A taxpayer is not barred from requesting relief from joint and several liability for tax deficiencies owed due to his ex-spouses gambling activities.  Harbin v. Commissioner, T.C., No. 9994-07, 137 T.C. No. 7, 9/26/11

Leonard Harbin and Bernice Nalls, a married couple, divorced in 2004.  During their marriage, Nalls gambled at various casinos and played the lottery.  Nalls kept a calendar of and some receipts for her gambling activities. Harbin and Nalls filed a joint federal income tax return in 1999 and 2000.  For both years, Harbin relied on Nall's documents and conversations with Nall to determine her gambling income and expenses. 

In an audit of these years, Nall provided the IRS with different documentation to establish her gambling income and expenses.  The IRS determined the couple owed additional taxes and issued a tax deficiency for both years.  Harbin and Nall executed a stipulated decision that they jointly owed the deficiencies and related penalties.  Neither Harbin nor Nall requested "Innocent Spouse" relief from the tax deficiencies and related penalties under Section 6015, nor appealed the decision.

After Harbin and Nall divorced, the IRS applied Harbin's 2004 overpayment credit to the former couple's1999 unpaid tax liability.  Harbin requested relief from joint and several liability for the tax deficiencies under section 6015.  The IRS denied Harbin's request and issued a Final Notice of Determination Concerning Your Request for Relief from Joint and Several Liability under section 6015. 

The U.S. Tax Court found that the under the common law doctrine of res judicata, Harbin would be prevented from obtaining relief from the tax deficiencies under section 6015 if 1) such relief was an issue in the prior proceeding or 2) the U.S. Tax Court decided that the taxpayer participated meaningfully in the prior proceeding .  Nall's gambling activities were an issue in the prior proceeding.  However, since Nall "exercised exclusive control over the prior deficiency case as it related to the tax deficiencies at issue," and Harbin and Nall were not fully informed by their attorney, Harbin did not meaningfully participate in the audit of Nall's gambling activities. 

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