Women more frequently request relief
Innocent spouse relief comes in three forms. Relief is available in all instances only when you and your spouse originally filed your tax return as “Married Filing Jointly.”
Three Categories of Innocent Spouse Relief are:
- Traditional relief under Internal Revenue code section (IRC) 6015(b);
- Separate Liability Election under IRC 6015(c);
- Equitable relief under IRC 6015(f).
This blog discusses traditional relief:
You are relieved of tax liability (including penalties and interest) for an understatement of income by your spouse under IRS 6015(b) if all of the following rules are met:
- You filed a joint income tax return.
- Erroneous items of your spouse result in an understatement of tax.
- You prove that when you signed the joint return you didn’t know, and didn’t have any reason to know, that the tax was being understated.
- Holding you liable for the tax is unfair, considering all the circumstances of your situation.
- You assert innocent spouse relief within two years from the date the IRS begins collection activity. (If you are requesting equitable relief, the two year limitation generally doesn’t apply.)
How does the IRS decide if a spouse is innocent?
In one case, the 5th Circuit laid out certain factors to consider to determine whether a taxpayer was innocent (in this case the spouse seeking relief was an attorney.) Factors the court considered were:
- Level of education
- Involvement in the family business
- Lavish or extraordinary expenditures
- The guilty taxpayer’s level of evasiveness and deceit regarding the family’s finances.
All these factors are used to determine awareness on the part of the innocent spouse. Did he/she know or should have known that the reported tax was understated.
For more information, read “IRS makes it easier to apply for Innocent Spouse Relief” , “Innocent Spouse Relief” and IRS Publication 971, Innocent Spouse Relief.
