Publication 971 (Rev. April 2008) - Innocent Spouse Relief (Page 9 of 23) in pdf

not considered separation for this purpose. A tempo-

and your spouse were divorced in 2006. In addition, you

rary absence is one where it is reasonable to as-

had no knowledge or reason to know at the time you

sume that the absent spouse will return to the

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

household, and the household or a substantially

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

equivalent household is maintained in anticipation of

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

the absent spouse’s return.

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

•

stances, to determine whether to grant you equitable relief

Whether you would suffer a significant economic

from the $5,000 underpaid tax.

hardship if relief is not granted. (In other words, you

would not be able to pay your reasonable basic

living expenses.)

Factors Weighing in Favor of Equitable

•

Whether you have a legal obligation under a divorce

Relief

decree or agreement to pay the tax. This factor will

not weigh in favor of relief if you knew or had reason

The following are examples of factors that will weigh in

to know, when entering into the divorce decree or

favor of equitable relief, but will not weigh against equitable

agreement, that your former spouse would not pay

relief.

the income tax liability.

•

Whether your spouse (or former spouse) abused

•

Whether you received a significant benefit (beyond

you.

normal support) from the underpaid tax or item caus-

•

Whether you were in poor mental or physical health

ing the understated tax. (For a definition of signifi-

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

cant benefit, see Indications of Unfairness for

requested relief.

Innocent Spouse Relief earlier.)

•

Whether you have made a good faith effort to com-

ply with federal income tax laws for the tax year for

Refunds

which you are requesting relief or the following

years.

•

If you are granted relief, refunds are:

Whether you knew or had reason to know about the

•

items causing the understated tax or that the tax

Permitted under innocent spouse relief as explained

would not be paid, as explained next.

later under Limit on Amount of Refund.

•

Not permitted under separation of liability relief.

Knowledge or reason to know. In the case of an un-

•

Permitted in limited circumstances under equitable

derpaid tax, the IRS will consider whether you did not know

relief, as explained under Refunds Under Equitable

and had no reason to know that your spouse (or former

Relief.

spouse) would not pay the income tax liability.

In the case of an income tax liability that arose from an

understated tax, the IRS will consider whether you did not

Proof Required

know and had no reason to know of the item causing the

understated tax. Reason to know of the item giving rise to

The IRS will only refund payments you made with your own

the understated tax will not be weighed more heavily than

money. However, you must provide proof that you made

other factors. Actual knowledge of the item giving rise to

the payments with your own money. Examples of proof are

the understated tax, however, is a strong factor weighing

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

against relief. This strong factor may be overcome if the

proof is required if your individual refund was used by the

factors in favor of equitable relief are particularly compel-

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

ling.

year.

Reason to know. In determining whether you had rea-

son to know, the IRS will consider your level of education,

Refunds Under Equitable Relief

any deceit or evasiveness of your spouse (or former

spouse), your degree of involvement in the activity gener-

In the following situations, you are eligible to receive a

ating the income tax liability, your involvement in business

refund of certain payments you made.

and household financial matters, your business or financial

expertise, and any lavish or unusual expenditures com-

Underpaid tax. If you are granted relief for an underpaid

pared with past spending levels.

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

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

Example. You and your spouse filed a joint 2005 return.

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

That return showed you owed $10,000. You had $5,000 of

payments, or payments that your spouse (or former

your own money and you took out a loan to pay the other

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

$5,000. You gave 2 checks for $5,000 each to your spouse

mated tax payments cannot be refunded because they are

to pay the $10,000 liability. Without telling you, your

spouse took the $5,000 loan and spent it on himself. You

considered made with the joint return.

Publication 971 (April 2008)

Page 9

Publication 971 (Rev. April 2008) - Innocent Spouse Relief Page 9

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