For people who are married and file a joint tax return, if only one spouse is responsible for the errors or omissions on that return, the IRS may be able to hold both spouses liable for any resulting tax deficiencies and penalties. This is known as "Innocent Spouse Relief."
Section 6015(b) Of The Internal Revenue Code
This section provides you relief from taxes you owe if your spouse did not report income, reported income fraudulently, or claimed deductions improperly.
The Innocent Spouse Relief under section 6015(b) of the Internal Revenue Code constitutes the exclusive remedy for a spouse who meets the definition of an innocent spouse.
Innocent Spouse Relief may be available if you can show that:
You filed a joint return
Tax is owed on the return
You did not know and had no reason to know, that there was an underpayment of tax when you signed the return
Taking into account all the facts and circumstances, it would be unfair to hold you liable for the deficiency.
You must request Innocent Spouse Relief no later than two years after the date on which the IRS first began collection activity against you.
Understanding Deficiency Liability
In order to request Innocent Spouse Relief, you must first understand deficiency liability. A tax deficiency exists when the amount of tax shown on your return is less than the correct amount of tax. The deficiency is the difference between the two amounts.
For example, if your joint tax liability should have been $12,000 but you only paid $11,000, the IRS would bill you for the $1000 deficiency plus interest.
Innocent Spouse Relief may provide protection from a tax deficiency, but it does not protect against other liabilities that may have arisen from the filing of the joint return, such as fraud penalties or interest charges.
Process Of Requesting Innocent Spouse Relief
To request Innocent Spouse Relief, you must file Form 8857, Request for Innocent Spouse Relief. This form must be filed separately from your tax return.
You will need to provide information about yourself, your spouse, your tax return, and the reason why you believe you qualify for relief. You will also need to sign the form under penalty of perjury.
When you file Form 8857 electronically, you must have a personal tax return signature authorization (PTROA) on file with the IRS. This authorizes the electronic filing of your tax return and permits the IRS to discuss it with your e-file provider. If you do not have a PTROA on file, you can get one by filing Form 8879, IRS e-file Signature Authorization.
You can get Innocent Spouse Relief even if your spouse does not agree to it or refuses to sign the form. In case you qualify for relief, the IRS will give you relief from liability for the tax owed. However, if your spouse does not agree to the relief and you are granted Innocent Spouse Relief, your spouse may be liable for any interest and penalties related to the underpayment of tax.
You can also get Innocent Spouse Relief if your spouse has died or is legally separated from you. You must file Form 8857 within two years from the date the IRS first began collection activity against you.
When you do not file Form 8857 within this time frame, you may still be eligible for relief if you can show that you did not know, and had no reason to know, that there was an underpayment of tax when you signed your return.
You will need to file a separate Form 8857 for each tax year for which you are requesting relief.
Reasons You May Not Qualify For Innocent Spouse Relief
There are certain circumstances under which you will not qualify for Innocent Spouse Relief.
You will not qualify if:
You filed a joint return solely to receive a tax refund
You would owe tax even if you had filed a separate return
Both you and your spouse benefited from the underpayment of tax
You signed the return knowing that it was incorrect
The IRS has already collected the deficiency from you through levy or seizure of your property
You and your spouse are divorced, legally separated, or no longer living together
You did not file Form 8857 within the required two-year timeframe
In case you do not qualify for Innocent Spouse Relief, you may still be able to get relief from joint and several liabilities under other provisions of the tax law.
For example, you may be eligible for relief under the Equitable Relief provision or the Separation of Liability provision.
You can find more information about these provisions and how to request relief on the IRS website.
The IRS Can Deny Your Request For Innocent Spouse Relief
The IRS can deny your request for Innocent Spouse Relief if it determines that you knew or should have known about the underpayment of tax when you signed the joint return.
The IRS will also deny your request if it finds that granting relief would promote abuse of the tax laws or be contrary to public policy.
When your request for Innocent Spouse Relief is denied, you will be liable for the tax owed, plus interest and any penalties that apply. You can appeal the IRS’s decision by filing a petition with the U.S. Tax Court within 90 days of the date of the IRS’s final determination.
Injured Spouse Vs Innocent Spouse
It’s important to note that Injured Spouse Relief and Innocent Spouse Relief are two different things.
Injured Spouse relief is available to taxpayers who filed a joint return, but did not benefit from, or have any knowledge of, the errors that resulted in tax debt. An injured spouse is only liable for their share of the tax debt.
Innocent Spouse Relief, on the other hand, is available to taxpayers who filed a joint return and are not responsible for the errors that resulted in tax debt. An innocent spouse is not liable for any part of the tax debt.
When you filed a joint tax return and are now facing a tax debt that you did not cause, you may be eligible for Innocent Spouse Relief. This relief can protect you from having to pay the taxes owed, plus interest and penalties. If you have any questions about Innocent Spouse Relief, or if you need help filing Form 8857, contact a tax professional.
We understand that tax debt can be overwhelming, and we are here to help. Contact us today to schedule a consultation. We look forward to helping you get the fresh start you deserve.