Innocent Spouse Relief / Divorce Tax Issues

As professional legal advisors, we here at The Law Offices of Ryan McFarland believe that if there’s a will, there’s a way. And in an Offer in Compromise (OIC), this mode of payment of tax debt gives you the opportunity to pay a tax debt that is less of what you owe provided that you have exhausted all the above efforts to make sure that you can pay.

Innocent Spouse Relief

This request allows you to separate an additional amount of tax debt owed between you and your former spouse or legally separated spouse. The separate allocation of the tax will determine the amount of tax debt you specifically owe. In order to qualify for Separation of Liability Relief, you must prove one of the following three factors at the time requested: (a) You’re divorced or legally separated rom the spouse with whom you file the joint return, (b) You’re widowed, OR (c) You haven’t been a member of the same household as the spouse with whom you filed the joint return at any time during the 12 month period ending on the date you requested relief.

Separation of Liability Relief

You are allowed to be granted innocent spouse relief only if you can prove that when you signed the return you had no knowledge of either the unreported income or the improper deductions or credits requested.  The burden of proof is on the person requesting the relief to prove they were unaware of the tax debt that would arise from this unreported income item or erroneous deduction or credit.  PLEASE NOTE:  Innocent Spouse Relief MUST be requested no later than 2 years after the date of the initial tax debt being collected against by the IRS.

Equitable Relief

If you do not qualify for Innocent Spouse Relief or a Separation of Liability Relief but there is an item on the jointly filed return you can attribute to your spouse, you may qualify for Equitable Relief. This is a request that is granted based on the facts and circumstances you are able to establish proving to the IRS that it would be unfair to hold you specifically liable for the tax debt.