Tax Debt Relief Can Be Available For An Innocent Spouse

Remedies Available: Innocent Spouse Relief, Separation Of Liability, Equitable Relief and Injured Spouse Relief.

There is opportunity for tax debt relief under the provisions covering innocent spouse relief and injured spouse relief. As tax attorneys, family law attorneys and CPAs, John Spurgeon and Associates can provide solutions for the discharge or reduction of your tax liability or tax liens.

Joint Filed Returns

It is common for married taxpayers to elect to file a joint tax return due to certain benefits that this filing status provides. Each person is jointly and individually responsible for the tax, interest and penalties—even if they later divorce. This is called joint and several liability.

Relief can be available under these situations:

  • Innocent spouse relief
  • Separation of liability
  • Equitable relief
  • Allocation of tax liability

Innocent spouse relief

An election, Request for Innocent Spouse Relief, would be filed with the IRS who will notify the other spouse. To qualify, the taxpayer must meet these conditions:

  • The joint return had an understatement of tax which was unknown to you
  • The understatement must be due to errors by your spouse such as unreported income uncovered by an IRS audit
  • It would be considered unfair to hold you responsible
  • Must request relief within 2 years of the commencement of the IRS collections process

You will not be eligible for innocent spouse relief if you had knowledge of the understatement.

Separation of Liability

This provides for the division of the understated tax liability between the two spouses from an earlier jointly filed return. The requirements are:

  • No longer married (including being widowed) or are legally separated
  • Not a member of the same household at any time during the 12 month period ending when you elected this option

This relief is not available if you had knowledge of the underpaid tax or engaged in an activity to transfer assets for the purpose of avoiding tax.

Equitable Relief

You can qualify for equitable relief if you meet these conditions:

  • You don’t qualify for the other two options: innocent spouse relief or separation of liability
  • It would be unfair to hold you liable

The IRS will take several factors into account including marital status, current financial situation or abuse during the marriage.

California is a community property state which generally provides for the equal division of community income and expenses. Our family law attorneys can provide counsel on these matters.

Grounds For Denial

  • It is important to provide all necessary information when filing for relief. The IRS may deny your request for lack of documentation.
  • If you have filed an Offer In Compromise, you will not be eligible for relief.

Tax debt relief is available as the IRS will suspend collection actions including tax liens and asset seizure while a determination is being made. If you have an existing IRS installment agreement you will be required to continue payments.

Injured Spouse Relief

Injured spouse relief differs from innocent spouse relief in that a refund may be denied as the refund is used to pay tax debts of the other spouse. The injured spouse can file for his/her share of the refund subject to certain conditions.

To obtain tax debt relief for innocent spouse situations we recommend you consult a tax attorney and CPA. Our practice also includes family law so we are confident that we could be of assistance to you.

We offer a complementary consultation. Please call today 626-440-9518.