Frequently Asked Questions

Innocent Spouse Relief FAQ
How do I file for innocent spouse relief?
What are the requirements to qualify for Innocent Spouse Relief?
What are Erroneous Items?
How Does the IRS define Actual Knowledge and Reason to Know?
What Are Some Indications of Unfairness for Innocent Spouse Relief?
How can I get relief from joint and several liability?
Is it possible for both spouses to request relief? And is relief possible for both?
Does the spouse that is not requesting relief eligible or have rights to appeal?
Will one spouse be notified if the other files a claim for innocent spouse relief?
What is an understatement of tax?
Will I qualify for innocent spouse relief in any situation where there is an understatement of tax?
How do I request Innocent Spouse Relief?
If I already qualified for an offer in compromise, can I still qualify for Innocent Spouse Relief?
If I was denied innocent spouse relief, should I reapply if I think I might qualify under equitable relief or separation of liability?
IRS Innocent Spouse Relief Form 8857 Form FAQ
Should I include a letter when filing Form 8857?
When should I file Form 8857?
If I filed form 8857 and only requested innocent spouse relief, will I be considered for the other types of relief as well?
Will Filing form 8857 cover multiple years of Innocent Spouse Claims?

Relief By Separation of Liability FAQ
What are the rules for Separation of Liability?
How do I qualify for separation of liability?
Why would a request for separate liability be denied?

Equitable Relief FAQ
What are the rules for Equitable Relief?
What Factors are considered in determining whether or not to grant equitable relief?

Other related items FAQ
What is injured spouse relief?
How do I request Injured Spouse Relief?
Can I receive a refund for any taxes paid if the relief is granted?(Relates to Innocent Spouse Relief, Equitable Relief, and Relief by separation of liability)

Innocent Spouse Relief FAQ

What are Erroneous Items?

1) Unreported income - This is any gross income item that wasn't reported by your spouse or ex-spouse.
2) Incorrect deduction, credit, or basis. This is an illegal or incorrect deduction or credit that was put on your spouse's return or submitted by your spouse or ex-spouse.

Below are some examples of Erroneous Items:

1. Your spouse or former spouse decided to deduct 20,000 in advertising costs, but actually never did the advertising.
2. Your spouse deducted an expense or cost that is not deductible according to the IRS. Such as your spouse claiming speeding tickets as business travel expenses. These fines are not tax deductible
3. Your spouse deducted 5,000 in Internet access fees when actually the 5,000 was for a vacation trip.

How Does the IRS define Actual Knowledge and Reason to Know?

Actual knowledge is if you actually knew about an erroneous item that belongs to your spouse (or former spouse). You and your spouse (or former spouse) remain jointly liable for that part of the understatement.

Reason to know is if you had any reason to know about an erroneous item that belongs to your spouse (or former spouse); the relief discussed here does not apply to any part of the understatement of tax due to that item. You and your spouse (or former spouse) remain jointly liable for that part of the understatement.

The IRS will decide as to whether you had actual knowledge or reason to know by looking at all facts and the circumstances around these facts. Sometimes the IRS may only grant you Partial Innocent Spouse Relief if you only knew about some incorrect or erroneous tax items when the return was filed.

What Are Some Indications of Unfairness for Innocent Spouse Relief?
Facts and circumstances will be reviewed by the IRS to determine as to whether you are responsible.

First, for example, the IRS considered whether you received a Significant Benefit from the erroneous Item. A Significant Benefit can be defined as "any benefit in excess of normal support -- like a transfer of rights to property even transfers several years after the tax return was submitted or your Spouse gave you a lot of money from his gambling winnings that were not reported (shouldn't you be suspicious if you spouse all of sudden gave you more money than the norm?).

Second, other factors and facts that the IRS will consider is whether your spouse left you, divorced you, and whether you received a benefit from the erroneous claim.

How can I get relief from joint and several liability?

Relief for joint and several liability now falls into three different categories: Innocent Spouse Relief; Separation of Liability; and Equitable Relief. Click the links to get the detailed requirements for each type of relief.

Is it possible for both spouses to request relief? And is relief possible for both?

Yes and Yes.

Does the spouse that is not requesting relief eligible or have rights to appeal?

The spouse that is not requesting relief can request an appeal regarding the preliminary determination on partial or full relief when the letter is released April 1, 2003 or later. Please contact us by signing up for a consultation for details.

Will one spouse be notified if the other files a claim for innocent spouse relief?

Yes. The IRS will notify the spouse that is not requesting relief in case they want to become involved. Moreover, he or she will also be informed regarding any determination in case they want to appeal.

What is an understatement of tax?

An understatement of tax is usually the discrepancy or difference as to what you reported on your return as to what was should have been reported as determined by the IRS.

Will I qualify for innocent spouse relief in any situation where there is an understatement of tax?

If you knew or had reason to know of an understatement or erroneous item on your tax return then you will not qualify for innocent spouse relief.

If I already qualified for an offer in compromise, can I still qualify for Innocent Spouse Relief?

No. We cannot consider your claim for any year in which an Offer in Compromise was accepted. Acceptance of an Offer in Compromise conclusively closes the tax year(s) compromised from any redetermination of the tax liability.

If I was denied innocent spouse relief, should I reapply if I think I might qualify under equitable relief or separation of liability?

No your request will not be considered by the IRS. When you file the innocent spouse relief form (IRS Form 8857) you should request all the times of relief that you think you may qualify for. Even if you requested just innocent spouse relief, the IRS will also determine if you qualify for equitable relief or relief by separation of liability. Sometimes there may be other options for settling your debt with the IRS if you did not qualify. Fill out the form here to get a free consultation.

IRS Innocent Spouse Relief Form 8857 FAQ
Should I include a letter when filing Form 8857?

You may include a letter and any other information you would like IRS to consider. A letter may help clarify your situation and help in speeding up the process of filing for innocent spouse relief. If including a letter it is good to give specific examples of how you meet the specific criteria needed to meet the requirements of qualifying for innocent spouse relief.


When should I file Form 8857?

Typically Form 8857 should be filed within two years of the first collection attempt against you. In July of 2011 the IRS revised it's stance on the 2 year rule and said they will no longer require individuals to file within the two year period. The two year rule was originally put into place because the IRS thought that evidence older than 2 years would likely be lost, but this is no longer the case. It is also highly advised that you do file for innocent spouse relief as soon as you think that there is a tax liability that has been created that you feel your spouse or former spouse is should be responsible for. A few signs that this may exist is if you receive a notice from the IRS that they are increasing your tax amount owed for reasons that you are unaware of or if the IRS is looking into your tax return for the purpose of proposing an increase to your tax liability for reasons that you are unaware of.

If I filed form 8857 and only requested innocent spouse relief, will I be considered for the other types of relief as well?

When filing form 8857 with the IRS, you should request all types of relief you think you may qualify for. If you don't, the IRS will normally still consider you for these types of relief as well. It is more likely for the IRS to accept your request if everything is filled out properly. If you need assistance filling out the form and determining if you would qualify, you can request a free consultation here.

Will Filing form 8857 cover multiple years of Innocent Spouse Claims?

Yes, it will cover multiple years. There is no reason to file more than one form 8857 with the IRS.

Relief By Separation of Liability FAQ

What are the rules for Separation of Liability?

Under this type of relief, you are dividing the liability for an understatement (including interest and Penalties) between you and your spouse. The amount is determined by looking at the proportion of your income and deductions related to the total income and deductions itemized. The understatement of tax allocated to you is generally the amount of income and deductions attributable to your earnings and assets.

How Do I Qualify for Separation of Liability?

To qualify for Separation of Liability you need to show that you are no longer married, separated, or widowed. Moreover, you must show that you were not part of the same household at anytime for the 12 months the joint returns applies too.

Why would a request for separation of liability be denied?

You and your spouse or former spouse transferred assets to avoid payment of tax or you the IRS can prove you know of the understatement when you jointly filed and signed.

Equitable Relief FAQ

What are the rules for Equitable Relief?

Equitable relief is only available if certain conditions are met. Those conditions are -- first, you do not qualify for innocent spouse relief or separation of liability election. Second, the IRS determines it unreasonable or unfair to hold you accountable for any understatement of tax when all facts are considered. More specific details can be found here on criteria in order to qualify.

What Factors are considered in determining whether or not to grant equitable relief?

-Current Marriage Status
-Any abuse experienced during marriage
-Whether spouse knew of understatement when tax was filed or it was deemed that a reasonable person would know
-Financial hardship that is causing you not to meet your basic living needs of food, shelter, and clothing.
-Divorce agreement that legal binds spouse to tax liabilities
-Who is truly responsible for the tax understatement
-If any significant benefited was received
-The mental or physical status of the spouse when the joint returned was signed


How do I request Innocent Spouse Relief?

File Form 8857, Request for Innocent Spouse Relief. It is best to sign up for a free consultation so we can assist as the procedures can get very complicated.

Other related items FAQ

What is injured spouse relief?

An Injured spouse can get tax relief when the a tax refund is withheld due to debts or other obligations to the IRS of the other spouse. To be considered an injured spouse, you must have:
1) Filed a joint return
2) Received income (such as wages, interest, etc.)
3) Made payments to a state and/or federal tax body.
4) Reported the income and tax payments on the joint return
5) Had an overpayment, all or part of which was applied to the past due amount of the other spouse.

How do I request injured spouse relief?

To request injured spouse relief, you must file form 8379 with the IRS. To get assistance you can fill out a request for a free consultation.

Can I receive a refund for any taxes paid if the relief is granted?

It depends upon the provision under which relief is granted.

a) If innocent spouse relief is granted under section 6015(b), refunds are allowable for amounts paid on or after July 22, 1998.

b) If separation of liability is granted under section 6015(c), no refunds are allowable.

c) If equitable relief is granted under section 6015(f), refunds may be allowed depending on whether it is for an understatement or an underpayment case. The requesting spouse must establish that he or she provided the funds used to make the payment for which he or she seeks a refund.

Understatements - Refunds are allowed for installment agreement payments made after the request for relief is made. 

Underpayments - Refunds are allowed for payments made after 7-22-98 unless the payments were made jointly with the requesting spouse, or payments were made with the return or payments were made by the non-requesting spouse.
Note: all refunds are subject to Internal Revenue Code section 6511. This code section only allows refunds for payments made within 2 years after the tax was paid or 3 years after the return was filed whichever is later.

 

 

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Do you qualify for Innocent Spouse Relief?

This site has all the information you need to understand what is required in filing for innocent spouse relief. Many times this information can be difficult to understand and we can help connect you with a tax expert in order to make sure you get the relief you need. Even if you do not qualify for innocent spouse tax relief, our tax experts have a proven record of settling tax debt for a fraction of what is actually owed.

If you need assistance filing for Innocent Spouse, or would like a free consultation to find out if you would qualify or to find our other options, please fill out the form for a free consultation.

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