The Tax Court has granted innocent spouse relief to the widow of former San Francisco Mayor Joseph Alioto, saving her $1.9 million in taxes and penalties.
Her late husband (pictured), who died in 1998, served as mayor of the City by the Bay from 1968 to 1976. Kathleen Sullivan Alioto petitioned for relief after receiving bills for $153,501 and $1,832,010 for their joint 1995 and 1996 tax returns.
The Tax Court found that she was unaware until after her husband's death of his precarious financial situation, including $74 million in debts, and the fact that he had been paying the debts of his first wife and her children.
"Mrs. Alioto was shocked, surprised and stunned to learn the amounts of the creditors' claims being asserted against the estate and that Mayor Alioto had used $18 million of their community property (income) to pay debts for others (including Angelina and his children from his marriage to Angelina) throughout her marriage to Mayor Alioto," wrote Judge Juan Vasquez.
The judge concluded that Mrs. Alioto qualified for innocent spouse relief. "Considering Mrs. Alioto's age, employment status and history, ability to earn, and number of dependents; the amounts reasonably necessary for food, clothing, housing, medical expenses, transportation, current tax payments, and expenses necessary to her production of income; the cost of living in her geographic area; and the amount of property available to satisfy her expenses, we find that she would suffer economic hardship because payment of the underlying liabilities would prevent her from paying reasonable basic living expenses," he wrote.
