Innocent Spouse Relief

If you signed a joint tax return with your spouse, you are jointly and severally liable for the taxes, IRS penalties and interest.

This means the IRS can pursue collection of the debt in full from either spouse regardless of which spouse’s income generated the deficiency.

IRS Innocent Spouse Relief

Sometimes a spouse signs a joint tax return without knowledge of the unreported income of her spouse or without knowledge of the legality of certain tax deductions claimed by her spouse.

Relief under these circumstances is called Innocent Spouse Relief.

Other times it is simply unfair or inequitable to hold a signing spouse liable for the joint tax debt.

This form of relief is known as Equitable Relief.

Requirements of Innocent Spouse Relief

The IRS will serve what is known as a Notice of Levy (the “IRS Levy”) on all of the taxpayer’s known financial institutions and employers.

To be eligible for innocent spouse relief you must meet the following conditions:

• You filed a joint return on which there was an understatement of tax due to an erroneous item relating to your spouse.
• You didn’t know, and had no reason to know, about the understatement of tax when you signed the return.
• Looking at all the facts and circumstances, it would be unfair to make you pay the tax.

If you think you qualify for IRS innocent spouse relief or IRS equitable relief, contact us by phone or email for a free consultation and evaluation of your case.

If you meet all these requirements, then you don’t have to pay the portion of tax, IRS penalties and interest that relates to this erroneous item.

If you do not meet the above requirements for Innocent Spouse Relief, you still may qualify for Equitable Relief if it is determined that, after “taking into account all the facts and circumstances, it is inequitable to hold [you] liable for the deficiency in tax.”

This is a very subjective determination and because of that there has been much inconsistency in its application both by IRS officials and Judges.

Applying for Relief

You have to affirmatively request innocent spouse relief or equitable relief. You do so by filing Form 8857 with the IRS.

Caution

You will not be granted innocent spouse relief or equitable relief from your joint tax debt unless your claim is backed up with substantial corroborating evidence and a compelling, written argument as to why relief is appropriate under the facts and circumstances of your case.

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// TAX ATTORNEYS & CPAS

The IRS audited my 2007 and 2008 tax returns and disallowed 100% of my business expenses because the auditor said I didn’t have sufficient records. I hired The Pappas Group and they were able to prove by other means that my deductions were valid and the IRS ended up only disallowing about 15% of my expenses. Had I not hired Pappas I would been assessed taxes, penalties and interest in excess of $100,000. The Pappas group now does all of my accounting work and prepares both my business and personal tax returns.

Susan T.Lakeland, FL

// WHAT PEOPLE ARE SAYING

The IRS audited my 2007 and 2008 tax returns and disallowed 100% of my business expenses because the auditor said I didn’t have sufficient records. I hired The Pappas Group and they were able to prove by other means that my deductions were valid and the IRS ended up only disallowing about 15% of my expenses. Had I not hired Pappas I would been assessed taxes, penalties and interest in excess of $100,000. The Pappas group now does all of my accounting work and prepares both my business and personal tax returns.

Susan T.Lakeland, FL