Eligibility Requirements for IRS Innocent Spouse Relief (Classic)
Section 6015 B of IRS Code
To qualify for innocent spouse relief, your spouse/ex-spouse needs to be responsible for the tax, penalties, or interest. If you are the responsible party, you don’t qualify. With this type of relief, married taxpayers who live with their spouse can still qualify.
Requirements for Innocent Spouse Relief (ISR)
You Filed a Joint Return for the Year You Are Seeking Relief
You must have filed a joint tax return for the year you are seeking relief. However, married taxpayers who live in community property states and filed to file joint tax returns may still qualify. You can find more information about community property states here.
The Return Has an Understatement of Tax
The joint return must contain an understatement of tax. That means that the return says you owe less tax than you really do.
You Blame Your Spouse or Former Spouse
An error caused by your spouse or former spouse is the reason for the understatement of tax. That may include underreporting income, claiming the wrong deductions, or over-claiming deductions or credits. Other examples may relate to using the wrong basis for claims related to capital gains or losses, as well as math errors.
You Were Unaware of the Understatement of Tax
Plain and simple, you did not know about the erroneous item(s) upon signing the return. However, you must be able to prove that you didn’t know. Furthermore, you must show there was no reason why you would have known. You will remain jointly responsible if the IRS thinks that a reasonable person should have known. This is one of the most common rejection reasons.
The IRS considers many factors. For instance, the IRS will consider your spouse’s finances, your educational background, and your business experience. Moreover, the IRS will look at patterns in previous years, and whether you participated in the activity related to the error.
It Is Truly Unfair to Hold You Liable for the Tax Due
There is a significant amount of interpretation in regards to this element. The IRS looks at a number of factors including whether you benefited (indirectly or directly) from the understated tax. The IRS will also look to see if you received a significant benefit. This is a benefit(s) in excess of normal support. For example, you acquired certain assets, property rights, or money after the filing of the return.
The agency also takes into account if you’re divorced, separated, and if your spouse left you. Essentially, the agency wants to see if there has been a pattern of your spouse lying and deceiving you.
The IRS Began Collection Activities Less Than 2 Years Ago
It must be less than two years since the IRS first attempted to collect these taxes from you. If you are requesting a refund for taxes paid, you must file the request within 3 years after the date the tax return is filed or 2 years following the payment of tax, whichever is later.
With all of the rules met above, there is a strong possibility you will find relief. If the IRS accepts your request, you are no longer liable for the tax, interest, or penalties related to the understatement of tax. However, if you do not meet the requirements above, you can look at other forms of IRS Innocent Spouse Relief.
If you are looking for a tax professional that has experience with Innocent Spouse Relief, you can find a list of tax professionals that have experience with innocent spouse relief here. Or you can start your search below to find the top-rated professional based upon your unique tax situation.