So I learned the other day about a really interesting (and beneficial to women) rule. It’s called the Innocent Spouse rule within the IRS. Basically, it’s intended to prevent spouses from having to pay back taxes on a joint return if they weren’t aware of the fact that their spouse wasn’t paying them or was committing fraud or other tax evasive measures. It’s intended to protect victims of domestic violence and whose spouse is committing fraud unbeknownst to them. It’s a women’s issue because the spouse that requests it is almost always the wife.
Even though these rules exist, it’s hard to actually be granted innocent spouse status. It’s difficult because you have to prove that you had no knowledge of it. And if you are perceived to benefit from it at all, you must not be innocent according to the IRS. Because abusers can’t keep you in golden cages, apparently. According to the IRS, even if you file a joint tax return with your spouse and they die leaving tons of back taxes, you’re on the hook. Also, if you divorce and in the proceedings agree that one spouse is responsible for the taxes, the IRS doesn’t take that into account and you can still be liable. Even if the other spouse earns all the income (say you’re a stay at home mom or your abusive husband doesn’t allow you to work outside the home), you can still be held responsible. They also feel that if “a reasonable person in similar circumstances would have known of the understatement” then you’re not eligible. How do they determine something like that? It seems so subjective. Also, they take your education background into effect, like if you’re more educated, you should have known or questioned the tax return. I’ll be completely honest here, I’m almost a college graduate and taxes still confuse me. Also, they’re required to contact your former spouse, which could restrict women from filing if their spouse was an abuser, they may be afraid of repercussions when the abusive spouse finds out. Additionally, if the IRS granted you relief, they could fight it. Abuse is often times about power and dragging you through a long, legal battle could be a form of one spouse continuing to try and exercise control over the innocent spouse. There is also a 2 year deadline (which they recently did away for equitable relief, but not for innocent spouse relief). Imagine being a woman faced with an abusive spouse that it will take you on average seven times to leave. Now imagine during all this time you’ve been together (which could be years before you even have the courage to leave for the first time) your husband has been filing taxes and evading rules and you owe back taxes, since your husband made you sign the tax return and threatened you with violence if you didn’t. Maybe this went on 5 or 10 years. Either way, the IRS says that you can’t file for the first return he filed or any of the other ones, because it’s been longer than 2 years. I think they should do away with this rule immediately, since it hurts more people than it could ever help. For the record, there is back and forth on this. Some news I read claims that the two year limit for everyone is done away with (and that’s what I thought at first), but the official IRS publication I link to below states, “This change does not apply to requests for regular innocent spouse relief or separation of liability relief. Instead, the 2-year period discussed on pages 2 and 20 of Publication 971 continues to apply.” So that is why I am going with the fact that it is NOT changed across the board. And it definitely should be. Doing away with the two year rule is something that has seen support from both Democrats and Republicans.
One woman, who upon her husband’s death discovered that he owed millions of dollars to the IRS (his lawyers had told him never to tell her anything), wrote Innocent Spouse: A Memoir about her experience.
For more information in audio form, you can listen to a podcast on the subject here (I have not listened to it, to be totally honest, because I prefer reading to listening, but I know some people are audio learners).
If you are an innocent spouse, remember that there is help out there. You can also find resources here. Please note: I am not an attorney and can not give legal advice. This is just my understanding from googling and reading.I’ve done my best that I can to provide you with accurate information, but it is only my understanding and not a background in tax law.
- IRS Innocent Spouse Rules are Tough – ABC News
- Tax Information for Innocent Spouses (Link broken as of 1/18/2016)
- Official IRS Publication on Innocent Spouse Relief
- Innocent Spouse Rule
- IRS To Give Innocent Spouse A Facelift – Forbes
- IRS ‘innocent spouse’ rules can be tough -USATODAY.com
- Innocent Spouse Questions & Answers (Link broken as of 1/18/2016)