As part of our blog series focusing on marital tax situation woes, we want to review how an unsuspecting, “innocent” spouse can be protected from a tax consequence on a jointly filed income tax return. Not everybody can qualify for Innocent Spouse Relief, so knowing the ins and outs is essential.

Many divorced or separated spouses have attempted to seek Innocent Spouse Relief but fail to consider the Internal Revenue Service’s overarching viewpoint when it comes to jointly filed income tax returns. It is always the IRS’ position that when taxpayers file a tax return together, they are both responsible for the tax and any penalties and interest due. And keep in mind that divorce decrees claiming one spouse as responsible for a tax debt over the other are NOT recognized by the IRS. The IRS stands firm on divorce being a civil affair and will not recognize a directive made by a state as it is a lower judicial system and has no authority over federal matters.

To first be considered for Innocent Spouse Relief, the following initial requirements have to have been met:

• The petitioner had to have filed a joint return with a spouse,
• the taxes determined due for the tax period in question were due to errors reported on the return, and
• the petitioner was not aware of the errors reported.

Qualifying errors for the Innocent Spouse Relief program are typically due to unreported income, incorrect/invalid deductions or credits claimed, or incorrect values given to assets for depreciation purposes.

There are various types of Innocent Spouse Relief afforded through the Internal Revenue Service’s program:

• Traditional Innocent Spouse Relief – this allows for complete absolution from the responsibility of paying the taxes, penalties, and interest due if your spouse did something wrong on the tax return.
• Equitable Relief – this allows the petitioner to get relief from paying taxes that the spouse understated or underpaid if it would be unfair to hold her/him responsible based on the facts and circumstances.
• Separation of Liability Relief – this allows a divorced or separated spouse to pay only her/his share of the understated taxes.

As with all things with the IRS, asterisks always come into play; this program is no exception to that practice. If the petitioner is a victim of domestic abuse, relief can still be granted even if she/he knew about the errors made on the tax return if:

• The petitioner was a victim of spousal abuse or domestic violence before signing the return,
• The errors made on the tax return were not questioned or challenged due to personal safety fears, and/or
• The petitioner signed the joint return because she/he was pressured or threatened.

While the IRS takes these assertions made by a taxpayer seriously, some validation will still be sought by the IRS. This can come in the form of police reports, hospital records, court records, or counselor or third-party attestations. The burden of proof is always going to be on the petitioner, so make sure you have some validating documentation that can be submitted with the Innocent Spouse Relief petition when it is a domestic abuse situation.

Is that the only asterisk that comes into play? Of course not! One of the biggest asterisks to keep in mind when it comes to seeking Innocent Spouse Relief is that it must be sought within two years of the taxpayer receiving a notice of IRS audit or balance due. Failure to submit the petition timely will result in the IRS refusing to consider the relief sought.

If an “innocent spouse” receives a tax bill from the IRS, the first thing she/he should do is seek the consultation of a tax professional with experience with this specific program. The team at Golden Lion Tax Solutions has successfully submitted and negotiated the acceptance of many Innocent Spouse Relief petitions over the 24+ years we have been representing clients before the IRS. If you or your client has a tax consequence that you believe qualifies for the Innocent Spouse Relief Program, reach out to us! We can typically assess a qualifying situation during a thirty-minute phone call.

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Your future and your family deserve the right protection. Golden Lion Tax Solutions will be your advisor and confidant throughout the entire journey. We guarantee to offer you or your business best-case solutions for your tax debt. We are by your side every step of the way. Start now and get your life back.

For help with your tax debts, email contactus@goldenliontaxsolutions.com or call 833-LION-TAX (833-546-6829)

Disclaimer: There are requirements that must be satisfied in order to qualify for some of the tax solutions we discuss on our website. Not all of our services will be suitable for every client. Golden Lion Tax Solutions is here to help you find the most appropriate solution to fit your situation.