Tax Relief for Innocent Spouses – You Must Act Swiftly to File Your Claim with the IRS

In recent tax relief news, the Seventh Circuit Court of Appeals ruled that the IRS can continue to apply the two-year deadline for taxpayers looking to file for “innocent spouse” relief. Basically, this treasury ruling upholds that taxpayers claiming innocent spouse tax relief must make their claims within 2 years of the IRS’s commencement of collection action.

What is meant by an “innocent spouse”?

Answer: When you and your spouse file a joint tax return, both of you are therefore “jointly and severally” liable for any taxes due. Many married taxpayers do this because of certain benefits this filing status allows. If you did so, you may be held responsible for monies due, even if your spouse earned all of the income. And this is true even if a divorce decree states that your spouse will be responsible for any amounts due on previously filed joint returns.

However, if you qualify for Innocent Spouse Relief, you may not have to pay the tax, interest, and penalties related to your spouse (or former spouse).

For example, if it is later shown that one spouse had unreported income, the other spouse may try to escape civil and/or criminal liability for the tax on that unreported income under the “innocent spouse” rule. To claim this protection, the innocent spouse must neither have known about the understated income (or other tax) nor could have reasonably known about it.

The “innocent” spouse not only avoids tax liability but also provides a safe harbor for the family assets.

How does this affect taxpayers?

Fellow tax blogger, Paul L. Caron (Tax Prof) points out that the previous court ruling followed the statute in not imposing a deadline for ‘innocent spouse’ filing. However, this new court decision puts in place a two year deadline (from commencement of the IRS’s collection) for claiming for innocent spouse relief. This shows the IRS’s push for a deadline for this tax relief option.

Judge Richard A. Posner writes, “The Tax Court’s basic thought seems to have been that since some statutes (in this case, some provisions of a statute) prescribe deadlines, whenever a statute (or provision) fails to prescribe a deadline, there is none. That is not how statutes that omit a statute of limitations are usually interpreted. Courts ‘borrow’ a statute of limitations from some other statute in order to avoid the absurdity of allowing suits to be filed centuries after the claim on which the suit was based arose.”

To read more about this ruling, read the full article or for thoughts and views on the ruling, check out the Tax Prof’s blog.

This reserved ruling shows the IRS’s persistance and strictness in regulating collection of taxes, back taxes and delinquent tax returns. As the most fierce collection agency on the planet, the IRS is serious in its pursuit of delinquent tax returns and taxpayers’ tax debts. If you are a taxpayer who has back taxes, interest and penalties over your tax problems, you need the help of an expert tax attorney or a Certified Tax Resolution Specialist. If you’ve decided to seek the tax relief you need, give yourself a peace of mind by knowing your tax problem, no matter how serious, is taken care of in an efficient and professional manner. If you feel the innocent spouse tax relief could be a viable option for you, contact our expert team of tax attorneys and specialists or read more on our innocent spouse page.

Tax Resolution Services, Co. is dedicated to providing affordable solutions to businesses and individuals alike who find themselves in trouble with the IRS. For more information or to receive a free innocent spouse tax relief consultation, visit www.TaxResolution.com or call (888) 699-7630.

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