Court grants full innocent spouse relief after husband’s financial control and abuse

Zaheen v. Commissioner, T.C. Memo. 2026-7, No. 13863-22. BL 19963.

The Tax Court relieved Asia Zaheen from a $120,510 deficiency and a §6662(a) accuracy penalty because her husband controlled the finances, used abuse and intimidation, and prevented her from learning about the taxable withdrawals.

Holding

The Court granted Dr. Zaheen full equitable relief under §6015(f) from joint and several liability for the 2019 deficiency and §6662(a) accuracy-related penalty tied to unreported taxable withdrawals routed through a self-directed solo §401(k) structure.

Why It Matters

• §6015(f) can provide full relief even when the requesting spouse had “reason to know,” if abuse or financial control made a meaningful inquiry unsafe or impractical.

• The Court treated the husband as the responsible party for the “phony” reporting item because he orchestrated the transaction and controlled access to the information.

• A spouse can lose streamlined relief if they cannot show economic hardship, but still win under the full facts-and-circumstances analysis.

• Intervenor spouses can oppose relief under §6015(e)(4), even when the IRS concedes relief.

Timeline

• February 1, 1998: Zaheen and Ehsan marry.

• 2017: They establish KME Investment Trust and a self-directed solo §401(k) arrangement tied to Asia Kamran, LLC.

• January 14, 2019: $257,907 withdrawn from Zaheen’s Merrill Lynch §401(k) account and deposited into the trust.

• January 25 to 31, 2019: $257,700 withdrawn from the trust and used mainly to pay down a Citizens Bank HELOC.

• 2019 return filed jointly. The taxable trust withdrawals are not reported.

• December 2021: Zaheen first learns from an IRS letter that the funds were not replaced as represented.

• February 28, 2022: IRS issues a notice of deficiency for $120,510 plus a §6662(a) penalty of $24,102.

• November 16, 2022: Ehsan intervenes to oppose relief.

• January 22, 2026: Tax Court grants Zaheen full §6015(f) relief.

Key Facts

• Zaheen was a self-employed physician. She worked through Zaheen Medical Center, a practice created in 2018 and initially jointly owned by the spouses.

• Ehsan was an electrical engineer working on contract. He also asserted control over the medical practice’s business and bank accounts.

• The couple used a Citizens Bank home equity line of credit to buy property and equipment for the medical center. The HELOC balance was about $291,939 as of January 19, 2019.

• In 2017, they created KME Investment Trust, which held a self-directed solo §401(k) plan. Both spouses were trustees with authority to act.

• In January 2019, $257,907 was withdrawn from Zaheen’s Merrill Lynch retirement account and rolled into the trust. The parties later stipulated that this rollover was not taxable.

• Soon after, $257,700 was withdrawn from the trust and used primarily to pay down the HELOC. The parties stipulated that these trust withdrawals were taxable.

• The 2019 joint return reported tax of $116,212 but did not report the taxable trust withdrawals.

• The Court credited evidence that Ehsan controlled the household and business finances, opened the mail, restricted account access, demanded signatures, and used threats and violence.

• Police and Massachusetts child welfare findings supported the abuse history. Ehsan entered a “continued without finding” type disposition after admitting to facts sufficient for guilt on an assault and battery charge tied to a 2021 incident.

Statutory or Regulatory Framework

• Joint filers face joint and several liability under §6013(d)(3). Each spouse can be liable for the full tax.

• §6015 provides three paths to relief from joint liability:

  • §6015(b), which allows relief for certain understatements if requirements are met.

  • §6015(c), which allows allocation in some separated or divorced situations.

  • §6015(f), which helps provide equitable relief when it is inequitable to hold the requesting spouse liable.

• Treasury regulations and IRS guidance direct courts to factors in Rev. Proc. 2013-34 when applying §6015(f).

• Rev. Proc. 2013-34 uses a three-step approach:

  • Threshold requirements.

  • Streamlined relief test.

  • Complete facts-and-circumstances factor analysis if streamlined relief does not apply.

• Under Rev. Proc. 2013-34, abuse and financial control can negate or mitigate “knowledge or reason to know.”

Arguments

Taxpayer argued:

• Ehsan controlled the finances and the transaction. He restricted her access to accounts and information.

• Abuse and intimidation prevented her from challenging the reporting or verifying the status of her retirement funds.

• It would be inequitable to hold her liable for the unreported taxable withdrawals.

Government argued:

• The IRS conceded that Zaheen qualified for §6015(f) relief.

Intervenor argued:

• Abuse allegations were unfounded or insufficiently specific.

• Zaheen should not receive relief because she knew about the retirement withdrawal and signed the return.

Court’s Reasoning

• The Court treated the case as a §6015(f) equitable relief case because Zaheen conceded she did not qualify under §6015(b) or §6015(c).

• The Court found the final threshold requirement satisfied. It attributed the reporting problem to Ehsan because he controlled the finances, drove the transaction, and used deception and intimidation to block access to information.

• Streamlined relief did not apply because Zaheen conceded she would not suffer economic hardship.

• Under the full equitable relief factors, the Court weighed the case mainly on knowledge, abuse, and financial control.

• The Court found Zaheen did not have actual knowledge of the taxable trust withdrawals that created the understatement. She knew of the initial Merrill Lynch withdrawal, but credibly testified that she believed the funds would be replaced and did not understand the trust mechanics.

• The Court found Zaheen had “reason to know” because she signed the return without reviewing it, and Ehsan’s secrecy should have raised concern for a reasonable person.

• The Court then treated that “reason to know” as negated by abuse and financial control. The Court found she could not safely press for answers or meaningfully access the information needed to confirm reporting.

• The Court credited corroborated testimony from Zaheen, two children, and the housekeeper. It also relied on police and child welfare findings, as well as Ehsan’s admissions in the criminal matter.

• Other factors were mainly neutral:

  • Marital status was neutral because Massachusetts does not recognize legal separation, and the divorce was pending.

  • Economic hardship was neutral because Zaheen did not claim it.

  • Legal obligation was neutral because there was no divorce decree allocating tax liabilities.

  • Significant benefit was neutral because the funds paid down business-related debt, there was no evidence of lavish spending, and Ehsan controlled the funds during the period.

  • Post-year compliance was neutral because the record did not establish whether compliance or noncompliance occurred later.

• Mental and physical health weighed in favor of relief based on the record of prolonged abuse and its effects.

Result

The Court granted Dr. Zaheen full relief under §6015(f) from the 2019 deficiency and the §6662(a) accuracy-related penalty.

The Takeaway

§6015(f) relief can override a “you should have known” narrative when the requesting spouse faced abuse and tight financial control that made real inquiry unrealistic. The record matters. Credible, specific testimony, along with third-party corroboration, can carry the case even when the IRS is no longer the main opponent.

List of Citations

• §6015(b), (c), (f): Statutory pathways for innocent spouse relief, including equitable relief under §6015(f).

• §6013(d)(3): Joint and several liability rule for joint returns.

• Rev. Proc. 2013-34, 2013-43 I.R.B. 397: IRS factor framework used for §6015(f) equitable relief analysis.

• Treas. Reg. §1.6015-4: Regulation describing §6015(f) equitable relief and reliance on published guidance.

• Maier v. Commissioner, 119 T.C. 267 (2002): Jurisdictional bases for Tax Court review of §6015 claims.

• Porter v. Commissioner, 132 T.C. 203 (2009): Standard of review and general §6015 framework.

• Hayman v. Commissioner, 992 F.2d 1256 (2d Cir. 1993): Constructive knowledge from signing returns and reason-to-know concepts.

• Bokum v. Commissioner, 94 T.C. 126 (1990): Actual knowledge concepts in omitted income settings.

• Pocock v. Commissioner, T.C. Memo. 2022-55: Attribution of “phony” items and role of abuse and control in §6015(f) analysis.

• Thomas v. Commissioner, 162 T.C. 9 (2024): Scope of review and consideration of unavailable evidence when no administrative record exists.