Taxpayers can get in tax trouble because of their spouses or (ex-spouse’s) financial problems - but the good news is the IRS has guidelines for innocent spouse relief.  And in a recent email, the Chief Counsel’s office has just released additional guidelines on the sharing of information in these types of cases.

CCH (http://tax.cchgroup.com/) reports:

The Chief Counsel’s Office has provided guidance, in an e-mail, regarding the sharing by the IRS, in innocent spouse cases, of information submitted by the requesting spouse concerning that individual’s current financial condition with the non-requesting spouse. According to the e-mail, the IRS cannot share the requesting spouse’s current year separate return. With respect to information from years before the return at issue (which might not necessarily relate to prior returns), that may depend on whether the information pertains to the requesting spouse’s knowledge of an item giving rise to a deficiency or knowledge that the non-requesting spouse would not pay the tax.

Regarding knowledge as to whether the tax was paid, the IRS often uses information from periods before the requesting spouse signed the return to establish knowledge such as the fact that the requesting spouse knew that the non-requesting spouse was having financial difficulties. This could show that it was unreasonable for the requesting spouse to believe that the non-requesting spouse would pay the tax. Therefore, if the requesting spouse provided information that indicated that she was not aware of the non-requesting spouse’s financial problems, the IRS could provide that to the non-requesting spouse, and the non-requesting spouse could provide information to prove that the requesting spouse actually did know of his financial problems.

With respect to knowledge of an item giving rise to a deficiency, the e-mail questioned whether any information from prior years would be relevant to this issue. One example might be if the requesting spouse claimed that she did not know that the non-requesting spouse had previously invested in a tax shelter (and benefits from that tax shelter the IRS reported on the return for the year at issue) and the non-requesting spouse would provide information that the requesting spouse did, in fact, know. Nevertheless, the test would really seem to be what the requesting spouse knew about the benefits reported on the return at issue.

The e-mail also pointed out that the sharing of information submitted by one spouse with the other spouse, as required under Reg. §1.6015-6(a)(1), “works both ways.” Thus, information submitted by the non-requesting spouse may also need to be disclosed, upon request, to the requesting spouse. The e-mail noted that the failure by the IRS to always comply with requests for information by the requesting spouse is an issue that has been raised in the past by the Tax Court.

*If you are in trouble with the IRS, our specialized staff of tax attorneys, CPAs, EAs and tax professionals can help. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 866-IRS-PROBLEMS.

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3. Ten Last Minute Filing Tips from the IRS - Save Time and Money When Filing Your 2008 Tax Returns
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Tags: Innocent Spouse, IRS help, IRS problem solver, irs problems, IRS tax problems, Michael Rozbruch, tax attorney, tax expert, tax help, tax relief, tax resolution, tax resolution expert, tax resolution services, tax settlement, tax shelter

This entry was posted on Monday, April 13th, 2009 at 9:27 am and is filed under Innocent Spouse, Working with the IRS. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.