Questions & Answers

This section answers questions commonly asked by taxpayers about innocent spouse relief.

What is joint and several liability?

Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows. Both taxpayers are jointly and individually responsible for the tax and any interest or penalty due on the joint return even if they later divorce. This is true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. One spouse may be held responsible for all the tax due.

How can I get relief from joint and several liability?

Relief now falls into three categories: "innocent spouse relief," "separation of liability," and "equitable relief." Each of these types of relief have different requirements. They are explained separately below.

What are the rules for innocent spouse relief?

To qualify for innocent spouse relief, you must meet all of the following conditions.

• You must have filed a joint return which has an understatement of tax.
• The understatement of tax must be due to erroneous items of your spouse (or former spouse).
• You must establish that at the time you signed the joint return, you did not know, and had no reason to know, that there was an understatement of tax.
• Taking into account all of the facts and circumstances, it would be unfair to hold you liable for the understatement of tax.
• You must request relief within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998.

What are "erroneous items"?

Erroneous items are any deductions, credits, or bases that are incorrectly stated on the return, and any income that is not reported on the return.

What is an "understatement of tax"?

An understatement of tax is generally the difference between the total amount of tax that should have been shown on your return and the amount of tax that was actually shown on your return. For example, you reported total tax on your 1998 return of $2,500. IRS determined in an audit of your 1998 return that the total tax should be $3,000. You have a $500 understatement of tax.

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

No. There are many situations in which you may owe tax that is related to your spouse, but not be eligible for innocent spouse relief. For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. You are not eligible for innocent spouse relief because you have knowledge of the understatement.

What are the rules for separation of liability?

Under this type of relief, you divide (separate) the understatement of tax (plus interest and penalties) on your joint return between you and your spouse. The understatement of tax allocated to you is generally the amount you are responsible for. To qualify for separation of liability, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857.

• You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. (Under this rule, you are no longer married if you are widowed.)
• You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857.

Why would a request for separation of liability be denied?

Even if you meet the requirements listed earlier, a request for separation of liability will not be granted in the following situations.

• The IRS proves that you and your spouse transferred assets as part of a fraudulent scheme.
• The IRS proves that at the time you signed your joint return, you had actual knowledge of any items giving rise to the deficiency that are allocated to your spouse.
• Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax.

What are the rules for equitable relief?

Equitable relief is only available if you meet all of the following conditions.

• You do not qualify for innocent spouse relief or separation of liability.
• The IRS determines that it is unfair to hold you liable for the understatement of tax taking into account all the facts and circumstances.
• You and your spouse did not transfer assets to one another as a part of a fraudulent scheme.
• Your spouse did not transfer assets to you for the main purpose of avoiding tax or the payment of tax.
• You did not file your return with the intent to commit fraud.
• You did not pay the tax.

Note. Unlike innocent spouse relief or separation of liability, if you qualify for equitable relief, you can get relief from an understatement of tax or an underpayment of tax. (An underpayment of tax is an amount properly shown on the return, but not paid.)

How do state community property laws affect my ability to qualify for relief?

Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Generally, community property laws require you to allocate community income and expenses equally between both spouses. However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability.

How do I request relief?

File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. You only need to file one Form 8857 even if you are requesting relief for more than one year.

If I am denied innocent spouse relief, must I reapply if I believe I might qualify under one of the other two provisions?

No. The IRS automatically will consider whether any of the other provisions would apply.

I only requested equitable relief but the IRS did not grant it. Must I reapply if I believe I might qualify under one of the other two provisions?

Yes. You must affirmatively choose innocent spouse relief or separation of liability in order for the IRS to determine whether or not you qualify for those types of relief.

I applied for innocent spouse relief before the law changed (July 22, 1998). Do I need to reapply?

No. The Service will consider your request under the new law as long as the liability was unpaid as of July 22, 1998. However, if you filed a claim prior to July 22, 1998, and you have not heard from the IRS, contact the IRS office where you sent your claim.

When should I file Form 8857?

If you are requesting innocent spouse relief, separation of liability, or equitable relief, file Form 8857 no later than 2 years after the date on which the IRS first began collection activities against you after July 22, 1998.

Where should I file Form 8857?

Follow the instructions on Form 8857.

I am currently undergoing an examination of my return. How do I request innocent spouse relief?

File Form 8857 with the employee assigned to examine your return.

What if the IRS has given me notice that it will levy my account for the tax liability and I decide to request relief?

All collection activity is suspended from the date the request is received by the Service until the final determination is made.

What is "injured spouse relief"?

Injured spouse relief is different from innocent spouse relief. When a joint return is filed and the refund is used to pay one spouse's past-due child and/or spousal support, a past-due federal debt, or past-due state income tax, the other spouse may be considered an injured spouse. The injured spouse can claim his or her share of the refund using Form 8379, Injured Spouse Claim and Allocation. To be considered an injured spouse, you must have:

• Filed a joint return,
• Received income (such as wages, interest, etc.),
• Made tax payments (such as withholding or estimated tax payments),
• Reported the income and tax payments on the joint return, and
• An overpayment, all or part of which was applied to the past-due amount of the other spouse.