IRS Guidelines Help More Innocent Spouses

The Internal Revenue Service recently proposed new guidelines aimed at providing tax relief for more innocent spouses who request equitable relief from their income tax liability. A Forbes article entitled IRS Lowers The Bar For Innocent Spouse Relief, details how the new proposals address the criteria used in making innocent spouse relief determinations in equitable relief cases and adjust the factors used in granting equitable relief.

Since 2003, the Internal Revenue Service has seen equitable relief cases grow significantly. As a result, the program has been reviewed and revised to grant more future innocent spouse relief cases. In the past, innocent spouse relief cases were determined by weighing eight factors equally, placing the burden of proof on the taxpayer and making these complex cases very hard to win.

The following factors were relaxed:

Apply anytime- Taxpayers are no longer required to file an innocent spouse relief application within two years after first action to collect the joint tax liability. Spouses, who were previously denied relief, can now reapply under the new IRS guidelines and within the statute of limitations.
Marital status – In the past, if a couple was still married when the innocent spouse filed for relief, this factor weighed against the filing spouse. New changes show this factor to be neutral.
Significant benefit – The new guidelines take into consideration instances where one spouse has full financial and household control over the other and engages in a lavish lifestyle. This factor is now considered neutral.
Abuse – Mental or physical health factors once ignored are now considered as new guidelines recognize the severity of abuse in its many forms. These can include drug and alcohol abuse as well as physical and mental abuse in cases where an innocent spouse’s restricted access to financial documents make them fearful of retaliation by the controlling spouse.

If a taxpayer is able to prove they meet guidelines for innocent spouse tax relief, they may not be subject to the tax liability caused by their spouse. However, they may have a hard time proving these factors without expert representation.

While more taxpayers will most likely qualify for innocent spouse relief under these new guidelines, they are strongly recommended to consult with a certified tax resolution specialist or tax attorney who understands the complexities of innocent spouse cases and can increase the chances of reaching a positive outcome.

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