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New Rule for Innocent Spouse Relief
August 5, 2011
First, let me apologize for pushing this blog to the side these past few months. Client work has kept me more than busy, but that is no excuse. I have decided to re-dedicate my efforts toward maintaining a blog with topics that on the surface may seem dry and boring, but are incredibly relevant to many taxpayers. Today’s topic briefly discusses the changes made to Internal Revenue Code (“IRC”) Section 6015, commonly known as Innocent Spouse Relief. Effective July 25th, 2011, the IRS abandoned its two-year deadline for those taxpayers requesting relief from joint and several liability under IRC Section 6015(f). If you are unfamiliar with the concept of joint and several liability, here is a brief example that best illustrates the concept: A and B are jointly and severally liable to C for $10,000. C may pursue collection action against both A and B for $10,000 each, but may only collect a total of $10,000. The IRS’s collection of a tax liability utilizing joint and several liability plays out mostly in situations where married taxpayers separate. Although the taxpayer’s split, the liability is not and the IRS has the ability to pursue each individual taxpayer for the full liability (again, they can only collect once). Innocent Spouse Relief is an individual taxpayer’s request for relief from jointly and several liability arising from a jointly filed return. The remedy requested is to re-assess liability for the amount owed, if any, in their individual capacity. The majority of taxpayers requesting Innocent Spouse Relief are either divorced or legally separated, not every taxpayer who deserves relief falls into one of those categories. 6015(f) is known as equitable innocent spouse relief because it is a catch-all for those taxpayers not eligible to request relief under the other provisions of Section 6015. Specifically, 6015(f) is used most often by taxpayers still married and not considered separated from their spouses. Thus, while the IRS has made significant changes to Innocent Spouse Relief, the abandoning of the two-year deadline for requesting relief from joint and several liability applies only to those requesting it under 6015(f). The other sections, most notably 6015(b) and (c), are unaffected. For more information on the changes, including an FAQ provided by the IRS, please click here.