Seeking Relief From the IRS For a Spouse's Bad Tax Filing, Part II

On behalf of Brian Coggins of Coggins Law, P.C. posted in Tax Delinquency on Friday, October 9, 2015.

In our last post, we began speaking on the issue of seeking relief from the IRS for a spouse's tax misdeeds. We've already spoken about innocent spouse relief. Another possible means of relief is separation of liability, which involves allocating to a taxpayer his or her share of unpaid liabilities and penalties stemming from an understatements of tax.

Separation of liability is available in cases where a taxpayer is no longer married to, or is legally separated from, the spouse with whom he or she filed a joint return. It is also available in cases where the taxpayer was not a member of the same household as the spouse with whom the joint return was filed. This form of relief is not available in cases where spouses fraudulently transferred assets to one another, had actual knowledge of any erroneous items leading to a tax deficiency for one's spouse, or where one spouse transferred property to the other to avoid tax liability.

A third possibility is equitable relief, which may be available in cases where a taxpayer does not qualify for either innocent spouse relief or separation of liability. Equitable relief allows a taxpayer to obtain relief for liability and penalties stemming from either an understatement of tax or an underpayment of tax. Various conditions must be met in order to qualify for equitable relief.

A taxpayer who believes his or her spouse may be filing taxes incorrectly or fraudulently can, of course, protect himself or herself by filing taxes separately. In cases where the damage is already done, though, it may be necessary to seek some form of relief. Working with an experienced tax law attorney can help one navigate the process smoothly and ensure that one's rights are protected.