Many marriages include arrangements where one partner will handle the financial affairs of both of the spouses. In a situation similar to that, it can be easy to see how one spouse might be completely in the dark as to the items listed on a jointly-filed tax return. But, the act of “turning a blind eye” and signing the return without review can create serious complications when attempting to claim innocent spouse relief.

One of the requirements of any of the three types of innocent spouse relief is that the partner claiming innocent spouse did not know or have reason to know of the erroneous item on their jointly-filed taxes. Not reading the return before signing it works against the innocent spouse in that it may not satisfy the taxpayer’s duty of inquiry.

The IRS and courts have established that spouses have a duty to review their joint returns and inquire as to their validity if a reasonably prudent taxpayer in the requesting spouse’s position would have questioned a deduction or tax liability in general.

If the taxpayer requesting innocent spouse relief can show that they inquired or attempted to inquire about the validity of an item of income or deduction but the other spouse assured them that the items of the return were correct, the United States Tax Court has determined that the duty of inquiry has been met.

Making a showing that a taxpayer whom is requesting innocent spouse relief did not know or did not have reason to know of erroneous tax return item carries a large burden of proof. There are several factors that must be considered when making such an assertion.

 

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