Protecting Innocent Spouses from Tax Liabilities: Understanding IRS Relief Options
At Golden Lion Tax Solutions, we recognize that tax professionals often encounter clients who assume obtaining Innocent Spouse Relief is a straightforward process. However, many divorced or separated individuals overlook the Internal Revenue Service's (IRS) position regarding jointly filed income tax returns. This blog post aims to educate tax professionals on the nuances of Innocent Spouse Protection while highlighting the services we offer at Golden Lion Tax Solutions.
Understanding Innocent Spouse Relief
When taxpayers file a joint tax return, the IRS holds both spouses equally responsible for any taxes, interest, and penalties owed. This means that divorce decrees assigning tax debt responsibility to one spouse are not recognized by the IRS, which views divorce as a civil matter. It is crucial for tax professionals to guide their clients through the complexities surrounding Innocent Spouse Relief.
Qualification Criteria for Innocent Spouse Relief
To qualify for Innocent Spouse Relief, the following conditions must be met:
Joint Return: The petitioner must have filed a joint tax return with their spouse.
Deductions or Errors: The taxes owed must stem from errors reported on the return.
Lack of Knowledge: The petitioner must not have been aware of the discrepancies on the return.
Typical qualifying errors that can result in Innocent Spouse Relief include:
Unreported income
Incorrect or invalid deductions or credits
Misrepresented asset values
It’s important to note that this relief only applies to taxes associated with the spouse's income from employment or self-employment, excluding taxes owed on the petitioner’s own income.
Special Considerations for Victims of Domestic Abuse
Relief can also be granted in cases of domestic abuse, even if the petitioner was aware of the errors on the joint return. The IRS takes such claims seriously, requiring validation through:
Police reports
Hospital records
Court documents
Counselor or third-party attestations
While the burden of proof lies with the petitioner, having the appropriate documentation can significantly support their Innocent Spouse Relief petition.
Timeliness is Key
One crucial point to remember is that Innocent Spouse Relief must be pursued within two years of receiving an IRS notice of audit or balance due. Failing to act within this timeframe can result in the IRS denying the relief request.
Types of Relief Available
The IRS offers various forms of Innocent Spouse Relief:
Traditional Innocent Spouse Relief: Complete absolution from responsibility for taxes, penalties, and interest if the spouse made an error.
Equitable Relief: Provides relief in cases where holding the petitioner accountable would be unfair based on the facts and circumstances.
Separation of Liability Relief: Allows divorced or separated spouses to pay only their share of the understated taxes.
Next Steps for the "Innocent Spouse"
For those who find themselves in the position of an "innocent spouse," the first step is to consult a tax professional experienced in handling cases of Innocent Spouse Relief. It’s essential that this professional understands the complexities involved in submitting and negotiating these petitions effectively.
Golden Lion Tax Solutions: Your Trusted Partner
If you or someone you know is facing tax consequences that may qualify for Innocent Spouse Relief, don't hesitate to reach out to us at Golden Lion Tax Solutions. With over 25 years of experience representing clients before the IRS, we can assess your situation in just a thirty-minute phone call.
At Golden Lion Tax Solutions, we are committed to helping tax professionals navigate the intricacies of Innocent Spouse Relief while providing the highest level of support and expertise to their clients. Together, let's ensure that the "innocent spouse" is protected from unfair tax liabilities.