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IRS Innocent Spouse Relief

Kathryn Warner

Overview

In general, spouses who file joint income tax returns are jointly and severally liable for any tax reported on those returns, which means the IRS can pursue either spouse for the entire amount of tax due. However, the IRS may provide relief for certain qualifying taxpayers if a spouse improperly reported items or omitted items on a joint tax return without the other spouse’s knowledge. 

In Detail

TYPES OF RELIEF

Internal Revenue Code § 6015 provides three ways in which a taxpayer can qualify for innocent spouse relief.

Innocent Spouse Relief Under 6015(b)

Section 6015(b) provides relief from any additional tax owed if your spouse or former spouse failed to correctly report income. To qualify, a taxpayer must meet all the following requirements:

Requirements

  • A joint return has been made for at taxable year;
  • On such return there is an understatement of tax attributable to erroneous items of one individual filing the joint return;
  • The requesting taxpayer establishes they did not know and had no reason to know, that there was such an understatement; and
  • Taking into account all of the facts and circumstances, it would be inequitable to hold the requesting taxpayer liable for understatement of tax.

Knowledge Requirement

  • 6015 (b) requires that the requesting taxpayer did not know and had no reason to know of an understated tax. A taxpayer knew or had reason to know of an understatement if they:
    • Actually knew of the understated tax, referred to as actual knowledge, or
    • A reasonable person in similar circumstances would have known of the understated tax, referred to as constructive knowledge.

Separation of Liability Relief Under 6015 (c)

Under Section 6015(c), the IRS will allocate joint liability to each spouse based on their portion of income and deduction items on the return. To qualify, a taxpayer must meet the following requirements:

Requirements

  • Taxpayer must be (1) divorced or legally separated from the spouse with whom they filed the joint return; (2) widowed; or (3) has not lived in the same household as the spouse with whom they filed the joint return at any time during the 12-month period ending on the date relief was requested, and had no actual knowledge of the item that gave rise to the deficiency when they signed the joint return.

Knowledge Requirement

  • Unlike 6015(b), Section 6015(c) only requires the taxpayer did not have actual knowledge. This section does not contain the constructive knowledge provision contained in 6015(b).

Equitable Relief Under 6015 (f)

Under 6015(f), the IRS will provide relief when a taxpayer does not qualify under the other two sections. The IRS will grant this relief when, under all the facts and circumstances, it would be unfair to hold the taxpayer liable for the deficiency or underpayment of tax. The IRS will look at several factors to make this determination including whether the requesting taxpayer knowingly participated in the filing of a fraudulent joint return.

WHEN TO FILE

A taxpayer must request Innocent Spouse Relief or Separation of Liability Relief no later than two years after the date the IRS first attempted to collect the tax owed. A taxpayer may request Equitable Relief during the period of time the IRS can collect from them.

If you are considering making a request for innocent spouse relief, please feel free to contact us at McMahon & Tivnan today at 617-600-5400.