Day & Day LLP - Innocent Spouse Relief

Innocent Spouse Relief:

Innocent Spouse is when one spouse submits a request to the IRS and asks the IRS to relieve him or her of a federal tax

liability resulting from a previously filed joint tax return. The spouse that files the request is known as the “Requesting Spouse”

and the other spouse is known as the “Non-Requesting Spouse”. Innocent Spouse is not available for New Jersey income tax

purposes.

Often innocent spouse is raised when one spouse attempts to scare the other spouse into conceding on other issues in the

divorce by threatening to turn the spouse into the IRS and then claiming innocent spouse on any resulting tax liability.

In most divorce cases, when tax issues such as innocent spouse arise, each spouse is advised to retain a tax attorney. Hiring a

tax attorney GREATLY INCREASES each spouse’s expenses. With our experience with innocent spouse and other tax issues,

you will not need to hire other attorneys. Therefore, you costs will not drastically increase in order to protect your rights.

Under IRC 6013(d)(3), the tax liability resulting from a joint tax return is “joint and several”. This means that the IRS can look to

collect 100% of the tax due from either spouse. The joint and several liability of a joint tax return does not end when the couple

divorces. This means, if a joint tax return is filed and tax is still owed when after the divorce, both people are still responsible for

that tax. Or, if the joint tax return is audited after the divorce and money is owed, both people will still be jointly and severally

liable for the payment. This is where innocent spouse comes in.

Under IRC 6015, the IRS can grant innocent spouse to a requesting spouse if the requesting spouse meets one of three tests.

If granted, the requesting spouse will be relieved of paying a portion or all of the tax owed.

The most important thing to remember is that proving innocent spouse is very difficult. There are three possible tests used

when considering innocent spouse.

Traditional Innocent Spouse Relief

Separation Of Liability Relief, and

Equitable Relief

Each of the tests has a list of different requirements. All three tests are available when the tax liability is a result of the IRS

determining there is a tax deficiency after the tax return was filed. However, Equitable Relief can only be used if the requesting

spouse fails to meet the requirements of the first two tests. If the requesting spouse is asking for relief from tax that remains

unpaid from a filed tax return the equitable relief test must be used.