A taxpayer received a Notice of Deficiency for approximately $300,000 and contacted the Fordham Tax Clinic, directed by Professor Elizabeth Maresca, for assistance. She came to the U.S. from the Caribbean and had limited English proficiency. She focused her life on caring for her two children, one of whom had a severe disability and subsequently passed away. The client had limited her work to babysitting and housekeeping to maintain a flexible schedule to care for her disabled daughter.
The IRS claimed the taxpayer did not report $1,000.000 of income. This money stemmed from her spouse’s business. He had bad credit and in order to obtain financing, he ran the business under her name and social security number. Her involvement with the business was limited to signing documents at his request. She generally did not understand the documents or the implications of her signature. Notably, the client experienced abuse during the marriage that influenced her signing the documents. The taxpayer separated from her husband, who simply stopped filing returns for the year at issue. Since the business was operated in her name, the IRS asserted that all of the income from the business was attributable to her.
In the summer of 2018, students Alex Lipton ’19, Daniella Villatoro ’19, and Daniela Calabro ’20, began gathering more information about the business, including sending subpoenae to multiple individuals and companies that worked with the business. The information showed how the business was structured and confirmed that the taxpayer was not involved and did not receive the income that was unreported.
The following semester, the students prepared a memorandum of law which analyzed the evidence and summarized the law. The case was docketed in the U.S. Tax Court. After receiving the memorandum of law and hundreds of pages of documents in support, the IRS office of Chief Counsel attorney conceded that the client had not earned the income. Students in the Tax Clinic helped absolve the taxpayer of the $300,000 liability.