Tax disputes: What forms of relief are available to innocent spouses?

Innocent people who face tax controversy or collections due to a spouse’s errors on a joint return may be eligible for one of three forms of relief.

It is not unusual for married couples in Los Angeles to divide up important household responsibilities, such as managing the marital finances. These arrangements can be efficient, but they can also leave innocent people facing serious penalties when their spouses make errors in important tasks, such as jointly filing and paying taxes. Fortunately, the Internal Revenue Service grants these spouses various options for seeking relief from liability.

Innocent spouse relief

If a person's spouse was solely responsible for any errors or omissions that appeared on a joint tax return, the person may qualify for innocent spouse relief. This relief, which releases a person from responsibility for any back taxes or penalties, may be available if the person's spouse made the following missteps:

  • Calculating income or deductions incorrectly
  • Failing to report income
  • Claiming credits or deductions that were not applicable

A person who is seeking innocent spouse relief must show that, when she or he signed the joint tax return, she or he did not and should not have known that it contained erroneous information. Requests for innocent spouse relief must be made within two years of the date that the IRS first attempts to collect the debt resulting from the other spouse's error.

Separation of liability relief

People who are widowed or separated from their former spouses may alternately qualify for separation of liability relief. The IRS makes this form of relief available to people who have divorced, legally separated or been living apart from a spouse for at least 12 months. This relief ensures that a person is not held liable for resolving back taxes that are due because of his or her spouse's mistakes. The IRS also establishes a two-year deadline for requests for this form of relief.

Equitable relief

People who cannot qualify for innocent spouse relief or separation of liability relief may be eligible for equitable relief. In this case, a person must show that it would be unfair for the IRS to hold him or her liable for any outstanding tax liability resulting from his or her spouse's actions. The IRS decides whether to grant equitable relief based on many factors, including the financial hardships that the requesting spouse faces and the mental or physical health of the requesting spouse.

Potential challenges

Unfortunately, securing one of these three forms of relief may prove difficult for many people. In 2011, USA Today reported that the IRS grants less than half of the requests for innocent spouse relief that it receives. While the acceptance rate may be higher today, spouses should still appreciate the potential challenges of obtaining relief.

To improve the likelihood of a favorable outcome, anyone who faces tax controversy relating to a spouse's errors should consult with an attorney about requesting relief.