Publication 971 (Rev. April 2008) - Innocent Spouse Relief (Page 4 of 23) in pdf

(or former spouse) for purposes of requesting any relief

know of the item of community income. Not knowing the

from liability.

specific amount is not a basis for relief.

Reason to know. The IRS will consider all facts and

Relief for Married Persons Who Did

circumstances in determining whether you had reason to

Not File Joint Returns

know of an item of community income. The facts and

circumstances include:

Married persons who live in community property states, but

•

The nature of the item of community income and the

who did not file joint returns, have two ways to get relief.

amount of the item relative to other income items.

•

The financial situation of you and your spouse (or

Relief From Liability Arising From

former spouse).

Community Property Law

•

Your educational background and business experi-

You are not responsible for the tax relating to an item of

ence.

community income if all the following conditions exist.

•

Whether the item of community income represented

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

a departure from a recurring pattern reflected in prior

years’ returns (for example, omitted income from an

2. You did not include the item of community income in

investment regularly reported on prior years’ re-

gross income.

turns).

3. The item of community income you did not include is

one of the following:

Indications of unfairness for liability arising from com-

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

a. Wages, salaries, and other compensation your

spouse (or former spouse) received for services

and circumstances of the case in order to determine

he or she performed as an employee.

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

stated tax due to the item of community income.

b. Income your spouse (or former spouse) derived

The following are examples of factors the IRS will con-

from a trade or business he or she operated as a

sider.

sole proprietor.

•

Whether you received a benefit, either directly or

c. Your spouse’s (or former spouse’s) distributive

indirectly, from the omitted item of community in-

share of partnership income.

come (defined below).

d. Income from your spouse’s (or former spouse’s)

•

Whether your spouse (or former spouse) deserted

separate property (other than income described in

you.

(a), (b), or (c)). Use the appropriate community

property law to determine what is separate prop-

•

Whether you and your spouse have been divorced

erty.

or separated.

e. Any other income that belongs to your spouse (or

former spouse) under community property law.

For other factors see Factors for Determining Whether To

Grant Equitable Relief on page 8.

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

reason to know of, that community income. See Ac-

Benefit from omitted item of community income. A

tual knowledge or reason to know, below.

benefit includes normal support, but does not include de

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

5. Under all facts and circumstances, it would not be

benefit may consist of transfers of property or rights to

fair to include the item of community income in your

property, including transfers received several years after

gross income. See Indications of unfairness for liabil-

the filing of the return.

ity arising from community property law, later.

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

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

Actual knowledge or reason to know. You knew or had

the property is traceable to omitted items of community

reason to know of an item of community income if:

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

•

are considered to have benefitted from those omitted items

You actually knew of the item of community income,

of community income.

•

A reasonable person in similar circumstances would

have known of the item of community income.

Equitable Relief

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

Amount of community income unknown. If you are

now liable for an underpaid or understated tax you believe

aware of the source of the item of community income or the

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

income-producing activity, but are unaware of the specific

amount, you are considered to know or have reason to

you may request equitable relief (discussed later).

Page 4

Publication 971 (April 2008)

Publication 971 (Rev. April 2008) - Innocent Spouse Relief Page 4

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