IRS Revises Procedures for Innocent Spouse Relief

On January 5, the Internal Revenue Service announced new proposed guidelines regarding the innocent spouse relief laws. This new procedure will take into consideration abuse and financial control by the non-requesting spouse in order to determine whether or not the relief requested should be granted. The proposal revises the threshold requirements for making a request for equitable relief, and also revises the factors the IRS uses when evaluating innocent spouse relief requests.

According to IRS Commissioner Douglas Shulman, “The IRS is significantly changing the way we determine innocent spouse relief. These improvements should dramatically enhance our process to make it fairer for victimized taxpayers facing a difficult situation.”

In the IRS notice, the previous procedure for joint filed returns says, “Section 6013(d)(3) provides that married taxpayers who file a joint return under section 6013 will be jointly and severally liable for the income tax arising from that joint return.” The full notice can be found here.

The IRS has stated that during their review of the innocent spouse relief regulations, they realized when a requesting spouse had been abused by the non-requesting spouse, the requesting spouse might not have been able to challenge or question any items on the joint return. They especially would not have been able to question the payment of the taxes reported as due on the joint return. In some cases, the innocent spouse was told that the taxes had been paid, when in reality this was not true. In order to assist the innocent spouse in these situations, the IRS has revised their procedures for determining when a spouse should and should not be blamed for errors on tax returns.

The IRS states that the factors laid out in Revenue Procedure 2003-61 were revised to ensure that requests for relief under Internal Revenue Code Section 6015(f) are granted when the facts and circumstances warrant and, when appropriate, the requests are granted as quickly as possible during the administrative process.

The provisions in the proposed revenue procedure will expand the equitable relief analysis by providing additional considerations for taxpayers seeking relief. The notice states the IRS would apply the provisions of the proposed revenue procedure during their evaluation of claims for equitable relief until the requirements are finalized. However, it also goes the other way. If taxpayers believe they would receive more favorable treatment under the factors provided in previous guidelines, Revenue Procedure 2003-61, the notice states they may request the IRS to apply those factors until the new procedure is finalized.

The IRS wanted to ensure that proper measures were taken to enable the innocent spouse to remain innocent, and not hold them accountable for the mistakes of their spouse when the IRS investigates their claims.