part25-49

All relief from joint and several liability cases
are priority cases and will receive prompt consideration. TAS cases marked “Expedite”
have the highest priority.

Identify all years shown on
Form 8857 or specified in the requesting spouse’s (RS) correspondence.
All years must be addressed.

If the tax year is not indicated on the form,
the correspondence must specifically address a particular year to be considered.

If the research shows that you could consider
a request for relief for one year not being requested but you disallowed or
non-qualified the claim, advise the RS you could consider the other year.
Use Letter 3657A or
Letter 3658.

If a taxpayer only requests one year on Form 8857 but you could consider another year; build
the year on Form 8857 and then advise RS
via Letter 3659 to advise that there is
another year the Service could consider.

If there is no year indicated on
Form 8857 and a year was not mentioned in correspondence, return
the claim to the taxpayer with the appropriate paragraphs selected for Letter 3658. Explain that
Form 8857 could not be processed since the tax year was omitted.
Circle the received dates in red and remove all internal documents before
the claim is returned to the taxpayer.

All requests for relief from joint and several
liability MUST be established on AIMS using project
code 0014. Follow steps below in paragraphs (2) through (9) upon receipt of
claim. Time should be charged according to the table below

Date stamp Form 8857 when
received.

Determine if the request is processable
(i.e. contains a valid signature, tax period(s) and TINs). If any of these
are missing, circle the received date and return to the taxpayer explaining
why you are returning it using Letter 3658.

If the request is processable, the Area Innocent
Spouse Coordinator (ISC), or other designated responsible person, will promptly
establish the case on AIMS using Source Code 73, for requests filed with Examination,
unless the year is already established on AIMS in another source code.

Update the case to AIMS Project Code 0014 unless
another project code already exists (0001-0099).

Input TC 971 with Action Code (AC) 065 to the
joint account to identify the account as an innocent spouse case as discussed
in IRM 25.15.2.4.2.

The system automatically generates the TC 130
on the NRS.

Examination is required to input and update the
Innocent Spouse Tracking System (ISTS). See IRM 25.15.14
for details.

The function initially receiving the request for
relief has the responsibility of notifying the ISC to establish the case on
the ISTS. Examination must notify the ISC when the RAR is issued and what
the determination is in order for ISTS to be updated.

All IRC 6015 relief
from joint and several liability cases are subject to local streamline review
before Case Processing closes the case. All cases should be clearly marked
on Form 3198 or equivalent Special
handling – Innocent Spouse case. Technical Services (TS) will ensure
the appropriate closing instructions are included for Case Processing for
all open exam cases. TS will issue the Preliminary and Final Determination
letters and suspense for all post assessment claim cases.

The cases will be reviewed and approved by local
review staff. This is explained further in IRM 25.15.10
.

The term local review is used to refer to any
Area function performing the local review of joint and several liability determinations
regardless of whether the duties are performed by TS or by another designated
function.

In every examination of a joint return, the examiner
shall verify the last known mailing address for each spouse and document actions
taken to verify the address. The examiner shall check for a change of address
on IDRS and request each spouse confirm their mailing address at the initial
contact or interview.

If either spouse has a change of mailing address,
the examiner shall update the Master File using the procedures contained in
IRM 4.4.11, AIMS/Processing Handbook, Entity
Changes. Do not change the mailing address of one spouse based solely on information
obtained from the other spouse.

If there is a different address for the secondary
taxpayer, and there is no entity module established on the Master File (MF),
create a dummy entity and enter the correct address. Contact the Area AIMS/ERCS
Analyst for guidance on creating a dummy entity.

The examiner MUST explain
joint and several liability and relief available under
IRC 6015 to both taxpayers or their representative(s).

The examiner may provide the taxpayers or representative(s)
with IRS Publication 971,
Innocent Spouse Relief (And Separation of Liability and Equitable Relief)
, which explains these provisions in detail. If requested, provide
Form 8857, Request for Innocent
Spouse Relief, and the accompanying instructions.

See IRM 25.15.1.6 for
more details on Form 8857. See IRM 25.15.2.2 regarding taxpayer inquiries related to
relief from joint and several liability.

The discussion of joint and several liability
and available relief MUST be documented on the administrative
lead sheet work paper 105–1.2, or initial taxpayer contact sheet 120–1
for revenue agents, or on Form 4700, Examination Workpaper, for tax auditors and tax compliance
officers. If additional work papers are necessary, the administrative lead
sheet or Form 4700 should contain an index
reference to the supporting work papers. Document the case history record,
Form 9984, Examining Officer’s
Activity Record, the following:

When the spouses have different mailing addresses,
the examiner must send all correspondence separately
to each spouse.

Even if the spouses have the same mailing address,
the examiner must send the notices required by law separately
to each spouse along with items listed in IRM 4.10.1.6.8
, Examination of Returns. The examiner must copy the original notice and send the copy to the secondary
taxpayer in a separate envelope addressed solely to the secondary taxpayer.

If one or both of the spouses have not indicated
a new mailing address, all notices/letters must be sent
separately to the last known address.

For notification requirements see
IRM 25.15.1.9.

A NRS is the spouse who did not request relief
from joint and several liability. Contacting the NRS regarding the joint return
does not constitute disclosure to a third party.

The NRS must receive notice of, and an opportunity
to participate in, any proceeding with respect to an innocent spouse election
under IRC 6015.

Do not release one spouse’s personal
information to the other spouse. For example, do not release either spouse’s
new name, home address, telephone number, place of employment, etc., to the
other spouse.

Information with respect to the joint return account
module, such as balance due, may be released. If in doubt as to what may or
may not be disclosed, follow IRM 11.3.2, Disclosures to Persons with a Material Interest, established
guidelines or check with the local disclosure officer.

A copy of the administrative letter ( Letter 3284) notifying the NRS of the request for
relief and inviting participation in the proceedings should be included in
the case file, and Form 9984,
Examining Officer’s Activity Record, should be notated with the
date the letter was sent.

The NRS will also be notified of the preliminary
determination. Letter 3660 should be used
on a post-assessment case. The determination will be included in the Revenue
Agent Report (RAR) on a pre-assessment case.

See Exhibit 25.15.3 and
IRM 25.15.5 for letters to use when contacting the NRS.

The examiner shall consider the facts and circumstances
of the case, apply the innocent spouse law objectively, using the guidelines
provided in IRM 25.15.3 and
IRM 25.15.5 to determine whether any relief from joint and several
liability applies.

The examiner shall consider all
possible relief provisions that might apply even if the RS requests
relief under only one provision.

IRC 6015(e) was amended in December
2006. For claims affected by the amendment the CSED will be suspended for
many IRC 6015(f) only claims. See IRM 25.15.1.8
for a detailed discussion about the suspense of the CSED. In addition, the
Form 8857 was revised in June 2007, If the
RS used an old version of Form 8857 solely
requested relief under IRC 6015(f) and the
amendments do not apply, then follow the procedures in paragraphs 4 through
9 below. If any of the three conditions do not exist, consider relief under
all subsection of IRC 6015 unless further
advised by the RS.

If the RS only requested
IRC 6015(f), equitable relief, and it appears this relief would
not apply, consider relief under IRC 6015(b) or
IRC 6015(c). If it appears that (b) or (c)
relief might apply, contact the RS and suggest that he/she file an affirmative
election for (b) or (c). If the RS does not affirmatively elect (b) or (c),
do not grant any relief under either (b) or (c). Generally relief under (f)
would also not be appropriate because the RS has not met the burden of establishing
that (b) or (c) are not available.

If the RS wants consideration under IRC 6015(b)
or IRC 6015(c), the RS must amend
the original claim and affirmatively elect IRC 6015(b)
or IRC 6015(c). On post-assessment
cases, the collection statute will not have been suspended from the date of
the original claim unless the taxpayer elected (b) or (c).

If the RS wants to amend the
Form 8857 to include an election under IRC
6015(b) or IRC 6015(c) and the
balance due amount is $5,000 or less, oral authorization may be accepted.
Notate on Form 8857 in red ink the additional
relief sought, the date of such request, and initial the change. Document
the work papers appropriately. See IRM 25.15.3.2(5).

If the RS chooses to amend the
Form 8857 to include an affirmative election under
IRC 6015(b) or IRC 6015(c) and
the balance due is greater than $5,000, ask the RS to submit a written request
for specific additional relief consideration, signed under penalties of perjury.
Date stamp the document and staple it to the original
Form 8857.

The instructions in
See IRM 25.15.6.1.2. apply only when adding
additional code sections to the request.
The instructions
do not apply to
adding
additional years
to the request.
See IRM 25.15.6.1.2. for instructions for adding additional years
to the request.

Before reaching a determination, the examiner
must fully develop the facts and analyze the evidence. This will include contacting both spouses.

Form 4549, Income Tax Examination Changes Report, will be prepared in
open examination cases involving income tax adjustments in addition to an
innocent spouse issue.

The examination report will include all examination
issues and an explanation of the determination for the
innocent spouse claim. This will constitute the agreement for the examination
adjustments and the innocent spouse issue if signed.

The report will include only the pre-assessment
years open for examination.

The Form
4549″other information”
block for the RS must
include the following statement, appropriately completed: Mr./Mrs. ___, TIN ___,
requested Innocent Spouse relief under IRC 6015(b),
IRC 6015(c) or IRC
6015(f) for the tax year(s) ending ___.
Relief has been granted/denied. Mr./Mrs. ___is
jointly and severally liable for $___ plus
penalties and interest and individually liable for $___plus penalties and interest. See attached statement. The attached
statement is the separate computation explained in (6) below.

Years not under examination (post-assessment claims) for which an innocent
spouse claim has been filed will require a separate case file and letters
issued by Technical Services (TS).

Prepare separate computations for joint assessment
amounts and individual liabilities when a deficiency is allocated or apportioned
under IRC 6015(b),
IRC 6015(c) or IRC 6015(f). When
partial relief is allowed, the taxpayer remains liable for a portion of the
liability, i.e., the taxpayer had actual knowledge of two out of the three
adjustments made. See the procedures for allocating a deficiency at IRM 25.15.3.7.2.

If the case is considered unagreed, prepare unagreed
write-up Form 886-A, including the innocent
spouse issue, and prepare Letter 950.
This will constitute the 30 day letter for the innocent spouse issue as well.

In an agreed case where relief is being granted
for the entire deficiency, an agreement is not necessary from the RS.

Agreement to income tax adjustments may be secured
on the following forms:

If the case is partially agreed, use established
guidelines for partial agreements.

These cases are subject to local review and should be notated on the
Form 3198 or equivalent when closed to Technical
Services (TS) in Status 21. It is not necessary to seek approval prior to
issuance of an RAR.

In an unagreed case where an
IRC 6015 issue of relief from joint and several liability was raised
during an audit and there are other adjustments, normal unagreed deficiency
procedures should be followed.

The examiner will issue the 30 day letter according
to local procedures.

If no response is received within the 30 days,
forward the case to local review. Local review will then forward the case
to the 90 day section for issuance of the 90 day letter. The 90 day letter
will include an explanation of the innocent spouse issue. This will constitute
notice of the final determination to the RS and NRS as well as the notice
of deficiency.

If a request for an Appeals conference is made
within 30 days:

If the only unagreed issue is the innocent spouse
issue, treat the entire case as unagreed.

One or both spouses may request an Appeals conference in response to
the preliminary determination letter on all partial and full grants of relief.
Only the RS can request an appeal of a denial of relief.

When a request for relief from joint and several
liability is considered during an examination, additional information is required
on forms used in closing a case. The following forms are required in all cases unless otherwise directed by local areas where the case is
being worked:

If the case contains a post-assessment IRC 6015(b), IRC 6015(c) or
IRC 6015(f) claim except for cases noted
in (2) below, a final determination letter must be issued,
even if the case is agreed.

A Waiver of Collection Restriction in Innocent
Spouse and Separation of Liability Cases, Form 870-IS
, has been developed for use in post-assessment
IRC 6015(b), IRC 6015(c), or IRC 6015(f) cases. As noted in
See IRM 25.15.6.4.2.1., Form 870-IS is
not a final determination, but as the RS is agreeing to allow immediate collection,
it is anticipated that very few, if any RS, would petition the Tax Court.
See IRM 25.15.6.4.2.1.

If the taxpayer’s claim for
refund includes IRC 6015 issues, follow
normal claim procedures with the following exceptions:

The reviewer will return a case to the group if
there is an obvious error and relief should have been granted.

The case will also be returned if account problems
have not been resolved. The reviewer should monitor the required return of
cases from the group within 14 days.

The reviewer will take the following actions on
reviewed and approved cases: