this section is
relevant in determining whether relief
from joint and several liability is
appropriate for the nonrequesting
spouse should the nonrequesting spouse
also submit an application for relief.
§ 1.6015–7

Tax Court review.

(a) In general. Requesting spouses
may petition the Tax Court to review the
denial of relief under § 1.6015–1.
(b) Time period for petitioning the
Tax Court. Pursuant to section 6015(e),
the requesting spouse may petition the
Tax Court to review a denial of relief
under § 1.6015–1 within the 90-day
period beginning on the date the final
determination letter is mailed. If the
Secretary does not mail the requesting
spouse a final determination letter
within 6 months of the date the
requesting spouse files an election
under § 1.6015–2 or § 1.6015–3, the
requesting spouse may petition the Tax
Court to review the election at any time
after the expiration of the 6-month
period, and before the expiration of the
90-day period beginning on the mailing
date of the final determination letter.
The Tax Court also may review a claim
for relief if Tax Court jurisdiction has
been acquired under section 6213(a) or
6330(d). For rules regarding petitioning
the Tax Court under section 6213(a) or
6330(d), see §§ 301.6213–1, 301.6330–
1T(f), and 301.6330–1T(g) of this
chapter.
(c) Restrictions on collection and
suspension of the running of the period
of limitations—(1) Restrictions on
collection under § 1.6015–2 or 1.6015–3.
Unless the Secretary determines that
collection will be jeopardized by delay,
no levy or proceeding in court shall be
made, begun, or prosecuted against a
requesting spouse electing the
application of § 1.6015–2 or § 1.6015–3
for the collection of any assessment to
which the election relates until the
expiration of the 90-day period
described in paragraph (b) of this
section, or if a petition is filed with the
Tax Court, until the decision of the Tax
Court becomes final under section 7481.
Notwithstanding the preceding
sentence, if the requesting spouse
appeals the Tax Court’s determination,
the Internal Revenue Service may
resume collection of the liability from
the requesting spouse on the date of the
Tax Court’s determination unless the
requesting spouse files an appeal bond
pursuant to the rules of section 7485.
For more information regarding the date

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on which a decision of the Tax Court
becomes final, see section 7481 and the
regulations thereunder. Jeopardy under
this paragraph (c)(1) means conditions
exist that would require an assessment
under section 6851 or 6861 and the
regulations thereunder.
(2) Suspension of the running of the
period of limitations— (i) Relief under
§ 1.6015–2 or 1.6015–3. The running of
the period of limitations in section 6502
on collection against the requesting
spouse of the assessment to which an
election under § 1.6015–2 or § 1.6015–3
relates is suspended for the period
during which the Commissioner is
prohibited by paragraph (c)(1) of this
section from collecting by levy or a
proceeding in court and for 60 days
thereafter.
(ii) Relief under § 1.6015–4. If a
requesting spouse seeks only equitable
relief under § 1.6015–4, the restrictions
on collection of paragraph (c)(1) of this
section do not apply. The request for
relief does not suspend the running of
the period of limitations on collection.
(3) Definitions—(i) Levy. For purposes
of this paragraph (c), levy means an
administrative levy or seizure described
by section 6331.
(ii) Proceedings in court. For purposes
of this paragraph (c), proceedings in
court means suits filed by the United
States for the collection of Federal tax.
Proceedings in court does not refer to
the filing of pleadings and claims and
other participation by the Commissioner
or the United States in suits not filed by
the United States, including Tax Court
cases, refund suits, and bankruptcy
cases.
(iii) Assessment to which the election
relates. For purposes of this paragraph
(c), the assessment to which the election
relates is the entire assessment of the
deficiency to which the election relates,
even if the election is made with respect
to only part of that deficiency.
§ 1.6015–8

Applicable liabilities.

(a) In general. Sections 6015(b),
6015(c), and 6015(f) apply to liabilities
that arise after July 22, 1998, and to
liabilities that arose prior to July 22,
1998, that were not paid on or before
July 22, 1998.
(b) Liabilities paid on or before July
22, 1998. A requesting spouse seeking
relief from joint and several liability for
amounts paid on or before July 22, 1998,
must request relief under section
6013(e) and the regulations thereunder.
(c) Examples. The following examples
illustrate the rules of this section:
Example 1. H and W file a joint income tax
return for 1995 on April 15, 1996. There is
an understatement on the return attributable
to an omission of H’s wage income. On
October 15, 1998, H and W receive a 30-day
letter proposing a deficiency on the 1995

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joint return. W pays the outstanding liability
in full on November 30, 1998. In March 1999,
W files Form 8857, requesting relief from
joint and several liability under section
6015(b). Although W’s liability arose prior to
July 22, 1998, it was unpaid as of that date.
Therefore, section 6015 is applicable.
Example 2. H and W file their 1995 joint
income tax return on April 15, 1996. On
October 14, 1997, a deficiency is assessed
regarding a disallowed business expense
deduction attributable to H. On June 30,
1998, the Internal Revenue Service levies on
W’s bank account in full satisfaction of the
outstanding liability. On August 31, 1998, W
files a request for relief from joint and several
liability. The liability arose prior to July 22,
1998, and it was paid as of July 22, 1998.
Therefore, section 6015 is not applicable and
section 6013(e) is applicable.
§ 1.6015–9

Effective date.

Sections 1.6015–0 through 1.6015–9
are applicable for all elections under
§ 1.6015–2 or § 1.6015–3 or any request
for relief under § 1.6015–4 filed on or
after federal regulations are published in
the Federal Register.
Charles Rossotti,
Commissioner of Internal Revenue.
[FR Doc. 01–8 Filed 1–16–01; 8:45 am]
BILLING CODE 4830–01–U

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–106030–98]
RIN 1545–AW50

Source of Income from Certain Space
and Ocean Activities; Also, Source of
Communications Income
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking
and notice of public hearing.
SUMMARY: This document contains
proposed regulations under section
863(d) governing the source of income
from certain space and ocean activities.
It also contains proposed regulations
under sections 863(a), (d), and (e)
governing the source of income from
certain communications activity. This
document also contains proposed
regulations under sections 863(a) and
(b), amending the regulations in
§ 1.863–3 to conform those regulations
with these proposed regulations. This
document affects persons who conduct
activities in space, or on or under water
not within the jurisdiction of a foreign
country, possession of the United States,
or the United States (collectively, in
international water). This document
also affects persons who derive income
from transmission of communications.

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3903

In addition, this document provides
notice of a public hearing on these
proposed regulations.
DATES: Comments and outlines of oral
comments to be presented at the public
hearing scheduled for March 28, 2001,
at 10 a.m. must be received by March 7,
2001.
ADDRESSES: Send submissions to:
CC:M&SP:RU (Reg–106030–98), room
5226, Internal Revenue Service, POB
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be hand
delivered Monday through Friday
between the hours of 8 a.m. and 5 p.m.
to: CC:M&SP:RU (REG–106030–98),
Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue NW.,
Washington, DC. Alternatively,
taxpayers may submit comments
electronically via the Internet by
selecting the ‘‘Tax Regs’’ option on the
IRS Home Page, or by submitting
comments directly to the IRS Internet
site at: http://www.irs.ustreas.gov/
taxlregs/regslist.html. The public
hearing will be held in the auditorium,
seventh floor, Internal Revenue
Building, 1111 Constitution Avenue,
NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT:
Concerning the regulations, Anne
Shelburne, (202) 874–1490; concerning
submissions and the hearing, and/or to
be placed on the building access list to
attend the hearing, La Nita Van Dyke,
(202) 622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act
The collection of information
contained in this notice of proposed
rulemaking has been submitted to the
Office of Management and Budget
(OMB) for review in accordance with
the Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d)).
Comments on the collection of
information should be sent to the Office
of Management and Budget, Attn: Desk
Officer for the Department of Treasury,
Office of Information and Regulatory
Affairs, Washington, DC 20503, with
copies to the Internal Revenue Service,
Attn: IRS Reports Clearance Officer,
W:CAR:MP:FP:S:O, Washington, DC
20224. Comments on the collection of
information should be received by
March 19, 2001. Comments are
specifically requested concerning:
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the IRS,
including whether the information will
have practical utility;
The accuracy of the estimated burden
associated with the proposed collection
of information (see below);

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