Seeking Innocent Spouse Relief
The Internal Revenue Service is not a particularly sympathetic institution, and if items on your joint tax return were improperly reported, you can expect to face some serious penalties and interest payments. But, what if your spouse was the one who improperly reported items on your tax form? Well, if you are innocent, there are several ways to avoid being penalized for your spouse's mistakes.
Innocent spouses can file an IRS Form 8857 and request relief from paying taxes, penalties or interest that were the result of your spouse improperly reporting items on your joint tax form. This form may be used only if you meet several requirements. First, you have filed a joint return that does understate the tax that was due or has errors on it. Second, you have to establish that at the time the return was filed, you were not aware of any understatements. Third, you have to show that it is unfair that you should be held responsible. Lastly, the IRS must find that your spouse, and not you, committed the fraud.
Additionally, you can seek relief by separate allocation of liability. This means that, if you can establish that your spouse, and not you, was responsible for tax liabilities and you were divorced, and had no knowledge of it at the time and did not receive a benefit from the error, you will be relieved of liability.
Finally, you can ask for relief if you can establish that it is unfair for you to be held liable, or rather that equity requires that you have relief. This is determined by several factors, such as your marital status and situation financially. The IRS will also look to see if you have generally complied with income tax law in the past and also whether or not you benefitted from your spouse's fraud or understatement of taxes due.
This type of tax issue is unusual, but typically seems to arise when two spouses have separated or divorced and the guilty spouse is refusing to pay the IRS or their location cannot be determined. In such cases, the IRS usually goes after the other spouse because when a joint return is signed and filed, the IRS considers both spouses to be equally liable for whatever is on the return. Even if you are divorced, both parties are responsible for any debts that occurred during the marriage.
If you do qualify for innocent spouse relief, the IRS will not make you pay for the interest, penalties or taxes due for the portion of the joint return that was fraudulent. You will be held responsible for taxes that you did, in fact, owe just not the penalties for the fraud committed by your spouse.
Emely Peight likes writing about bankruptcy issues. To get further Tucson bankruptcy info, or if you require a Phoenix bankruptcy attorney, please check out these bankruptcy sites today.
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