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IRS Proposes to Expand Tax Relief for Innocent Spouses

If you’re married, you’re probably planning to file your taxes jointly; most couples do. You should know that spouses filing a joint return are generally each liable for all of the tax owed on that return—but the law provides equitable relief when one of the spouses has no control over, or perhaps no knowledge of, how the household’s financial situation is reported. This “innocent spouse” relief is especially important for women: 90 percent of those who request relief from joint liability are women, 65 percent of those who request relief make less than $30,000 a year, and some are survivors of domestic violence.  

Section 6015(f) of the Internal Revenue Code provides that equitable relief is available for innocent spouses, but the determination rests on a “facts and circumstances” test.  

The Department of the Treasury recently proposed updating, clarifying, and expanding IRS guidelines for granting equitable relief. The proposed guidelines are beneficial to low-income women in general and to survivors of domestic violence in particular. They extend the deadline for requesting innocent spouse relief, reflecting that victims of abuse may not be aware of problems with tax liability; expand the definition of abuse to include physical, psychological, sexual and emotional abuse and clarify that a spouse’s control over household finances can constitute abuse; and expand the criteria for determining when a spouse is subject to economic hardship that mitigates against holding that spouse liable for the tax.

The Center has submitted comments strongly supporting the new guidelines, with the additional recommendation that the allowance for basic living expenses in the determination of economic hardship take account of the number of dependents in the household. This is especially important for women, the large majority of single parents.

You can support domestic violence survivors and other filers eligible for innocent spouse relief by submitting comments to the IRS in support of the revised innocent spouse rules. The Center’s comments are posted here for you to consider in drafting your own comments. Comments are due on February 21, 2012.  

You can submit comments electronically via e-mail to Notice.Comments@irscounsel.treas.gov include “Notice 2012-8” in the subject line. You can also mail comments (in time to be received by February 21) to: Internal Revenue Service, Attn: CC:PA:LPD:PR (Notice 2012-8), Room 5203, P.O. Box 7604,
Ben Franklin Station, Washington, D.C. 20044.

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