The vast majority of married couples in America file a joint tax return every year. In so doing, each spouse is jointly and severally liable for one hundred percent (100%) of the total amount of back taxes owing. But what if one spouse leaves the other innocent spouse unfairly holding the bag? Is there any relief available under the tax laws? According to tax attorneys the answer is yes, however, getting the IRS to agree you’re eligible for innocent spouse relief may be a very different answer.
Tax lawyers say that in order to be considered for innocent spouse relief, the IRS (and ultimately the U.S. Tax Court) will consider a number of factors. Obviously, your marital status will be a key consideration in whether or not you may be eligible for relief. Your knowledge regarding the nonpayment of back taxes and the nature and extent of any economic hardship will also be important to making a determination.
Other considerations include what, if any economic benefit was received by the spouse seeking relief; whether the spouse seeking relief has been the subject of any abuse; and the health of the spouse may also be a factor. Perhaps one of the most important considerations is the non-requesting spouse’s obligation to pay any outstanding liability of back taxes owing.
Tax attorneys are quick to point-out that a request for innocent spouse relief must also be timely. Under an IRS two-year rule, an innocent spouse must seek relief within two years from when the IRS first tries to collect the back taxes. The two-year rule is not absolute and applies “generally.” Whether, and under what circumstances an innocent spouse may seek relief after two years remains somewhat of a question. Some Courts have recognized equitable relief claims may not be subject to the two year limitation, while others have ruled in support of the IRS’s position that equitable claims are also subject to the time restraint.
In a flurry of news releases, articles, and blogs the question of innocent spouse relief continues to be a hot topic. The IRS is supposedly directing its tax lawyers to fight aggressively against such claims, despite a growing line of U.S. Tax Court cases finding in favor of the innocent spouses.
If you’ve been left responsible for paying off back taxes which your estranged spouse, not you, should be paying and you have questions, you should consult a competent tax attorney who may be able to give you the answers you need. Don’t wait two years and give the IRS another reason to reject your request for relief, act promptly and consult a tax lawyer as soon as practical.
Segal, Cohen & Landis 9100 Wilshire Blvd., Ste. 601E Beverly Hills, CA 90212 (310) 285-3999