The IRS has significantly lowered the bar for innocent spouse relief

1. IRS Relaxes “Innocent Spouse” Relief
Rules
The IRS has significantly lowered the bar for innocent spouse relief.
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LAW OFFICE OF DAVID PARKER BLOG
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2.  A married couple filing taxes jointly commits to more than just
their relationship. Each partner also commits to responsibility
and liability for the taxes due from the marital community, and
for any wrongdoing committed by either one. The IRS does
have a provision called “innocent spouse relief” that allows one
spouse to avoid liability when the other has incurred tax
penalties for actions in which he or she was not involved and of
which he or she had no knowledge, but in the past taking
advantage of this feature of the law has been tricky and
difficult.
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LAW OFFICE OF DAVID PARKER BLOG
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3.  That may now be changing, according to a recent article in
Forbes. A new memorandum from the IRS has issued a set of
eight factors to weigh for the determination of the need for
spousal relief. Internal Revenue Code Section 6015 authorizes
the IRS to grant a spouse relief from a joint return where
holding the spouse accountable would be inequitable. That
hasn’t changed, but the specific criteria used to determine
“inequitability” may have.
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LAW OFFICE OF DAVID PARKER BLOG
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4.  It would be impossible to do justice to the new criteria here, but
they include marital status in the year for which the request is
made, legal obligations e.g. under a divorce decree, compliance
with tax law since then, whether the requesting spouse received
significant benefits from the nonpayment of taxes in question,
whether the requesting spouse had knowledge of the activities,
whether the nonrequesting spouse abused the requesting spouse,
whether the requesting spouse would suffer economic hardship
if the request is denied, and whether the requesting spouse
suffered poor mental or physical health either at the time of the
request or in the year for which the request is made.
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5.  Obviously this rule change can have significant impact on NY
estate planning and New York asset protection for married
couples, particularly those that file joint returns and may incur
scrutiny from the IRS from time to time. It would be a good
idea to read the original article to get a clear picture of how the
new rules operate.
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LAW OFFICE OF DAVID PARKER BLOG
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6. Law Office of David Parker
Estate Planning and Elder Law
 www.parkertrustlaw.com