Innocent Spouse Relief

When married taxpayers file a joint tax return, both taxpayers are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise as a result of the joint return even if they later divorce. Joint and several liability means that each individual taxpayer is legally responsible for the entire liability. Joint and several liability applies even if only one spouse claimed improper deductions or credits.

In some cases, however, an innocent spouse can get relief from joint and several liability of a tax underpayment if the taxpayer’s spouse or former spouse failed to report income, reported income improperly, or claimed improper deductions or credits. In order to qualify for Innocent Spouse Relief, the innocent spouse must meet several criteria: 1) the innocent spouse must have filed a joint return with an understatement of tax which was directly related to the other spouse’s omission of income or incorrectly reported deductions, credits, and property bases, 2) the innocent spouse must establish that at the time he or she filed the return, he or she did not know or have reason to know that there was an underpayment of tax, and 3) it must appear that after considering all the facts and circumstances, it would be unfair to hold the innocent spouse liable. Innocent Spouse Relief must be requested no later than two years after the date the IRS first attempted to collect the tax from the innocent spouse.