The IRS Code provides relief to spouses who have filed joint returns together and face a liability simply for that reason. The liability includes the tax and any interest or penalty due on the joint return. The innocent spouse defense enables one spouse to be relieved of liability and responsibility for tax, interest, and penalties resulting from the fraudulent actions or misrepresentations of the other spouse on the joint tax return.
Taxes for tax periods that qualify for relief cannot be collected from the innocent spouse, but the innocent spouse remains jointly and individually responsible for any tax, interest, and penalties for periods that do not qualify for relief. The typical claim for innocent spouse relief arises with a couple undergoing divorce, where the divorce decree states that one spouse is responsible for the payment of federal taxes. While this agreement is valid between the estranged spouses and will be upheld by the court, it does not prevent the IRS from seeking to collect from the spouse who is not obligated to pay under the divorce agreement.
Three different ways for the non-obligated spouse to escape liability for the tax, penalty, and interest arising from filing a joint tax return are:
In addition, tax relief is available to an “injured spouse.” When spouses file a joint return and the refund due thereon is applied by the IRS to pay one spouse’s delinquent payments for child or spousal support or a delinquent state or federal tax debt, the other spouse who is not obligated to make these payments may be considered an injured spouse. The injured spouse can claim his or her share of the refund, provided certain requirements are met.
Competent tax representation involves identifying which relief is available to a spouse and determining when to seek relief under more than one category.