by Linda Beale
IRS proposes new innocent spouse procedures
This proposed update to Rev. Proc. 2003-61 addresses the criteria used in making innocent spouse relief determinations for section 6015(f) equitable relief cases and revises the factors for granting equitable relief. The factors have been revised to ensure that requests for innocent spouse relief are granted under section 6015(f) when the facts and circumstances warrant and that, when appropriate, requests are granted in the initial stage of the administrative process.
The IRS indicates that it will now take into account the other spouse’s abuse and financial control in making determinations for innocent spouse relief.
Review of the innocent spouse program demonstrated that when a requesting spouse has been abused by the nonrequesting spouse, the requesting spouse may not have been able to challenge the treatment of any items on the joint return, question the payment of the taxes reported as due on the joint return, or challenge the nonrequesting spouse’s assurance regarding the payment of the taxes. Review of the program also highlighted that lack of financial control may have a similar impact on the requesting spouse’s ability to satisfy joint tax liabilities.
For example, the proposed Rev. Proc. indicates that a nonrequesting spouse’s abuse of the requesting spouse may outweigh the fact that the requesting spouse had knowledge of likely noncompliance and that the requesting spouse’s subsequent compliance is a factor that may weigh in favor of relief.
The proposed revenue procedure also provides for certain streamlined case determinations; new guidance on the potential impact of economic hardship; and the weight to be accorded to certain factual circumstances in determining equitable relief.
These appear to be noteworthy and appropriate changes. It is a problem when legal procedures fail to recognize the way that physical and psychological abuse can limit options for individuals. This is particularly true in the case of abused spouses, who may not be allowed to question financial statements or tax returns before being forced to sign them by the abusing spouse.
originally published atataxingmatter