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Situations where the IRS may grant innocent spouse relief

On Behalf of | Aug 16, 2021 | Blog, Tax Debt |

When married couples in Washington and around the country file joint tax returns, both spouses are jointly and severally responsible for any money owed. This means either spouse can be pursued individually by the Internal Revenue Service if income is not reported, exemptions are claimed that the couple are not entitled to, or some error leads to an unpaid tax balance. Interpreting the Internal Revenue Code strictly in situations like this can lead to an unfair outcome for people who left financial matters up to their husbands or wives, which is why the agency has a procedure in place known as innocent spouse relief.

Innocent spouse relief

People who are interested in pursuing innocent spouse relief should be aware that the process can take as long as six months to complete and their request could be denied. They usually have two years from the time the IRS notifies them about an outstanding balance to seek innocent spouse relief, but exceptions are sometimes made. This kind of tax relief is only available to spouses who:

  • Filed taxes jointly
  • Were not responsible for and were unaware of the error that led to the outstanding tax balance
  • Are able to prove that they were not responsible for the error
  • Have compelling circumstances

Factors the IRS considers

When it reviews requests for innocent spouse relief, the IRS considers factors including the couple’s financial situation, the innocent spouse’s educational background and whether the mistake that led to the outstanding balance is part of a pattern of errors. The agency also considers fairness, which means requests for relief may be denied if the innocent spouse benefited from the mistake. When relief is granted, the IRS pursues the spouse who made the mistake for the entire unpaid balance plus any penalties and fees required under U.S. tax law.

Requesting innocent spouse relief

People who wish to pursue innocent spouse relief can either submit a signed statement to the IRS or fill out a Form 8857. If their requests are denied, spouses who are divorced or separated may ask the IRS to divide the outstanding balance. This is known as separation of liability. Another option called equitable relief may be available to spouses in community property states like Washington who did not file taxes jointly but owe money to the IRS because their husbands or wives made mistakes.