Publication 971 - Innocent Spouse Relief - Internal Revenue Service (Page 10 of 24) in pdf

and your spouse were divorced in 2010. In addition, you

The amount of the refund is subject to the limit dis-

had no knowledge or reason to know at the time you

cussed later under Limit on Amount of Refund.

signed the return that the tax would not be paid. These

Understated tax. If you are granted relief for an under-

facts indicate to the IRS that it may be unfair to hold you

stated tax, you are eligible for a refund of certain payments

liable for the $5,000 underpaid tax. The IRS will consider

made under an installment agreement that you entered

these facts, together with all of the other facts and circum-

into with the IRS, if you have not defaulted on the install-

stances, to determine whether to grant you equitable relief

ment agreement. You are not in default if the IRS did not

from the $5,000 underpaid tax.

issue you a notice of default or take any action to end the

installment agreement. Only installment payments made

Factors Weighing in Favor of Equitable

after the date you filed Form 8857 are eligible for a refund.

Relief

The amount of the refund is subject to the limit dis-

cussed next.

The following are examples of factors that will weigh in

favor of equitable relief, but will not weigh against equitable

Limit on Amount of Refund

relief.

•

The amount of your refund is limited. Read the following

Whether your spouse (or former spouse) abused

chart to find out the limit.

you.

•

Whether you were in poor mental or physical health

IF you file Form 8857...

THEN the refund cannot be

more than...

on the date you signed the return or at the time you

requested relief.

Within 3 years after filing your

The part of the tax paid within 3

return

years (plus any extension of

time for filing your return) before

you filed Form 8857.

Refunds

After the 3-year period, but

The tax you paid within 2 years

within 2 years from the time you immediately before you filed

If you are granted relief, refunds are:

paid the tax

Form 8857.

•

Permitted under innocent spouse relief as explained

later under

Limit on Amount of

Refund.

Filled-in Form 8857

•

Not permitted under separation of liability relief.

•

Permitted in limited circumstances under equitable

This part explains how Janie Boulder fills out Form 8857 to

relief, as explained under Refunds Under Equitable

request innocent spouse relief.

Relief.

Janie and Joe Boulder filed a joint tax return for 2007.

They claimed one dependency exemption for their son

Proof Required

Michael. Their return was adjusted by the IRS because Joe

did not report a $5,000 award he won that year. Janie did

The IRS will only refund payments you made with your own

not know about the award when the return was filed. They

money. However, you must provide proof that you made

agreed to the adjustment but could not pay the additional

the payments with your own money. Examples of proof are

amount due of $815 ($650 tax + $165 penalty and inter-

a copy of your bank statement or a canceled check. No

est). Janie and Joe were divorced on May 13, 2009. In

proof is required if your individual refund was used by the

February 2010, Janie filed her 2009 federal income tax

IRS to pay a tax you owed on a joint tax return for another

return as head of household. She expected a refund of

year.

$1,203. In May 2010, she received a notice informing her

that the IRS had offset her refund against the $815 owed

Refunds Under Equitable Relief

on her joint 2007 income tax return and that she had a right

to file Form 8857.

In the following situations, you are eligible to receive a

Janie applies the conditions listed earlier under

Inno-

refund of certain payments you made.

cent Spouse Relief

to see if she qualifies for relief.

Underpaid tax. If you are granted relief for an underpaid

1. Janie meets the first and second conditions because

tax, you are eligible for a refund of separate payments that

the joint tax return they filed has an understated tax

you made after July 22, 1998. However, you are not eligi-

due to Joe’s erroneous item.

ble for refunds of payments made with the joint return, joint

payments, or payments that your spouse (or former

2. Janie believes she meets the third condition. She did

spouse) made. For example, withholding tax and esti-

not know about the award and had no reason to

mated tax payments cannot be refunded because they are

know about it because of the secretive way Joe con-

considered made with the joint return.

ducted his financial affairs.

Page 10

Publication 971 (September 2011)

Publication 971 - Innocent Spouse Relief - Internal Revenue Service Page 10

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