Did you know that you could get out of the tax debt due to the misdeeds or fraud committed by your spouse? Innocent Spouse Relief was designed to alleviate unjust situations where one spouse was clearly the victim of fraud perpetrated by their spouse or ex-spouse.
When you file a joint income tax return, the tax law makes both you and your spouse jointly responsible for the entire tax liability. This is called joint and several liability. Joint and several liability applies not only to the tax liability you show on the return but also to any additional tax liability, such as interest and penalties, that the IRS determines to be due, even if the additional tax is due to income, deductions or credits of your spouse or former spouse. You remain jointly and severally liable for the taxes and the IRS still can collect from you, even if you later divorce and the divorce decree states that your former spouse will be solely responsible for the tax.
In some cases, by requesting innocent spouse relief, a spouse (or former spouse) can be relieved of responsibility for paying tax, interest and penalties on a joint tax return. In other words, a spouse can get relief from joint and several liability.
Three types of relief are available to married persons who filed joint returns:
- Innocent spouse relief: By requesting innocent spouse relief, you can be relieved of responsibility for paying tax, interest and penalties if your spouse (or former spouse) improperly reported items or omitted items on your tax return. Generally, the tax, interest and penalties that qualify for relief can only be collected from your spouse (or former spouse). However, you are jointly and individually responsible for any tax, interest and penalties that do not qualify for relief. The IRS can collect these amounts from either you or your spouse (or former spouse).
You must meet all of the following conditions to qualify for innocent spouse relief:
- You filed a joint return,
- There is an understated tax on the return that is due to erroneous items of your spouse (or former spouse),
- You can show that when you signed the joint return you did not know, and had no reason to know, that the understated tax existed (or the extent to which the understated tax existed),
- Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated tax.
- Separation of liability relief: Under this type of relief, the understated tax (plus interest and penalties) on your joint return is allocated between you and your spouse (or former spouse). The understated tax allocated to you is generally the amount for which you are responsible.
To qualify for a separation of liability request, you must have filed a joint return and meet either of the following requirements at the time of the request:
- You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief,
- You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date a request is submitted.
- Equitable relief: If you do not qualify for innocent spouse relief or separation of liability relief, you may still be relieved of responsibility. One of the many conditions for getting equitable relief is that you can establish that, taking into account all of your facts and circumstances, that it would be unfair to hold you liable for the understated or underpaid tax.
If you qualify for Innocent Spouse Relief, you may not owe any tax. Even though you meet the qualifications for innocent spouse relief, it does not mean that the IRS will automatically approve the request for tax relief. That is why it is critical to have professional tax representation to ensure your best odds of success with your request for innocent spouse relief.