Under normal circumstances, a husband and wife who sign a joint return are both held liable for the tax. By law, the IRS may take adverse collection action against either individual for any delinquent liabilities. This includes situations where one spouse did not earn the income from which the liability stemmed and after dissolution of marriage, even if a spouse has pledged to be liable for the tax owed in a divorce settlement.
However, the IRS has provided options for relief through the innocent spouse provisions of the Internal Revenue Code. This is particularly important in situations where only one spouse is a viable collection source or where adverse collection action threatens an ex-spouse’s reasonable standard of living. In order to file an Innocent Spouse Claim, taxpayers must file a Form 8857 which requires detailed answers to a number of questions about the spousal relationship and the liability in question.
In addition to the filing of Form 8857, Innocent Spouse Claims have four main requirements:
- The spouses filed a joint return for the tax year in dispute
- There was a substantial understatement of tax caused by an erroneous item or negligence of one spouse.
- The other spouse who signed the return did not know or have reason to know there was a substantial understatement of tax liability.
- It is inequitable or unreasonable to hold the spouse liable for the delinquent liability.
If you intend to file an Innocent Spouse Claim, you should hire an experienced tax attorney to navigate you through the process. The IRS is generally not inclined to relieve spouses from joint liability or provide equitable relief, unless a claim is properly stated and there is compelling reason to grant leniency. Innocent spouse cases are structured like mini-trials with several elements, which the taxpayer has the burden of proving. Failure to meet any of the required elements will result in a denial of your Innocent Spouse Claim.
Furthermore, the other spouse has a right to be notified of your claim and can intervene or otherwise issue objections to the claim. Community property states, such as California, can also raise a number of difficult issues that an experienced attorney should be retained to handle. Because of the complexity and variety of the issues involved, you should consult an attorney before proceeding with your Innocent Spouse Claim.
Our office has a proven track record of innocent spousal defense, both in the IRS Appeals Division and in Tax Court. In addition, if your former spouse has filed an Innocent Spouse Claim with the IRS, we can advise you as to your rights and how to challenge the claim if you desire.
Don’t become a victim. If you have any questions or if we can further assist you, please contact our San Diego, Orange County or Beverly Hills Innocent Spouse Relief attorneys today.
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