The IRS has issued proposed guidance which would update former guidelines regarding innocent spouse relief under Code Sec. 6015. Under that section, a spouse may request relief from joint and several liability for a tax liability resulting from a joint tax return. A similar provision of the Tax Code provides relief from a liability resulting by operation of community property laws. Under the new procedure, the IRS would consider abuse and financial control by the non-requesting spouse in determining whether equitable relief is warranted for the requesting spouse.
The new procedure also proposes to change the deadline for filing a request for equitable relief from two years after the first collection activity by the IRS to the expiration of the period of limitation for collection (or refund or credit).
Currently, the IRS will not grant any relief unless the tax liability at issue is attributable to a tax item of the non-requesting spouse. The new procedure would add an exception for situations in which the non-requesting spouse’s fraud gave rise to the understatement of tax or deficiency.
The new guidance also clarifies that no one factor or majority of factors absolutely controls the determination of a grant of relief. Innocent spouse status may be granted regardless of whether most factors militate for or against the requesting spouse’s position. Also, a finding that the requesting spouse would not suffer economic hardship if relief is not granted would not weight against a grant of relief.