IRS Innocent Spouses
So your spouse is responsible for the taxes and you want out.
Well the IRS wants to know why you signed the return in the first place! With women’s rights increasing, the IRS loves to deny the innocence of a spouse, saying that you should know better.Yes, men can be innocent spouses, too.
Be prepared to answer these questions: Why didn’t you read the return when you signed it? Why did you think your non-filing, non-tax paying husband was going to pay the taxes on the return this time? That tends to be the main issue to resolve.
Also, each spouse is separately liable for the whole thing. I had a case where the husband was responsible for 95% of the tax liability, then became ill and was out of work. His wife divorced him for abuse. I filed an offer in compromise for him and got him out of most of the taxes. The IRS went after the wife for the balance. We filed an innocent spouse claim and lost. Her attorney, who did not practice IRS representation, was good at getting the husband to sign the divorce decree stating he would be liable for the full amount of tax. The IRS won’t abide by state law in these matters. The divorce degree had no effect against the IRS.
In attempting to relieve the wife from the taxes, we attempted to prove that due to her medical state, education level, and the advice of the innocent spouse attorney, she just quickly signed the return along with other papers, not even looking at the tax balance! She figured, why bother since she wasn’t going to pay it anyway. She just wanted to get the divorce over with to stop the abuse from her husband.
I tried to show that she signed under duress. The IRS still insisted that she should have understood her responsibility to pay the taxes when she signs a return.
Community property states may be tougher on this issue. This case went to the Taxpayer Advocate and we finally won.
My other cases were successful because I was able to show that the innocent spouse had reason to believe that the husband was going to pay the tax as he always did in the past. You must also show why you didn’t elect to file a separate return. Be prepared to have the non-requesting spouse answer an IRS letter asking his side of the story, so you better make nice if you want to win your claim.
Your ex is allowed to be a witness against you, even in tax court! 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 you’re 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.
Various Correspondence We/You Will Get From The IRS, During An Innocent Spouse Case:
- 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.
Let’s Look At The Code 6015…
There are three sources of relief if you signed a joint return. A) 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 nor 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 to 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.
B) 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. C) Code 6015(f) – 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 relief 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.
You should also check out form 8379 on injured spouse relief, if that is your case.
For more help, contact me.
- If you are considering hiring us, call Joe Mastriano, CPA 713-774-4467.
- Think your IRS matter is handled? Think again!
- For your analysis,
These are common terms and our thoughts about them used us in our business.
husband’s name – Am I liable for taxes under my husband’s name?
sister’s taxes – can my account get levied for my sister’s taxes?
innocent spouse – relief, applying for. Joint liability relief.
injured spouse – form or rules. Share of the overpayment.
cp 3219n – we didnt receive your tax return. We have calculated your tax, penalty and interest based on wages and income.
cp 3219b – the statutory notice of deficiency intent to assess a tax deficiency and informs you of your right to petition.
tax credit for adoption – of kids from England, Middle East, China, Russia, Europe.
tax exemption – for blind, elderly.
refundable child tax credit – support to prove dependents.
child support wage garnishment- IRS must allow child support court ordered payments when levying on your wages.
claiming injured spouse- spouse who’s money is taken by IRS sending to other spouse so you are injured no innocent.
father’s taxes – Can IRS levy on my father’s taxes?
child and dependent care credit- must qualify with job and prove payments for child care deduction credit.
brother’s taxes- You ask “do I have to pay my brother’s taxes?”
child tax credit- credit for child care (not school) when working.
family trusts – Audit of family trust and family trust tax returns.
divorce tax – Do I pay my ex’s taxes in a divorce?
cp 2531 – your tax return does not match the information we have on file.
cp 2566 – we didn’t receive your tax return. We have calculated your tax, penalty and interest based on wages and other income reported by employers.
filing status – How do I change my filing status?
cp 2000 – notice of proposed adjustment for underpayment/overpayment.
wife’s name – missing or SS # not on return.
tax credit for children – Grand kids, sister’s kids, in laws, cousins.
irs agent – disallowed my dependent kids.
cp 2566r – we are holding your refund until we receive one or more unfiled tax returns.
cp 3219a – we received information that is different from what you reported, notice explains how the amount was calculated and how you can challenge it in U.S. tax court.