If the IRS is pursuing collection action against you for an income tax liability for which you believe you are not responsible because the liability was derived from a spouse (or former spouse), you may be correct and have legal grounds to dispute the liability. The IRS has a specific provision called innocent spouse relief
There are several different ways for a spouse that was “wronged” by their “non-innocent” spouse to be relieved from some or all of their tax liability. These include Innocent Spouse Relief, Separation of Liability Relief, and Equitable Relief.
Innocent Spouse Relief
Individuals who meet the criteria for Innocent Spouse Relief can be relieved of liability if the “non-innocent” spouse (or former spouse) improperly reported items or omitted items on the couple’s joint tax return. All of the following criteria must be met:
- You filed a joint return.
- There is an understated tax on the return that is due to erroneous items of your spouse or former spouse.
- You are able to demonstrate that when you signed the joint return you did not know, and had no reason to know, that the understated tax existed (or the extent to which the understated tax existed).
- Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated tax.
Separation of Liability Relief
Here, the understated tax (plus penalties and interest) on your joint return is allocated between you and your spouse (or former spouse). Although you cannot get a refund for any liabilities that have already been paid, you may qualify for this type of relief if you meet the following criteria:
- You filed a joint return.
- You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief (if you are widowed, then you are no longer married).
- You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file the appropriate IRS form requesting relief.
If you do not qualify for either of the above, it may still be possible for you to be relieved of some, or all, of the tax liability via equitable relief. While the criteria for this type of relief is a bit complicated and lengthy, a simplified explanation is as follows:
If you did not knowingly participate in any tax avoidance or fraudulent activities and you establish that it would be unfair to hold you liable for the understated or unpaid tax, then it may be possible for you to be granted equitable relief. In addition to this, if you knew or participated in your spouse’s wrongful acts, but can establish that you were afraid to challenge your spouse because you were the victim of spousal abuse, the IRS will take this into consideration, and may be willing to overlook the fact that you participated or knew about wrongful actions.
Please contact us to discuss whether you might meet the criteria for Innocent Spouse Relief, Separation of Liability Relief or Equitable Relief.
Individuals who meet the criteria for Innocent Spouse Relief can be relieved of liability. Individuals who do not qualify for Innocent Spouse relief may qualify for “Equitable Relief,” if, taking into consideration all of the facts and circumstances, the IRS finds that it would be unfair to hold one of the spouses liable. Please contact us to discuss whether you might meet the criteria for Innocent Spouse Relief or Equitable Relief.
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