Innocent spouse relief is an IRS provision that allows a spouse or former spouse to be relieved of joint and several liability for taxes, interest, and penalties arising from errors or omissions by the other spouse on a jointly filed return.
Three types of relief:
1. Innocent Spouse Relief (IRC §6015(b)): - Requesting spouse must show they did NOT know and had no reason to know about the understated tax. - The understated tax must be attributable to the other spouse's erroneous items. - Must be inequitable to hold the innocent spouse liable.
2. Separation of Liability (IRC §6015(c)): - Only for divorced, legally separated, or widowed individuals. - Allocates the joint liability between spouses based on who is responsible for the items. - The requesting spouse pays only their portion. - Available even if they knew about the understatement, unless they had actual knowledge.
3. Equitable Relief (IRC §6015(f)): - A catch-all for situations where the other two types don't apply. - Available if it would be inequitable to hold the spouse liable. - Can apply to underpayments (not just understated tax) — the only type that can.
Joint and several liability: When spouses file a joint return, each is 100% responsible for the entire tax liability. Innocent spouse relief is the only way to escape this joint liability.
Deadline to request: Generally within 2 years of the first IRS collection activity against the requesting spouse (for types b and c). No time limit for equitable relief (type f).
> Exam tip: Know the three types of innocent spouse relief and when each applies. Equitable relief is the only type that covers underpayments (not just understatements). The 2-year deadline applies to types (b) and (c). Heavily tested on EA Part 3.