Most married couples choose to file a joint tax return because of the certain benefits that this filing status allows. However, when filing jointly husband and wife are jointly and severally liable for any tax, any additions to tax, interest and penalties for every year in which they filed a joint income tax return even if they later divorce.
Joint and several liability means that each of them is legally responsible for the entire liability even if only one spouse earned all of the income or improperly claimed deductions or credits. This remains true even if the couple’s divorce decree states that only one of the spouses will be responsible for the amounts due on previously filed joint returns.
In some cases, however, one of the spouse’s may request innocent spouse relief from the IRS, and if granted, be released from the joint and several tax liabilities.
Timing. Timing is extremely important since a late-filed request will be dismissed as untimely. You must ask for innocent spouse relief no later than two years after the IRS collections first started.
Types of relief. There are three types of relief from joint liability:
1. Innocent Spouse Relief relieves you from the additional tax owed if your spouse or former spouse failed to report income, reported income improperly or claimed improper deductions or credits.
2. Separation of Liability Relief permits allocation of the additional tax owed between you and your former spouse when an item was not reported properly on a joint return. In this case, you would only have to pay tax in the amount for which you are responsible.
3. Equitable Relief may apply when you don’t qualify for innocent spouse relief or separation of liability relief for something not reported properly on a joint return and attributable to your spouse. You may also qualify for equitable relief if the amount of tax is reported correctly but it was not paid with the return.
In deliberating the application for the innocent spouse relief, the IRS considers all of the facts and circumstances surrounding the joint tax return in dispute. They can look at the lifestyle factors, the spouse’s education, their involvement in the family’s business and financial affairs, and the culpable spouse’s evasiveness and deceit concerning their finances.
Needless to say, knowledge of the legal requirements for the relief and the presentation of your case to the IRS are crucial for the success of your innocent spouse relief request. The support and guidance of an experienced attorney are essential for construction of a convincing argument and fulfillment of all of the procedural requirements. You will also benefit from legal representation if your spouse attempts to argue against removing you from the tax liability or otherwise challenges the propriety of the relief.
Contact San Diego Tax Law Group today for experienced and effective assistance with your innocent spouse relief claim.