Pressure from congressional members, taxpayer advocacy groups and innocent spouses with back tax appeals has prompted the Internal Revenue Service to change a nearly 10-year-old rule that could affect some married individuals in Dallas. The two-year window for victims of spousal tax abuse has been opened.
Federal laws hold both partners in a marriage responsible for taxes owed in joint filings, unless one spouse can prove that he or she is innocent. Those granted innocent spouse status are relieved of undue IRS tax or penalties in situations where one partner was unaware of the other’s tax slip-up.
The 2002 tax law required married partners to file for innocent spouse status within two years of the IRS-imposed collection date. Taxpayer groups have complained that spouses, unknowingly caught up in a husband or wife’s tax situation, often are not aware immediately of an IRS problem, which can cause them to miss the deadline.
IRS officials now state that, by extending the amount of time an innocent spouse has to file for reduced-tax liability, certain spouses can get tax relief. Of the estimated 50,000 innocent spouse requests that the IRS receives each year, about 2,000 were thrown out based on the two-year rule.
The removal of the two-year cap on innocent spouse filings takes effect immediately and will apply to some, but not all, IRS court cases. In some instances, those married individuals who were denied innocent spouse status will be able to re-file.
The IRS cautions that the two-year rule will still apply to some spouses who are separated or divorced. In making its judgments on innocent spouse applications, the federal tax agency reviews whether a spouse was aware of the tax dilemma and if possible violence between the partners has been documented.
Source: San Francisco Chronicle, “IRS Removes Two-Year Cap on Certain Innocent Spouse Claims,” 25 July 2011