How to Request Innocent Spouse Relief From Joint Federal Tax Liability

When can Form 8857 help with joint tax liability?

When spouses file a joint federal income tax return, both generally become responsible for the entire tax liability, including additional tax the IRS later determines is due. This joint and several liability can continue after divorce and even when a divorce decree says one former spouse is responsible for the tax.

If you believe all or part of that liability should instead be your spouse's or former spouse's responsibility, the IRS directs you to file Form 8857. The form can be used to request relief from tax liability and related penalties and interest.

What are the main innocent spouse relief requirements?

For traditional innocent spouse relief, the IRS instructions state that all of the following generally must apply:

• You filed a joint return for the tax year involved.
• The return has an understated tax caused by an erroneous item of the spouse or former spouse with whom you filed.
• When you signed the return, you did not know and had no reason to know that the understated tax existed, or did not know its full extent.
• Considering all the facts and circumstances, it would be unfair to hold you responsible for that understated tax.

An erroneous item can include omitted or incorrectly reported income, a deduction, credit or basis. Partial relief may be possible when you knew about an item but did not know its full extent.

What if traditional innocent spouse relief does not fit?

Do not abandon the request merely because you are unsure which legal category applies. Form 8857 covers multiple forms of spouse relief, and the IRS states that you do not have to determine which type best fits your situation.

Separation of liability relief

Separation of liability can allocate understated tax between you and the person with whom you filed the joint return. Under the Form 8857 instructions, it may be available if that person is deceased or if you are now divorced, legally separated, or lived apart from that person at all times during the 12 months before filing Form 8857. Knowledge of the erroneous item can prevent relief for the portion connected with that item.

Equitable relief

Equitable relief may apply when it would be unfair to hold you responsible for understated or unpaid tax and you do not qualify for the other applicable forms of relief. Importantly, the IRS states that equitable relief is the form of spouse relief available for unpaid tax that was correctly reported on the return but not paid.

What is the deadline for filing Form 8857?

File as soon as you become aware of a tax liability that you believe should be your spouse's or former spouse's responsibility. The deadline is not identical for every form of spouse relief.

For innocent spouse relief and separation of liability, current IRS guidance states that you generally must request relief within 2 years of the applicable IRS collection or notice event. The Form 8857 instructions describe the general rule as no later than two years after the IRS's first attempt to collect the tax from you and identify collection actions that can start that period.

Different deadlines apply to equitable relief. For relief from an unpaid balance, the request generally can be made while the IRS still has time to collect the tax, normally a 10-year collection period that can be suspended. For a credit or refund, the IRS states that the request generally must be made within three years after the return was filed or two years after the tax was paid, whichever is later. Special deadlines apply to relief involving community income.

Because these periods depend on the type of relief and your IRS history, do not delay filing simply because you do not yet have every supporting document.

How do you file Form 8857?

Complete Form 8857 for the tax year or years involved, answer the questions about your circumstances and attach information supporting your request. If you request relief for more than six tax years, IRS Publication 971 states that you must file an additional Form 8857.

Do not attach Form 8857 to your federal tax return and do not send it to the Tax Court. The current IRS instructions provide these submission routes:

• U.S. Postal Service: Internal Revenue Service, P.O. Box 120053, Covington, KY 41012.
• Approved private delivery service: Internal Revenue Service, 7940 Kentucky Drive, Stop 840F, Florence, KY 41042.
• Fax: 855-233-8558.

These filing instructions apply even if you are already communicating with an IRS employee about an examination, appeal or collection matter.

What supporting information should you provide?

Provide complete answers and information relevant to the IRS's evaluation of your circumstances. The Form 8857 instructions emphasize that information you want considered should be submitted during the administrative process because later Tax Court review may be limited to the administrative record plus certain newly discovered or previously unavailable information.

If you add pages or supporting documents, write your name and Social Security number on them. If you request a refund of payments you personally made, the IRS may require proof that the payments came from your own money, such as a bank statement or canceled check.

If you need tax-return information while preparing your request, you can also review how to get a free IRS tax return transcript.

What happens after you submit Form 8857?

The IRS reviews the form for completeness and contacts the spouse or former spouse identified in the request to ask whether that person wants to participate. IRS guidance states that review may take up to 6 months or longer.

By law, the IRS must contact the spouse or former spouse. The Form 8857 instructions state that there is no exception to this contact requirement, including for victims of spousal abuse or domestic violence. However, the IRS says it does not disclose personal information such as your current name, address, phone number, employer, income or assets to that person. Information the IRS uses to decide the case may otherwise be disclosed, so the instructions advise redacting personal information about yourself or others when privacy is a concern.

While the request is pending, continue filing and paying your current taxes as required. The Form 8857 instructions state that the IRS generally cannot collect from you for the tax year covered by the pending request, but interest and penalties can continue to accrue.

What if abuse or threats affected the joint return?

The IRS specifically recognizes circumstances involving spousal abuse and domestic violence. Its current guidance states that a person may potentially qualify for relief even when they knew about errors if abuse occurred before signing the return, they did not challenge the items because of fear, or they signed because of pressure or threats.

If you believe your signature on the joint return was forged or you signed under duress, explain this on Form 8857. IRS instructions state that a joint-return election is not valid if the signature was forged or signed under duress. If the IRS determines there was no valid joint return, it can remove you from that account rather than resolving the matter solely through innocent spouse relief.

Innocent spouse relief is not injured spouse allocation

These IRS procedures solve different problems. Innocent spouse relief concerns tax liability you believe should belong to your spouse or former spouse. Injured spouse allocation generally concerns your share of a joint refund that the government applied to certain debts owed by your spouse.

Form 8857 cannot be used to request injured spouse allocation. The IRS uses Form 8379 for that separate procedure.

How is this different from settling or paying tax debt?

Form 8857 asks the IRS to determine whether you should be relieved of liability connected with your spouse or former spouse. It is different from asking to settle a tax debt that remains legally yours or arranging to pay that debt over time.

If the liability is yours but you cannot pay it in full, the relevant options may instead include an IRS Offer in Compromise or an IRS payment plan. The Form 8857 instructions also state that you should not file it for a tax year when you entered into an Offer in Compromise covering the liability.

Can you appeal if the IRS denies relief?

After reviewing the request, the IRS generally sends a preliminary determination to both spouses. Both generally have 30 days from the date of the preliminary determination letter to appeal. IRS Appeals identifies Form 12509, Innocent Spouse Statement of Disagreement, as the form used to explain disagreement with the preliminary decision.

After the IRS completes its consideration, it issues a final determination. A requesting spouse who disagrees may generally petition the United States Tax Court within 90 days from the date of the final determination letter. The IRS also states that a requesting spouse may petition the Tax Court if the IRS has not made a final determination within six months after Form 8857 was filed, subject to the applicable Tax Court rules.

Common mistakes that can affect a Form 8857 request

• Waiting to file because you do not yet have every document, even though a filing deadline may be running.
• Sending Form 8857 with your tax return instead of to the dedicated IRS address or fax number.
• Leaving the form unsigned or undated; the IRS states that an unsigned Form 8857 cannot be considered.
• Using Form 8857 when the actual issue is an injured-spouse refund offset requiring Form 8379.
• Assuming divorce automatically removes joint federal tax liability.
• Assuming only traditional innocent spouse relief matters when separation of liability or equitable relief may apply.
• Ignoring an IRS notice of deficiency while waiting for Form 8857. The IRS instructions warn that a Tax Court petition deadline shown in a notice of deficiency continues to run while the IRS considers the relief request.