IRS Innocent Spouse Relief

reviewed by Drew O. Mark
March 6, 2018

Dealing with the IRS as an Innocent or Injured Spouse

When two people meet, fall in love, and decide to get married, one of the last things on their minds is taxes. Imagine going to file your first set of taxes as a married couple only to discover that your spouse is tens of thousands of dollars in debt to the IRS.

Some people don’t discover this until well after they filed. They may be expecting to get a tax return, only to receive a letter saying that the amount has been offset to pay a former debt. Unfortunately, a spouse can find themselves liable for another person’s tax debt almost as soon as they get married.

The IRS considers it a personal responsibility to check out the status of your future spouse’s tax returns. While most normal people don’t think to do this, it can end up having serious repercussions for those that take on their spouse’s tax debt.

Once those taxes are filed jointly, the other party agrees to accept that debt as their own. This can include everything from liens against a bank account to the seizure of property that originally belonged to the innocent spouse.

Fortunately, there are some options for people that are not responsible for their spouse’s tax debt. If you married someone who failed to file taxes or improperly did so several years before even meeting you, the IRS is willing to make some allowances.

Sitting down with a tax professional or speaking with a taxpayer advocate can inform you of some of your options. Individual research is also an excellent way to get started.

An Overview of Standard Innocent Spouse Relief

Innocent Spouse relief is the most basic form of the separation of one party’s responsibilities from those of the other. In order to qualify for any type of innocent spouse relief, the person applying will need to have filed a joint tax return for that particular year.

The person applying for relief will also need to be able to prove that they are not liable for any of the issues with the tax return or the outstanding debt. This can happen when you marry someone who has tax debt that they were hiding from the previous year.

If one party incurred tax debt due to self-employment or evaded taxes and hid this fact from the other party, then this is an example of innocent spouse eligibility.

There also instances when a couple may be divorcing, or one spouse incorrectly files taxes without the other party being present. In order to be eligible for any type of relief or a portion of the tax return, the innocent spouse will need to be able to prove their separation from the other party, or the fact that the other party filed without their knowledge.

When a person is found to be eligible for innocent or injured spouse relief they may receive all or a portion of the tax return owed to them. This can include things like child tax deductions and any income that they provided during that year.

The IRS provided form for an innocent spouse can be filled out at the time of the tax return. It usually needs to be filed separately, and some online or automated tax services will allow you to do this while preparing your online tax returns.

The form takes into account any type of domestic violence or risks to the party who’s filing the innocent spouse claim. It’s very important to disclose all of this information in order to remain safe, and to place responsibility where it needs to be.

If no IRS led collection activities have taken place in the last two years, then no one is eligible for the innocent spouse relief. The IRS believes that if someone truly was entitled to any type of monetary compensation they would have filed as quickly as possible.

Evaluate your tax situation

By evaluating your tax situation, you can identify areas where you may be able to reduce you tax burden and make informed decisions about your financial future.

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Understanding Separation of Liability Options

Separation of Liability is a bit more complicated than simply filing for injured or innocent spouse relief. In this instance, the person filing is agreement to some liability in the overall tax debt.

They’re also claiming that they are responsible for the total tax debt and would like there are liability separated from their partners. This is advantageous for people who owe significantly less than their spouse or soon-to-be ex-spouse.

Separating liability often takes place after divorce when couples are dealing with financial issues. It can also be appropriate when one spouse had a large tax debt prior to the marriage or that they incurred independent of the other party.

If the other party became aware of this debt and made an attempt to help their spouse to pay it back, they may have assumed some of the liability. Or, perhaps they had some tax difficulties of their own prior to divorce. In this instance it would be appropriate to separate the liability into make each party responsible for only what they owe.

In order to be eligible for the separation of liability relief, the couple must be legally separated or divorced. The person filing must also have lived independent from their spouse for period of at least 12 months. This proves that they are moving forward with their taxes individually, and that the tax that will have to be resolved on an independent basis.

The IRS can deny a separation of liability if they believe that assets were transferred in order to avoid taxation or the paying of a tax debt, or they believe that both parties were aware of fraudulent activity. Never file for any type of relief unless you are truly innocent and able to prove your ignorance of certain circumstances.

What is IRS Equitable Relief?

Equitable relief becomes appropriate when a person is not eligible for innocent spouse relief for the separation of liability relief. Equitable relief is open to a great deal of discretion within the IRS. The person handling the claim may look at all of the information and decide that the person who filed is truly innocent of the tax debt.

This can happen when the numbers on the tax return are all overall amount was not paid as it should be. It can also be applied to those who may have been somewhat aware of their spouse’s tax problems but were not fully apprised of the gravity of the situation.

In order to qualify for equitable relief, the IRS is going to look at a number of different facts. They will consider the current marital status and the reason why the spouse signed off on the yearly tax returns knowing that there may be a problem.

If the injured party truly believed that their spouse was going to pay the amount owed or that their spouse was going to set up some sort of payment arrangement with the IRS, they may be found innocent of the penalties.

The IRS is also going to consider whether or not withholding a portion of the tax return is going to cause severe financial hardship for the injured party. This is one of those times that personal discretion comes into play. If the agent truly believes that you’ll lose your home or be unable to feed your family if the IRS proceeds, they may decide to allow this type of relief.

This is usually the last resort for the IRS, and it’s important to give them any and all information available when applying for this type of relief. The more evidence that a person is able to show proving their innocence in circumstances of tax trouble, the better off they’re going to be when seeking relief of any kind.

The IRS can also consider your mental state at the time of signing your tax returns, and any abuse that might’ve occurred between your spouse and yourself. This is why it’s very important to provide as much documentation as possible when filing for equitable relief. The IRS also has up to 10 years to collect on unpaid tax debts. It’s very important to contact a professional or make sure you understand this process before trying to go ahead with any of it.

Requesting Relief

In order to request relief of any kind you’ll need to fill out an IRS form 8857. This is a seven-page form that will require you to detail your reasons for requesting relief. This is also the best time to let the IRS know everything that’s happened leading up to that point.

It can help to submit a letter and any criminal documentation of spousal abuse or other circumstances that show that you are innocent of the tax debt. Make sure to provide as much detail as possible that directly support your claims.

Sitting down with a tax professional can help you to understand the qualifications that need to be met prior to receiving relief. It can also give you insight into any outstanding tax returns you have, and let you know what you need to do prior to filing.


Clinton F Wassor

Clinton F. Wasser, holding a Master of Science in Legal Studies of Taxation, brings a wealth of expertise in tax planning and compliance to his writing. With a career rooted in the workings of the tax landscape, Clinton navigates difficulties with finesse. Beyond his professional accomplishments, he generously volunteers his time to educate high school students about the nuances of taxes. As an author, Clinton marries his real-world experience with a passion for simplifying tax concepts. He has found that his technique empowers readers to better understand the world of taxation.
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