A significant number of couples choose to file joint taxes to mainly take advantage of the higher standard deductions and other benefits that married couples enjoy. However, most of these couples do not understand the legal ramifications that come with the joint-filing status. The government, for example, is allowed to come after either spouse in the event that there is a debt or wrongdoing by the other partner. If you are facing such a problem, this is where innocent spouse relief can help you. Having this problem in the midst of a divorce can make it even more complex since divorces are mostly traumatic.
All you need to know about innocent spouse relief
While it is possible for an innocent spouse to get some relief, this can only be possible under the right circumstances. First, this relief is only available for income taxes since employment taxes are excluded. Second, the relief can only be invoked by spouses that filed a joint income tax return. Those that filed returns on the basis of married filing separate are not entitled to the relief since everyone in such an arrangement is responsible for their taxes. Third, the IRS and even the courts are likely to disregard any tax liability that a couple may have set out in their divorce proceedings. Finally, it is also important to check with the laws from your state to ensure that you can get relief from both the IRS and your state.
How can you qualify for this relief?
The IRS can offer you a relief if you were unaware of your spouse’s tax fraud actions. Qualifying for this type of relief can, however, be hard since you need to meet a couple of conditions. These include;
*You must prove that you were not involved in the fraud committed- This is one of the most important conditions that you need to fulfill before you get the innocent spouse relief. Not only should you not be involved in committing the offense but you should not also be aware of the fraud. If you and your spouse share a bank account, for example, it is difficult to be considered for the relief since you could tell if there was any additional income that wasn’t reported.
*You should have filed a joint income tax return with your spouse- It is worth noting that a joint income tax return assumes that a couple is willing to share responsibility for the information or reports they file with the IRS. To get relief, it is essential that the couple must have filed jointly for the period in question.
*Your spouse should have misrepresented the financial information when filing the tax returns- You will need to show that your spouse did one of the following things without your knowledge or consent.
- Failed to report a portion or all of their income
- Underreporting their income
- Claiming false deductions
- Claiming relief/credits that do not apply
*You need to request relief within the specified period- The IRS only allows you to claim innocent spouse relief two years from the time they take action for the tax debt to the time you can claim for the relief.
Who can make the election?
Any party or even both parties that have filed jointly may choose to challenge the liability that the IRS seeks to impose. If your petition is successful then you will only be responsible for the tax that is attributed to your income and subsequent deductions and not that of your spouse. The law is also generous with regards to timing. It allows you to request the innocent spouse relief at any time during the IRS examination and even during the time the IRS seeks to collect the debt.
A spouse that seeks to get the relief should complete IRS Form 8857 and post it to the IRS offices. It is extremely important to ensure that any information provided in the form is accurate as it will determine whether you get the relief or not. It is also recommended that you maintain the services of a distinguished tax defense attorney who will help you during the process.
Will your spouse be informed?
Unfortunately, the IRS is obligated to inform your spouse as a matter of due process if you request relief. This is not only just a formal requirement but it also helps the IRS get the position of the other spouse over your assertions. Many people are, however, concerned about how their partners will react if they file for innocent spouse relief. This becomes even more complicated if a spouse is requesting relief from a separated partner. For those who are concerned about their partner’s reaction to the relief request, there are other options like the use of an Offer-in-Compromise Doubt as to liability.
What to do if the IRS is pursuing you for taxes you know nothing about
If the IRS keeps sending you letters about a tax debt that you owe from a year that you filed jointly, it is easy to think you have no alternatives even if you don’t know about it. The IRS, through their innocent spouse relief program, has recognized that it may not be fair to pursue taxpayers that have no idea about the underpayment of the tax. This was created to protect such spouses but requesting an innocent spouse relief may prove to be a complicated issue. The IRS looks at various things to determine that indeed you had no involvement in the said activity. It is advised that you should have a tax defense attorney to help you go through the process and ensure you secure that innocent spouse relief.
Although filing joint tax returns may seem like a great idea due to the benefits incurred, there are a lot of legal complications that may arise if one partner engages in tax fraud. In such cases, the other spouse may find themselves with an increased tax debt that they are obligated to pay without even knowing how it came about. With a good tax defense attorney, you can claim innocent spouse relief and stop the IRS from pursuing you.
Contact an Attorney
If you are looking to file Innocent Spouse Relief or have any other tax issues, contact the attorneys at Ayar Law today for free, no-obligation advice 800.571.7175