Publication 971 (Rev. April 2008) - Innocent Spouse Relief (Page 8 of 23) in pdf

the liability. A transfer will be presumed to have as its main

6. Your spouse (or former spouse) did not transfer

property to you for the main purpose of avoiding tax

purpose the avoidance of tax or payment of tax if the

or the payment of tax. See Transfers of Property To

transfer is made after the date that is 1 year before the date

Avoid Tax, earlier, under Separation of Liability Re-

on which the IRS sent its first letter of proposed deficiency.

lief.

This presumption will not apply if:

•

7. You did not file or fail to file your return with the intent

The transfer was made under a divorce decree, sep-

to commit fraud.

arate maintenance agreement, or a written instru-

ment incident to such an agreement, or

8. The income tax liability from which you seek relief

•

must be attributable to an item of the spouse (or

You establish that the transfer did not have as its

former spouse) with whom you filed the joint return,

main purpose the avoidance of tax or payment of

unless one of the following exceptions applies:

tax.

a. The item is attributable or partially attributable to

If the presumption does not apply, but the IRS can

you solely due to the operation of community

establish that the purpose of the transfer was the avoid-

property law. If you meet this exception, that item

ance of tax or payment of tax, the tax liability allocated to

will be considered attributable to your spouse (or

you will be increased as explained above.

former spouse) for purposes of equitable relief.

b. If the item is titled in your name, the item is pre-

sumed to be attributable to you. However, you

Equitable Relief

can rebut this presumption based on the facts and

circumstances.

If you do not qualify for innocent spouse relief, separation

c. You did not know, and had no reason to know that

of liability relief, or relief from liability arising from commu-

funds intended for the payment of tax were misap-

nity property law, you may still be relieved of responsibility

propriated by your spouse (or former spouse) for

for tax, interest, and penalties through equitable relief.

his or her benefit. If you meet this exception, the

Unlike innocent spouse relief or separation of liability

IRS will consider granting equitable relief although

relief, you can get equitable relief from an understated tax

the underpaid tax may be attributable in part or in

(defined earlier under Innocent Spouse Relief) or an un-

full to your item, and only to the extent the funds

derpaid tax. An underpaid tax is an amount of tax you

intended for payment were taken by your spouse

properly reported on your return but you have not paid. For

(or former spouse).

example, your joint 2005 return shows that you and your

d. You establish that you were the victim of spousal

spouse owed $5,000. You pay $2,000 with the return. You

abuse or domestic violence before signing the re-

have an underpaid tax of $3,000.

turn, and that, as a result of the prior abuse, you

did not challenge the treatment of any items on

Conditions for Getting Equitable

the return for fear of your spouse’s retaliation. If

you meet this exception, relief will be considered

Relief

although the understated tax or underpaid tax

may be attributable in part or in full to your item.

You may qualify for equitable relief if you meet all of the

following conditions.

1. You are not eligible for innocent spouse relief, sepa-

Factors for Determining Whether To

ration of liability relief, or relief from liability arising

Grant Equitable Relief

from community property law.

2. You have an understated tax or an underpaid tax.

The IRS will consider all of the facts and circumstances in

order to determine whether it is unfair to hold you responsi-

3. You did not pay the tax. However, see Refunds,

ble for the understated or underpaid tax. The following are

later, for situations in which you are entitled to a

examples of factors that the IRS will consider to determine

refund of payments you made.

whether to grant equitable relief. The IRS will consider all

factors and weigh them appropriately.

4. You establish that, taking into account all the facts

and circumstances, it would be unfair to hold you

liable for the understated or underpaid tax. See Fac-

Relevant Factors

tors for Determining Whether To Grant Equitable Re-

lief, later.

The following are examples of factors that may be relevant

to whether the IRS will grant equitable relief.

5. You and your spouse (or former spouse) did not

•

transfer assets to one another as a part of a fraudu-

Whether you are separated (whether legally or not)

lent scheme. A fraudulent scheme includes a

or divorced from your spouse. A temporary absence,

scheme to defraud the IRS or another third party,

such as an absence due to imprisonment, illness,

such as a creditor, ex-spouse, or business partner.

business, vacation, military service, or education, is

Page 8

Publication 971 (April 2008)

Publication 971 (Rev. April 2008) - Innocent Spouse Relief Page 8

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