Academic journal article Journal of Accountancy

Innocent Spouse Relief Reversed

Academic journal article Journal of Accountancy

Innocent Spouse Relief Reversed

Article excerpt

Congress enacted the innocent spouse provisions to expand the relief available to certain taxpayers. The technical requirements for this relief, however, have resulted in numerous lawsuits. The Ninth Circuit Court of Appeals recently reversed the Tax Court, thus denying relief in certain situations.

Gwendolyn Ewing and Richard Wiwi married in 1995 and filed a joint tax return for the year. Because Richard had failed to pay estimated taxes on his income, a tax was due on the return; the couple included only part of this amount with the return. In 1999 Gwendolyn filed form 8857 requesting relief under the innocent spouse provisions for the remaining tax due. The IRS denied her request. She filed with the Tax Court, which ruled in her favor. The IRS appealed.

Result. For the IRS. IRC section 6015 grants innocent spouse relief in three instances. Subsection (b) grants relief if the requesting spouse was unaware of the erroneous item. Subsection (c) grants relief if the couple is divorced or separated. Subsection (f) grants relief if the taxpayer does not qualify under the other two sections and it would be inequitable not to grant relief. Gwendolyn requested relief under this third rule.

Section 6015(e) provides that the Tax Court can review a denial of relief in cases of tax deficiencies if the taxpayer claimed relief under subsection (b) or (c). Referring to the Congressional Record, the Tax Court determined its review was not limited to deficiency cases. …

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