Chicago Tax Attorneys for Innocent Spouse Claims

Innocent Spouse Relief for Overdue Taxes

You may already know that when a married couple files a joint federal income tax return, both spouses are "jointly and severally" liable for any unpaid taxes, whether there is a balance due on the tax return or whether that balance comes about later, say after an IRS audit of the return. And this is true even if the couple later separates or divorces.

But did you know that, even though a state divorce court may order one of the parties to pay all the taxes as part of the settlement, the IRS is not bound by that order, and may still proceed against either spouse for full payment of the liabilities – even if the tax liabilities are completely attributable to the errors or omissions of the other spouse?

Long ago, Congress recognized that, in some limited situations, the joint and several liability that attaches to joint return filing may be unduly harsh when applied to a spouse who had nothing at all to do with the understatement or nonpayment of the taxes. Innocent Spouse Relief was accordingly statutorily provided as a means for relief in these limited circumstances.

The problem for claiming spouses, however, is that historically it was nearly impossible to qualify for the relief. Not only was the statute written very rigidly, but the U.S. Tax Court time and time again interpreted the provisions even more strictly, rarely ruling in favor of a taxpayer claiming entitlement to the relief at trial.

The good news is that, in 1998, Congress liberalized the relief provisions somewhat, broadening the types of situations in which the relief might be available.

There are currently three bases for relief: 1) traditional relief, available for "understatements" of tax; 2) the 1998-added "underpayment" of taxes relief, available for taxes already assessed (i.e., in collection); and 3) the 1998-added "equitable" relief, available in some cases to claiming spouses who do not qualify for either of the other two types of relief.

Although Congress provided a mechanism for obtaining relief from a tax return jointly filed with a spouse or ex-spouse, it remains one of the most difficult set of factors to satisfy. Our practice has extensive experience successfully arguing these cases before the IRS and in the U.S. Tax Court, providing you a distinct advantage over those individuals that try and pursue these matters on their own or with less qualified attorneys.

Chicago Tax Law Attorneys

At the Tax Practice of IIT Chicago-Kent College of Law, we have substantial and extensive experience submitting and arguing innocent spouse relief claims on behalf of clients before the IRS administratively as well as in the U.S. Tax Court. As an example, see our victory in the Bozick v. Commissioner case, T.C. Memo 2010-61. If you have tax debts due to the actions of your former spouse, contact us for a candid evaluation of your chances for getting relief from the assessments.