IRS Innocent Spouse Tax Relief
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If you signed a joint tax return with your spouse, you are jointly and severally liable for the taxes, penalties and interest.
This means the IRS can pursue collection in full from either spouse.
IRS Innocent Spouse Relief
Sometimes a spouse signs a joint tax return without knowledge of the unreported income of her spouse or without knowledge of the legality of certain tax deductions claimed by her spouse. Relief under these circumstances is called Innocent Spouse Relief.
Other times it is simply unfair or inequitable to hold a signing spouse liable for the joint tax debt. This form of relief is known as Equitable Relief.
Requirements of Innocent Spouse Relief
To be eligible for relief you must meet the following conditions:
- You filed a joint return on which there was an understatement of tax due to an erroneous item relating to your spouse.
- You didn’t know, and had no reason to know, about the understatement when you signed the return.
- Looking at all the facts and circumstances, it would be unfair to make you pay the tax.
If you meet all these requirements, then you don’t have to pay the portion of tax that relates to this erroneous item.
Requirements for Equitable Relief
If you do not meet the above requirements for Innocent Spouse Relief, you still may qualify for Equitable Relief if it is determined after “taking into account all the facts and circumstances, [that] it is inequitable to hold [you] liable for the deficiency in tax.”
This is a very subjective determination and because of that there has been much inconsistency in its application both by IRS officials and Judges.
Applying for Relief
You have to affirmatively request these forms of relief. You do so by filing Form 8857 with the IRS.
This form is deceptively simple. You will not be granted relief unless it is backed up with substantial corroborating evidence and a compelling, written argument as to why relief is appropriate under the facts and circumstances of your case.
If you think you may qualify for IRS innocent spouse relief, contact us by phone or email for a free consultation.