Double Taxation: A Take On All Things Taxes

Innocent Spouse Relief Just Got Easier to Come By

Ladies, if you’re still single, I’ve got some unsettling news for you: married life ain’t all longingly-staring-into-each-other’s-eyes-while-sharing-the-perfect-sunset. Men are repulsive, reprehensible creatures. We leave the toilet seat up. Our discarded toenail clippings find their way into the  bed sheets with alarming frequency. And yes, on occasion, we’ll underreport millions in federal income tax before running off with a comely 23-year old Mary Kay sales rep, leaving you with three unruly kids and a hefty tax bill.  

Luckily, the IRS has your back. While the Service is virtually powerless to remedy toilet seat and toenail problems, Section 6015 of the Code permits an “innocent spouse” to seek relief from a joint tax liability.  Section 6015 provides three potential sources of relief:

Section 6015(b) provides a “general” relief rule available to all joint filers, including those who are still married to each other.

Section 6015(c) covers additional relief available to joint filers who at the time an election is filed (1) are divorced or legally separated from the other party to the joint return in question or (2) have lived apart from the other party for the preceding 12 months.

Lastly, when neither  6015(b) nor 6015(c) applies, an innocent spouse may still gain relief under the equitable relief provisions of  Section 6015(f).  Under the related regulations, a claim for relief under Section 6015(f) had to be made within 2 years of the date collection activities started against the requesting spouse.

Notice 2011-70, issued today, liberalizes the time frame a spouse has to request this late relief. Under the Notice — which was written in response to a number of court cases challenging the validity of the “two-year” regulations — a request for equitable innocent spouse relief must now be made within the 10-year period for collections under Section 6502.

As for the Notice’s impact on current and future requests: 

  • The IRS will no longer apply the two-year limit to new equitable relief requests or requests currently being considered by the agency.
  • A taxpayer whose equitable relief request was previously denied solely due to the two-year limit may reapply using IRS Form 8857, Request for Innocent Spouse Relief, if the collection statute of limitations for the tax years involved has not expired.
  • Taxpayers with cases currently in suspense will be automatically afforded the new rule and should not reapply.
  • The IRS will not apply the two-year limit in any pending litigation involving equitable relief, and where litigation is final, the agency will suspend collection action under certain circumstances.