Form Pa-971 - Relief From Joint Liability (Innocent Spouse Relief) Page 2
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11How To Request Relief
Relief from an Understatement of Tax Due to an
Erroneous Item ( See Flowchart A, Page 7)
File an election packet to request relief for an outstand-
An understatement of tax is generally the difference
ing PA Personal Income Tax liability. The election packet
between the total amount of tax that you should have
includes the following forms:
reported on your return and the amount of tax that you
PA 8857, Request for Relief from Joint Liability
actually reported. For example, you reported total tax of
PA 12507, Innocent Spouse Statement
$2,500 on your 2005 return. The Department reviewed
your 2005 return and determined that the total tax is
PA 12510, Questionnaire for Spousal Relief from
$3,000. You have a $500 understatement of tax.
Joint Liability for Requesting Spouse
You may be relieved of joint liability for an understate-
REV-488, Statement of Financial Condition for
ment of tax and the related interest and penalties if all
Individuals.
the following conditions are met:
You may request relief for more than one tax year in a
1. You filed a joint return which has an understate-
single election packet.
ment of tax due to an erroneous item of your
spouse;
You must fully complete all of the above forms for a valid
election packet. See the instructions on Form PA 8857
2. You establish that at the time you signed the joint
for more information.
return you did not know and had no reason to know
that there was an understatement of tax. (If you
Spousal notification. The Department is required to
establish that you were the victim of domestic
inform the non-electing spouse (your spouse or former
abuse prior to the time you signed your joint
spouse) of your request for relief from liability. There are
return, and because of the prior abuse, you did not
no exceptions even for victims of spousal abuse or
challenge the treatment of any items on the return
domestic abuse.
for fear of your spouse’s retaliation, you can quali-
fy for relief even if you had actual knowledge of
The Department will contact the non-electing spouse and
your spouse’s understatement of tax.); and
allow him or her to provide information that may assist
3. Taking into account all the facts and circumstances,
in determining your eligibility for relief from joint
it would be unfair to hold you liable for the under-
liability. The Department will also inform the non-elect-
statement of tax.
ing spouse of its preliminary and final determinations
regarding your request for relief. However, to protect
Erroneous item. Erroneous items include:
your privacy, the Department will not provide
• Unreported income. This is any gross income item
information to the non-electing spouse that could
received by your spouse that is not reported;
infringe on your privacy. The Department will not provide
• Incorrect deduction or credit. This is any improper
your new name, address, information about your
deduction or credit claimed by your spouse.
employer, phone number, or any other information that
• Basis error. Income was incorrectly calculated
does not relate to a determination about your request for
because the basis used by your spouse to deter-
relief from liability.
mine the gain or loss was incorrect.
When To Request Relief
The following are examples of an erroneous item:
You should file a complete election packet as soon as you
1. The expense for which a deduction is taken was
become aware of a tax liability for which you believe only
never paid or incurred. For example, your spouse,
your spouse or former spouse should be held liable. You
a cash-basis taxpayer, deducted $10,000 of
must file the packet no later than 2 years after the date
advertising expenses on PA Schedule C, but never
the Department first attempted to collect the tax from
paid for any advertising.
you. Some example of attempts that may start the 2-
2. The expense does not qualify as a deductible
year period are:
expense. For example, your spouse claimed a
• The mailing of a notice that the Department plans
business fee deduction of $10,000 that was for the
to intercept your Federal Income Tax refund.
payment of state fines. Fines are not deductible.
• The issuance of a writ of execution.
3. No factual argument can be made to support the
deductibility of the expense. For example, your
The issuance of a billing notice, a preassessment notice,
spouse claimed $4,000 for security costs related to
or an assessment notice is not a collection activity.
a home office. The cost were actually veterinary
and food costs for your family’s two dogs.
TIP: You should not file an election packet until the tax
for which relief is requested may no longer be appealed.
4. Your spouse claims a resident credit for taxes paid
Your appeal rights must have expired before you request
to another state, but no tax was due or paid to the
relief from joint liability.
other state.
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Parent category: Financial