Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows. Both taxpayers are jointly and individually responsible for the tax and any interest or penalty due on the joint return even if they later divorce. This is true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.

In some cases, a spouse will be relieved of the tax, interest, and penalties on a joint tax return.

The three types of relief available are:

Innocent spouse relief

Marital status considered as an equitable factor. The taxpayer must establish that he or she had no knowledge OR reason to know about the tax liability and income it is attributable to. A determination that it is inequitable to hold the taxpayer liable for the spouse’s tax. IRS must consider all facts & circumstances. Marital status is considered as an equitable factor. It is possible to obtain a refund if the claim is filed within two years from the first IRS collection activity. Fraud is a consideration in equity determination.

Separation of liability

Must be divorced, widowed; legally separated; OR not living together for at least 12 months prior to the election. The IRS must establish that the taxpayer had actual knowledge of deficiency items (note, the burden of proof has shifted from the taxpayer above, to the IRS). The election is deemed invalid if IRS shows the taxpayer transferred assets as part of a fraudulent scheme. No refund of prior payments is available.

Equitable relief

Relief will be granted if all of the following conditions are met:

1. No longer married, legally separated, OR living together for 12 months prior to request
2. No knowledge or reason to know when return signed; knowledge can be overcome by factors of abuse or financial control
3. The taxpayer will suffer economic hardship if relief not granted

Equitable Relief Factors

1. Factors can be For Relief, Against Relief, or Neutral: Marital status (6015(c))
2. Economic Hardship (defined in Regs. §301.6343-1(b)(4))
3. Non requesting spouse’s legal requirement to pay the liability
4. No knowledge or reason to know that liability would not be paid (for underpayment) or of item (for deficiency)
5. Significant Benefit
6. Compliance with Income Tax Laws
7. Abuse (but not duress)
8. Mental or physical health
9. Any other facts or circumstances that may weigh for or against relief