In our last blog post, we talked about Innocent Spouse Relief Part 2 – Injured Spouse Relief. This week, we will be discussing Equitable Relief, 6015(f). As the name suggests, this type of relief is meant to provide fairness in tax cases where one spouse has been treated unfairly. There are a few key aspects of Equitable Relief that we will be discussing in this blog post.
There are two main benefits that can be conferred by Equitable Relief.
First is the ability to shift the liability for taxes, interest, and penalties to the non-requesting spouse. This is perhaps the most important benefit of Equitable Relief, as it allows for a sense of fairness in cases where one spouse may be unfairly burdened by tax debt.
The second benefit is the ability to extend the period of limitations for assessing additional taxes. This can be a helpful relief in cases where it may take longer to resolve the tax matter.
There are three main provisions of Equitable Relief, which are as follows:
These are the three main provisions of Equitable Relief, which must be met in order for the relief to be given. If you believe that you meet these requirements, then you may want to consider filing for Equitable Relief.
In case you believe that you are eligible for Equitable Relief, then you will need to file Form 8857. This form can be found on the IRS website, and it must be filed within two years from the date of the first collection activity.
Once you have filed Form 8857, you will need to provide information about your spouse, as well as your marriage. You will also need to provide information about your tax return, and why you believe that you should not be held liable for the unpaid tax.
After you have submitted Form 8857, the IRS will review your case and determine whether or not you are eligible for Equitable Relief. If they determine that you are eligible, then they will provide relief from the unpaid tax.
When determining whether or not to provide Equitable Relief, the IRS will take into account all factors. This includes, but is not limited to, the following:
It is important to note that, even though you may be divorced, you are still considered married for tax purposes if the divorce is not yet final. This means that you are still responsible for any unpaid tax liability, even if your spouse is the one who incurred the debt.
Consequently, if you are going through a divorce, it is important to be aware of the tax implications. You may want to consider filing for Equitable Relief, in order to protect yourself from being held liable for any unpaid tax debt.
There is an extension for asset transfers if the requesting spouse can prove that the transfer was made to protect the requesting spouse from financial abuse. This extension allows for up to one year from the date of divorce or legal separation to file Form 8857.
If you have been a victim of financial abuse, and you have transferred assets in order to protect yourself, then you may be eligible for this extension. However, you will need to provide documentation to the IRS in order to prove that the transfer was made for this purpose.
In order for Equitable Relief to be granted, it must be shown that the unpaid tax is attributable to the non-requesting spouse. This means that the requesting spouse must prove that they did not know, and had no reason to know, that the tax would not be paid.
The burden of proof is on the requesting spouse, and the IRS will take into account all factors when making their decision. To prove that you did not know, and had no reason to know, that the tax would not be paid, you will need to provide evidence.
This evidence can include, but is not limited to, the following:
If you can provide evidence to show that you did not know, and had no reason to know, that the unpaid tax would not be paid, then you may be eligible for Equitable Relief.
It is important to note that there are specific timelines that are imposed on Equitable Relief. For example, if you did not file your tax return on time, then you will only have two years from the date of the first collection activity to request Equitable Relief.
Additionally, there is a limit on the amount of taxes that can be relieved. The maximum amount that can be relieved is $50,000, and this includes interest and penalties.
The IRS has the discretion to provide, or not provide, Equitable Relief. Even if you meet all of the requirements, the IRS may still decline to provide relief.
When the IRS decides to deny your request for Equitable Relief, they will send you a notice explaining their decision. The notice will also include information on how to appeal the decision. If you believe that you are entitled to Equitable Relief, but the IRS has denied your request, then you should contact a tax professional.
They will be able to help you navigate the appeals process and increase your chances of success.
You also have the right to appeal the IRS's decision in court. However, this is a complex process, and you should only pursue this option if you have the help of a tax professional.
In case you are going through a divorce, it is important to be aware of the potential tax implications. You may want to consider filing for Equitable Relief in order to protect yourself from being held liable for any unpaid tax debt. However, it is important to note that there are specific requirements that must be met in order to be eligible for Equitable Relief. Additionally, the IRS has the discretion to provide, or not provide, relief.
If you have any questions about your eligibility for Equitable Relief, or if you have been denied relief, you should contact a tax professional. They will be able to help you navigate the appeals process and increase your chances of success.
Best regards,
Kenneth Morris, EA
Call me: (678) 641-3193