| The "innocent spouse" rule is the one exception to the | | | | she signed the return under duress. |
| law making both currently married or former spouses | | | | Prior to July 22, 1998, it was harder for a spouse to |
| responsible for an IRS debt. (Internal Revenue Code | | | | avoid liability for joint tax debts. |
| 6013(e).) A spouse, or more commonly, an ex-spouse, | | | | Usually, innocent spouse claims are made by divorced |
| may be relieved of joint tax debts incurred after July | | | | taxpayers. People who are still married, however, can |
| 22, 1998 (the effective date of major changes to the | | | | also use the innocent spouse rule. |
| law), as well as joint tax debts incurred before that | | | | EXAMPLE: |
| date but paid afterwards. | | | | Francisco and Imelda filed a joint tax return, were |
| Under the current rule, an innocent spouse filing a joint | | | | audited, and were found to have substantially under |
| tax return must show:o all or part of the tax | | | | reported Francisco's business income. Francisco had |
| understatement was due to erroneous items of the | | | | skimmed about $60,000 from his delicatessen. Imelda |
| other spouse ANDo he or she did not know, and had | | | | convinced the IRS that she was an innocent |
| no reason to know, there was an understatement by | | | | spouse-she knew nothing about the income, had no |
| the other spouse ANDo it would be unfair to hold the | | | | reason to know about it (she was in the hospital |
| innocent spouse liable. | | | | recovering from surgery when Francisco did their |
| Even if a spouse does not qualify, the IRS can grant | | | | taxes), and did not benefit from it (Francisco blew the |
| partial relief by apportioning the tax bill. The IRS will | | | | money gambling)-and so it would be unfair to hold her |
| allow the "partially" innocent spouse to recompute his | | | | liable. Francisco changed his ways, and the marriage |
| or her separate tax liability (what would be owed | | | | survived. Imelda went back to work and, using her |
| under a separate return) and owe just that amount. | | | | good credit, saved by not having a tax lien filed against |
| The IRS can deny innocent spouse relief if it concludes | | | | her, bought a home and obtained a mortgage in her |
| that the spouse had actual knowledge of the tax | | | | name alone. She and Francisco lived there, and he |
| misdeed and still voluntarily signed the return. The only | | | | entered into an installment payment plan with the IRS |
| hope for the innocent spouse is to show that he or | | | | for the taxes. |