Relief for Innocent Spouses

Sometimes happily ever after doesn’t work out, and two people end up going their separate ways. Although they might divide their belongings, they can’t break up any previous tax bills or tax returns they filed together.

This is known as joint and several liability. It means that one spouse is as liable as the other for all items appearing on returns they filed together and equally liable to pay all the tax due, whether or not they’re divorced. So if a joint return is audited, each spouse is liable for any additional tax that may be assessed, even if it was from something the other spouse deducted or forgot to report. In such a situation, a taxpayer could request innocent spouse relief from joint and several liability.

In 1998, Congress passed a law making the requirements for obtaining such relief less stringent. People can request this relief in three ways - expanded innocent spouse relief, separate liability election and equitable relief.

The expanded innocent spouse relief is a new version of an old law. Prior innocent spouse requirements were relatively strict. The new law relaxes those requirements to a point where taxpayers may be relieved of a portion of the additional assessment they did not know about or had no reason to know about.

Separate liability election allows certain taxpayers to elect to have the additional assessment limited to the portion that would be allocated to their share of the item(s) at issue, based, for example, on their own earnings or deductions.

Equitable relief is available when a person does not meet the conditions for innocent spouse or separate liability relief, but it would nevertheless be unfair to hold the person responsible for an unpaid tax or an additional assessment. Such a case might arise when one spouse did not know, and had no reason to know, that the other spouse took the money intended for paying the tax and used it for his or her own benefit instead.

The IRS has revised Publication 971, Innocent Spouse Relief, and Form 8857, which people may use to request this relief, to reflect the new provisions of the law. Both are available by calling 1-800-829-3676.

No Refund for Some

Expecting a refund, but haven’t paid certain bills? Some people may find themselves waiting a long time. Federal law allows income tax refunds to be taken to pay off all or part of past-due child and spousal support, delinquent student loans, income tax or other federal debts. The IRS will let people know if their refund was used to pay back what they owe.

SSNs - Write On

The IRS is listening to what taxpayers are saying. In response to tax-payers’ concerns about privacy, the IRS isn’t printing taxpayers’ Social Security numbers anywhere in the tax instruction booklets. But the tax returns must still have the SSNs, so taxpayers should remember to write them on before sending their returns to the IRS.

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