Publication 971 - Instructions Innocent Spouse Relief Forms

party to a pending TEFRA partnership proceeding,

Or you can visit the Tax Court’s web site at

then you are not entitled to innocent spouse relief.

•

If you entered into a closing agreement for both

partnership items and nonpartnership items, while

Community Property Laws

you were a party to a pending TEFRA partnership

proceeding, you are not entitled to innocent spouse

relief for the nonpartnership items. But you will be

You must generally follow community property laws when

entitled to relief for the partnership items (if you oth-

filing a tax return if you are married and live in a community

erwise qualify).

property state. Community property states are Arizona,

California, Idaho, Louisiana, Nevada, New Mexico, Texas,

Washington, and Wisconsin. Generally, community prop-

Transferee liability not affected by innocent spouse

erty laws require you to allocate community income and

relief provisions. The innocent spouse relief provisions

expenses equally between both spouses. However, com-

do not affect tax liabilities that arise under federal or state

munity property laws are not taken into account in deter-

transferee liability or property laws. Therefore, even if you

mining whether an item belongs to you or to your spouse

are relieved of the tax liability under the innocent spouse

(or former spouse) for purposes of requesting any relief

relief provisions, you may remain liable for the unpaid tax,

from liability.

interest, and penalties to the extent provided by these

Married persons who did not file joint returns in commu-

laws.

nity property states have two ways to get relief.

Example. Herb and Wanda timely filed their 2000 joint

Relief from liability arising from community property

law. You are not responsible for the tax relating to an item

income tax return on April 16, 2001. Herb died in March

of community income if all the following conditions exist.

2002, and the executor of Herb’s will transferred all of the

•

estate’s assets to Wanda. In April 2003, the IRS assessed

You did not file a joint return for the tax year.

a deficiency for the 2000 return. The items causing the

•

You did not include an item of community income in

deficiency belong to Herb. Wanda is relieved of the defi-

gross income.

ciency under the innocent spouse relief provisions, and

•

Herb’s estate remains solely liable for it. However, the IRS

You establish that you did not know of, and had no

may collect the deficiency from Wanda to the extent per-

reason to know of, that community income.

mitted under federal or state transferee liability or property

•

Under all facts and circumstances, it would not be

laws.

fair to include the item of community income in your

gross income.

Tax Court Review of Request

After you file Form 8857, you can ask the United States

Equitable relief. If you do not qualify for the relief de-

Tax Court to review your request. You can ask the United

scribed above and are now liable for an underpayment or

States Tax Court to review your request in the following

understatement of tax you believe should be paid only by

your spouse (or former spouse), you may request equita-

two situations.

ble relief (discussed later).

1) You disagree with the IRS’ final determination notice

Requesting relief. You request relief from liability arising

telling you the extent to which your request for relief

from community property law by filing Form 8857, as dis-

has been denied.

cussed earlier. Fill in Form 8857 according to the instruc-

2) You do not receive a final determination notice from

tions.

the IRS within 6 months from the date you filed Form

8857.

Innocent Spouse Relief

The United States Tax Court is an independent judicial

body and is not part of the IRS.

By requesting innocent spouse relief, you can be relieved

You must file a petition with the United States Tax Court

of responsibility for paying tax, interest, and penalties if

in order for it to review your request for relief. You must file

your spouse improperly reported items or omitted items on

the petition no later than the 90th day after the date the

your tax return. Generally, the tax, interest, and penalties

IRS mails its final determination notice to you. If you do not

that qualify for relief can only be collected from your

file a petition, or you file it late, the Tax Court cannot review

spouse. However, you are jointly and individually responsi-

your request for relief.

ble for any tax, interest, and penalties that do not qualify for

You can get a copy of the rules for filing a petition

relief. The IRS can collect these amounts from either you

by writing to the Tax Court at the following ad-

or your spouse.

dress.

The IRS will figure the tax you are responsible for after

United States Tax Court

you file Form 8857. You are not required to figure this

400 Second Street, NW

amount. But if you wish, you can figure it yourself. See How

Washington, DC 20217

to Allocate the Understatement of Tax later.

Page 3

Publication 971 - Instructions Innocent Spouse Relief Forms - 2003 Page 3

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