Innocent Spouse

Innocent Spouse Relief

When a person files a joint tax return

with his/her spouse, it creates joint and several liability between the two. This means that legally, both parties are equally liable to the IRS for the entire tax liability, the penalties and the interest assessed by the IRS. This holds true regardless of which spouse made the error, or if the individuals are still married at the time of the IRS assessment.

Luckily, the IRS provides the ability for one of the spouses to avoid liability for the tax debt. The avoidance of this tax obligation is often referred by the general public as “Innocent Spouse Relief.”

The IRS actually provides three ways for a spouse with joint back tax issues to avoid joint and several liability. True Innocent Spouse Relief is only one of the three methods, though most people are referring all three with use of the term. The three methods are true Innocent Spouse Relief, Separation of Liability Relief, and Equitable Relief. Each is discussed in more detail below:

Innocent Spouse Relief

will completely relieve a person from the liability on the tax, penalties, and interest, if granted by the IRS.

  1. Joint Tax Return: A joint tax return must have been filed by the individual requesting relief and his/her spouse.
  2. Improper Filing: The joint tax return must have contained an erroneous item or an understated tax due.
  3. Lack of Knowledge: The individual asking for relief can show that he/she did not know and had no reason to know of the improper filing.
  4. Unfairness: Looking at the totality of the circumstances, it would be unfair to hold the person seeking relief responsible for the tax debt.

Separation of Liability Relief

provides for allocation of tax, penalties and interest in proportion to the actual amount of tax that a person owes rather than joint and several liability. To qualify for Separation of Liability Relief a taxpayer must satisfy the following requirements:

  1. Joint Tax Return: A joint tax return must have been filed by the individual requesting relief and his/her spouse.
  2. Understated Taxes: Tax relief is only being requested for understated taxes. This is defined as tax obligations where your total tax due was more than what was shown on your income tax returns.
  3. Lack of Knowledge: The individual asking for relief can show that he/she did not know and had no reason to know of the understated tax filing.
  4. Not Together: Husband and wife are no longer married, separated, widowed, or were not members of the same household during the 12 month period immediately before relief is requested.

Equitable Relief

can still be sought from the IRS if they unable to qualify for Innocent Spouse Relief or Separation of Liability Relief. Equitable Relief is a means for the IRS to make a fair and reasonable determination of tax liability for taxpayers that do not qualify for other relief. To be considered for Equitable Relief, the following conditions must be satisfied:

  1. Joint Tax Return: A joint tax return must have been filed by the individual requesting relief and his/her spouse.
  2. Tax Obligation: Tax relief can be sought for both understated taxes due and for unpaid taxes due.
  3. Only Remaining Remedy: To be considered, a taxpayer cannot qualify for Innocent Spouse Relief or Separation of Liability Relief.
  4. Lack of Knowledge: The individual asking for relief can show that he/she did not know and had no reason to know of the understated tax filing.
  5. Spouse at Fault: Relief can only be provided on the portion of tax due that is attributable to the other spouse’s liability whether in whole or proportionally.

A Tax Settlement Attorney Can Help

Like with most legal matters,

an experienced attorney can properly evaluate your situation and advise you of the proper course of action. Tax law can be complicated. The use of a tax attorney can make the process much easier. If you are considering filing for innocent spouse relief, locate a local tax lawyer. If you are in Ohio, the attorneys of Barr, Jones & Associate have offices in Columbus, Cincinnati and Cleveland. Out tax lawyers are ready and willing to help you through your IRS tax troubles. Call today for your free telephone consultation.