My Former Spouse Ran Up a Big Tax Debt, Am I Stuck With It?

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There’s something called Classic Innocent Spouse Relief. Now, I’m not really sure if you’re going to see it called that anywhere else; that’s just what I happen to call it because it’s actually what people think of when they think of innocent spouse relief. There’s a number of elements here, and I’m going to go ahead and take care of those one by one.  Click here to read or watch more IRS Help resources.

The first element is that, this is very simple, that if you’re talking about a personal income tax problem then that’s the only instance where innocent spouse actually applies, you must have filed a joint tax return. So, if you filed a married filing separate return or head of household return or something like that with those filing statuses, then innocent spouse doesn’t apply and you’re out before you could even consider innocent spouse relief.

But the second element is that there must have been an understatement of tax attributable to the erroneous items of the other spouse. Now, what does that mean? It means that there has to be an understatement of tax, meaning there was a minimization of how much tax was owed, and this has to have occurred due to the erroneous issues of the other spouse. It can’t be your problem, in other words; you can’t be the guilty spouse and complain that, “Hey! I should get relief because I made these mistakes.” No, it doesn’t work like that at all.

The third element is that the potential innocent spouse cannot have known about those erroneous items of the other spouse at the time the return was signed. If they did know of those erroneous items at the time that the return was signed then, of course, that only makes sense that you’re not eligible for innocent spouse. You knew, you shouldn’t have signed, therefore, you’re not going to qualify for at least classic innocent spouse relief.

The fourth element is that it has to be inequitable or unfair for the IRS to hold the innocent spouse liable. What does that mean? It actually means something that it doesn’t quite sound like. It means that it would be unfair to the extent that you would not be able to pay, really, is what it means. In my opinion, that’s what the IRS is looking for; that it would be unfair for you to be victimized by the actions of, what I like to call, the guilty spouse.

The fifth and last element for classic innocent spouse is that the application for innocent spouse relief must be filed within two years of the first collection attempt by the IRS.
What that really means is within two years of a notice of federal tax lien, a final notice of intent to levy, and a number of other actions, or that they’re keeping your refund, for example… those are all items that actually trigger the first collection activity.

What it doesn’t mean is that you got to a notice demanding full payment and then more than two years went by and therefore, you’re ineligible. No, that’s not what it means. The first collection action in this particular scenario means one of those things that I just discussed. There might be a few others but basically it means some fairly significant, attempt by the IRS to collect the money and you ignored it for more than two years.

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