The Internal Revenue Service announced on July 25, 2011 that it will extend help to more innocent spouses by eliminating the two-year time limit that now applies to certain relief requests.  The exisiting regulations which were adopted in 2002 require that innocent spouse requests seeking equitable relief be filed within two years after the IRS first takes collection action against the requesting spouse.

So the good news is :

  • The IRS will no longer apply the two-year limit to new equitable relief requests or requests currently being considered by the agency.
  • A taxpayer whose equitable relief request was previously denied solely due to the two-year limit may reapply using IRS Form 8857, Request for Innocent Spouse Relief, if the collection statute of limitations for the tax years involved has not expired. Taxpayers with cases currently in suspense will be automatically afforded the new rule and should not reapply.
  • The IRS will not apply the two-year limit in any pending litigation involving equitable relief, and where litigation is final, the agency will suspend collection action under certain circumstances.

Innocent spouse relief is only available to taxpayers who file a joint return.  It is designed to help a taxpayer who did nto know and did not have reason to know that his or her spouse underpaid or understated their tax liability.

For more information visit irs.gov or call our office and we would be happy to help you!

Smooches,

Buffie the Tax Heiress