Demeter v. Commissioner of Internal Revenue

Andrea Demeter (plaintiff) and Jeffrey Demeter were married and filed joint tax returns. Jeffrey ran a small business and largely handled the couple’s finances. Andrea performed enough duties for the business to know that it was economically troubled. The couple had two children and lived a modest lifestyle. Jeffrey filed tax returns that correctly calculated the couple’s tax liability. However, Jeffrey never paid the tax. After receiving a notice of intent to levy assets from the Internal Revenue Service (IRS) (defendant), Andrea confronted Jeffrey, who said he would get a loan to pay the taxes. Andrea was aware that Jeffrey had overextended his credit and that he had been denied for loans in the past. The couple’s financial situation worsened, leading to a home foreclosure and bankruptcy. The couple divorced. Jeffrey agreed to provide support payments and to pay the IRS the owed amount as part of the divorce settlement. Jeffrey fulfilled neither obligation. Andrea and her two children moved in with her boyfriend. Andrea lost all her assets and went on government food assistance. At all times after the divorce, Andrea complied with her tax-filing obligations. Andrea petitioned the IRS for relief from liability for the unpaid tax. The IRS initially denied the petition, and Andrea challenged the denial in the United States Tax Court. The IRS changed its position to be in favor of relief, but Jeffrey filed as an intervenor in the case arguing against granting Andrea relief.