Innocent Spouse Rule
If you sign a joint return, the IRS may be able to collect any tax relating to that return from you � even if your spouse was the one who reported incorrectly. There are three ways to get out of paying your spouse's tax. The one described on this page is the innocent spouse rule.
Requirements for Relief
If you meet all these requirements, then you don't have to pay the portion of tax that relates to this erroneous item.
Available while still married. Innocent spouse relief may be available even if you're still married to, and living with, the spouse who should have reported additional tax. If you have assets of your own and want to protect them from collection by the IRS, these rules determine whether you can be held liable.
Erroneous item. Innocent spouse relief applies only to tax liability that arises from an "erroneous item." That means you can't use this provision for relief if you sign a correct return and your spouse simply fails to pay the amount shown on the tax return. If your return was correct and your spouse didn't pay, see Equitable Relief.
Lack of knowledge.
This requirement is one of the biggest problems in obtaining innocent
spouse relief. You don�t get relief if you knew the return was incorrect
� or even if the court thinks you should have known. Some court
decisions indicate that you can't satisfy this condition unless you actually
examine the return and ask questions about anything that doesn't seem right
� an unrealistic expectation in many marriages. Sometimes the decisions
seem to punish a spouse for being well educated, suggesting that anyone with
a good academic background should have identified the problems in the
return. This part of the rule is a major source of unfairness, but it
remains part of the law. A more favorable "lack of knowledge"
requirement applies under the Separate
Equitable considerations. This is a provision of prior law that should have been fixed in 1998, but wasn't. The rule is that you're eligible for relief only if "taking into account all the facts and circumstances, it is inequitable to hold [you] liable for the deficiency in tax." The problem with this rule is that the courts sometimes have a strange idea of what is inequitable. Or perhaps more accurately, different judges have different ideas on this count. For example, if the judge feels that you had a high standard of living while your spouse was cheating on taxes, you could be stuck paying the tax bill even though you didn't know about the cheating and had no reason to know. The judge may think you received a benefit from the cheating in the form of a high lifestyle, so you should pay the tax � as if you should have lived more modestly on the off chance it turned out your spouse was a tax cheat! Our hope is that the courts will interpret this provision more favorably in the future, in light of Congressional intent to provide more generous relief. Only time will tell.
Applying for Relief
Effect of Relief
by Kaye Thomas