Concerned Spouse and The Internal Revenue Code

On occasion, a divorcing or divorced spouse (“Concerned Spouse”) will express concern about the potential for a tax liability (including interest and penalties) for a joint tax return that was filed during the marriage.

Typically, the Concerned Spouse says that she or he had minimal, if any, involvement in the preparation of the tax return; however, she or he has a concern that there might be a problem with the return if it is audited.

The Internal Revenue Code has several sections that offer protection to a Concerned Spouse.

Section 6015(b). Innocent Spouse Relief.

Section 6015(b) offers relief from liability for a Concerned Spouse who is still married.

For (b) to apply: (1) a joint return has to have been filed for the tax year; (2) on the return there is an understatement of tax attributable to erroneous items of one individual filing the joint return; (3) the other individual (Concerned Spouse) filing the joint return establishes that in signing the return she or he did not know, and had no reason to know, that there was an understatement; (4) taking into account all the facts and circumstances, it is inequitable to hold the other individual (Concerned Spouse) liable for the deficiency in tax for the taxable year attributable to the understatement; and (5) the other individual (Concerned Spouse) elects, on the appropriate IRS form, the benefit of subsection (b) not later than the date which is two years after the date the IRS began collection activities with respect to the individual (Concerned Spouse) making the election.

Under (b), the Concerned Spouse has the burden to establish that she or he did not know and had no reason to know that there was an understatement.

Section 6015(c). Separation of Liability Relief.

Section 6015(c) provides protection for a Concerned Spouse who is no longer married; is legally separated; or has not been a member of the same household with his or her spouse for the 12 months immediately preceding the Concerned Spouse’s election of (c). As with (b), a joint tax return must have been filed for the tax year.

Under (c) the burden is on the IRS to show that the Concerned Spouse knew of the understatement by the other spouse. As with (b), the Concerned Spouse must make the election on the appropriate IRS form not later than the date which is two years after the date the IRS began collection activities with respect to the individual (Concerned Spouse) making the election.

Section 6015(f). Equitable Relief.

Section 6015(f) provides equitable relief if: (1) a joint tax return was filed for the tax year; (2) relief is not available to the Concerned Spouse under either (b) or (c); and (3) taking into account all the facts and circumstances, it is inequitable to hold the Concerned Spouse liable for any unpaid tax or any deficiency (or any portion of either).

After July, 2011, the IRS stopped requiring that the request under (f) be made no later than two years after the date the IRS began collection activities with respect to the individual (Concerned Spouse) making the election.

Revenue Procedure 2013-34, states the current timeline for a Concerned Spouse to request equitable relief under (f).

Revenue Procedure 2013-34, Section 4, .01, (3)(a), provides in part:

“If the requesting spouse is applying for relief from a liability or a portion of a liability that remains unpaid, the request for relief must be made on or before … the date the period of limitation or collection of the income tax liability expires, as provided in section 6502. Generally, that period expires 10 years after the assessment of tax, but it may be extended by other provisions of the Internal Revenue Code.”

As with all things related to the Internal Revenue Code, attention to detail is imperative.

The Family Law attorneys at DeWitt are experienced in providing counsel and advice on all matters relating to a family, including protections provided in the Internal Revenue Code for a Concerned Spouse. Hopefully, you have found this post (and the other posts on the Family Law News Feed) informative and helpful. Please contact the Family Law group if you have questions or need assistance with a family law matter.

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