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The IRS Innocent Spouse Rule

The Internal Revenue Service recognizes that sometimes, when a joint return is filed, both parties may not be responsible for a resulting tax liability. However, when a tax liability exist, either party can be held jointly and severally liable. This means that either spouse could be held responsible for entire tax liability. The Internal Revenue Service provides 3 types of relief Innocent spouse relief, separation of liability, and equitable relief. Often, innocent spouse relief is thought to be the same as injured spouse relief. Though similarities exist, injured spouse relief applies to actual or probable loss of overpayment (refund) due to one spouse having delinquent student loans, child support, federal or state tax liability, or other issues that causes a refund off-set (refund allocated to tax debt).

To qualify for innocent spouse relief the tax payer must have filed a joint return, show that when return was signed you didn’t know, and had no reason to know that the understated tax occurred, have an understated tax that’s due to inaccurate item (i.e. unreported income, misstated deduction, basis, or credit), and facts reveal unfairness to hold spouse responsible. “Innocent spouse relief will not be granted if the IRS proves that you and your spouse (or former spouse) transferred property to one another as part of a fraudulent scheme” (irs.gov pub. 971). Separation of liability allocates tax liability plus penalties and interest resulting from a filed joint return between each spouse. Allocation is based on taxes, penalties, and interest each spouse would ordinarily be responsible for if taxes were filed separate from their spouse. Other requirements include tax payer seeking relief had a separate residence during the 12-month period ending on the date relief request is submitted, and you are no longer married or legally separated from the spouse you filed joint return with. If you do not qualify for innocent spouse relief, or separation of liability, you may still be able to obtain relief. The IRS could grant equitable relief under the following conditions. You don’t qualify for innocent spouse relief, or separation of liability, you file the proper form at the proper time, you filed a joint return for the year in question, no assets where fraudulently transferred to defraud the IRS, creditor, or business partner, and your spouse transferred no assets to you for tax avoidance purposes. Remember, in all instances the Internal Revenue Service will check to see if you are tax compliant in the year or years following the tax year or years relevant to your request for relief. If you need assistance with applying for Innocent Spouse Relief, Separation of Liability, Equitable Relief, or Injured Spouse Relief. Call Advantage Tax Services now. You will be connected to a licensed tax professional with the experience to rendered the best resolution offered by the Internal Revenue Service. To contact Advantage Tax Service call or email us at 866-606-3570

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