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The Three Types of Innocent Spouse Relief

Typically, taxpayers who file joint returns are both responsible for the entire tax, interest, and penalties associated with that return. Innocent spouse relief can provide one spouse with an exception to the general rule of joint and several liability.

For example, say your spouse earned all of the income and claimed all the deductions and credits on your joint tax return. Later on you find out that your spouse made some improper deductions. The IRS can come after you for the entire tax debt owed by your spouse, even if you didn’t know that your spouse was understating their tax liability.

Read on to find out about the three types of Innocent Spouse Relief

Get Relief From Your Spouse’s Tax Debt

You can claim innocent spouse relief to avoid being held responsible for your spouse’s tax debt. But you have to take the necessary steps to submit your forms and provide proof that you are eligible for this relief.

There are three varieties of innocent spouse relief, and each has its own specific requirements.

Traditional Innocent Spouse Relief

The first type of innocent spouse relief can get you relief from additional tax assessed against your joint return due to an erroneous item claimed by your spouse or former spouse. You must meet the following three requirements to claim this relief:

  1. There is an erroneous item on your joint return that is solely attributable to your spouse. An erroneous item could either be income that your spouse failed to report or an improperly claimed credit or deduction.
  2. You did not know or have to reason to know about the understatement of tax on your return.
  3. It would be unfair to hold you responsible for the understatement of tax based on all the facts and circumstances.

Separation of Liability

This type of innocent spouse relief will only give your partial relief from additional tax assessed on your joint return. Rather than holding both spouses responsible for the full amount, the IRS agrees to allocate a portion of the debt to each spouse individually.

You need to meet one of the following criteria to claim separation of liability relief:

  1. You are divorced or legally separated from the spouse you filed the joint return with.
  2. You are widowed.
  3. You have not lived in the same household as the spouse your filed the joint return with at any time during the past 12 months.

Additionally, you cannot claim this type of innocent spouse relief if you had actual knowledge of the erroneous item on the joint return.

Equitable Relief

Equitable relief provides a catch-all variation of innocent spouse relief if the IRS believes it would be inequitable or unfair to hold one spouse accountable for the tax debt under all the facts and circumstances. You can only claim this type of relief if you are not eligible for either of the other two types of innocent spouse relief.

The crucial difference between this and the other two kinds of innocent spouse relief is that it does not require there to be an erroneous item on the return. This relief can be used for tax liability that is properly stated on the return, but just wasn’t paid. But the tax debt must be attributable to your spouse’s income, not yours.

The IRS can use their discretion when deciding to grant equitable relief. They will look at a long list of factors when making this determination, including whether you knew about erroneous items on the return, whether you are still married to the spouse you filed your return with, if you are suffering an economic hardship, and if you were the victim of spousal abuse.

You generally have two years to file a claim for innocent spouse relief beginning on the date when the IRS first tried to collect the tax debt from you. There may be cases when you have more time if you are claiming equitable relief.

If you are receiving IRS notices for tax debt that is attributable to your spouse or former spouse, consult with a tax attorney to see if you can use an innocent spouse defense to avoid this tax liability.

The tax attorneys at Ayar Law can assist you with a claim for innocent spouse relief and other tax debt solutions. Call us at 248-262-3400 for free and confidential legal advice.

 

Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.