Innocent Spouse Relief- The Program
This month, we will close our discussion on innocent spouse relief. In my first post on the subject, I gave a broad outline and talked about how to sever the joint tax liability between you and your spouse. In the last post, I walked through what qualifies for innocent spouse relief. In this post, we will take a deep dive into the entire program.
In essence, innocent spouse relief is the forgiveness of all, or part of federal tax debt filed by a married couple during a year (the year in question) the couple filed joint tax returns. To file this type of relief, a Form 8857 must be completed. A Form 8857 should be filed as soon as you become aware of tax liability that you believe your spouse or former spouse should solely be responsible for paying. Although there may be exceptions, you generally need to file the Form 8857 within 2 years of the first IRS effort to collect the tax from you that occurs after July 22, 1998. You may be triggered to start the process of completing the Form 8857 if the IRS is reviewing your filings and suggesting an increase in tax liability or if the IRS explicitly sends you a notice.
Now, there is the outstanding question of who exactly qualifies for the innocent spouse relief program. Each case is handled on an individual basis but there are common practices when looking at the qualification for such a program.
- You and your spouse (or former spouse) filed taxes jointly.
- Your spouse (or former spouse) did not report your joint tax returns accurately.
- You did not know the joint tax return being filed was either accidentally or purposefully filed incorrectly AND you can prove it.
If you have one or more of these qualifications, you may have a good case with the IRS for this relief program. The IRS will access your individual case, and based on their findings, will decide to relieve you from all or some liability or determine that you indeed are liable. While the IRS is reviewing your case, you can also review your joint tax findings to present a different amount of financial responsibility.
As stated earlier in this post, there are exceptions to the Form 8857 being filed within 2 years of the first collection attempt made by the IRS. One such exception is that if you want to request relief on the basis of community property laws, the Form 8857 must be filed no later than 6 months before the expiration period of restrictions on assessment (including extensions) against your spouse (or former spouse) for the tax year you are requesting relief. Even within this exception, there are formalities and additional things to consider.
The good news is that even if you do not fall within the parameters of the innocent spouse relief program, all hope is not lost. There are two additional relief programs available for those who are or were married, Separation of Liability Relief and Equitable Relief. Both types of relief also require the submission of a Form 8857 but have different requirements and qualifications to be considered before requesting.
It is understandable that some people may be fearful of their spouse finding out they are requesting an innocent spouse relief review, but just know that by law, the IRS does have to notify the non-requesting spouse. There are zero exceptions to this legal obligation.
Innocent spouse relief can certainly be useful for those who believe they may qualify. A Form 8857 must be filed during the time periods given by the IRS. There are exceptions and these qualifying time periods may vary depending on the grounds in which you have filed a request for this program. Even if you and your spouse are no longer legally married, the IRS is lawfully compelled to contact all parties.
I am Maine’s IRS Problem Solver. My firm helps Maine taxpayers in trouble. If you or someone you know in Southern Maine wants more information on how to resolve your IRS tax problems, please feel free to contact me directly at 207-502-7181 or by filing out my contact form. A Maine tax attorney can help you consider your options.
James D. Wade, Esq.
Law Office of James D. Wade
57 Portland Road, Unit 3
Kennebunk, ME 04043