Posted by : Daniel Stoica in (Articles, Income Taxes, Tax Topic) On: July 25th, 2011
Innocent Spouse Relief was designed to alleviate clearly unjust situations where one spouse was the victim of fraud perpetrated by their spouse or ex-spouse.
The change to the innocent spouse relief is a major step toward improving the IRS’s process by making it more fair to this exclusive group of taxpayers. There are many types of situations that taxpayers may face and this change will allow innocent spouses to find relief from past victimization.
The IRS began a review of relief provisions regarding innocent spouses this year. Policy changes will be in operation by the fall and help will be there for taxpayers. The IRS will be expanding the program, as well, in order to help innocent spouses.
- The two-year limit will no longer apply, according to the IRS. There will be no more new equitable relief request regarding this.
-Taxpayers who were previously denied relief can now reapply with the the 8857 Form, Request for Innocent Spouse Relief. As long as the statute of limitations have not run out, current applicants will automatically be granted the relief.
-The IRS is not going to apply the two-year limit with regards to litigations that are currently pending, until they are finalized. The IRS will then suspend collections efforts on a case-by-case basis.
These changes will take effect immediately. For details, find Notice 2011-70 or www.irs.gov.
The existing regulations were put in place in 2002 and required innocent spouses to file within two years after the IRS takes collections action against the innocent spouse. The time limit was put in place after a public hearing. It was created to resolve these issues in a timely manner after all evidence was presented. The IRS will formally remove this time limit in the near future.
The two-year period for innocent spouses who are seeking relief under section 6015 of the Internal Revenue Code still applies. The refund statute of limitations also applies to the tax years that are covered by the innocent spouse request.
This relief is only available to taxpayers who filed joint tax returns. The innocent spouse relief is in place to assist taxpayers who didn’t know their spouse under paid their income tax. Publication 971, Innocent Spouse Relief, provides more information about the new program.
Please contact a tax professional if you have questions about Innocent Spouse Relief.