There are several different situations in which a taxpayer may request innocent spouse relief. One of these is the formal administrative process, which is commenced by filing Form 8857, Request for Innocent Spouse Relief.
What is IRS Form 8857?
Form 8857 is an IRS tax form used by taxpayers to file for relief from a tax liability that involves a spouse or an ex-spouse. We all know by now that whenever a couple files a joint tax return, they are jointly responsible for any tax liability, regardless of whether they are married or divorced.
Who can file Form 8857?
Form 8857 is utilized by a taxpayer whose spouse or ex-spouse is responsible for any tax liability. Although, filing Form 8857 is not sufficient for the grant of relief to the requesting spouse. The requesting spouse must meet the following qualifications:
- A joint return with tax understatement is filed.
- The tax is due to a spouse’s erroneously listed income or deductions.
- It is unfair to make the requesting taxpayer liable for the understatement.
If the request is denied, the requesting spouse has the option to appeal the decision.
When should a taxpayer file Form 8857?
The taxpayer must file the form as soon as his or her spouse or ex-spouse’s tax obligation has come to his or her knowledge. Usually, the IRS sends a notification regarding the tax obligation. Any request filed before receipt of the notification is premature and will not be considered.
A spouse or an ex-spouse seeking equitable relief for a balance due may file Form 8857 within the time period the IRS has to collect the tax debt. In most cases, that is 10 years from the date the tax liability was assessed. On the other hand, the amount of time to request equitable relief for a credit or refund is within three (3) years after the original date of filing the original return or within two (2) years after the payment of tax, whichever is later.
Once the IRS has received the taxpayer’s Form 8857, the IRS will review the information in the form and issue a preliminary determination, either granting or denying the request. If denied, the taxpayer may either seek review by the Appeals Office or do nothing. After review or if the taxpayer does nothing, a notice of final determination letter is issued. If the taxpayer disagrees with the determination, he or she can petition the Tax Court to review the determination no longer than 90 days after the IRS mails the determination.
Suppose the IRS fails to issue a determination within six (6) months of the taxpayer’s request for relief or election under IRC Section 6015(c). In that case, the taxpayer can petition the Tax Court to determine the appropriate relief.