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Innocent Spouse

‘Innocent Spouses’ Get Tax Relief

Divorced or legally separated people facing IRS difficulties because their spouses failed to pay taxes should have an easier time getting relief under guidelines recently announced.

The rules, which arose from the IRS reform law Congress passed last summer, are aimed at preventing people from suffering if their former partner made a mistake, cheated on taxes, or simply refused to pay Uncle Sam.

"This is an important step that provides new avenues of relief in extraordinary situations to married or formerly married taxpayers," said Deputy Treasury Secretary Lawrence Summers.

Development of the interim rules will permit the Internal Revenue Service to decide a backlog of 2,000 requests for "innocent spouse" relief that were pending before the reform law passed Congress in July. The rules will be used in all other such cases until final guidelines are adopted next year.

Under the tax code, married people filing joint income tax returns are each liable for taxes owed and assessments arising from an audit, interest, and penalties. Existing law provided for some relief for innocent spouses, but qualifying was fairly strict.

The new law provides outright relief for spouses who can establish that they didn’t know taxes were not being paid and for situations in which an additional tax is clearly the other spouse’s responsibility.

The IRS has also issued guidelines for a new "equitable relief" category for people who don’t qualify for the other types of relief, but could still suffer -- even if they knew their spouse wasn’t paying taxes.

The IRS will weigh other factors in deciding such a relief request, including a showing that paying the tax would cause "undue hardship" financially, that the taxpayer suffered abuse at a spouse’s hands, or that the non-paying spouse had a legal obligation -- such as a divorce decree -- to eventually pay the tax.

Find out right now, without cost to you, whether or not you qualify for innocent spouse or equitable relief. Call for a Free Consultation!

"The taxpayers affected have been among the nation’s most vulnerable and will benefit significantly from the enhanced relief," IRS Commissioner Charles Rossotti said.

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