I'm Darrin Mish. For 32 years I've practiced federal tax litigation \u2014 routine audits, Tax Court cases, and everything in between. If you're facing an IRS issue, here's what you need to know first.<\/p>\n
As most married couples file their tax returns jointly, there are bound to be a number of those who run off once they get into tax trouble and leave their spouses with the burden of tax liability. \u00a0Once joint tax returns are made, both spouses are jointly and severably liable for 100% of the taxes. \u00a0In cases where one spouse runs off, the innocent spouse must prove to the IRS that he or she (usually it\u2019s \u2018she\u2019) is innocent and must do so within a specific time frame. \u00a0Then only can he or she claim for innocent spouse relief<\/a>.
\nThere are certain conditions the IRS considers in deciding if you can be classified as an innocent spouse. \u00a0These conditions must be present within 2 years from the time the IRS begins collecting the tax debt.
\n\u2022Marital status \u00a0 \u00a0\u2022 Economic hardship\u2022 Knowledge about nonpayment of taxes\u2022 Subsequent compliance with income tax laws\u2022 Significant economic benefit\u2022 Abuse of requesting spouse\u2022 Poor health\u2022 Non-requesting spouse\u2019s legal obligation to pay the outstanding liability
\nThere have been several cases where the innocent spouses have brought their cases to the tax court for leniency with regards to the timing rule of 2 years. \u00a0Many of these cases involve thieving spouses and even spousal abuse. \u00a0And generally the tax court has acceded to such petitions. \u00a0But the IRS would appeal the cases in the appellate court and usually wins the case.
\nSome Senators have written to the IRS on this matter. \u00a0Democrat Senators Max Baucus (MT), Sherrod Brown (OH) and Tom Harkin (IA) wrote a letter recently that called for a more realistic deadline for innocent spouse relief. \u00a0Likewise, many members of the House have also thrown their support behind a call to abolish the 2 year time bar altogether.
\nIn actual fact, the tax code itself does not set the 2 year time limit for equitable relief. \u00a0Bearing in mind the IRS statute of limitations gives the agency 10 years to collect your taxes, the innocent spouse relief should also be accorded the same time frame to be given.<\/a> \u00a0Restricting innocent spouse claims to the first 2 years out of the 10 years seems contrary to the purpose of the innocent spouse statute.
\nIn response to the letter and support for a review of the time bar, the IRS has finally relented. \u00a0In a letter to lawmakers dated April 29, IRS Commissioner Doug Shulman promised to review the 2 year requirement as part of its \u2018Fresh Start\u2019 program for taxpayers who cannot afford to pay their taxes.<\/p>\n