There are three avenues of relief that Congress has given innocent spouses.
The traditional approach to obtaining innocent spouse relief is centered around a request authorized under IRC Section 6015(b). However, it can be difficult to qualify for traditional innocent spouse relief. Alternatively, certain taxpayers may also consider whether adequate relief can be obtained through spousal allocation, as set forth under IRC Section 6015(c) or equitable relief as set forth in IRC Section 6015(f). Talking to an experienced tax attorney is the first step in determining the form of relief right for you and developing a viable approach to secure that relief.
What Benefits Will Traditional Innocent Spouse Relief (IRC § 6015(b)) Provide?
Traditional innocent spouse relief is undoubtedly the most difficult form of relief to obtain, but it is nevertheless the appropriate option in an array of scenarios. Under traditional innocent spouse relief, the innocent spouse can escape liability for paying tax, interest, and penalties that qualify for relief. This means that the responsible spouse will become solely liable for the unpaid tax. Taxpayers can request traditional innocent spouse relief by filing IRS Form 8857. Taxpayers are not required to calculate the amount of tax they will be responsible for following relief, however it is wise to make this calculation so that the taxpayer not only has an idea of their potential future liability, but also to set a baseline to help determine if an appeal is necessary.
What Benefits Will Spousal Allocation (IRC §6015(c)) Provide?
Spousal allocation or Relief by Separation of Liability can also serve to provide tax relief when one spouse is responsible for the underpayment of tax or other tax issues. Through relief by spousal allocation, responsibility for tax deficiencies may be allocated per each spouse’s culpability for the deficiency. This form of relief is granted despite the community property considerations that would otherwise lead to joint liability. One drawback to this form of relief is that tax refunds are not available.
What Benefits Will Equitable Spousal Relief (IRC § 6015(f)) Provide?
Equitable spousal relief should probably be thought of as spousal relief of the last resort. This is because this form of relief is only available when relief is not otherwise available under IRC §6015(b) or IRC §6015(c). Equitable relief, or relief based on fairness, can be granted for tax debts shown due and owing on the tax return, but have not yet been paid. Additionally, tax refunds are available through this form of relief.
