The IRS Reform Act of 1998 created 3 types of Innocent Spouse relief:
1. Innocent Spouse Relief.
- .Understatement is due to an erroneous item.
- Innocent spouse did not know or have reason to know of the understatement.
- Inequitable to hold him/her responsible for the tax.
- Relief must be requested within 2 years of when collection activity began.
- allocation of the liability.
- refund is available if granted within 3 years of filing the return.
2. Separation of Liability Relief
- Must be divorced or legally separated for at least 12 months.
- No actual knowledge of the understatement of the item giving rise to the liability.
- Must be requested within 2 years form when collection activity began.
- Will be treated as if they filed separately.
- No refund available but the liability is separated.
3. Equitable Relief.
- Must meet the 7 threshold conditions for evaluation by the IRS.
- Takes into account all facts and circumstances.
- Liability is apportioned.
- Must be filed before the Collection Statutory Expiration Date. Normally, 10 years from the date the tax was assessed..
- Refunds are available.
If you or someone you know has an IRS issue, feel free to contact me at finmansvc@gmail.com or toll free at 800-485-0123
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