Innocent Spouse: Separating the Marital Tax Liability
Charles P. Rettig
Hochman, Salkin, Rettig, Toscher & Perez, P.C.
September 1, 2012
Married taxpayers may elect to file joint returns with their spouse. Generally, taxpayers filing joint returns are jointly and severally responsible for all liabilities associated with the joint return. As such, each spouse is individually responsible for the accuracy and completeness of the return and payment of the income tax liability as reported on the return as well as any additional tax, penalties, additions to tax, and interest. Thus, under the joint and several liability concept, each spouse is responsible for the entire income tax liability even though all or part of the liability arises from income earned by or a deduction attributable to the other spouse. Because of this joint and several liability, either spouse, including one which had no involvement in the activity generating the taxable income, can be individually liable for the entire tax deficiency.
Code §6015 sets forth various forms of potential relief from joint and several liability, including: (a) Innocent Spouse Relief Relating to all Joint Filers (Traditional), Code §6015(b); (b) Innocent Spouse Relief for Divorced or Legally Separated Taxpayers (the Separate Liability Election), Code §6015(c); and (c) Innocent Spouse Relief for Those Otherwise Deserving (Equitable Relief), Code §6015(f).
If the income tax liability is relieved under Code §6015, related penalties, additions to tax, additional amounts, and interest are relieved. Taxpayers may request relief from joint and several liability on Form 8857, Request for Innocent Spouse Relief, or a similar statement containing the same information signed under penalties of perjury. Upon receipt of Form 8857, the IRS will consider relief under subsections Code §6015(b), (c), and (f). The non-requesting spouse (NRS) must receive notice of, and an opportunity to participate in, any proceeding with respect to an election of relief from joint and several liability under Code §6015.
If a spouse is relieved of a tax liability, the IRS will no longer pursue the innocent spouse for payment of the liability. However, even though an innocent spouse is not personally liable, the innocent spouse's interest in community property, and other property jointly owned with the responsible spouse, may continue to be subject to collection of the liability by the IRS. If under the law of the state in which the spouses reside, the IRS can look to jointly owned property interests to collect a liability of either spouse, a determination that one spouse is entitled to relief under Code §6015 does not affect the ability of the IRS to collect the liability from the jointly held property. In certain circumstances such as where the tax has been assessed and the property is encumbered by the federal tax lien, an otherwise innocent spouse who receives jointly owned property in a marital dissolution or separation agreement may find this property interest remains subject to collection by the IRS despite the fact the former jointly owned property might now be deemed to be separate property as a result of a proper division of property.
Number of Pages in PDF File: 14
Keywords: IRS, TAX, innocent spouse, 6015, internal revenue code, Code, separate liability election, wiksel, Form 8857working papers series
Date posted: March 6, 2013
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