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There are now many court decisions under the applicable code section 6015. Please look up cases to support your request when filing. Also check any updates to the code. How? By looking up the code on the IRS website and reading it.
If this gets really difficult to handle and you can’t afford to hire a good representative, try to convince the Taxpayer Advocates office to help you (scream hardship), or your current R.O. Some R.O.’s are really very nice and may help you. Just don’t dump it on their lap. Put together what you can and ask them to review it. Write down specific questions and ask them to answer them, so you can complete it.
Of course, if you didn’t sign the return, then you are not liable. If you had income, then you always had the choice to file under the filing status of “married filing separate”. Separate returns means you pay your share and he pays his. Community property states split income so that may cause a problem for the lower income spouse.
O.K. so let’s look at the code 6015.
There Are Three Sources Of Relief If You Signed Any Joint Tax Returns:
- Code 6015(b) a general relief rule (IRS must prove) for joint filers, even if still married (if still married, it’s even harder to win your claim).Under 6015(b)(1) You must prove that all 5 conditions are met. List them one by one and explain how they are met. I do this on all my claims under this rule. It is essential to try to show evidence, not just make statements. O.K.?
- You filed a joint return. (A copy of the return is good.)
- There is an understatement of tax on a joint return attributable to errors of the other spouse. A copy of the return showing a liability would qualify, or show that the liability was the result of an audit. Then show that it was from his income and deductions and not from yours.
- Show that when you signed the return, you did not know or had reason to know of the understatement of the tax. Here is where they get you. If there was a refund or a small liability on the bottom line, or the taxes were a result of an audit, this is less difficult to prove. But if the big liability you are trying to get out of is staring at you on the bottom of the second page of the Form 1040, not far from where you put your signature, you will have a big fight from the IRS trying to prove you didn’t know that the taxes were owed! Different parts of the country have different interpretations of this. It is important do your case research. The knowledge part should be satisfied if you did not know or have reason to know at the time the return was signed, that the taxes would not be paid. You must establish that it was reasonable to believe he would pay the liability. I won a case where the therapist of the separated couple assured my client that he would pay the tax, even though he had previous tax liabilities. Given the nature of therapist and clients, it was reasonable for her to accept her therapist’s professional evaluation of her husband, which included her opinion and reassurance to her that her husband would pay the taxes. The IRS accepted this.
- It is inequitable to hold you liable for the joint tax. (Here you not only show that it is his, but show that you never benefited from the money. If he bought you fancy clothes, a new car, house etc. with the money, then the IRS will want you to pay the tax on it.)
- You must show that you are making this claim within two years after the IRS first began collection activities. (In my experience, my clients usually think it started after it really did. Call ACS or your R.O. right away, to look up this date for you. Then you will know when the 2 years are up. I once won an innocent spouse appeal on one year and lost on the other because one of the years was past the 2 year period. Luckily for my client the one we lost was for a very small amount.
- Code 6015(c) additional relief for joint filers who at the time of the election (now, that you are filing for innocent spouse)…
- Are divorced or legally separated from the other tax return signing party
- Or have lived apart from the other party for the preceding 12 months.
Under 6015(c) to deny the claim the IRS must prove that you had actual knowledge of the terms that gave rise to the deficiency at the time you signed the return. If you know of some of the deductions then that part will be denied but not the rest.
- If code 6015(b) or (c) doesn’t apply you still can get relief under code 6015(f)
Here you show that even if you don’t qualify under the above codes, it would be inequitable to hold you liable. You should get signed notarized statements from unrelated parties. You must satisfy all of the following conditions.
- You filed a joint return for the year in question.
- You don’t qualify under 6020(b) or 6020(c).
- You must file within 2 years of the first collection activity of the IRS (although this has not held up in tax court).
- No assets were transferred between spouses as part of a fraudulent scheme.
- The husband did not transfer disqualified assets to you. As defined in code 6015(c)(4)(B).
- You did not have any fraudulent intent when filing, or not filing the return.
- The liability you are requesting relief from is not from an item on the return that is yours.
In addition the following must be true…
- You are divorced or legally separated from the other tax return signing party, Or have lived apart from the other party for the preceding 12 months.
- On the date you signed the return, you had no knowledge or reason to know that your husband would not pay the tax liability. You must establish that it was reasonable to believe that he would pay the tax liability.
- You will suffer an economic hardship if you don’t get the relief you seek.
The IRS will consider all facts and circumstances and not just a single factor. It is very critical to develop your arguments under each category.
Innocent spouse cases are best suited for professional representation, so please consider hiring someone who has experience. Consider borrowing the money to pay the fees if necessary.
If you cannot, and must proceed on your own, I suggest that you buy a professional guide on preparing innocent spouse relief cases. Sometimes you need to have a more in depth technical manual. Or you could pay me to review the forms for you, and then pay for additional advice beyond that to look up case citations for you.
Just remember, as with any collection case, assuming you waited till this reached the collection division, you must appease the collection officer. Make sure you get an agreement (verbal is o.k.) to stop collection action during the time you are preparing your relief request. Once prepared and given to the collection employee of the IRS, make sure they agree to stop collection action during the process. If the IRS employee refuses the request, they will want your financial statement information, forms 433A and if necessary 433B and the required backup. You can do this if you want, or complain the group manager that they should wait. Mention you will be seeking the opinion of the Taxpayer Advocate and they may back off. If not ask them for the phone number of the local office, or look it up, and tell them that the collection division refuses to hold off collections while the IRS looks into your valid claim of innocent spouse. Remember to prove hardship, and let them know that the collection person wanted financial statements and backup. You need to be truthful with any group managers and the Taxpayer Advocate’s office about the collection officer’s position as well as yours. If you make the argument one sided and don’t give equal weight to the collection persons side of the story, your credibility will be weakened. On the other hand, if you do give equal weight, then you will be seen as credible, and may sometimes be believed over the collection person. This has happened to me many times. In my early years I felt like I was unfairly overruled by some higher up IRS groups. Then as I got more experienced and gave equal weight to the IRS employee’s arguments, I was treated a lot more fairly. So state your disagreement, your feelings etc. as if you were talking to an impartial mediator. The IRS is not your enemy!
Use Form 8857 Request for Innocent Spouse Relief to apply. Also complete Form 12510 Questionnaire for requesting spouse. The form is filed with the revenue officer assigned to your case, or appeals officer if you are in an appeal. Most people don’t address this issue until it hits collections, but if you are really serious, and you see that this liability is coming from an audit, and you get a 90 day notice of deficiency, then you could also file a tax court petition within the 90 days to preserve your rights. This way if you lose, you can go to tax court. You will need to hire someone to represent you though. Anyway, if you waited till a collection officer contacted you, they will normally back off while you have a chance to file and resolve this claim. If not, you could file a CDP appeal. If an abuse situation, put on the top of the form 8857 “Potential Domestic Abuse” and then explain the abuse in a separate attached statement.
Various Correspondence You Will Get From The IRS…
- A letter acknowledging receipt of the innocent spouse claim.
- A letter notifying non-requesting spouse of the preliminary decision to grant the relief.
- A questionnaire for the non-requesting spouse.
- Preliminary letter granting the relief.
- Letter notifying requesting spouse of final approval of relief.
- Preliminary letter denying relief and giving your appeal rights.
- Notice advising that requesting spouse is not entitled to relief and right to tax court.
- Letter to taxpayer with a discussion about the relief.
The form and questionnaire are pretty self explanatory once you are clear on what code section you qualify under. After you do your research on the arguments you qualify under, fill out the form to reflect the “picture you are painting” of the situation. As you know, never contact the IRS by phone or by sending in forms, unless you have prepared ‘your picture’ that you are presenting of your information and situation.
It’s O.K. to call the IRS to try to get information while you are getting your information together. You must be willing to hang up if asked questions beyond the initial identifying ones. I do not suggest that you answer any other questions.
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