Innocent Spouse, Expansion of Program

The U.S. Internal Revenue Service has proposed rules to extend the amount of time taxpayers can apply for its “innocent spouse” relief program which stops collection of taxes in certain situations.

The Innocent Spouse program is a safety net for as many as 50,000 taxpayers per year who have filed tax returns as married couples yet collection of the tax due would be unfair.    For example,  when one spouse does not realize the other had accumulated a tax liability.

The I.R.S. now proposes that qualified taxpayers would have up to 10 years to apply for the program and stop a tax collection process.    Generally, the IRS has 10 years to collect an assessment of tax. Therefore, this proposal provides an avenue of relief during the entire collection period.

Interestingly, the proposed rules would also stop the IRS from demanding unpaid taxes while an application is being processed.

The proposed rules will be open for public comment for 90 days before finalization.

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