What is innocent spouse relief

Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Generally, couples filing a joint tax return are both, jointly, responsible for any tax obligation.

When additional taxes from unreported income and erroneous deductions or credits come to light, both partners will remain liable, even if they have divorced. Getting a divorce doesn't stop the IRS from considering that both parties retain joint and several liability for a tax obligation, even if a divorce decree states that only one party is responsible for the tax. According to the IRS, if there is a balance due, a spouse or ex-spouse generally must file Form within the time period the IRS has to collect the tax.

That period is generally 10 years from the date the tax liability was assessed. In the case of a credit or refund, you generally must file your request within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later.

You must also not have had actual knowledge of the item that gave rise to the deficiency at the time you signed the joint return, unless you can show that you signed the return under duress. If you don't qualify for innocent spouse relief or separation of liability relief, you may still qualify for equitable relief. To qualify for equitable relief, you must establish that under all the facts and circumstances, it would be unfair to hold you liable for the deficiency or underpayment of tax.

In addition, you must meet the other requirements listed in Publication , Innocent Spouse Relief. See Revenue Procedure PDF for additional information about qualifying for equitable relief, including how the IRS will take into account abuse and financial control by the nonrequesting spouse in determining whether equitable relief is warranted.

To seek innocent spouse relief, separation of liability relief, or equitable relief, you should submit to the IRS a completed Form , Request for Innocent Spouse Relief or a written statement containing the same information required on Form , which you sign under penalties of perjury. You may also refer to Publication , Innocent Spouse Relief for more information. If you request relief from the joint and several liability of a joint return, the IRS is required to notify the spouse you filed jointly with of your request and allow him or her to provide information for consideration regarding your claim.

If you lived in a community property state and didn't file as married filing jointly, you might qualify for relief from the operation of state community property law. Refer to Publication for more details. In real life, how could that happen without your knowledge? Well, if you and your spouse filed a joint tax return and you signed it, there is your answer. While this is an extreme example, all too often, a spouse will be called into question about suspect tax activities conducted by their husband or wife.

Most of the time, it is for a pretty innocuous error that can be easily resolved; you fix it and no big deal. Marriage saved. However, there are situations where fraud has been knowingly committed and the spouse who has been kept in the dark has to try to explain to the authorities — when they truly have no idea what just happened.

It can be a very painful and humiliating experience to know that your spouse deceived you and you are expected to clean up the mess, which could also mean being on the hook for their liabilities. If you meet specific criteria you will be absolved of any atrocities committed by your spouse.

This is a huge relief to know that at least some of the devastation will be lifted off your shoulders. We have helped other wronged spouses and we can help you. Because of certain benefits that filing jointly allows, many married taxpayers elect to file joint returns. However, filing a joint return carries the added burden of both parties being liable for the tax due. In addition, under the IRS code, married taxpayers who file jointly are each liable for any additions to the tax, penalties, or interest associated with the account.

This is a concept in the law known as joint and several liability , meaning that the spouses are responsible for any tax liabilities together jointly but can be held responsible for them as individuals severally. From a practical standpoint, the IRS does not have the resources to make the determination on its own of who is an innocent spouse.

This would require the IRS to review thousands upon thousands of joint collection accounts and make individual determinations as to whom should be assessed an increase in liability. This is why when a married couple signs their tax return, both parties are attesting to the accuracy of the tax that is owed.

As such, if the IRS finds an increase in the amount of tax that is owed, it holds both parties equally responsible for the increase. This carries two implications. First, it places the burden on the parties to determine how to pay the liability, rather than the IRS. Where appropriate, innocent spouses should not be fearful in raising it as a defense to a deficiency or underpayment of federal income taxes. Freeman Law Firm Services. If you need assistance in managing the legal process , Freeman Law is where clients turn when the stakes are high and the issues are complex.

We offer value-driven services and provide practical solutions to complex legal issues. Existing Client? Enter the code:. Matthew Roberts. History of Innocent Spouse Relief. Section Relief. Section b Relief A requesting spouse can qualify for Section b relief of all or a part of the joint tax liabilities if the requesting spouse can show: A joint tax return was filed; The joint tax return has an understatement of tax attributable to erroneous items of the nonrequesting spouse.

For these purposes, an erroneous item is an income, deduction, credit, or basis item that is omitted from or incorrectly reported on the joint tax return. See Reg. When the requesting spouse signed the return, he or she did not know or have reason to know of the understatement; Under the applicable facts and circumstances, it would be inequitable to hold the requesting spouse liable for the joint tax liability; and The requesting spouse elected relief within 2 years after the IRS began collection activities against him or her.

Section c Relief. To qualify for relief under this provision, the requesting spouse must show the following: A joint tax return was filed; When the innocent spouse requests relief, the innocent spouse is no longer married to the nonrequesting spouse or they are legally separated, widowed, or had not lived in the same household for the 12 months immediately prior to the election; The IRS cannot show that the requesting spouse had actual knowledge, at the time the joint tax return was signed, of any item giving rise to the deficiency; and The innocent spouse elected relief within 2 years after the IRS began collection activities against him or her.

Section f Relief. Here, Section f can provide relief if the requesting spouse can show: The requesting spouse does not qualify for relief under Section b or Section c above; and Under all the facts and circumstances, it would be inequitable to hold the taxpayer liable for the underpayment or deficiency.

Threshold Requirements of Rev. Streamlined Determinations. To meet the streamlined determination criteria, the requesting spouse must show: The requesting spouse is no longer married to the nonrequesting spouse; The requesting spouse would suffer economic hardship if relief were not granted; and The requesting spouse did not know or have reason to know that there was an understatement or deficiency on the joint income tax return or did not know or have reason to know that the nonrequesting spouse would not or could not pay the underpayment of tax reported on the joint income tax return.

These include: Whether the requesting spouse is no longer married to the nonrequesting spouse as of the date the IRS makes its determination. If the requesting spouse is married to the nonrequesting spouse, this factor is neutral. If the requesting spouse is no longer married to the nonrequesting spouse, this factor weighs in favor of relief. Whether the requesting spouse will suffer economic hardship if relief is not granted.

For these purposes, an economic hardship exists if satisfaction of the tax debt in whole or in part would cause the requesting spouse to be unable to pay reasonable basic living expenses. If denying relief from joint and several liability will cause the requesting spouse to suffer economic hardship, this factor weighs in favor of relief. Conversely, if denying relief from joint and several liability will not cause the requesting spouse to suffer economic hardship, this factor will be neutral.

For understatement cases, whether the requesting spouse knew or had reason to know of the item giving rise to the understatement or deficiency as of the date the joint return was filed. If the requesting spouse did not know and had no reason to know of the item giving rise to the understatement, this factor weighs in favor of relief. On the other hand, if the requesting spouse knew or had reason to know of the item giving rise to the understatement, this factor weighs against relief.

For underpayment cases, whether the requesting spouse knew or had reason to know that the nonrequesting spouse would not or could not pay the tax debt at the time the return was filed or within a reasonable period of time after the return has been filed. This factor weighs in favor of relief if the requesting spouse reasonably expected the nonrequesting spouse to pay the tax debt reported on return.

Whether the requesting spouse or nonrequesting spouse has a legal obligation to pay the outstanding federal tax debts, g. This factor weighs in favor of relief if the nonrequesting spouse has the sole legal obligation to pay the outstanding income tax debts pursuant to the agreement. If the requesting spouse has the sole obligation to pay, this factor weighs against relief.

Whether the requesting spouse significantly benefitted from the unpaid tax debts or understatement.