Innocent Spouse Relief from Federal Income Tax

Paule, Camazine & Blumenthal, P.C. posted in Experts on Wednesday, December 04, 2013.

By Barton E. Saettele

Married couples do not have to file joint federal income tax returns, but most married couples do.

When a joint return is filed, both spouses have joint and several liability for that particular tax year. This means that if there is an underpayment of tax for that tax year, the IRS can try to collect it (and any applicable interest and penalties) from both spouses, even if only one of the spouses was at fault for the underpaid tax.

Divorce has no effect on this joint and several liability. Both spouses remain liable for the total amount owed, even if a divorce judgment assigns the obligation to only one of the spouses.

What can someone do if he or she filed a joint return, unaware that his or her spouse was responsible for underpaying tax? One thing someone finding themselves in this predicament can do is make a request to the IRS for what is commonly referred to as “innocent spouse relief”. If someone qualifies for “innocent spouse relief” they are no longer liable for the underpaid tax or any applicable interest and penalties.

The law regarding “innocent spouse relief” is complex. There are actually several different types of relief available, all with their own separate requirements.
People often lump these separate types of relief together and refer to them collectively as “innocent spouse relief”. Although the law is complex, its main goal is simple: to only provide relief when someone is truly “innocent”.

The IRS looks at many different factors in analyzing whether someone is truly “innocent”. These factors include, but are not limited to, the following (note that the precise factors the IRS examines varies based on the particular type of relief requested):

Was the requesting spouse responsible for the underpaid tax?

Did the requesting spouse know about the underpaid tax when he or she signed the joint return?

Did the requesting spouse have reason to know about the underpaid tax when he or she signed the joint return?

Did the requesting spouse receive a significant benefit directly or indirectly related to the underpaid tax?

In processing an “innocent spouse relief” request, the IRS must contact the non-requesting spouse or non-requesting former spouse and give them the opportunity to be part of the process. There are no exceptions to this requirement, even for victims of domestic violence.

There are strict deadlines for making “innocent spouse relief” requests. Because of these strict deadlines, and because of the complexity in the law discussed above, taxpayers should strongly consider seeing a tax advisor immediately if they believe they may benefit from filing a request for “innocent spouse relief”.

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