Publication 971: Innocent Spouse Relief

Publication 971, also referred to as Pub 971, is an official guide from the Internal Revenue Service (IRS) that explains Innocent Spouse Relief. This relief program offers tax forgiveness to spouses who unknowingly filed inaccurate joint tax returns.

Who Qualifies for Innocent Spouse Relief?

Not everyone who filed a joint return with an underpayment qualifies for relief. To be eligible, you must meet all the following conditions:

A. Filed a Joint Return: You must have filed a joint tax return with your spouse (or former spouse) for the year(s) in question.

B. Understated Tax: There must be an understatement of tax on the return. This means you owe more tax than was originally reported.

C. Erroneous Items by Spouse: The understatement must be due to erroneous items (income, deductions, credits) reported by your spouse (or former spouse).

D. Innocence: You must be considered innocent with respect to the understatement. This means you didn't know, and had no reason to know, that your spouse was underreporting income or claiming incorrect deductions/credits.

E. Fairness: Granting you relief must be fair to the IRS. This considers your knowledge or participation in your spouse's tax activities, your economic situation, and whether you benefited from the understatement.

Types of Innocent Spouse Relief

There are three types of relief available under Pub 971:

A. Innocent Spouse Relief: This relieves you of the entire tax liability attributable to your spouse's erroneous items.

B. Separation of Liability Relief: This divides the tax liability between you and your spouse based on your respective incomes.

C. Equitable Relief: This provides relief in situations where the above options wouldn't be fair, considering all circumstances.

What if I suspected my spouse might be underreporting income?

Pub 971 acknowledges that simply suspecting your spouse might be underreporting income isn't enough to qualify. You'll need to demonstrate a reasonable effort to obtain knowledge about their income.

Does divorce impact eligibility?

No, you can still apply for Innocent Spouse Relief even if you are divorced.

How long do I have to file for relief?

Generally, you have two years from the later of the date the IRS first contacts you about the tax deficiency or the date you paid the tax to file for relief. However, there are exceptions, so consulting a tax professional is recommended.

What happens if my request is denied?

The IRS will provide a written explanation for the denial. You can appeal the decision within 60 days.

Can I get relief for past tax years?

Yes, you can file for Innocent Spouse Relief for tax years the IRS hasn't assessed yet.