Rick Jacobsen v. CIR ( 2020 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 18-3371
RICK E. JACOBSEN,
Plaintiff-Appellant,
v.
COMMISSIONER OF INTERNAL
REVENUE,
Defendant-Appellee.
Appeal from the United States Tax Court.
No. 25348-15 — Elizabeth Crewson Paris, Judge.
ARGUED SEPTEMBER 13, 2019 — DECIDED FEBRUARY 13, 2020
Before BAUER, ROVNER, and SYKES, Circuit Judges.
ROVNER, Circuit Judge. Petitioner Rick E. Jacobsen’s former
wife Tina M. Lemmens embezzled over $400,000 from her
employer, income that was not reported on the couple’s jointly
filed income taxes. As relevant here, after Lemmens was
convicted for her embezzlement, the Internal Revenue Service
(“IRS”) audited the couple’s joint tax returns for 2010 and 2011.
2 No. 18-3371
For those years, the IRS proposed total net adjustments
attributable to omitted embezzlement income (there were other
unrelated proposed adjustments) of over $300,000, with
corresponding deficiencies and accuracy-related penalties of
over $150,000. Jacobsen sought relief under the tax code’s
“innocent spouse” provision, 26 U.S.C. § 6015(b), and equitable
relief provision, § 6015(f). As relevant here, the Tax Court
granted Jacobsen innocent spouse relief for 2010, but denied all
relief for 2011. Jacobsen appeals, but we affirm.
I.
The stipulated facts as found by the Tax Court provide a
backdrop for Jacobsen’s claim on appeal. While Jacobsen and
Lemmens were married, Lemmens, an accountant, handled all
of their finances. During the relevant time period (2009-2011),
Lemmens worked for a blood bank, where her duties included
processing accounts payable and issuing checks to vendors.
Jacobsen, who holds an associate’s degree, worked as a
machine operator at a factory. In addition to working at the
factory, which he did in twelve-hour shifts fourteen days per
month, Jacobsen inspected properties for financial institutions
and insurance companies.
Jacobsen deposited wages from his work as a machine
operator into a personal account at Evergreen Credit Union in
Wisconsin. The remainder of the couple’s income, from both
Lemmens’ job and Jacobsen’s home inspections, was deposited
into a joint account at Community First Credit Union.
That joint account was also used by Lemmens for deposits
that she had actually embezzled from the blood bank.
Throughout the tax years at issue here, Lemmens was embez-
No. 18-3371 3
zling from the blood bank by drafting checks to herself or
adding sizable amounts to her own paychecks and classifying
the excess as reimbursements.
Lemmens was eventually arrested in June 2011 for embez-
zling over $450,000 from her employer. The Tax Court credited
Jacobsen’s testimony that he neither knew of, nor had reason
to know of Lemmens’ scheme at the time of her arrest.
First, as discussed above, Jacobsen was for the most part
completely uninvolved with the couple’s finances. Specifically,
he never reviewed bank or credit card statements, nor did he
look over their personal or business finances, which Lemmens
managed. Nor would have reviewing their finances necessarily
have alerted him to Lemmens’ embezzlement given her
practice of depositing the embezzled funds via check into the
couple’s joint account. These checks would have been difficult
to distinguish from the checks for the home inspection busi-
ness, which were also made out to Lemmens and tended to be
for similar amounts.
Moreover, throughout the period of Lemmens’ embezzle-
ment, there was nothing lavish or excessive about their
spending. Although they did gamble heavily during the
relevant time period, the Tax Court concluded that Jacobsen
attributed the funds available for gambling to the success of
their home inspection business and the available income from
their other employment. The Tax Court also concluded that
nothing about their lifestyle would have alerted him to her
scheme. During the years Lemmens was embezzling from the
blood bank, Jacobsen drove a used car that he did not replace,
4 No. 18-3371
they did not pay off their mortgage, and at one point they even
had some utilities disconnected for failing to pay.
Lemmens was convicted in 2011 and sentenced in January
2012. Although the two remained married throughout the
criminal trial and into her term of imprisonment, they ulti-
mately became estranged sometime in 2013 and divorced in
May 2015. Their divorce decree specified that Jacobsen and
Lemmens would each pay half of the 2010 and 2011 tax
liabilities. Jacobsen, however, maintains that he believed he
was only agreeing to pay half of the liabilities remaining after
excluding the embezzlement income.
The disputed tax liabilities arose from the audit of the
couple’s jointly submitted tax returns for 2009, 2010, and 2011.
After Lemmens was convicted, an IRS agent analyzed bank
deposits and interviewed both Lemmens (from jail) and
Jacobsen. In early 2013, the IRS prepared Form 4549 Tax
Examination Changes proposing adjustments to the tax returns
from all three years, most of which arose from income adjust-
ments attributable to Lemmens’ embezzlement.1 As relevant
here, for 2010 the IRS proposed total net adjustments of
$298,710.14, of which $261,959.14 was attributable to omitted
embezzlement income. That proposed adjustment resulted in
a deficiency of $103,247 and an accuracy-related penalty under
26 U.S.C. § 6662(a) (imposing a 20 percent penalty onto amount
of underpayment) of $20,649.40. For 2011, the total proposed
adjustment was $106,424.94, of which $62,449.94 was attribut-
1
Jacobsen did not challenge proposed adjustments that were unrelated to
Lemmens’s embezzlement, such as approximately $45,000 in disallowed
Schedule C car and truck expenses from the home inspection business.
No. 18-3371 5
able to omitted embezzlement income. This created a defi-
ciency of $25,912, and an accuracy-related penalty of $5,182.2
Lemmens and Jacobsen both signed the Form 4549, thereby
consenting to the assessed adjustments and penalties.
In January 2014, Jacobsen filed a Form 8857 with the IRS,
requesting innocent spouse relief under § 1615 for 2009, 2010,
and 2011. Although the IRS made a preliminary determination
granting Jacobsen full relief, it reconsidered its decision after
Lemmens filed a statement of disagreement. Ultimately in July
2015, the IRS office of appeals denied all relief under § 6015.
In October that same year, Jacobsen, who was by then
divorced from Lemmens, filed a timely petition under § 6015(e)
seeking review in the Tax Court and entitlement to relief for all
three years. The Tax Court first dismissed Jacobsen’s 2009 tax
and penalty liability as moot because it had by then been
discharged in bankruptcy.
The Tax Court then considered Jacobsen’s eligibility for
relief under 26 U.S.C. § 6015(b), (c), and (f), which each provide
a means for relief from liability for an understatement attribut-
able to the other spouse listed on the joint filing. Each subsec-
tion contains slightly different criteria for relief, but as relevant
here, relief is available under both subsections (b) and (c) only
if the Tax Court finds that the requesting spouse neither
actually knew nor had reason to know of the understatement.
The Tax Court granted Jacobsen § 6015(b) relief for 2010,
but denied any relief for 2011. In reaching its conclusion, the
2
For 2011 then, Jacobsen’s half of the $31,094 liability (deficiency plus
accuracy penalty) cited by the Tax Court would be $15,547.
6 No. 18-3371
Tax Court accepted Jacobsen’s testimony that he was totally
unaware of his then-wife’s embezzlement when they filed their
2010 tax returns.
The Tax Court also considered the factors set forth in
26 C.F.R. § 1.6015-2(c) (containing a non-exhaustive list of facts
and circumstances relevant to concluding whether the request-
ing spouse should have known of the understatement) and
concluded that Jacobsen likewise had no reason to know of the
2010 understatement. Section 1.6015-2(c) directs the court to
consider “the nature of the erroneous item and the amount of
the erroneous item relative to other items; the couple’s finan-
cial 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.” The Tax Court concluded that each of these factors
supported the determination that Jacobsen was unaware of the
understatement, as required for relief under § 6015(b).
The assessment for 2011, however, was different. Lemmens
was arrested that same year, so by the time the 2011 returns
were filed in April 2012, she had been convicted of embezzle-
ment and was incarcerated. The Tax Court thus denied relief
under § 6015(b), and (c) on account of Jacobsen’s knowledge of
the omitted income. It then considered whether Jacobsen was
entitled to relief under § 6015(f), which applies when relief is
No. 18-3371 7
unavailable under subsections (b) or (c), but it would nonethe-
less be inequitable to hold the requesting spouse liable.
With the exception of knowledge of the understatement,
which bars relief under § 6015(b), the considerations for
equitable relief under § 6015(f) mirror those the Tax Court had
considered in assessing Jacobsen’s eligibility for relief under
§ 6015(b), which applies when the requesting spouse lacked
knowledge of the understatement and it would be inequitable
given all the facts and circumstances to hold that spouse liable.
See 26 U.S.C. § 6015(b)(1)(C), (D); see also 26 C.F.R. § 1.6015-2(d)
(“All of the facts and circumstances are considered in deter-
mining whether it is inequitable to hold a requesting spouse
jointly and severally liable for an understatement.”). The Tax
Court considered Jacobsen’s eligibility for equitable relief with
reference to each of the following seven nonexhaustive factors
set forth in the applicable IRS Revenue Procedure: (1) the
current marital status of the spouses, (2) whether the request-
ing spouse would suffer economic hardship if relief were not
granted, (3) whether the requesting spouse knew or had reason
to know of the understatement, (4) whether either spouse has
a legal obligation to pay the outstanding Federal income tax
liability, (5) whether the requesting spouse significantly
benefitted from the understatement, (6) whether the requesting
spouse has made a good faith effort to comply with the income
tax laws in the years following the years for which relief is
sought, and (7) whether the requesting spouse was in poor
mental or physical health at the time the joint return was filed.
Rev. Proc. 2013-34, 2013-43 I.R.B. 397, at 400–403.
With the exception of the third factor, whether Jacobsen
knew or had reason to know of the understatement, the Tax
8 No. 18-3371
Court concluded that each of the foregoing factors favored
Jacobsen or were “neutral.” The Tax Court nonetheless
concluded that Jacobsen’s actual knowledge in 2011 of
Lemmens’ embezzlement and the accompanying tax under-
statement weighed “too heavily” against him to allow equita-
ble relief under § 6015(f). Jacobsen appeals, challenging only
the Tax Court’s conclusion that he was not entitled to equitable
relief from liabilities arising from embezzlement income
omitted from the 2011 return.
II
The Internal Revenue Code specifies that a husband and
wife who file a joint tax return are jointly and severally liable
for the taxes on their combined incomes. 26 U.S.C. § 6013(d);
see, e.g., Resser v. C.I.R., 74 F.3d 1528, 1534 (7th Cir. 1996). The
so-called innocent spouse statute of the Code, 26 U.S.C. § 6015,
provides potential avenues of relief to those spouses who
would otherwise be held unfairly liable for tax obligations
arising from jointly filed federal income tax returns. Section
6015 liberalizes the availability of innocent spouse relief
beyond what was previously available under § 6013(e)3, which
Congress added after the Supreme Court held in James v.
United States, 366 U.S. 213 (1961), that embezzled funds
constituted taxable income.
3
In 1998, Congress significantly restructured and expanded the availability
of innocent spouse relief by repealing 26 U.S.C. § 6013(e) and replacing it
with § 6015 as part of the Internal Revenue Service Restructuring and
Reform Act of 1998, Pub. L. No. 105-206, § 3201, 112 Stat. 685, 740 (1998). See
H. Conf. Rep. No. 105-599, at 249 (1998).
No. 18-3371 9
Section 6013(e) was designed to protect innocent taxpayers
after the IRS began assessing underpayments and associated
penalties from the spouses of embezzlers, even when the
spouse was unaware of the embezzling or associated tax
liability. It allowed relief where the underpayment was due to
fraud by the taxpayer’s spouse, the taxpayer did not and had
no reason to know of the underpayment, and it would be
inequitable to hold the taxpayer liable for the underpayment
in light of the facts and circumstances. In 1984, Congress
amended that section and slightly broadened the available
relief. See Pub. L. No. 98-369, § 424(a), 98 Stat. 494, 801 (1984).
Still not content with the availability of relief, Congress later
repealed § 6013(e) entirely and enacted § 6015 in the Internal
Revenue Service Restructuring and Reform Act of 1998 to
make “innocent spouse status easier to obtain.” H.R. Conf.
Rep. No. 105-599, at 249–51 (1998), reprinted in 1998
U.S.C.C.A.N. 288.
Section 6015, as relevant here, provides three separate
avenues for relief in subsections (b), (c), and (f). Conceding his
ineligibility for relief under § 6015(b) or (c) on account of his
awareness of Lemmens’ embezzlement when he filed the
couple’s 2011 taxes, Jacobsen challenges only the Tax Court’s
conclusion that he is ineligible for equitable relief under
§ 6015(f). The Tax Court may grant such relief when “taking
into account all the facts and circumstances, it is inequitable to
hold the individual liable for any unpaid tax or any deficiency
(or any portion of either).”
Although the parties agree generally that we review the
Tax Court’s decisions “in the same manner and to the same
extent as we review district court decisions from the bench in
10 No. 18-3371
civil actions,” 26 U.S.C. § 7482(a)(1); Gyorgy v. C.I.R., 779 F.3d
466, 472–73 (7th Cir. 2015); Resser, 74 F.3d at 1535, they disagree
as to whether that means we review the denial of relief under
§ 6015(f) for clear error or an abuse of discretion.
The parties’ differing views on the standard of review hinge
in part on the Taxpayer First Act, legislation that was passed
shortly after the parties filed their briefs. See Pub. L. No. 116-25,
133 Stat. 981 (July 1, 2019). As relevant here, § 1203 of the
Taxpayer First Act added a new paragraph at the end of
§ 6015(e) codifying the existing practice of de novo review by
the Tax Court of appeals from the denial of innocent spouse
relief. Because this addition to § 6015 simply “clarified,” see
Pub. L. No. 116-25, § 1203 (“Clarification of equitable relief
from joint liability.”), the existing standard and scope of Tax
Court review, the Commissioner maintains it has no effect on
our standard of review. Thus, argues the Commissioner, denial
of relief under § 6015(f) should be reviewed in the same
manner as any determination of equitable relief in the district
court—for abuse of discretion. See, e.g., Bowes v. Ind. Sec. of
State, 837 F.3d 813, 817 (7th Cir. 2016) (explaining general
applicability of abuse of discretion standard to equitable
determinations).
Jacobsen, however, insists that the Taxpayer First Act
confirms his position that we review decisions under § 6015(f)
for clear error. Jacobsen explains his reasoning as follows:
(1) the Taxpayer First Act makes equitable relief under
§ 6015(f) mandatory as opposed to discretionary; (2) manda-
tory relief under subsection (f) “is now the same as mandatory
relief under subsection (b),” which also contains an inequity
No. 18-3371 11
condition; and so (3) Tax Court rulings under subsection (f)
should be reviewed under the same standard as subsection (b).
Jacobsen finds further support for his position with the fact
that subsection (b) is a continuation and expansion of former
§ 6013(e), which we held in Resser was subject to clear error
review, 74 F.3d at 1535.
We are unconvinced, however, that the Taxpayer First Act
(which settled only the Tax Court’s standard of review of IRS
determinations) sheds any particular light on our standard of
review as to relief under § 6015(f), which multiple courts have
recognized as for abuse of discretion. See Greer v. C.I.R., 595
F.3d 398, 344 (6th Cir. 2010) (innocent spouse relief under
§ 6015(b) reviewed for clear error but equitable relief under
§ 6015(f) reviewed for abuse of discretion); Cheshire v. C.I.R.,
282 F.3d 326, 338 (5th Cir. 2002) (same). Fortunately, we need
not resolve the issue today, as we would affirm the Tax Court’s
decision under either deferential standard. See Freda v. C.I.R.,
656 F.3d 570, 573 (7th Cir. 2011) (declining to “unravel” the
“quandary” about the appropriate standard of review where
Tax Court’s decision would be upheld under either standard);
Wellpoint, Inc. v. C.I.R., 599 F.3d 641, 645 (7th Cir. 2010) (“We
needn’t wade deeper into this mire, however. For this is not a
case in which the standard of review determines the out-
come[.]”).
As described above, Revenue Procedure 2013-34 identifies
seven possible factors for consideration in assessing whether to
grant relief under § 6015(f). And although it is not bound by
them, the Tax Court generally follows the applicable Notices
12 No. 18-3371
or Revenue Procedures. Pullins v. C.I.R., 136 T.C. 432, 438–39
(2011).
Jacobsen acknowledges that with the exception of his
knowledge for 2011, the Tax Court correctly assessed the
positive, negative, or neutral impact of each of the seven
factors listed in Revenue Procedure 2013-34. He also concedes
that in light of Lemmens’ conviction in early 2012, he had
“reason to know” of the embezzlement income by the time he
filed their 2011 tax return. Yet he maintains that the Tax Court
erred when it concluded that he had actual knowledge of the
unreported embezzlement income for 2011.
The longstanding test for “knowledge” of omitted taxable
income “is not knowledge of the tax consequences of a transac-
tion but rather knowledge of the transaction itself.” See, e.g.,
Quinn v. C.I.R., 524 F.2d 617, 626 (7th Cir. 1975). Under this
standard, the Tax Court’s conclusion that Jacobsen, who was
aware of Lemmens’ indictment, trial, and subsequent convic-
tion for embezzlement, had actual knowledge of the embezzled
income is uncontroversial. In conceding that he had “reason to
know” of the embezzled income, Jacobsen admits that after
Lemmens’ conviction but before he filed their taxes he should
have looked into the 2011 bank statements to ascertain the
amounts of embezzled income, looked at the analysis of
embezzled income by year from Lemmens’ trial, or sought
information from Lemmens to determine how much she
embezzled in 2011. But, Jacobsen argues, because he did none
of these things, he lacked “actual knowledge” of the 2011
embezzlement income as contemplated by Revenue Procedure
2013-34.
No. 18-3371 13
Jacobsen’s argument boils down to his claim that he cannot
be accountable for having actual knowledge because there was
no evidence in the Tax Court that he knew the precise amounts
embezzled, an argument he supports with reference to slight
differences in the totals calculated by the restitution order in
Lemmens’ criminal trial, the joint stipulation in their divorce
decree, and the IRS agent’s audit calculations.
Jacobsen’s argument, however, is based on the faulty
premise that he is not responsible for demonstrating that he
lacked knowledge of the embezzled income. First, relying on
§ 6015(c)(3)(C), Jacobsen maintains that innocent spouse relief
is foreclosed only if “the Secretary demonstrates that an individ-
ual making an election under this subsection has actual
knowledge at the time such individual signed the return of any
item giving rise to the deficiency.” (Emphasis added.) But
§ 6015(c), which applies to taxpayers who are no longer
married or otherwise separated according to certain criteria in
the statute—criteria Jacobsen acknowledges do not apply to
him and Lemmens for the 2011 return—is an exception to the
general rule that for all other types of innocent spouse relief
the taxpayer bears the burden of proof. See, e.g., Cheshire, 282
F.3d at 332 (“Except for the knowledge requirement of
§ 6015(c)(3)(C) … the taxpayer bears the burden of proving that
she has met all the prerequisites for innocent spouse relief.”);
see also C.I.R. v. Neal, 557 F.3d 1262, 1277 (11th Cir. 2009)
(taxpayer bears burden of demonstrating eligibility for
equitable relief under § 6015(f)). Given the Tax Court’s undis-
puted finding that Jacobsen was aware of Lemmens’ embezzle-
ment when he filed the 2011 return, it would be his burden, not
14 No. 18-3371
that of the Commissioner, to demonstrate his lack of knowl-
edge.
Instead of doing this, Jacobsen simply notes that the Tax
Court made no explicit finding that he knew the particular
amount of embezzlement income in 2011. Jacobsen faults the
Tax Court’s actual knowledge finding because there “was
nothing in the record” demonstrating that he read any docu-
mentation from Lemmens’ trial that would establish the precise
amount of embezzled income from 2011. But it would be
Jacobsen’s obligation, not that of the Commissioner, to have
demonstrated that he could not have accurately determined
the amount embezzled in 2011. Nothing in the record suggests
he did so, and we therefore see no reason to question the Tax
Court’s conclusion that he had actual knowledge of the 2011
embezzlement income.
The Tax Court reached that conclusion after considering all
the facts and circumstances as anticipated in Sec. 1.6015-
3(c)(2)(iv), Income Tax Regs. The Tax Court noted that by the
time he filed the return in April, Jacobsen was aware of
Lemmens’ arrest in June of 2011, her conviction in November
2011 of embezzling $485,681, and her January 2012 sentence to
incarceration and restitution. Jacobsen cites no authority, nor
are we aware of any, suggesting that a finding of actual
knowledge would be precluded by the fact that a petitioning
spouse may not, as a result of his own lack of investigation, be
aware of the precise amount of embezzlement, particularly
when he has not offered any explanation as to why he failed to
access that information. See Porter v. C.I.R., 132 T.C. 203, 212
(2009) (§ 6015 “does not protect a spouse who turns a blind eye
to facts readily available to her”).
No. 18-3371 15
Jacobsen’s argument that the Tax Court improperly
assigned too much weight to that knowledge is more persua-
sive. Jacobsen claims that because, with the exception of
knowledge, the factors relevant to relief under § 6015(f) all
favored him or were neutral, by denying Jacobsen’s request for
equitable relief the Tax Court essentially elevated lack of
knowledge to a but-for criteria for relief. Jacobsen suggests the
Tax Court’s conclusion was especially problematic in light of
Congressional intention to liberalize innocent spouse relief.
Specifically, prior to the 2013 changes discussed supra, the
relevant Revenue Procedures directed that actual knowledge
of the understatement would be treated “as a strong factor
weighing against relief.” Rev. Proc. 2003-61, 2003-32, I.R.B. 296,
§ 4.03(2)(a)(iii)(B), superseded by Rev. Proc. 2013-34. The
Revenue Procedures accompanying the 2013 changes to § 6015
expressly abandon that approach, stating in Rev. Proc. 2013-34,
§ 3.07 that “actual knowledge of the item giving rise to an
understatement or deficiency will no longer be weighed more
heavily than other factors, as it did under Rev. Proc. 2003-61.”
See also Rev. Proc. 2013-34 § 4.03(2)(c)(i)(A) (“Actual knowledge
of the item giving rise to the understatement or deficiency will
not be weighted more heavily than any other factor.”).
As discussed above, the Tax Court considered each of the
seven factors identified for consideration in Internal Revenue
Procedure 2013-34 § 4.03(2)(a)–(g) and determined that only
the third factor, whether the requesting spouse knew or had
reason to know of the understatement, weighed against
Jacobsen’s request for equitable relief.
Notably, the court fully considered those factors favoring
relief. It noted Jacobsen’s failure to benefit significantly from
16 No. 18-3371
the embezzled income as well as his subsequent compliance
with tax laws. And the court took note of the fact that Jacobsen
is a veteran suffering from PTSD who experienced a mental
breakdown in response to Lemmens’ crime and has since
moved three times and held four different jobs.
Because each of the factors for consideration was either
neutral or favored relief, Jacobsen claims the Tax Court must
have weighed knowledge more heavily than the other factors,
in contravention of Rev. Proc. 2013-34 § 4.03(2)(c)(i)(A).
Nothing in the Tax Court’s opinion, however, suggests that it
believed knowledge of the embezzled funds necessarily
precluded Jacobsen from equitable relief or automatically
outweighed the other factors for consideration. Although the
2013 regulations make clear that knowledge is no longer
necessarily a strong factor weighing against relief, as Jacobsen
himself acknowledges in his brief, they do not prohibit the Tax
Court from assigning more weight to petitioner’s knowledge
if such a conclusion is supported by the totality of the circum-
stances. As explained in the Revenue Procedures, “no one
factor or a majority of factors necessarily determines the
outcome.” Rev. Proc. 2013-34 § 4.03. And although knowledge
no longer weighs heavily against relief, nothing in the statute
or revenue procedures forecloses the decisionmaker from
concluding that in light of “all the facts and circumstances,”
§ 6015(f), knowledge of the understatement weighs heavily
against granting equitable relief. There is thus no reason to
believe the Tax Court’s decision was necessarily erroneous
because only one of the nonexhaustive factors for consideration
weighed against relief.
No. 18-3371 17
Jacobsen also suggests it was inappropriate for the Tax
Court to factor his “participation in preparing the 2011 return”
into its assessment, characterizing it as “another way for the
court to extra-count” Jacobsen’s knowledge of the embezzl-
ment. In assessing the role of Jacobsen’s knowledge in his
entitlement to equitable relief, the court noted that in addition
to Jacobsen’s actual knowledge on account of Lemmens’
criminal conviction and sentence, in 2011 Jacobsen himself
provided the tax information to the paid preparer, whereas in
previous years Lemmens had always prepared and submitted
the tax information. Far from demonstrating that the Tax Court
erred, the court’s consideration of his role in preparing the
2011 return demonstrates its commitment to heed the Revenue
Procedure’s directive that the seven listed factors merely
provide “guides” as opposed to an “exclusive list” and that
“[o]ther factors relevant to a specific claim for relief may also
be taken into account.” Rev. Proc. 2013-34 § 4.03(2).
It is clear from its opinion that the Tax Court considered the
factors relevant to Jacobsen’s specific claim for relief. The court
considered Jacobsen’s individual circumstances as it analyzed
each of the listed factors. Jacobsen does not argue, nor could
he, that the Tax Court misapprehended the facts or otherwise
overlooked information relevant to Jacobsen’s claim.
We are sympathetic to Jacobsen’s situation, and recognize
that the Tax Court could have easily decided on this record
that Jacobsen was entitled to equitable relief under § 6015(f).
Indeed, were we deciding the case in the first instance as
opposed to on deferential review, we may have decided the
case differently. But notwithstanding the existence of many
factors favoring relief and only Jacobsen’s knowledge counsel-
18 No. 18-3371
ing against it, nothing in the record indicates the Tax Court
misapprehended the weight to be accorded Jacobsen’s knowl-
edge or treated it as a decisive factor barring relief. Indeed, its
discussion of each of the factors as well as the relevance of
Jacobsen’s involvement in preparing the 2011 taxes demon-
strate that the Tax Court did not engage in a mechanical
balancing of the factors where the number of factors favoring
relief necessarily counterbalanced the ultimate question of
whether it was inequitable to hold Jacobsen liable for the 2011
deficiencies. We thus cannot say the Tax Court either abused
its discretion or clearly erred in its denial of relief for 2011. See
Greer, 595 F.3d at 353 (“We are indeed sympathetic to Mrs.
Greer’s situation, and again might decide her case differently
had we the opportunity to rule in the first instance rather than
on deferential review. But we cannot say that the prospect of
financial ruin is so plain on the record that the Tax Court
abused its discretion in denying equitable relief.”).
III.
Jacobsen’s case is a close one, and we are ultimately
persuaded by our deferential standard of review. Because
nothing in the record leads us to believe the Tax Court clearly
erred or abused its discretion, we AFFIRM its denial of
equitable relief.