The IRS innocent spouse rule

The Internal Revenue Service recognizes that sometimes when a joint return is filed, both parties may not be liable for the resulting tax liability. However, when there is a tax obligation, either party can be held jointly and severally liable. The Internal Revenue Service provides 3 types of innocent spouse relief, separation of responsibilities, and equitable relief. Innocent spouse relief is often believed to be the same as injured spouse relief. Although there are similarities, Injured Spouse Relief applies to the actual or probable loss of the overpayment (reimbursement) due to a spouse having delinquent student loans, child support, federal or state tax liability, or other issues that result in compensation. reimbursement (reimbursement assigned to tax debt).

To be considered for injured spouse relief, the tax payment must have made and reported tax payments, or claimed a refundable tax credit. In addition, the payment of taxes should not be legally responsible for the payment of amounts due. If you filed a joint return and are not responsible for the debt, but are entitled to a portion of the refund, you can request your portion by filing Form 8379, Injured Spouse Allowance.

To qualify for innocent spouse relief, the tax payment must have filed a joint return, show that when the return was signed you did not know and had no reason to know that the underestimated tax occurred, you have an underestimated tax that is due to an inaccurate item (i.e., undeclared income, incorrect deduction, basis, or credit), and the facts reveal unfairness to hold the spouse liable. “Innocent spouse compensation will not be awarded if the IRS proves that you and your spouse (or former spouse) transferred assets to each other as part of a fraudulent scheme” ( pub. 971). The separation of responsibility assigns the tax liability plus penalties and interest resulting from a joint return filed between each spouse. The allowance is based on taxes, penalties, and interest that each spouse would normally be liable for if the taxes were filed separately from their spouse.

Other requirements include paying taxes seeking relief had a separate residence during the 12-month period ending on the date the relief application was filed, and you are no longer married or legally separated from the spouse with whom you filed the joint declaration. If you don’t qualify for innocent spouse relief or separation of responsibility, you may still be able to get relief. The IRS may grant equitable relief under the following conditions. You do not qualify for innocent spouse relief or separation of liability, file the proper form at the proper time, filed a joint return for the year in question, no assets were fraudulently transferred to defraud the IRS, creditor, or business partner and spouse did not transfer assets to you for tax evasion purposes.

Remember, in all cases, the Internal Revenue Service will verify if you comply with the taxes in the year or years after the fiscal year or years relevant to your request for tax relief.

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