The IRS recognizes that sometimes a person acts on behalf of both parties without the consent of the spouse while making tax decisions such as claiming improper tax credits or improper tax deductions. The government will not penalize both parties in this case if the innocent spouse can prove the following:
- Prove that when the joint tax return was filed, he or she had no knowledge to know of the improper tax actions such as claiming improper credits or deductions, stating less income then earned.
- Prove to the IRS that it would be unjust to hold them liable to pay the taxes because of the improper actions.
- Request tax debt relief help within TWO years of the IRS’ first attempt to collect the money.
If you did all of the above knowingly, you may opt to qualify for “separation of liability relief” or “equitable relief”. To qualify for separation of liability relief, one must be legally divorced, widowed, or have not been in the same household for the corresponding tax year. The benefit of the “separation of liability relief” is that you are only responsible for only a portion of the tax liabilities caused by inaccurate tax returns.