To qualify for innocent spouse relief, you must be dealing with a tax caused by a spouse’s error, with proof that you didn’t know or have a reason to know about the tax issue. The IRS also determines whether, based on all facts and circumstances, it would be fair to hold you responsible.
Innocent Spouse Relief is an IRS program that protects taxpayers from being held responsible for misreporting or underpayment on a joint tax return due to their spouse, ex-spouse, or late spouse.
In most cases, you’ll only learn about this tax debt when you receive an IRS letter stating that a deduction was claimed incorrectly or that some income wasn’t reported. Or even worse, you might learn about the problem when the IRS sends a notice threatening to garnish your wages or go after your bank account.
The good news is you don’t have to pay for something that wasn’t your fault. The IRS and the MN Department of Revenue both have programs to protect spouses from joint liability in these cases – but you must meet specific criteria, and the right legal representation is critical.
Whether you need innocent spouse relief from the IRS, Minnesota, or any other state, we’ve got you covered. Josh has experience successfully applying IRS innocent spouse relief cases with great outcomes.
You’re In the Right Place If…
Our innocent spouse relief services may be the right solution if you’re dealing with the following:
- The IRS is trying to collect a tax debt from you for a joint tax return, and you believe you shouldn’t be held liable.
- You didn’t know about the underreporting or the tax deductions claimed in a joint return, and you have no reason to know.
- You’re divorced or separated, and you’re no longer financially connected to your spouse.
- Your ex-spouse or spouse handled all the finances and filing.
- Your signature was forged on a tax return you didn’t see.
- You were coerced into signing a joint return with incorrect information.
- You believe the tax was assessed unfairly, and you need to know your options.
Best Tax Pro has helped countless clients dealing with the above scenarios, and we are ready to help you.
What Is Innocent Spouse Relief?
Innocent Spouse Relief allows an individual to reduce or eliminate additional tax liabilities, penalties, and interest from a joint return if their spouse or former spouse incurred the liability without their knowledge or if other factors would make it inequitable to hold the taxpayer responsible for the debt.
By law, spouses who file a joint income tax return are both responsible for the full amount of tax, penalty, and interest incurred on their return. Due to joint and several liability, the IRS has the right to go after either spouse for the full amount due. But the agency recognizes that the law is not always fair, and under IRC § 6015, an individual may elect to seek relief by filing Form 8857 if they meet the applicable eligibility requirements.
When you contact us, we’ll review your case inside and out to see which type of innocent spouse relief you qualify for, and if you’re not a candidate for this type of relief, we’ll help you pursue alternatives.
What Are My Options?
There are three main types of relief you might be eligible for in this situation. They include:
- Innocent spouse relief – This is for individuals who filed a joint tax return with their spouse or ex-spouse, but later found that their partner made a mistake, such as incorrectly claiming deductions or not reporting all of their income.
- Separation of liability relief – If you and your partner are legally separated or divorced and you filed a joint return, this relief absolves you of responsibility for your spouse’s portion of the tax bill, meaning you only owe tax related to your income.
- Equitable relief – This is for those who don’t qualify for innocent spouse relief or separation of liability relief but still believe being held responsible for the tax debt is unfair.
The IRS reviews Form 8857 for all three types of relief, and our experienced team ensures your application, written narratives, and supporting documents are positioned for approval.
Case Study: $248,000 in Forged-Return Tax Debt Removed
To give you an idea of how this works and how we can actually help. Let’s look at what happened with our client Camila (not her real name).
When Camila received IRS Statutory Notices of Deficiency showing that she owed at least $248,000, she panicked because she didn’t understand where the tax debt came from. After looking into the situation, she learned that her ex-husband had filed tax returns in both their names and forged her signature.
He had since left the state, started a new business, and built a second family. And yet, here was Camila, being held liable for a $248,000 tax debt that she had nothing to do with and had never seen. Unfortunately, Camila was an easy target because she was an immigrant who was fully dependent on her ex-husband financially and didn’t have any idea how to defend herself against the IRS. When we heard that, we were ready to jump in with the support she needed.
After reviewing her case, I immediately recognized it as an innocent spouse case, gathered all copies of the actual forged signatures as evidence, and filed a Form 8857 petition with the IRS. I also brought in the Taxpayer Advocate Service (TAS), which helped move the petition forward faster.
The outcome: Within 15 months, the IRS approved her relief. Her tax transcript showed a balance of $0, with all $248,000 removed from her name. As you can imagine, she went from terrified to relieved and ecstatic. Camila has since remarried and no longer carries the burden of a tax debt that wasn’t hers.
All tax cases are unique and may have different outcomes, but you can always rely on Best Tax Pro to defend your rights and help you secure the best results possible. If you have a tax debt from a joint return and you don’t believe you should be held liable for it, reach out to us and let us review your case.
Situations Where Innocent Spouse Relief Can Help
These situations are more common than you think, and tragically, clients are often worried about coming forward. On some level, they often believe the tax debt is their fault – but that’s almost never the case.
When you approach our team, we’ll provide you with non-judgmental, empathetic services that start with listening to your story. Here are just some of the situations where taxpayers need innocent spouse relief.
- One spouse hides a secret side hustle, investments, or a business from the other spouse, and they fail to report that income. The other spouse only learns about it after receiving IRS notices.
- A spouse claims fake business expenses, charitable deductions, or credits to reduce the tax on a joint return; the other spouse believes the information is accurate and has no reason to suspect otherwise.
- As in the above case study, some spouses prepare tax returns and forge their partners’ signatures. The partner only learns of the tax debt when the IRS comes to collect.
- One spouse is financially abusive. They coerce the other spouse into signing tax documents without letting them ask questions or review what’s been reported.
- A spouse runs the family business and keeps inaccurate books, and the other spouse relies on those records to prepare the joint return, not having any inclination that they’re working with fraudulent numbers.
These are just a few examples of the situations we come across – you may see your situation above, or you may be dealing with something a bit different. Regardless of what’s gone on, at Best Tax Pro, we understand how easily this happens, and we are here to help with no judgment.
What Happens If I Ignore This? Why You Need to Act Now
If you ignore the IRS notices and do nothing, the IRS assumes you agree with the tax liability and can pursue you and your spouse (or ex-spouse) for the full amount. This could lead to collection activities such as:
- Tax liens: The IRS can attach federal tax liens against your property.
- Wage garnishment: The IRS can ask your employer to send a portion of your paycheck directly to the IRS to cover the tax debt; this continues until the tax debt is fully paid.
- Bank levies: The IRS can seize funds from your bank accounts to cover the tax debt.
The IRS can also revoke your passport if you have a seriously delinquent tax debt, and if you’re remarried, the IRS may even be able to seize assets that you own jointly with your new spouse. Keep in mind that the penalties and interest continue accruing throughout it all.
The biggest reason to reach out now – there’s a deadline. You typically only have two years from when you learned about the tax debt to request relief.
How Does Best Tax Pro Handle Innocent Spouse Cases?
Here’s what to expect when you work with us:
- Review and evaluation: We review your tax history and joint returns to understand how you incurred the tax debt. Based on the facts at hand, we determine the type of tax relief you’re eligible for. We explain the options to you and let you choose the path forward.
- Gather documents: We gather all the supporting documents to support our claim – this could be unauthorized signatures, financial records, divorce documents, anything that can help your case.
- Prepare and file the request: We file our well-documented claim, explaining why you shouldn’t be held liable for the tax debt. That stops any pending collection actions (wage garnishments, bank levies, etc.) from moving forward.
- Handle all IRS communication: We respond to any requests for additional information and advocate on your behalf throughout the IRS review process.
- Involve Taxpayer Advocate Service (TAS): If your case is delayed or stalled, we know when to involve TAS to help move things along.
When we represent clients in innocent spouse cases, it’s not just about filing paperwork; it’s about building a persuasive case that leverages the tax code, the specific facts of your situation, and supporting documents. In these types of relief, strategy is everything.
What to Expect: Outcomes and Timelines
Every innocent spouse case is different, and the outcome depends on the specific facts and evidence available. In our case study, it took 15 months to resolve with the IRS; however, some cases will take longer or shorter amounts of time.
For example, if you have unfiled returns in your tax account, we would need to file them first, which could potentially extend the timeline.
Here are all the expected outcomes:
- Full relief: The IRS approves your claim, and all the tax debt, penalties, and interest for the joint tax liability in question are removed.
- Partial relief: The IRS provides partial relief. They absolve you from some of your spouse’s tax debt, but not all of the liability covered in your application.
- Denial: The IRS determines that you don’t qualify for the spouse relief. If we believe you have sufficient evidence to support your appeal, we will review your appeal options.
If the IRS doesn’t respond to your application within six months, you have the right to petition the Tax Court. Working with a USTCP like Joshua Webskowski helps to ensure you can take advantage of this option if it’s the best strategy for your situation.
What If You Still Owe Taxes? Additional Resolution Options
Even with a successful claim, you may still end up with tax debt. If you owe tax after the case is resolved, for whatever reason, we help you explore tax relief options to help you stay compliant. Here are some of the resolution options we can help with:
- IRS installment agreement: This plan allows you to pay your tax debt in manageable monthly payments.
- Offer in compromise (OIC): This program allows you to settle with the IRS for less than you owe.
- Currently Not Collectible (CNC) status: This temporarily pauses collection actions if you can demonstrate that paying the tax liability would cause you financial hardship.
When You Should Seek Help – And When You Don't Need to
You should seek help if the IRS is pursuing you for a spouse or former spouse’s tax debt you didn’t know about. If the debt is very small, you may want to handle the case on your own, but in almost every other situation, you should seek professional representation. Get help immediately if:
- You’ve received a Final Notice of Intent to Levy.
- The IRS is garnishing your wages or threatening to seize your assets.
- The IRS has frozen your bank account.
- A revenue officer has been assigned to your account.
- You’ve known about the tax debt for a while, but you’ve been scared to take action.
Our licensed tax professionals can help you sort through your evidence, determine the tax spouse relief option that works best in your case, and help with the application process.
Why Choose Best Tax Pro?
Here’s why you should consider working with us:
- Josh Webskowski: Josh alone can be “your why”. He is an Enrolled Agent, US Tax Court Practitioner (USTCP), NTPI Fellow, and Past President of the Minnesota Society of Enrolled Agents.
- Diversified team: Besides Josh, our team includes former IRS personnel, with attorney and CPA resources available in the company.
- Direct experience with innocent spouse cases: We’ve successfully helped many clients claim innocent spouse relief, including the case study above where we saved a client nearly a quarter of a million dollars.
- Authorized to represent all 50 states: We are based in Rockford, Minnesota, and are federally authorized to represent taxpayers in all 50 states.
- Convenient services: We can help both virtually and in person. We can sort all your tax problems regardless of your location.
Frequently Asked Questions (FAQs)
Here are answers to the most common questions we get on innocent spouse relief:
If your spouse signed your name without your authorization, you may have a strong basis for the relief. A forged signature can prove that you didn’t agree to the filed joint return and didn’t authorize the reported income, deductions, or credits.
IRS Form 8857 is used to claim innocent spouse relief for a tax debt arising from a joint return. The form is very detailed and helps the IRS determine whether you qualify for relief and, if so, what kind. It’s advisable to have a tax professional approve the answers before filing your claim with the IRS. You can also apply for innocent spouse relief if you’re facing liability for a separately filed return in a community property state like Wisconsin.
It can take several months for the IRS to reach a verdict for complex cases. While some cases are resolved in a few months, others take over a year – processing really varies from one case to another.
Yes, you generally must file a claim no later than two years after the IRS’s first attempt to collect tax from you, with a few exceptions. Ideally, you should file Form 8857 as soon as you become aware of the tax liability, which you believe only your spouse should be held responsible for.
Find Out If You Qualify for Innocent Spouse Relief
Before you decide to apply for innocent spouse relief, it’s important to determine whether you meet the IRS eligibility requirements – let’s talk. You deserve relief, and our team can help you find it.
Don’t let your balance grow bigger due to penalties and interest. Don’t put your assets at risk. Instead, take the first step now – contact us and let’s explore the best way forward for your case. You can also call us at 763-477-4205 for a quicker response.