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An Overview of Innocent Spouse Relief

January 10, 2020
Weisberg Kainen Mark, PL

When the IRS begins pursuing unpaid taxes and imposes penalties on an individual or business, it will not let up easily. There are, however, exceptions filers may use to avoid paying back taxes, interest, and penalties, and one of those ways is by applying for Innocent Spouse Relief. You may be eligible for this form of tax relief if you and your spouse (or ex-spouse) filed a joint tax return. 

Four-Part Test

To be eligible for Innocent Spouse Relief, there are four prongs you must be able to satisfy each of the following:

  1. Due to your spouse’s actions, you filed a joint tax return that does not fully state the amount of tax due because of an erroneous filing. Examples of an erroneous filing include unreported income, underreported income, or improper deductions. 
  2. At the time of filing, you did not know that it contained errors.
  3. It is determined, after all facts and circumstances have been reviewed, that holding you personally liable for back taxes, interest, and penalties owed would be unfair. 
  4. There has been no attempt by you or your spouse to transfer property between the two of you for any fraudulent purpose. 

How to Apply for Innocent Spouse Relief

To start, you will need to fill out and sign Form 8857 – Request for Innocent Spouse Relief. After this form has been completed and sent to the IRS, your (current or former) spouse will be notified and have the ability to respond to the accusation. If it is found that you did not have knowledge of the erroneous filing at the time, then you will usually be granted the relief. If it is found that a reasonable person would have known about the errors, then you will not be granted the relief. Partial relief is also possible if you can show that you did not know about a significant portion of unreported income. 

Example of Innocent Spouse Relief

Suppose your spouse completes freelance graphic design projects in her spare time. You know this fact about her, but you were not aware that she actually worked nearly 40 hours a week at this, instead of her claiming that she only worked 10-15 hours per week. Your job necessitates constant travel, and you are not home a full quarter of the time, so you were unaware that she greatly underreported her income as a freelancer when it came time to file a joint return. Because of these facts, you have a good chance of acquiring Innocent Spouse Relief from the IRS. 

Conclusion

As straightforward as Innocent Spouse Relief may sound, there are many complexities involved. The IRS does not let people off easily when it comes to tax returns that result in understated tax liabilities. If you are dealing with any type of dispute with the IRS, call Weisberg, Kainen, Mark at 305-374-5544. 

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Weisberg Kainen Mark, PL

As experienced trial lawyers with a passion for justice, our firm provides clients with compelling advocacy, attorney availability, and creative solutions to your tax or criminal law matters.

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