The Reform Act of 1998 broadened the relief available to spouses who filed joint returns, yet the circumstances demonstrate that it would be unfair to hold both spouses equally responsible for the joint liability. In many of these cases, a spouse is relieved of responsibility for tax, interest and penalties on the joint tax return.

Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows. Both taxpayers are jointly and individually responsible for the tax and any interest or penalty due on the joint return even if they later divorce. This is true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. One spouse may be held responsible for all the tax due even if the other spouse earned all the income. The new provisions for relief from this joint and individual liability may relieve a spouse of the liability.

This relief from joint and individual liability should not be confused with injured spouse relief. You are an injured spouse if you file a joint return and all or part of your share of the refund was, or will be, applied against your spouse's past-due Federal tax, child support, Federal nontax debt such as a student loan or a past-due state tax debt. Form 8379, Injured Spouse Claim and Allocation, must be filed in order to claim injured spouse relief. For more information, refer to Tax Topic 203, Failure to Pay Child Support and other Federal Obligations.

There are now three types of relief from joint and individual liability for spouses who filed joint returns:

1. Innocent spouse relief for additional tax you owe from an audit
2. Separation of liability for additional tax you owe from an audit
3. Equitable Relief when you do not qualify under (1) or (2) for additional tax you owe from an audit or for tax you owe from an original return you filed.

You must meet all of the following conditions to qualify for innocent spouse relief:

1. You filed a joint return which has an understatement of tax directly related to erroneous items of your spouse. Any income, deduction, basis amount or credit is an erroneous item if it is omitted from the joint return or incorrectly reported on the joint return.
2. You establish that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement.
3. Taking into account all the facts and circumstances, it would be inequitable to hold you liable for the understatement of tax.

To qualify under separation of liability you must have filed a joint return and must meet one of the following requirements:

1. You are divorced, legally separated or widowed from the spouse with whom you filed the joint return for which you are requesting relief; or

2. You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period before you file Form 8857, Request for Innocent Spouse Relief.

If you qualify for the election to separate liability, we will allocate the understatement of tax from the erroneous items to the spouse to whom they belong.

You may qualify for equitable relief if you do not qualify for innocent spouse relief or separation of liability or your request for relief is for an unpaid balance due shown on a return you filed. To qualify for equitable relief you must establish why it would be inequitable to hold you jointly and individually liable for the liability associated with your joint return, and the Service will consider your request.

If you request innocent spouse or separation of liability relief, the Service is required to notify the spouse with whom you filed the joint return of your request and to allow them to provide information for consideration.

Form 8857, Request for Innocent Spouse Relief, must be filed in order to elect innocent spouse relief, separation of liability or to request equitable relief. You may also refer to Publication 971, Innocent Spouse Relief, for more information.

Note: If you lived in a community property state and filed as "married filing separate," rather than "married filing joint," you might still qualify for equitable relief. Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Refer to Publication 971 for more details.

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