Innocent Spouse Relief Tips

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Am I eligible for innocent spouse relief?

Are You Eligible?

  • Did I file a joint return for the year in question?

When you filed your joint return, did you think everything was properly included on it?

If you knew about something not being included (any erroneous item), did you not sign the return because you were in a domestically abusive household?

Has the IRS audited your joint return and assessed additional penalties, taxes, or interest?

Was this the result of unreported income, understatement of tax, or incorrect deductions/credits?

Has the IRS attempted to take your tax refund from you?

Has the IRS attempted to levy your bank account?

Has the IRS attempted to garnish your wages?

Has it been less than two years since the IRS first attempted to collect the tax balance due from you?

If you can answer “yes” to all of the above questions, you probably qualify for innocent spouse relief.

What are some innocent spouse relief rules?

Innocent Spouse Relief Rules

To qualify for innocent spouse relief, you must meet all of the following conditions (also known as IRS innocent spouse rules):

  • You must have filed a joint return which has an understatement of tax.
  • The understatement of tax must be due to erroneous items caused by your spouse. Erroneous items would be any unrecorded gross income item received by your spouse; and any incorrect deductions, property basis, and/or credits reported on your joint tax return.
  • You must 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 of tax. The IRS will determine what a “reasonable person” would believe. If you had any actual knowledge, or a reason to know, about the improper items you would not qualify for the innocent spouse relief. The only exception to this would be if you were involved in a domestic abuse situation.
The “reason to know” determination made by the IRS involves a variety of situations. The nature and amount of the erroneous items will be considered (obviously a larger amount would stick out...and why wouldn't you question that?). The IRS will also review your educational background and business experience. They also will look into your extent, if any, of participating in the activity that results in the erroneous item(s).

The “reason to know” determination is important to the IRS in innocent spouse relief requests since the IRS will try to defeat your claim based on this.

  • Taking into account all of the facts and circumstances, it would be unfair to hold you liable for the understatement of tax. This area, also, involves a variety of considerations made by the IRS. They will review whether your spouse deserted you, whether you are divorced or separated, and whether you gained any benefit from the erroneous items.
  • You must request your innocent spouse relief using IRS Form 8857.
  • You must request relief within 2 years after the date on which the IRS first began collection activity against you
  • You must not be involved in an Offer in Compromise payment program with the IRS. The Offer in Compromise program legally closes the tax year that any of your unpaid taxes are applied to. Taxes cannot be re-determined once that happens.

How can I appeal an innocent spouse relief?

Innocent Spouse Relief Appeal

If you were denied an innocent spouse relief election, you can appeal the decision. You must file for a petition with the Tax Court within 90 days after receiving the denial.

Even though you are requesting a review on your innocent spouse relief election, your spouse (“non-electing” - the one not applying for the innocent spouse relief) can intervene during the process.

The IRS is required by law to notify the non-electing spouse about your innocent spouse relief request. This is intended to allow the non-electing spouse with an opportunity to become involved in the determination.

What form do I need to request innocent spouse relief?

Innocent Spouse Relief Form

In order to request any innocent spouse relief, you must prepare and file IRS Form 8857 (Request for Innocent Spouse Relief). In addition to filing this IRS form, you must also include a statement explaining why you qualify.

IRS Publication 971 (Innocent Spouse Relief) contains information which can help you.

If you do not make the election for innocent spouse relief within two years from the date the IRS first began collection activities against your joint return, you will forfeit any chance to receive it. Be certain, therefore, that you fill out and mail Form 8857 as soon as possible.

You can obtain IRS Form 8857 via the IRS website (by printing or downloading), ordering online; by phone, or by mail.

When does innocent spouse relief not apply?

Innocent Spouse Relief Does Not Apply

Innocent spouse relief is available for understatement of income on a jointly filed tax return. However, it is not available in cases where a joint return was filed with a correct tax liability and the taxes were unpaid.

In other words, if you and your spouse filed a joint return and all the information was correct – you cannot request innocent spouse relief if no taxes were enclosed with your joint tax return. This is known as failure to pay taxes. You two will be penalized.

Where do I mail my IRS Form 8857?

Where To Mail Your Request

The IRS provides a centralized unit for mailing your Form 8857 (Request for Innocent Spouse Relief). The mailing address you are to directly send your completed form (along with explanation statement) to is:

IRS - IRS-Stop 840-F
Innocent Spouse
PO Box 120053
Covington, KY 41012

Be certain you send your request for innocent spouse relief form to this address, and not your usual IRS tax return address. By sending your request to any other address, of course, the processing time will lengthen.

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