Everything you Need to Know About Innocent Spouse Relief

When you are married, you can either file a joint tax return with your spouse, or you can file separate returns. If you and your spouse file a return together, then you are both equally liable for all taxes during the years you are married, as well as any penalties or interest. However, realizing that there are instances when it would be unfair to hold both spouses equally responsible, the IRS created the Innocent Spouse Relief Program.

What is Innocent Spouse Relief?

In order to help protect a taxpayer from being forced to pay for incorrect information reported by the taxpayer's spouse on their return, the IRS set up the Innocent Spouse Relief Program. If a taxpayer can prove that he or she is legitimately not responsible for owed tax debts stemming from the years the taxpayer was married, then the IRS may decide to collect from only the spouse or ex-spouse. There are three different forms of spouse relief, which are all described in more detail below. If a taxpayer does not qualify for one type, then it is possible that he or she may qualify for another.

Classic Innocent Spouse Relief

The original form of spouse relief will fully relieve a taxpayer of their spouse's tax liability. According to the IRS, the following conditions must be met before innocent spouse relief will be granted:

A taxpayer filed a joint return, which had incorrect information relating to the taxpayer's spouse.
The taxpayer proves that, at the time he or she signed the joint return, the taxpayer did not know, and had no reason to know, that there was incorrect information reported by the taxpayer's spouse on the return.
Given all of the facts, the IRS determines that it would be unfair to hold the innocent taxpayer responsible for the incorrect information reported by the taxpayer's spouse on the return.
The innocent taxpayer applies for relief within two years of the IRS's first attempt to collect the amount owed.

Relief by Separation of Liability

Under this form of innocent spouse relief, the IRS can allocate different amounts of the original tax liability to each spouse instead of holding them equally liable for the entire amount. To qualify for this form of relief, the tax debt needs to have stemmed from an error such as under reporting of income, or incorrectly calculating your tax liability. You and your spouse must also be in compliance with the following conditions:

You and your spouse did not fraudulently transfer assets to each other as part of a scheme to defraud any third party, including the IRS, creditors, business partners, etc.
You had no knowledge of erroneous items on your tax return at the time it was filed.

Equitable Relief

Taxpayers who do not qualify for Classic Innocent Spouse Relief or Relief by Separation of Liability may qualify for the Equitable Relief program. This form of innocent spouse relief is the only one that will allow you to request relief from an underpayment of tax where the tax liability was listed correctly on a taxpayers return, but was not paid. According to the IRS, you must meet the following conditions to qualify for equitable relief.

You do not qualify for Classic Innocent Spouse Relief or Relief by Separation of Liability.
The IRS deems it unfair to hold you liable for the underpayment of taxes taking into account all of the facts and circumstances of your case.
You and your spouse did not transfer assets as part of a fraudulent scheme.
Your spouse did not transfer property to you for the main purpose of avoiding taxes.
You did not file your return with the intent to commit fraud.
You did not pay the tax.

The Tax Lady Roni Deutch and her law firm Roni Deutch, A Professional Tax Corporation have been helping taxpayers across the nation find IRS tax relief for over seventeen years. The firm has experienced tax lawyers who can fight IRS tax liens on your behalf.