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When can someone qualify for tax-related innocent spouse relief?

On Behalf of | Sep 4, 2023 | Criminal Defense

Annual income taxes are a responsibility for every employed adult and anyone earning passive income through investments. Married couples often file joint tax returns so that they can combine their obligations and receive a larger joint refund. It is very common for those filing a joint tax return to have one spouse typically manage those papers each year while the other has very little to do with the tax filing other than signing the final documents.

Unfortunately, this can lead to a scenario in which one spouse has no idea that the other has done something inappropriate or even illegal on a tax return. Receiving notice from the Internal Revenue Service (IRS) of an upcoming audit or of potential tax fraud prosecution can frighten people and damage the relationship between spouses.

Thankfully, the spouse not involved in putting together the tax return can sometimes avoid legal responsibility for the actions of their partner. The IRS provides innocent spouse tax relief in limited circumstances.

Who might qualify for inner spouse tax relief?

The IRS recognizes that most households divide labor and that spouses don’t often talk at length about finances or taxes. One spouse could engage in all kinds of intentional malfeasance with the other never having any idea. Therefore, in a scenario where one spouse has consistently filed tax returns and the IRS has indicated an intention to take legal action, there are systems in place to protect the spouse not involved in the tax return process.

Innocent spouse relief is available for those who were unaware of their spouse’s misconduct. Additionally, they will typically need to show that they did not directly benefit from the tax fraud or evasion that occurred. Spouses also need to live in a community property state.

Provided that the situation meets those standards, it may be possible for the individual not responsible for filing the tax return each year to avoid prosecution and financial responsibility for any tax debt their spouse may have incurred. Learning more about the rules that apply to tax controversies can help people plan the best possible response to minimize the criminal and legal consequences stemming from their tax issues.