When couples file joint tax returns, they generally assume equal responsibility for the accuracy and completeness of the information provided. Each spouse is also individually, jointly, and severally liable for the tax amount due show on the joint tax returns. However, there are situations where one spouse may be held liable for the tax deficiencies resulting from errors or omissions made by the other spouse. In such cases, innocent spouse relief can provide a solution by relieving an innocent spouse from the burden of tax liabilities. In this blog, we will explore the concept of innocent spouse relief, its eligibility criteria, and the relevant provisions in the Internal Revenue Code.
Understanding Innocent Spouse Relief
Under the Internal Revenue Code, innocent spouse relief offers a way for eligible taxpayers to avoid being held responsible for tax deficiencies resulting from their spouse's actions. This relief is intended to provide equitable treatment for spouses who were unaware of, and had no reason to know about, the errors or omissions made on their joint tax return.
Section 6015 of the Internal Revenue Code governs innocent spouse relief, providing three types of relief options: Innocent Spouse Relief (Section 6015(b)), Separation of Liability Relief (Section 6015(c)), and Equitable Relief (Section 6015(f)). A more detailed explanation of each type of relief is provided below.
Innocent Spouse Relief (I.R.C. § 6015(b))
To qualify for Innocent Spouse Relief, certain conditions must be met:
- A joint return was filed with an understatement of tax;
- At the time of signing, the innocent spouse had no knowledge of the understatement; and
- Considering the circumstances, it would be unfair to hold the innocent spouse liable for the tax deficiency.
Separation of Liability Relief (I.R.C. § 6015(c))
This relief option applies when there is an understatement of tax on a joint return, and the spouses are legally separated or no longer married.
Equitable Relief (I.R.C. § 6015(f))
Equitable relief is available when a taxpayer does not qualify for Innocent Spouse Relief or Separation of Liability Relief. It provides a remedy for individuals who can demonstrate that it would be unfair to hold them liable for the tax deficiency.
Important Considerations and Filing for Relief
When seeking innocent spouse relief, it's crucial to understand the specific requirements and procedures outlined in the Internal Revenue Code. Here are a few key considerations:
- Time Limit: Innocent spouse relief claims must generally be filed within two years after the IRS begins collection activities against the requesting spouse. See I.R.C. § 6015(b)(1)(E).
- Supporting Documentation: Gathering and providing appropriate documentation to support your claim is essential. This may include financial records, communication records, and any other evidence that demonstrates your lack of knowledge or involvement in the understatement of tax.
- Consult with a Tax Professional: Given the complexity of innocent spouse relief and its potential impact on your tax liability, it is highly recommended to seek guidance from a qualified tax professional or experienced tax attorney who can provide personalized advice and assistance throughout the process.
Innocent spouse relief can provide much-needed relief to individuals who find themselves unjustly burdened by tax deficiencies resulting from their spouse's actions. By understanding the provisions outlined in the Internal Revenue Code, and consulting with a knowledgeable tax professional, you can navigate the process effectively and safeguard your rights. Remember, seeking professional guidance is crucial to ensure that your claim is supported by the necessary documentation and to maximize your chances of a successful outcome.
Contact Provident Legal Counsel today to discuss your federal tax situation. Schedule a Consultation or call (214) 432-6100.