When Is Innocent Spouse Relief Available for IRS Tax Debts?

 Posted on April 15, 2021 in Tax Audits

When a married couple files a joint tax return, “joint and several liability” will apply to any tax debts related to that return. This means that if the Internal Revenue Service (IRS) conducts a tax audit and determines that the couple owes taxes due to erroneous information on their joint tax return, the spouses will be equally liable for paying these tax debts. This can sometimes come as a surprise, especially if a couple has gotten divorced since filing the joint tax return in question. Even if a divorce decree addressed tax issues and states that one spouse will be responsible for paying joint tax debts, the IRS can still pursue repayment from both spouses. However in some cases, a person may receive innocent spouse relief if they were not responsible for the tax debts.

Innocent Spouse Relief Eligibility Requirements

Innocent spouse relief may be available in situations where individual income taxes or self-employment taxes are owed to the IRS based on incorrect information on a couple’s joint tax return. To be eligible for innocent spouse relief, a person must be able to show that errors on a tax return were solely attributable to their current or former spouse. They will need to verify that when they signed the joint tax return, they did not know or could not reasonably have known about the errors.

A person may receive innocent spouse relief based on errors on a tax return related to unreported or misreported income or claiming of improper tax deductions, credits, or property basis. For example, if a person’s ex-spouse was a business owner, and they did not report all income earned through their business in a certain year, while also claiming tax deductions for business expenses without actually paying for those expenses, a tax audit may determine that taxes are owed. If the other spouse was not involved in the business and had no knowledge of the business’s finances, they may be eligible to receive innocent spouse relief, and the other spouse will be solely responsible for paying the tax debts.

Spouses may also receive other forms of relief from joint tax debts. Separation of liability relief may divide the amount owed between the spouses based on their financial resources and ability to pay. Those who do not meet the eligibility requirements for this type of relief may qualify for equitable relief if holding one party responsible for joint tax debts would not be fair, such as in situations where a person was subject to abuse or financial control by their former spouse.

Contact a San Jose Innocent Spouse Tax Relief Attorney

If the IRS has notified you that you owe taxes based on a joint tax return filed with your current or former spouse, you will want to understand your options. At John D. Teter Law Offices, we will work with you to determine whether you are eligible for innocent spouse relief or other forms of relief, and we will advocate on your behalf when addressing these matters with the IRS. To learn more about how we can help with your case, contact our San Jose, CA tax relief lawyer by calling 408-866-1810.

Sources:

https://www.irs.gov/businesses/small-businesses-self-employed/innocent-spouse-relief

https://www.irs.gov/taxtopics/tc205