The Tax Resolution Institute wants taxpayers to know that innocent spouse relief is more accessible today than almost ever before. There are requirements that need to be met to be designated an innocent spouse. In part two of this blog, we shall go through the necessary requirements. Naturally, these requirements do not have to be met on your own. The tax resolution specialists and tax attorneys at The Tax Resolution Institute will help you establish the written track record for the IRS of such innocent spouse criteria.
IRS Innocent Spouse Relief Criteria
IRC § 6015(f) allows innocent spouse relief to a requesting spouse if, taking into account all the facts and circumstances, it is inequitable to hold the individual liable. The following factors are examined in determining whether equitable relief in the form of innocent spouse relief is available:
- The innocent spouse is no longer married, legally separated, or not living together for 12 months prior to the request.
- The innocent spouse did not know or have reason to know that the non-requesting spouse would not pay. General factors used to determine whether the innocent spouse has a reason to know include (a) the innocent spouse’s level of education; (b) the innocent spouse’s involvement in family financial affairs, (c) lavish or unusual expenditures in comparison with the family’s past style of living; and (d) the culpable spouse’s deceit about the couple’s finances.
- The innocent spouse would suffer an economic hardship if forced to pay the outstanding tax liabilities. Economic hardship is defined as an inability to meet reasonable basic living expenses as they arise. Courts will consider the innocent spouse’s age, employment status, the amount reasonably necessary for food, clothing and housing, the cost of living in the area, the amount of property exempt from levy, and expenses for production of income.
- Whether the requesting spouse received a significant benefit (luxuries and the like) from the unpaid income tax liabilities.
- Whether the requesting spouse has complied with income tax laws in the taxable years following the years that the request for innocent spouse relief.
- It was not the innocent spouse’s legal responsibility for the tax.
- There was some form of abuse against the innocent spouse or she had some mental or physical condition at the time the returns in issue were filed.