What is an Innocent Spouse Claim?
The purpose of the innocent spouse rule so far as the IRS is concerned is to effectively limit the joint liability which results when a couple files a joint income tax return. Be aware, however, that filing an innocent spouse claim is both difficult and time-consuming particularly in community property states. There is one form of relief for any person filing jointly and another form those who may be separated or divorced from their spouse or widowed. The IRS may also—if they choose—make the determination to relieve the taxpayer of liability because they find it unfair to do so. The spouse making the innocent spouse claim may be relieved of joint tax liability if they meet certain criteria. First of all, a joint tax return must have been filed, and on that return one spouse must have made an underpayment of the taxes owed or an understatement of income.
Criteria for Innocent Spouse Claim
The spouse claiming innocent spouse exemption must not have known about the tax understatement and must be seeking relief in an IRS-approved manner within two years of collection actions against him or her. Generally speaking it is easier to obtain innocent spouse relief in the event of a separation, divorce or death of a spouse. In these cases the innocent spouse may ask for a separation of liability for the tax deficiency on a proportional basis, acting as though separate tax returns had been filed from the very beginning. Issues which resulted in tax deficiencies will be portioned to the spouse who incurred those deficiencies. Such relief must be requested within two years of collection action against the innocent spouse.
In order to determine whether or not you will qualify for an innocent spouse claim you must be able to prove that the taxes owed definitively belong to your ex-spouse. This could be because you were not working at the time the taxes were incurred or perhaps from your spouse’s self-employment activities. You may have also been under the impression that your spouse paid the taxes at the time they were due. You will have to prove you will suffer a serious financial hardship if the IRS insists you pay the taxes owed. In other words, you must be left with enough money to be able to pay your basic living expenses such as a roof over your head, food, utilities and clothing.
No assets may have been transferred between spouses or any other fraudulent activity taken place and the requesting spouse must not have filed the return in question with any sort of fraudulent intent. You must prove you did not gain any sort of significant benefits from the unpaid taxes or that you suffered abuse during the course of your marriage. When there was abuse in the marriage, the spouse claiming innocent spouse relief might not have been able to successfully question anything on the joint return. If you feel you meet the criteria for innocent spouse relief you should consult a tax attorney in order to get a more comprehensive look at the overall tax situation. You want to make sure your interests are completely protected and that can be accomplished through having a qualified tax attorney on your side.