Innocent Spouse Relief

Innocent Spouse ReliefWhen a couple files a joint income tax return, the resulting tax owed is a joint and several liability which means that each person is individually liable for the full amount due to the IRS. Fortunately, the IRS recognizes that there are certain circumstances whereby one spouse should not be unfairly held liable for the tax liability of the other spouse. You make a claim using the “innocent spouse relief” defense. San Diego Tax Resolution Lawyer Paul Staley can evaluate your circumstances to determine if you qualify for innocent spouse relief.

95% of Couples File “Joint Tax Returns…”

In 2007, IRS statistics reported that 54 million tax returns were filed listing the “married – filing jointly” status compared with only 2.7 million returns with “married – filing separately” status. That means that a little over 1 million of 26 million “couples” decided to keep their tax filings separate.

Why Couples File Joint Returns

Couples file jointly to take advantage of Tax Incentives! Filing joint tax returns allows couples to take advantage of tax credits, tax incentives, and other benefits available only to married, joint filers. There is that one potential drawback to filing jointly, and that is that each spouse is each responsible —jointly and individually— for any taxes, interest and penalties due on returns filed while they were married. Even a later divorce shield them from that liability. If you file joint tax returns, the liability is “joint and several,” meaning that the IRS can come after either spouse for 100% of the debt.

How severe could the consequences be? Well, a “stay-at-home mom and homemaker” could be held responsible for all tax liabilities owing from her husband’s income — though the husband was solely-responsible for the entire income for that tax year.

Couples who file joint returns pay income taxes as ONE person, even if your spouse earned 100% of the income, the income tax liability is joint. If your spouse divorces you, purposefully disappears, or goes and dies on you, you are still liable for paying any taxes unless you are able to persuade the IRS that you are the “Innocent Spouse.” Even should the IRS agree with your argument, they don’t have to waive the tax liability, so it pays to have competent and experienced legal help when dealing with an agency that is this big and powerful.

What if my Spouse or ex-Spouse is the made this mess?

If your current spouse or your ex-spouse created a tax liability —either unintentionally or deliberately— by under-reporting income or overstated deductions, the “good spouse” (aka: the innocent spouse) is considered liable and will be held accountable by the IRS for satisfying any outstanding tax obligations. Isn’t that Unfair? Yes, it is, but what can you do about it? What you can do is to make a case to the IRS through their approved procedure to demonstrate why you are the innocent victim of your spouse and why you should not be held equally-liable for the resulting tax debt.

Some 50,000 individuals file for “Innocent Spouse Relief” with the IRS each year. It can be very difficult to prove your case without having some expert help, and many people attempting to make a case on their own are denied. That doesn’t mean you should not make an attempt. Taxpayers who involve a tax lawyer have a far greater chance of getting ones’ innocent spouse filing taken more seriously with a far-better chance for a positive result. Innocent Spouse Relief is a form of tax relief that can completely or significantly relieve you of your tax liabilities, interest and penalties as a result of filing a joint tax return with your current or ex-spouse.

2 Year Rule Reversed! – In July of 2011, the IRS eliminated a requirement that would disqualify taxpayers from “innocent spouse status” if they fail to file for Innocent Spouse Relief within two years. Up until then, the IRS denied applicants who missed its deadline of two years after the first collection notices were sent to taxpayers. The problem was that most taxpayers were not made aware of the 2-year rule, and did not even know they were facing a tax issue because, in many instances, they never saw the IRS notices as the spouse who created the tax problem kept the notices and the tax obligations hidden, or the innocent spouse feared a spouse’s reaction should they consider contesting their part in the creation of the tax mess.

There are 3 categories of relief you may request…

…for spouses who filed joint returns:

1 – Innocent Spouse Relief – can relieve you of all responsibility for paying tax, interest and penalties if you can prove your spouse made mistakes or even failed to report income, improperly reported income, or claimed improper deductions or credits. This is the most difficult of the three categories to secure approval because you must prove to the IRS that at the time of the filing, you did not know, and had no reason to know, that your spouse made legitimate mistakes or intentionally underpaid taxes. A competent tax lawyer will have the experience you need to make your case or appeal a denial if you have attempted this on your own

2 – Separation of Liability Relief – is where the IRS simply allows you to pay the portion of taxes which you are responsible for and then goes after your spouse for his or her understated tax liability, interest and penalties holding you harmless for your spouses tax debt.

3 – Equitable Relief – If you cannot prove eligibility for “Innocent Spouse Relief” or “Separation of Liability Relief” for something not properly reported on your joint tax return, you may qualify for equitable relief if the correct amount of tax was reported on your joint return but the tax remains unpaid. Under “Equitable Relief,” the IRS will often give more leeway when it is difficult to prove you are the innocent spouse.

Innocent Spouse and Injured Spouse Links:

  • Publication 555, Community Property (PDF)
  • Instructions for Form 8379, Injured Spouse Allocation (PDF)
  • Form 8857, Request for Innocent Spouse Relief (PDF)
  • Instructions for Form 8857, Request for Innocent Spouse Relief (PDF)
  • Publication 971, Innocent Spouse Relief (PDF)

You Need Innocent Spouse Relief if Your Ex is in IRS Trouble

Get some help —Make that call!

San Diego Tax Resolution Lawyer Paul Staley, provide a no-obligation, confidential consultation and has appointments available for evenings and weekends. We accept all major credit cards and can make other payment arrangements so that we can help you get your tax problems straightened out without adding additional layers of financial burden on you and your family. To speak to Paul now, or to schedule a confidential free consultation call (619) 235-9645.