What is Innocent Spouse Relief ?

What is innocent spouse relief?

Married couples are allowed to file joint income tax returns.  Very often, women who are stay-at-home moms who have no personal income of their own file a joint income tax with their husbands.  Others are victims of domestic violence and they automatically sign the income tax return prepared by their husband without knowing any of the contents of the return.

When the IRS reviews the income tax returns or audits the taxpayer, the IRS discovers that there are misrepresentations and misstatements on items of income, deduction, or exemption.  Sometimes, the IRS finds
that items for personal allowances were not accurately or truthfully claimed. The spouses are then assessed a liability to pay back taxesplus interest, penalties and surcharges.

When does innocent spouse relief apply?

As spouses file joint returns, their liability for the tax will also be joint. This means that the IRS can run after one of the spouses or both of the spouses.  In cases where the spouse who had no knowledge
of information about the wrong information in the tax return is sued for collection of the back taxes, what can the innocent spouse do?  The innocent spouses can file for relief.

What must the innocent spouse prove?

The IRS gives the innocent spouse two years within the time of the tax assessment to file for innocent spouse relief.  A spouse who seeks to defeat a tax collection suit must be able to show that he or she has timely filed for innocent spouse relief.

A spouse who files for this relief from payment of taxes must prove that he or she had no knowledge of the fraudulent entries in the tax return; and that the spouse had no knowledge about the unreported income or overstated exemption or deduction. Also, the innocent spouse must not have participated in the misrepresentations in the tax return.

In cases where the innocent spouse is a victim of domestic violence or when she is a victim of sexual, physical or emotional abuse such that she does not control any of the finances, the IRS can waive the 2-year statute of limitations within which the innocent spouse can file for equitable relief.  The innocent spouse must also be able to prove that when all the facts are considered, it will appear that making the innocent spouse pay the tax liability is not equitable or just.

What kinds of relief can be given?

An innocent spouse can ask that her tax liability be separated from her husband’s tax liability.  Or, the innocent spouse can ask for partial relief.  The innocent spouse can also ask for equitable relief and be absolved from paying any tax liability for the tax return she signed with her husband.

For help in filing for innocent spouse relief, speak with a competent and experienced New York Tax Attorney.  We at the Maxwell Law Firm, PLLC assist clients with filing tax extensions, tax return
preparation, amendments, tax collection defense, tax settlements, and other services. If you need assistance please feel free to call us at 718-701-0095 to discuss your options.