Steps To Prepare an Innocent Spouse Relief Case

There is a rule that the IRS has that is called the innocent spouse rule. This rule allows a spouse who believes they are not responsible for the debt of their other spouse to receive relief with the IRS from that tax debt. We are going to walk you through the steps you need to take to prepare your own innocent spouse case in front of the IRS.

Organizing an Innocent Spouse Relief Case

A few tips before we lay out a step by step instruction to success with an innocent spouse case. It is important that you approach your case as systematically as possible. Prepare as you would for any other legal case, you must present all the facts and prove your point. It is extremely important that you gather all the evidence and present them in a detailed and concise manner.

Determine your rights and if relief is available to you

1. First you must establish that a joint return was in fact filed.

2. Check to see if there is an understatement of tax for your joint return.

3. Make sure that the understatement of tax is not due to yourself and is the fault of your spouse.

4. Determine if the spouse that is required to pay the understatement has previous knowledge of the existence of an understatement.

5. Find out how long it has been since the IRS has started collecting the understatement of tax. A request for innocent spouse relief must be filed within two years of the first payment given to the IRS for an understatement of tax.

Put together a case that supports your innocent spouse claim

Put together a detailed summary of your personal finances, your personal history with the family finances, a history of your educations, your financial skills, and your involvement in the finances of your spouse’s business. You want to show the IRS that you did not know what your spouse was doing financially that put you in an innocent spouse situation.

Establish a detailed report of who handled your tax returns and how they were prepared and filed. You want to show that you did not have knowledge of the information contained on your tax returns and the information that was filed with the IRS.

If you come to the conclusion that you did not review the return yourself then you must explain to the IRS why this did not occur.

If you did ask questions about your tax return but received information that was fraudulent or not complete then you must explain to the IRS how this took place and who is responsible for it.

Put together evidence that shows it is not fair to hold yourself accountable for the understatement of tax created by your spouse:

1. If there was an agreement made between you and your spouse on any legal documents that shows who was responsible for the taxes then you need to show this to the IRS. This document could be a separation agreement, divorce decree, property settlement and things of this nature.

2. If you believe there was abuse or fraud that took place behind your back, then state this claim in your case to the IRS.

3. If you believe you were manipulated in any way, develop evidence that supports this claim.

4. Show evidence that a requirement to pay the understatement of tax would create an economic hardship for yourself.

5. You must also show to the IRS that your standard of living was not improved because of your spouse’s actions. Show to the IRS that you did not receive any gifts or perks because of the actions of your spouse. Determine that you were completely unaware of the understatement created by your spouse and the benefits it provided them.

6. Create a list of witnesses that you can call to prove all the points that you have made to the IRS. You may also consider putting together an affidavit if you believe it is in your best interest.

Prepare the forms that are required by the IRS for an innocent spouse case

You must prepare and complete Form 8857. This is the form that requests innocent spouse relief. Remember that the stronger you make your initial case; the easier it will be to obtain innocent spouse status.

Present your case to the IRS

It is best practice to file your Form 8857 to request a face to face meeting. Even if you are already under audit or collection has begun on your understatement of tax, it is in your best interest to request a face to face meeting through filing a Form 8857.

Appeal a decision to deny your request for innocent spouse relief

If it is determined that you were denied innocent spouse relief you can still appeal the decision like any other type of decision. Make sure to seek legal representation when putting together an appeal.

Tax Court

Your last option is to go to Tax Court. This is the option that would be taken if you appeal is denied. Remember that Tax Court can be very expensive and time consuming, it is best to seek legal advice regarding whether the pros outweigh the cons in your decision to send your case to Tax Court.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.


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