Segal Cohen & Landis Reviews Why IRS Proposes to Ease Restrictions For Innocent Spouse Relief

When a couple files their taxes they may file as married filing jointly to take advantage of the benefits of filing together. However, there can be a downside. Each spouse is then liable for the entire amount owing to the Internal Revenue Service (IRS) even if they did not earn a single dime during the marriage or did not prepare the tax returns. Under limited circumstances the IRS will allow a spouse to be relieved of the tax liability.

These limited circumstances changing according to Kelly Erb at Forbes. Last year the IRS released Notice 2012-8 which “significantly lowered the bar for innocent spouse relief.” Why the change? The IRS is attempting to address various issues that occur when a claim for innocent spouse relief is filed. Among those issues is the issue of abuse which before recently was treated unevenly by the IRS in absence of firm evidence of physical abuse. This standard has changed for the better and the IRS now recognizes a wide range of abuse.

The real change comes however comes in the form of extending the amount of time a taxpayer may file for this relief. Before taxpayers only had two years to file for innocent spouse relief. This week the IRS proposed to make permanent rules to extend the amount of time taxpayers can apply for equitable relief through an innocent spouse application. A taxpayer now has up to ten years to file for relief. Good news indeed for taxpayers.

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