An Overview of the IRS Tax Collections Process for Non-Tax Lawyers
30. Innocent Spouse Relief
Innocent Spouse relief. Innocent spouse relief is a fairly hot topic of conversation particularly among family lawyers and those individuals who are going through separations because oftentimes these people feel that they wrongly injured by their spouse or significant other’s tax liability.
Innocent spouse requires several things and I want to be clear about those from the onset.
First of all, you must have some sort of understated tax in the return that you had no knowledge to. If your spouse runs a business and they understated their tax liability and you had no knowledge of it, then you could potentially be a candidate for a innocent spouse. You also have to show that when you sign the return you have no knowledge of the liability and do not benefit from it.
That is a particularly tricky proposition because oftentimes if one spouse is cheating on their return or understating liability then the other spouse is receiving some indirect benefit of that whether it’s increased cash or to the household or some other financial gain. The IRS will not grant innocent spouse relief in those cases. For a more detailed determination on innocent spouse liability we do recommend that you speak to a practitioner.
However, there is also something called separation of liability relief. Separation of liability relief is a little bit easier to get an innocent spouse. Essentially what you’re doing is asking the IRS to partition the liability between the taxpayer and their spouse divided in terms of their appropriate share.
This happens all the time with audits. It’s a really useful tool to use if your particular client doesn’t qualify for innocence spouse relief, separation of liability or relief might be another avenue for them and should be considered.
Finally, there’s a more general term of equitable relief for people who don’t fall in those two brackets. It is very difficult to get general equitable relief in the IRS usually when they grant an innocent spouse relief they like to do it based on one of those two criteria.
But again it is something that we recommend that you talk to somebody who is a professional one and who knows this area of law. It’s something that I would not tackle as a taxpayer or as a general practitioner. So it’s really important that you get some guidance on this going forward in order to give your innocence spouse claim the best chance for success.