The innocent spouse rule (also sometimes written as innocent-spouse rule) is a section of the tax code that provides provisions for an individual if eligible, to not have to pay the tax of his or spouse if the amount reported was not accurate. This rule applies to a spouse that is able to prove that he or she did not incur the taxes being billed and did not benefit in any way from the failure to pay the taxes.
The innocent spouse rule applies not only to divorced couples, or those in the process of divorcing but also to couples who are presently married. Couples who choose to file a joint tax return are responsible for any taxes that are owing, regardless of whether the taxes belong to them or to their spouse. The only way to avoid being held responsible for the taxes of your spouse is to use this rule. The Internal Revenue Service (IRS) will not consider any other reason for not paying taxes filed jointly.
When a joint tax return is filed both people are responsible as a couple and as individuals for the taxes that are owing as well as for any penalties that are owing. If the couple is divorcing or will be divorced after the tax return has been filed, this does not eliminate any of the accountability to pay the money owed to the government. In a divorce decree it may state that one spouse is expected to pay taxes that are owing from previous years. This does not let the other person off the hook however. If the person does not pay the government what they owe them then the IRS is permitted to look to the other ex-spouse for payment of the outstanding balance.
Using the Innocent Spouse Rule
It is Section 434c (1) of the Internal Revenue Code that seeks to protect an “innocent spouse” from tax liability if specific conditions are met. The innocent spouse rule can be used if the tax return contained errors in the reporting of taxes. For instance if the amount of money that was owed was understated due to the fact that the other spouse did not report a portion of his/her income or claimed deductions that he/she was actually not entitled to. The rule can also be used if the innocent spouse was in the dark about any of this information at the time that the return was signed and filed. If the circumstances that hold the innocent party responsible for paying the taxes are deemed unfair then the rule can be put into play. Under any of these circumstances the innocent spouse is permitted to file for this exemption with the Internal Revenue Service.
If you are sent a collection letter from the IRS and you feel that you qualify for the innocent spouse rule then you should file a Form 8857 which is a Request for Innocent Spouse Relief. From the time collection proceedings are started you have two years to file this form. However the sooner you file it the better!
Once you have submitted Form 8857 the collection proceeding by the IRS will cease until the matter can be looked into and resolved. The amount of time this will take may vary from one case to another. Some cases are more complex to investigate than others.
Collection proceedings can be started by the IRS in more than one manner. A notice of intention to levy under section 6330 of the tax code may be received. If you were supposed to receive an income tax refund it may be withheld in order to pay for back taxes that are owed. In some cases a lawsuit will be instigated in order to collect taxes that have not been paid and that are owing from property that is owned by the innocent spouse.