Innocent Spouse Relief – Designed To Protect Ex-Spouses Who Find Themselves Liable For The Other Spouse’s IRS Tax Debt
Marriage is a bond built on love, trust, and much more. But sometimes it can lead to some very serious issues including tax related problems.
Spouses who file joint tax returns or who simply sign a tax return that their partner has prepared, have often found that they’re being held responsible for back taxes they may not feel liable for.
It’s very common for ex-spouses to face tax related issues, and as a result the government passed tax related laws to help ex-spouses avoid tax debt that is the responsibility of the other spouse. Innocent spouse relief provides some measure of protection from this issue and is well worth learning about if you are facing tax debt that you feel is the responsibility of your ex-spouse.
There are three main types of innocent spouse relief covered under IRC code 6015:
• Basic Innocent Spouse Relief
• Separation of Liability Relief
• Equitable Relief
Each of these is better for different situations, and works better for different individuals. Figuring out which is the right one for your situation is the first step towards getting the innocent spouse relief you need.
Basic Innocent Spouse Relief
Basic Innocent Spouse Relief is designed to provide relief from taxes you have been found responsible for that are from your spouse or a former spouse failing to report their income, reporting income incorrectly, or claiming improper deductions or tax credits. In short, it’s used to help alleviate the burden placed on you through the actions of your spouse. It can often alleviate all of the tax debt you’re facing, as long as you can prove that you aren’t responsible for the situation.
Separation Of Liability Relief
Separation of Liability Relief is different in that it allocates taxes owed between you and your former spouse. This is done when items aren’t reported properly on a joint return and you’re found to owe more taxes as a result. In this case, taxes will be allocated between the two of you and you’ll only be responsible for a portion of the tax debt.
Finally, Equitable Relief is kind of a ‘last resort’ that is used when a taxpayer doesn’t qualify for either of the above options. It’s a kind of relief that is applied to individual items on a joint tax return that can be attributed to your spouse or ex-spouse. It could also be used in cases where taxes haven’t been repaid but the tax amount was reported correctly.
To request innocent spouse relief, you’ll need to complete Form 8857 and submit it to the IRS. But before you do so, it’s worth taking a look at whether or not you’ll actually qualify for the relief at all. A few things can help you determine whether or not you’re eligible to request this form of tax related relief from the IRS. The IRS’ official website actually has a questionnaire that can help you determine your eligibility, but the following can help break it down for you more clearly.
To qualify for innocent spouse relief, you’ll need to meet all of the following criteria.
• You must have filed a joint return with an understatement of tax that can be fully and solely attributed to your spouse. This is done by proving an erroneous item on your spouse’s behalf such as income your spouse received but that they didn’t claim on the tax return.
• You must also be able to show that you didn’t know and had no reason to know that your spouse was understating taxes.
• You must also be able to show that it is unfair to hold you personally responsible for the understated taxes.
In other words, to qualify for basic innocent spouse relief you need to prove that your spouse misreported the particular aspect of your taxes that you’re being held at fault for and that it was not your doing and that you had no knowledge of it.
Qualifying for separation of liability relief is a bit different, and you must have filed a joint tax return with your spouse and meet at least one of the following conditions.
• You must be divorced or legally separated from the individual you filed the joint return with.
• You must be widowed from the spouse you filed the joint return with.
• You must not have been a member of the same household as the other party on the joint return. You must not have lived together for a period of 12 months prior to requesting your separation of liability relief.
If you meet at least one of these conditions you’ll be able to qualify for separation of liability relief, which will separate the responsibility of taxes between you and your ex-spouse.
As for equitable relief, you need to be able to prove that it is unfair for the IRS to hold you personally liable for the underpayment or the understatement of tax.
This is in addition to meeting the basic criteria for innocent spouse relief, and the process of proving that it is unfair to hold you liable can be very tricky in many instances. IRS Publication 971 contains more detailed information about this and about all aspects of innocent spouse relief.
If you feel like you qualify for one of the types of innocent spouse relief, your next step will be to complete Form 8857 and submit it to the IRS. This form contains numerous bits of information regarding your past tax returns, your current situation, and more. It must be filled out completely and honestly, and is signed under penalty of perjury.
Once Form 8857 has been filled out and submitted, the IRS will be required by law to notify the spouse with whom you filed your return.
This is to allow the other party the chance to provide information that could help in the determination of your innocent spouse relief claim. Any information that they submit to be considered, will be submitted under penalty of perjury as well.
It may take several months for the IRS to fully review your situation and to make a determination as to whether or not you qualify for and are approved for Innocent Spouse Relief. It’s important that you take the time to know which of the different types of Innocent Spouse Relief you may qualify for before you submit your information and that you take the time to get your current finances in order so you will be able to be fully prepared for the process and so you can easily answer any questions the IRS may have for you.
In order to ensure you get the best chance of receiving your innocent spouse relief, it’s a good idea to get the help of a qualified, experienced tax attorney.
Mary King has been providing clients with legal assistance since 1993 and serves the entire state of Florida including Sarasota, Bradenton and surrounding areas. Instead of passing your case off to a paralegal and forgetting it, your case will be handled by a real attorney throughout its duration. You’ll be able to find out more about what your chances of getting innocent spouse relief are, have someone guide you through the process, and learn more about additional options if you need them. If you are being held liable for back taxes that are the responsibility of your ex-spouse, contact Mary today to set up your initial consultation.