Innocent Spouse Relief

Find Out if You Qualify for Innocent Spouse Relief from the IRS

The Internal Revenue Service (IRS) holds spouses equally responsible for the contents of their joint tax returns. However, it also acknowledges that joint responsibility is not warranted in all cases. If your spouse (or former spouse) understated your joint tax liability without your knowledge, you may qualify for innocent spouse relief from the IRS.

While it may be possible to secure innocent spouse relief in a wide range of circumstances, specific eligibility criteria apply. As a result, before you file, it is important to ensure that this is an option you have available. It is also important to ensure that this is your best option under the circumstances at hand. Our attorneys can help you make an informed decision about how to deal with the IRS, and then we can handle all necessary filings and communications on your behalf.

Eligibility for Innocent Spouse Relief

So, when can you file for or request innocent spouse relief? As the IRS explains, you may be eligible to file “if your spouse understated taxes due on your joint tax return and you didn’t know about the errors.” To file for innocent spouse relief, you truly need to be innocent. If you were aware that your spouse was underreporting his or her income (or even if you had reason to suspect that your spouse might have been underreporting his or her income), you will need to consult with an attorney about the other options you may have available.

Additionally, innocent spouse relief is only available to individuals who are facing liability for taxes related to their spouse’s income. This specifically includes:

• The spouse’s income from employment; and,
• The spouse’s income from self-employment.

If you are facing liability for any other back taxes (and associated penalties and interest), you will need to consult with an attorney about your other options in this scenario as well. Additionally, even with regard to income taxes, innocent spouse relief may be unavailable due to:

• Negotiating an Offer in Compromise (OIC) or closing agreement with the IRS;
• Participating in a relevant judicial proceeding (i.e., a tax appeal) in which you did not request relief; or,
• Participating in a relevant judicial proceeding in which the court denied the relief requested.

If you are eligible for innocent spouse relief, you must request this relief within two years of receiving a relevant notice from the IRS. This could be either an audit notice or a notice of taxes due. When you schedule a free and confidential consultation at Oberheiden P.C., an attorney at our firm will work with you one-on-one to assess your eligibility; and, if necessary, your attorney will help you assess your eligibility for alternate forms of relief as well.

Put our highly experienced team on your side

Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd

Former DOJ Trial Attorney

Partner

Brian J. Kuester

Former U.S. Attorney

Hon. Kevin McCarthy

55th Speaker, U.S. House of Representatives (ret.)

Government Consultant

Mike Pompeo

Of Counsel

Former U.S. Secretary of State

John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara

Federal Appeals Attorney

Nicholas B. Johnson

Former Prosecutor

Roger Bach

Former Special Agent (DOJ)

Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen

Former Supervisory Special Agent (FBI)

Alternatives to Innocent Spouse Relief (If You Are Not Eligible)

There are several potential alternatives to innocent spouse relief for those who are ineligible to file. However, as each of these alternatives is also only available in certain specific circumstances, making an informed decision about how best to proceed requires the advice of experienced federal tax counsel. Once you get in touch, our federal tax attorneys can assess your eligibility for alternatives including (but not limited to):

Separation of Liability Relief

As the IRS explains, “[i]f your joint tax return understated the amount of taxes due and you are divorced, separated or no longer living with your spouse, you may be able to pay only your share of the understated taxes.” If you are separated or divorced and you are not eligible for full innocent spouse relief, seeking separation of liability relief could be your best option.

With separation of liability relief, the outstanding liability from your pre-divorce or pre-separation joint return (or returns) is divided between you and your former spouse based on your respective incomes and assets. Once the IRS makes this division, “[y]ou become responsible only for your share of the tax bill.” In the right circumstances, this can substantially reduce the amount you owe, and it can provide the opportunity to come current on your obligations to the IRS. This option can also help improve your credit score by reducing the amount of debt reported.

Equitable Relief

The IRS provides equitable relief to current and former spouses in limited circumstances. If you do not qualify for innocent spouse relief, you may qualify for equitable relief, “if it would be unfair to hold you responsible based on all the facts and circumstances.” When deciding whether to provide equitable relief, the IRS considers factors including (but not limited to):

• Current marital status;
• Any risk of economic hardship;
• Whether you knew (or had reason to know) that your spouse was underreporting or underpayment;
• Whether you “significantly benefited” from your spouse’s underreporting or underpayment; and,
• Your physical and mental health condition.

While demonstrating that you deserve equitable relief can be challenging, the IRS maintains this program for a reason—and it awards relief when warranted. Again, our attorneys can help you realistically assess all of your options, and we can help you seek appropriate relief (or other remedies) based on your personal situation.

IRS Penalty Abatement

You may qualify for IRS penalty abatement regardless of your marital status—and regardless of whether your spouse was solely responsible for filing an inaccurate joint return. The IRS offers penalty abatement in three primary circumstances:

• First-Time Penalty Abatement – If this is the first time you are facing IRS penalties, you may qualify for first-time penalty abatement.
• Reasonable Cause – You may also qualify for penalty abatement if you can show “reasonable cause” for your filing or payment error.
• Statutory Exceptions – The IRS recognizes four statutory exceptions to when penalties are warranted.

Here, too, our attorneys can assess your eligibility and help you make an informed decision about which of these options (if any) to pursue if you do not qualify for innocent spouse relief. If you are eligible for penalty abatement, the IRS will abate the interest applied to your penalties as well.

Offer in Compromise (OIC) or Other Federal Tax Relief

If you owe more than you can afford to pay and are not eligible for any of the form of relief discussed above (and you do not have grounds to file an IRS appeal), you still have options available. In this scenario, it is extremely important to pursue one of these options so that you do not fall further behind and face IRS collection. Some examples of these additional alternatives to innocent spouse relief include:

• Offer in Compromise (OIC) – Negotiating an offer in compromise (OIC) with the IRS allows you to settle your tax debt for less than you owe, potentially receiving credit for part of the debt you don’t have to pay.
• Installment Agreement or Payment Plan – Negotiating an installment agreement or payment plan allows you to pay off your full tax debt (if you are not eligible for an OIC) over time.
• Currently Not Collectible (CNC) Status – Seeking currently not collectible (CNC) status allows you to delay payment and pause collection, though additional penalties and interest may continue to accrue.

Just like the other options discussed above, these alternatives are all available in different circumstances—and they all come with different benefits and risks. We can help you make an informed decision about what to do; and, if you need relief, we strongly encourage you to contact us to learn more.

FAQs: Seeking Innocent Spouse Relief from the IRS

Schedule a Free and Confidential Consultation with a Tax Attorney at Oberheiden P.C.

If you would like to know more about seeking innocent spouse relief from the IRS, we encourage you to contact us promptly. Please call 888-680-1745 or send us your contact information online to schedule a free and confidential consultation today.