Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows. In filing jointly, both taxpayers are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise as a result of the joint return even if they later divorce.Joint and several liability means that each taxpayer is legally responsible for the entire liability. Thus, both spouses are generally held responsible for all the tax due even if one spouse earned all the income or claimed improper deductions or credits. This is also true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. In some cases, however, a spouse can get relief from joint and several liability.

1. Relief from Joint and Several
Liability
Innocent Spouse Relief
Presented by
Sidney Goldin, CPA

2. History
A. Pre-1998 Act Law Requirements
1. Understatement of Tax Liability
a.)Applied only if understatement exceeded a certain
percentage of innocent spouse income
2. No specific provision or guidelines for
equitable treatment for innocent spouses for
underpayments of tax liability

3. IRS Restructuring and
Reform Act of 1998
A. Expansion of Spousal Relief
B. Liberalization of Requirements
C. Filed on Form 8857

4. IRS Restructuring and
Reform Act of 1998
D. Code Section 6015(b)
1. Understatements of Tax Liability
a.) Amended Tax Returns
b.) Deficiencies (below)
2. No relief if innocent spouse knew or should
have known of understatement
3. No relief if requesting spouse received
significant benefit

5. IRS Restructuring and
Reform Act of 1998
E. Code Section 6015(c)
1. Election to Allocate as Separate Liability
a.) Tax Return Filing
b.) Audits with resulting deficiencies
c.) Liability allocated in proportion to items
attributable to deficiency of particular spouse

6. IRS Restructuring and
Reform Act of 1998
F. Equitable Relief for Understatements and
Underpayments (code Section 6015(f))
1. Cannot qualify under 6015(b) or 6015(c)
2. Form 8857 must be filed
3. All relevant factors considered

7. IRS Restructuring and
Reform Act of 1998
G. Revenue Procedure 2003 – 61, Section 4.02 –
Safe Harbor Provisions
1. Requesting spouse no longer married at time of
filing for relief; joint return filed during marriage
2. Requesting spouse must have had reasonable
belief that tax liability would be paid
3. Requesting spouse would suffer economic hardship
if not granted relief
Service will ordinarily grant relief if all
provisions are satisfied

8. IRS Restructuring and
Reform Act of 1998
H. General Prerequisites to Equitable Relief
(Rev. Proc. 2003-61, Section 4.01, 2003-2, CB
296)
1. Joint return filed
2. No relief available under 6015(b) or (c)
3. No transfer of assets between spouses in
fraudulent scheme

9. IRS Restructuring and
Reform Act of 1998
4. No transfer of disqualified assets among
spouses (tax avoidance)
5. No failure to file or fraudulent filing by
requesting spouse
6. Underpayment of liability is attributable to
non-requesting spouse

10. IRS Restructuring and
Reform Act of 1998
I. Revenue Procedure 2003-61, Section
4.03(2), 2003-2, CB 296
1. Referred to as eight “balancing factors”
considered by Tax Court Cases, Thomassen
and Gail Prescott Drayer
a.) No longer married
b.) Knowledge
c.) Economic Hardship

11. IRS Restructuring and
Reform Act of 1998
d) Significant Benefit
e) Compliance with Federal Income Tax Laws
f) Abuse
g) Mental or Physical Health
h) Non-requesting Spouse’s legal obligation
to pay the taxes pursuant to divorce
decree

12. Wife Granted Full Relief
No Payments
Joint Husband Wife
Liability $100,000 Split Liability $100,000 $100,000
Transferred <$100,000> Relief $0 <$100,000>
Due $0 Due $100,000 $0
$50,000 Paid In
Joint Husband Wife
Liability $100,000 Split Liability $50,000 $50,000
Paid In <$50,000> Relief $0 $50,000
Transferred <$50,000> Due $50,000 $0
Due $0

13. IRS Restructuring and
Reform Act of 1998
J. Non-requesting spouse must be notified of
filing by requesting spouse from the IRS
1. Must be given opportunity to contest
2. Must be allowed to participate in all
proceedings

14. IRS Restructuring and
Reform Act of 1998
K. “Injured” Spouse Relief
1. Not the same as innocent spouse claim
2. Joint return filed and refund used to pay past
taxes of liable spouse
3. Non-liable spouse qualifies for refund
4. Filed on Form 8379

15. IRS Restructuring and
Reform Act of 1998
L. Code Section 6015(e)
1. Denial of relief by IRS reviewable by U.S. Tax
Court
2. Case heard on a “De Novo” or fresh basis
(non abuse standard)
3. No IRS collection or enforcement action
during pendency of all legal proceedings

16. For Additional Information Contact
Sidney Goldin, CPA
Goldin Peiser & Peiser, LLP
Sgoldin@GPPcpa.com
214-635-2509
www.GPPcpa.com
Note: This content is accurate as of the date published above and is subject to
change. Please seek professional advice before acting on any matter contained
in this presentation.