Publication 971 - Innocent Spouse Relief - Internal Revenue Service (Page 5 of 24) in pdf

•

The financial situation of you and your spouse (or

begins an examination of your return during that 6-month

period, the latest time for requesting relief is 30 days after

former spouse).

the date the IRS’ initial contact letter to you. The period of

•

Your educational background and business experi-

limitation on assessment is the amount of time, generally

ence.

three years, that the IRS has from the date you filed the

•

Whether the item of community income represented

return to assess taxes that you owe.

a departure from a recurring pattern reflected in prior

years’ returns (for example, omitted income from an

Innocent Spouse Relief

investment regularly reported on prior years’ re-

turns).

By requesting innocent spouse relief, you can be relieved

of responsibility for paying tax, interest, and penalties if

Indications of unfairness for liability arising from com-

your spouse (or former spouse) improperly reported items

munity property law. The IRS will consider all of the facts

or omitted items on your tax return. Generally, the tax,

and circumstances of the case in order to determine

interest, and penalties that qualify for relief can only be

whether it is unfair to hold you responsible for the under-

collected from your spouse (or former spouse). However,

stated tax due to the item of community income.

you are jointly and individually responsible for any tax,

The following are examples of factors the IRS will con-

interest, and penalties that do not qualify for relief. The IRS

sider.

can collect these amounts from either you or your spouse

•

Whether you received a benefit, either directly or

(or former spouse).

indirectly, from the omitted item of community in-

You must meet all of the following conditions to qualify

come (defined below).

for innocent spouse relief.

•

Whether your spouse (or former spouse) deserted

1. You filed a joint return.

you.

2. There is an understated tax on the return that is due

•

Whether you and your spouse have been divorced

to erroneous items (defined later) of your spouse (or

or separated.

former spouse).

3. You can show that when you signed the joint return

For other factors see

Factors for Determining Whether To

you did not know, and had no reason to know, that

Grant Equitable Relief

later.

the understated tax existed (or the extent to which

the understated tax existed). See

Actual Knowledge

Benefit from omitted item of community income. A

or Reason To

Know, later.

benefit includes normal support, but does not include de

minimis (small) amounts. Evidence of a direct or indirect

4. Taking into account all the facts and circumstances,

benefit may consist of transfers of property or rights to

it would be unfair to hold you liable for the under-

property, including transfers received several years after

stated tax. See

Indications of Unfairness for Innocent

the filing of the return.

Spouse

Relief, later.

For example, if you receive property, including life insur-

Innocent spouse relief will not be granted if the IRS

ance proceeds, from your spouse (or former spouse) and

proves that you and your spouse (or former spouse) trans-

the property is traceable to omitted items of community

ferred property to one another as part of a fraudulent

income attributable to your spouse (or former spouse), you

scheme. A fraudulent scheme includes a scheme to de-

are considered to have benefitted from those omitted items

fraud the IRS or another third party, such as a creditor,

of community income.

former spouse, or business partner.

Equitable Relief

Understated Tax

If you do not qualify for the relief described above and are

You have an understated tax if the IRS determined that

now liable for an underpaid or understated tax you believe

your total tax should be more than the amount that was

should be paid only by your spouse (or former spouse),

actually shown on your return.

you may request equitable relief (discussed later).

Erroneous Items

How and When To Request Relief

Erroneous items are either of the following.

You request relief by filing Form 8857, as discussed ear-

1. Unreported income. This is any gross income item

lier. Fill in Form 8857 according to the instructions.

received by your spouse (or former spouse) that is

For relief from liability arising from community property

not reported.

law, you must file Form 8857 no later than 6 months before

the expiration of the period of limitations on assessment

2. Incorrect deduction, credit, or basis. This is any

(including extensions) against your spouse for the tax year

improper deduction, credit, or property basis claimed

for which you are requesting relief. However, if the IRS

by your spouse (or former spouse).

Publication 971 (September 2011)

Page 5

Publication 971 - Innocent Spouse Relief - Internal Revenue Service Page 5

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