Innocent Spouse Relief

Separation of Liability Relief: Eligibility Requirements

When applying for the Separation of Liability Relief, this means the IRS won’t hold one spouse jointly responsible for the tax liability of a former or current partner. This includes interests and penalties.

The IRS will assign the understatement of tax based on the income and deductions from your earnings and assets.

For this type of relief, there is no refund. Once you’ve already settled the tax due, that, unfortunately, cannot be returned to you.

Eligibility Requirements for Separate Liability Relief (Under Section 6015)

To be accepted for Separation of Liability, these are the following requirements:

You Were Married and Filed Jointly on Your Filing Status

A joint tax return for the year must be filed, indicating that you are looking to divide the understatement of tax with your former spouse.

 Errors on the Return Leads to Understatement of Tax

Because there was an understatement of tax on the joint tax return, this resulted in unpaid taxes.

During the time you file Form 8857, one or two of the following conditions must be met:

You are Divorced, Legally Separated, or Widowed

When you apply this rule, widowed people are no longer married.

Not a Member of Household for the Last 12 Months

When you file for relief using Form 8857 during the last 12 months, you should not be in the same household with your spouse.

To be considered as part of the same household, the IRS will check if:

  • You still share the same residence with your spouse
  • There is a temporary absence from the household and there is an assumption of returning to the house. Let’s take for example that the household is still being maintained because the residents are expected to return. The reasons for a temporary absence could be due to military service, education, military service, vacation, business, and illness.

Reasons Why the Separation of Liability Requests Get Denied by the IRS

It does not automatically mean you qualify for relief even if you meet all the mentioned requirements. Should the following situations be discovered by the IRS, separation of liability relief may not be granted.

  • The property was transferred to your spouse or ex-spouse in order to avoid taxes.
  • There was fraudulent intent for transferring assets to your spouse or ex-spouse. It doesn’t necessarily need to be against the IRS. Defrauding a creditor, a business partner, or another party also qualify.
  • You had knowledge about possible errors in the tax return even after signing. No statement of liability relief will be given for that portion even if you had actual or partial knowledge of the errors.

The IRS Looks at Certain Factors to Support Actual Knowledge

Whether you knew about the error on the joint tax return when you signed it, the IRS will check:

  • If you refused or avoided learning about the item to shield yourself from the liability.
  • If you or your spouse (or former spouse) owned the property that resulted in the erroneous item
  • Consult with a tax professional so you are better informed and more equipped to handle your tax concerns.

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