Filling taxes with a spouse as “married filing jointly” may cause problems if one spouse contributes incorrect, false, or fraudulent information, or doesn’t pay their share. One spouse may be on-the-hook for tax or penalty payments even though the other spouse was the wrongdoer. Moreover, one spouse may become liable for tax payments on the income of the other spouse even though there is no access to that income. The appropriate action to take in cases such as these may be to file for innocent spouse relief from the IRS.

Each Spouse is “Jointly and Severally” Liable

(in English: The IRS can collect in full from either spouse)

When a joint income tax return is filed, both filers become responsible for the entire amount of taxes owed on such return. Both filers also become responsible for any additional taxes owed based on income that was not correctly reported on the tax return. Even if spouses agree in a divorce that they will not be liable for the other spouse’s tax liability, the IRS can still collect from either spouse following a divorce for the entire amount of taxes due. One way to be relieved of a former spouse’s tax liability is by filing for innocent spouse relief.

Qualifying For Innocent Spouse Relief

A spouse may qualify for innocent spouse relief (and therefore be absolved of liability) if the following conditions are met:

  • The spouses filed a joint return.
  • The tax amount due on the return is understated because of erroneous items (unreported income or incorrect deduction, credit or basis – tax value attributed to an asset) reported by the non-innocent spouse.
  • The innocent spouse can show that when he or she signed the return, he or she did not know about the understated tax amount.
  • It would be unfair to hold the innocent spouse liable for paying the tax, after reviewing all the facts and circumstances.

If a spouse believes he or she meets the above conditions and wishes to request innocent spouse relief, he or she should file Form 8857: Request for Innocent Spouse Relief (discussed below).

Factors the IRS Will Consider in Granting Innocent Spouse Relief

The IRS will look at various factors to determine whether an alleged innocent spouse had reason to know of an erroneous item and will review additional factors to determine the fairness of holding one spouse liable for the tax. Overall, the IRS may consider many factors, including:

  • Current marital status
  • Knowledge of taxes already paid or charged in an audit
  • Likelihood of innocent spouse suffering economic hardship if forced to pay
  • Receipt of any economic benefit to the innocent spouse due to the wrongdoing of non-innocent spouse
  • Innocent spouse’s subsequent compliance with tax laws
  • The origination of the income giving rise to the tax
  • Abuse or desertion during marriage

Form 8857: Request for Innocent Spouse Relief

A Request for Innocent Spouse Relief (Form 8857) should be filed as soon as a spouse is aware of tax liability that only the other spouse should be responsible for, and must be filed within two years of the IRS’ first attempt to collect the taxes. There are exceptions to this rule and certain court rulings have given innocent spouses a time period longer than two years, but it is safest to stay within the two-year period.

After you file the Request for Innocent Spouse Relief, you may petition the United States Tax Court to review your situation if you disagree with the determination letter sent in response to Form 8857 or if you do not receive a determination letter within six months of filing the request.

For more information regarding innocent spouse relief, special circumstances or exceptions, and further details about the program, read the following IRS publication #971. You may also contact The Law Offices of Stephen Moskowitz, LLP for a free attorney-client privileged consultation about your specific situation and whether you qualify for Innocent Spouse Relief, or some other type of relief.