Spouse With No Control Over Finances Wins Equitable Relief Under Sec. 6015(f)

(Parker Tax Publishing February 2026)

The Tax Court granted full relief to a requesting spouse under Code Sec. 6015(f) for an understatement on the return she jointly filed with her soon-to-be former spouse resulting from taxable distributions from the requesting spouse's 401(k) retirement account. The court found that, although the requesting spouse had reason to know of the item giving rise to the understatement of tax, her knowledge was negated by the former spouse's abusive treatment of her and his full control over the couple's finances. Zaheen v. Comm'r, T.C. Memo. 2026-7.

Background

Dr. Asia Zaheen and Kamran Ehsan were married in 1998, one day after they met. That year, they moved to the United States from Pakistan. They subsequently had four children. Dr. Zaheen and Ehsan lived together in the family home until Dr. Zaheen filed for divorce in 2021.

During 2019, Dr. Zaheen was self-employed as a physician at Zaheen Medical Center, a medical practice that, at the time, was jointly owned by Dr. Zaheen and Ehsan. Ehsan is an electrical engineer. Zaheen Medical Center was established in 2018. Dr. Zaheen and Ehsan used funds from a home equity line of credit (HELOC) to purchase the property where the business was located.

Dr. Zaheen generally felt discouraged from inquiring about or participating in the family's finances. Ehsan controlled the family's finances and opened the household's mail. Ehsan generally rebuffed Dr. Zaheen's attempts to participate in or inquire about the family's finances. Ehsan sharply scrutinized and criticized Dr. Zaheen's and the children's spending habits. Dr. Zaheen could access only one account to which her salary from her medical practice was paid. Dr. Zaheen felt afraid to transfer funds out of or otherwise use funds from the joint accounts she held with Ehsan.

Ehsan also exerted financial control over Dr. Zaheen's medical practice. Despite his lack of a medical education, and the fact that Massachusetts law prohibits nonphysicians from owning or controlling a medical practice, Ehsan claimed to be a partial owner and the CEO of Zaheen Medical Center. To Dr. Zaheen's exclusion, Ehsan had full control over Zaheen Medical Center's bank accounts. Ehsan viewed Dr. Zaheen as an employee and paid her a salary. He would become aggressive if Dr. Zaheen sought to use funds from a Zaheen Medical Center account.

Dr. Zaheen testified that Ehsan asserted at times that she was his property, that he was entitled to her earnings, and that all of their property was his. In 2017, Dr. Zaheen explicitly asked Ehsan not to use funds from her retirement account for his business ventures. Ehsan would often communicate threats against Dr. Zaheen and the children in conjunction with financial demands, including that Dr. Zaheen sign documents. Further, Ehsan threatened that he would leave Dr. Zaheen financially ruined if she ever attempted to divorce him.

Since they were married in 1998, and through the years at issue, Ehsan subjected Dr. Zaheen to various forms of abuse. Ehsan had a short temper and on occasion broke plates and glasses in front of their children if they did not obey him. In one instance, which the children also witnessed, Ehsan berated Dr. Zaheen and strangled her for eating chocolate. For years during their marriage, Dr. Zaheen frequently slept separately from Ehsan out of fear of sexual abuse. He once dragged her from the separate room to the room that he was sleeping in, locked the door, and threatened to harm the children if she did not have sexual intercourse with him.

In 2021, Dr. Zaheen informed Ehsan that she was filing for divorce and sked for the business records pertaining to Zaheen Medical Center. Ehsan became violent and verbalized threats to Dr. Zaheen. Dr. Zaheen called the police to report Ehsan's actions. Following an investigation, police determined that there was probable cause that Ehsan committed assault and battery against Dr. Zaheen. Dr. Zaheen applied for and was granted an abuse prevention order against Ehsan. In addition, the Massachusetts Department of Child and Family Services (MDCF) investigated Ehsan for allegations of neglect. Dr. Zaheen reported to the MDCF that she was the victim of years of significant abuse. The MDCF concluded that in response to Ehsan's abuse and threats, the children exhibited fear and numbed emotions.

Dr. Zaheen and Ehsan used funds Dr. Zaheen held in a 401(k) account with Merrill Lynch (Merrill Lynch account) to pay down the debt incurred on the HELOC. Ehsan represented that he would use the proceeds from his other business and the sale of other property he held to replace the funds withdrawn from the Merrill Lynch account within 30 days. In January 2019, a withdrawal of $257,907 was made from Dr. Zaheen's Merrill Lynch account. In February 2019, Dr. Zaheen requested that Ehsan share the password to her Merrill Lynch account in order for her to confirm that the withdrawn funds had been returned. Ehsan refused and replied that she needed to trust and believe her husband. Believing the funds had been replaced and unwilling to risk provoking Ehsan's anger at her or their children, Dr. Zaheen did not inquire further about the balance of her Merrill Lynch account.

Dr. Zaheen and Ehsan filed a joint Form 1040, U.S. Individual Income Tax Return, for 2019. Their return did not report the withdrawal from Dr. Zaheen's Merrill Lynch account. Dr. Zaheen first learned in December 2021 that the withdrawal was not timely replaced when she received a letter from the IRS that identified the unreported income. In 2022, the IRS issued to Dr. Zaheen and Ehsan, each, a Notice of Deficiency determining a deficiency and a penalty for the unreported retirement distribution. Dr. Zaheen filed a petition with the Tax Court, seeking a redetermination of the adjustments in the Notice of Deficiency and asserting innocent spouse relief as defense. The IRS conceded that she was entitled to innocent spouse relief under Code Sec. 6015(f). Ehsan filed a Notice of Intervention and became a party to the case, opposing relief.

Innocent Spouse Relief

When married taxpayers file a joint return, each spouse is jointly and severally liable for the entire amount of tax shown on the return or found to be owing. Nevertheless, Code Sec. 6015 provides three potential avenues and procedures for relief from joint and several liability: (1) full or partial relief for an understatement of tax under Code Sec. 6015(b), (2) proportionate relief for an understatement of tax under Code Sec. 6015(c), and (3) full or partial equitable relief for an understatement or underpayment of tax under Code Sec. 6015(f). Because all parties agreed that Dr. Zaheen did not qualify for innocent spouse relief for tax year 2019 under Code Sec. 6015(b) or (c), she sought equitable relief under Code Sec. 6015(f).

Code Sec. 6015(f)(1)(A) provides relief from joint and several liability if, under the facts and circumstances, it is inequitable to hold the requesting spouse liable for any unpaid tax or any deficiency (or any portion thereof). Rev. Proc. 2013-34 sets forth a three-step analysis for evaluating 6015(f) claims for relief. The procedure sets forth (1) seven threshold requirements; (2) a three-part test for streamlined relief; and (3) if a requesting spouse does not qualify for streamlined relief, a nonexclusive list of factors indicating that it would be inequitable to hold the spouse jointly and severally liable.

Under the full equitable relief analysis of Code Sec. 6015(f), the Tax Court considers the following factors: (1) current marital status; (2) whether the requesting spouse would suffer economic hardship if relief were not granted; (3) in understatement cases, whether the requesting spouse knew or had reason to know of the item giving rise to the understatement and the effect of any spousal abuse or financial control; (4) whether either spouse has a legal obligation to pay the outstanding federal income tax liability; (5) whether the requesting spouse significantly benefited from the understatement or underpayment; (6) whether the requesting spouse has made a good faith effort to comply with the income tax laws; and (7) whether the requesting spouse was in poor mental or physical health at the time the joint return was filed. No single factor is dispositive, and the degree of importance of each factor varies depending on the requesting spouse's facts and circumstances.

In this case, the court first determined that Dr. Zaheen met the threshold requirements of Rev. Proc. 2013-34 and that did not qualify for streamlined relief. Turning to the full equitable relief analysis, the court focused primarily on the third factor, i.e., Dr. Zaheen's knowledge or reason to know of the withdrawal from the Merrill Lynch account and the effect of abuse and her lack of financial control.

Analysis

The Tax Court held that Dr. Zaheen was entitled to full equitable relief under Code Sec. 6015(f) after finding that it would be inequitable to hold her liable for the understatement of tax for 2019.

The court found that Dr. Zaheen did not have actual knowledge of the 401(k) withdrawal since she did not learn about the transaction until she received an IRS notice in 2021. However, the court concluded that Dr. Zaheen had reason to know of the withdrawal. The court noted that Dr. Zaheen is a well-educated person who nevertheless signed the joint 2019 return without reviewing it. In the court's view, a reasonable person would have been alerted to potential issues given that, after Dr. Zaheen inquired about whether the withdrawn funds had been returned, Ehsan responded that the funds were returned and that she should trust him while preventing her from confirming his statements for herself.

The court further found, however, that Dr. Zaheen's knowledge was negated by her credible allegations of significant abuse. In the court's view, Dr. Zaheen testified with specificity and particularity as to numerous instances in which Ehsan became aggressive towards her or the children. The court also noted that Dr. Zaheen's testimony was corroborated by the children and family's housekeeper as well as Ehsan's admission in his criminal case and the findings of investigations conducted by local police and MDCF. The court found Dr. Zaheen's allegations of abuse significant enough to negate the court's finding that she had reason to know of the item giving rise to the understatement. Under the circumstances, the court did not believe Dr. Zaheen could have questioned the accuracy of the joint return without risking her or her children's safety.

The court further found that, to the extent Dr. Zaheen had actual knowledge of the transaction giving rise to the tax liability for 2019, her knowledge was negated by Ehsan's financial control. Despite Dr. Zaheen's being the primary earner, the court found that Ehsan controlled nearly all financial matters for the household and Zaheen Medical Center. The court thought that Ehsan's claiming the title of CEO and his joint ownership of Zaheen Medical Center was indicative of the unreasonable nature of control he exerted over Dr. Zaheen. In addition, the court noted that Dr. Zaheen did not participate in the preparation of the 2019 and Ehsan did not give her a reasonable opportunity to review it but demanded her signature. In the court's view, even if Dr. Zaheen had an opportunity to review the return, Ehsan's exertion of financial control over her - notably by restricting her access to her own, and joint, financial accounts - would have prevented Dr. Zaheen from ascertaining the return's inaccuracy. Further, the court observed that Dr. Zaheen made reasonable efforts to inquire about the 401(k) withdrawal and requested the password to the Merrill Lynch account so that she could confirm that he returned the withdrawn funds, but was met with demands for obedience and trust.

For a discussion of innocent spouse relief, see Parker Tax ¶260,560.

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