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Can spouses avoid tax penalties if they prove their innocence?

Married couples hold many benefits. Not only can they share their lives together, they can also get special tax privileges. But this financial advantage comes with great responsibility. If spouses file a joint tax return, they can be equally liable for those returns and any interest, penalties and other expenses that come with them. That holds true even if one spouse is the sole source of income.

However, there are some exceptions to this rule. If one spouse makes a mistake when filing their joint return, the other can potentially avoid liability. They can do this by requesting innocent spouse relief from the IRS.

One spouse may omit or provide inaccurate information on a joint tax statement without the other's knowledge. If this happens, the IRS may conduct an audit. Depending on the circumstances, if they can prove they were involved in the submission process but did not know or recognize any errors, they may be able to receive partial or full relief from the consequences.

How does someone qualify for innocent spouse relief?

Spouses requesting relief must meet the following requirements under section 6015(b) of the federal tax code:

  • They filed their return for the year.
  • The spouse requesting relief can prove they didn't know about any errors in the joint return.
  • The agency finds that the spouse isn't liable for the tax errors.
  • The spouse applies for relief within two years.
  • The IRS attributes inaccuracies in the return to the filer's spouse.

What could disqualify me from getting relief?

The IRS may reject a relief request if the spouse admits to knowing about any errors. If a spouse contains what the agency calls "actual knowledge" about the incorrect item(s) on the return, they can hold them responsible for any interest or penalties owed. But in some cases, spouses can receive partial relief if they can prove they only held partial knowledge about the inaccuracies.

In other situations, if the agency has reason to believe the spouse knew of any issues, they can deny their request. The IRS may make this decision based on a variety of factors. Those can include:

  • The spouse's financial situation.
  • The spouse's experience and educational background.
  • The spouse's level of participation in filing an erroneous return.
  • The spouse's involvement and approval of the return before its submission.
  • Whether inaccurate statements on the current return reflect other inaccuracies in years' past.

It's better to figure these things out sooner rather than later

Even the smallest mistake on a tax return can leave spouses in a tight spot. Not only can these errors cost them a fortune, but they may also have to deal with the relentless and brute tactics of the IRS. California couples facing coping with these issues may want to consult with a trusted tax attorney. They can provide clients with the aggressive representation they need when facing this government goliath.

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Law Offices of Robert T. Leonard, APC

Woodland Hills Office
21700 Oxnard Street
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Woodland Hills, CA 91367

Toll Free: 888-408-9486
Phone: 818-224-7935
Fax: 818-587-3833
Woodland Hills Tax Law Office

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