Innocent spouse relief provides protection for a spouse or ex-spouse that was not aware of tax problems on a joint return, or who had no recourse to stop the tax debt, misfiling, or failure to file. This is a valuable protection in particular for former spouses who have suffered for their previous partner’s financial mismanagement or fraudulence. Innocent spouse relief is determined on a case-by-case basis and though it can be difficult to obtain, it can significantly reduce or eliminate the tax debt you owe. If you are suffering from the tax debt or penalties that a former spouse accrued and you had no part in or no knowledge of, you may be eligible for innocent spouse relief.
How Does Innocent Spouse Relief Work?
To understand how innocent spouse relief works, tax liability between joint returns must first be understood. When married taxpayers file their returns together, they must both be aware of their income status, expenses, the status of business interests, and other parts of their return. When a joint return is filed, it is assumed that both taxpayers know what they are filing. It is also assumed then that they are both individually and jointly responsible for any tax debt.
Unfortunately, both taxpayers are not always aware of the contents of their joint return. In many cases, one spouse files a return and the other spouse is not involved. In some cases, the return entrusted to one spouse is incorrect, fraudulent, or it was never filed at all. Since both spouses are responsible for the return, the IRS can pursue action against one spouse for the debts which the other caused. This is where innocent spouse relief comes in.
While both spouses are generally responsible for a joint return, there are cases where this responsibility can be severed, or it is not reasonable to assign the tax debt or penalties to the spouse who wasn’t involved (the “innocent spouse”). To be eligible for innocent spouse relief, several parameters must be met, and each of these will be individually evaluated by the IRS.
- Mistakes or misfiling on the tax return was the fault of the other spouse.
- The innocent spouse was somehow prevented from seeing or changing the tax return.
- The innocent spouse cannot be fairly held responsible for the incorrect return.
Since innocent spouse relief is granted on a case-by-case basis, there are many situations which may fit the parameters. The way a case is presented and the manner in which it is filed makes all the difference under these circumstances. If you are divorced or separated and you have found yourself responsible for your ex-spouse’s falsified, incorrect, or otherwise misfiled return, innocent spouse relief may be an ideal option for you.