Innocent Spouse Relief

Innocent Spouse Relief

By: Martin M. Shenkman, CPA, MBA, JD

A husband and wife are both liable for the tax on any joint income tax return. However, if you can demonstrate that you did not know, or do not have reason to know of your spouse’s tax hanky panky, you can get off the tax hook. This “out” is known as innocent spouse relief. IRC Sec. 6015. Innocent spouse relief is an issue in divorces when one spouse seeks to avoid the tax liability for the misdeeds of an ex-spouse. Unfortunately, it is not easy to qualify for relief. You have to demonstrate that you filed a joint income tax return, and the tax understatement was due to the erroneous items of your spouse. You must show that you did not know, or had no reason to know of the problem. Finally, it must be unfair to hold you responsible. In a recent case the wife, who was college educated, had access to joint financial accounts, balanced the couple’s checkbook, and was aware of the couple’s ownership of limited partnership interests that trigged the tax understatement did not qualify. The court felt she did not meet her duty to inquire into the transactions. Robert Golden, et ux. V. Comr. (2007) TC Memo 2007-299.

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