Your Former Spouse Filed for Innocent Spouse Relief: Your Rights as the Other Spouse

The letter says your former spouse has asked the IRS to relieve him or her of liability for your joint tax returns. If the IRS agrees, the IRS will look to you for the whole balance. You did not ask for this fight, but you are in it.

Most of what is written about innocent spouse relief is aimed at the person requesting it. This guide is for the other side: the nonrequesting spouse. You have rights in this process. Use them carefully.

Why you got the letter

Internal Revenue Code section 6015(h)(2) directs the Treasury to write regulations giving the other spouse notice of, and an opportunity to participate in, any administrative proceeding on an innocent spouse claim. Treasury Regulation 1.6015-6(a) does that. When the IRS receives a request under section 6015(b), (c) or (f), it must send a notice to your last known address telling you about the claim and giving you an opportunity to submit information.

The IRS must also notify you of its preliminary and final determinations. Form 8857 tells the requesting spouse that the other spouse will have the opportunity to participate by completing a questionnaire about the tax years involved.

You do not have to respond, but you should think about it

Treasury Regulation 1.6015-6(a)(1) says you are not required to submit information. Silence has no penalty.

But silence has consequences. If you do not respond, the IRS decides the case based on what your former spouse submitted and what is in IRS records. If the claim is granted, your former spouse is relieved and you remain liable. Under section 6015 and its regulations, relief applies only to the requesting spouse; the nonrequesting spouse's liability does not go away.

What information the IRS wants from you

Treasury Regulation 1.6015-6(b) says the IRS will consider all relevant information you submit, including:

1. The legal status of your marriage.
2. The extent of the requesting spouse's knowledge of the erroneous items or underpayment.
3. The extent of the requesting spouse's knowledge of or participation in the family business or financial affairs.
4. The requesting spouse's education level.
5. The extent to which the requesting spouse benefited from the erroneous items.
6. Any asset transfers between you.
7. Any indication of fraud on the part of either spouse.
8. Whether it would be inequitable to hold the requesting spouse liable.
9. The allocation or ownership of the items giving rise to the deficiency.
10. Anything else relevant.

That list tracks the legal tests. If your former spouse kept the books for your business, signed the checks, or picked the vacation homes, the IRS wants to know.

A word of caution about what you say

Be truthful, be specific, and be measured. The IRS is evaluating credibility on both sides.

Two cautions in particular.

Your response can be shared. Under Treasury Regulation 1.6015-6(a)(1), on request of either spouse, the IRS will share with one spouse the information submitted by the other, unless sharing would impair tax administration. Assume your former spouse may see what you write.

Your response can matter for your own claim. Treasury Regulation 1.6015-6(c) says that not submitting information does not affect your ability to seek relief for the same year. But information you do submit is relevant if you later file your own claim. If you describe yourself as the spouse who ran everything, do not expect to claim later that you did not know what was on the return.

You may have your own claim

Here is something many nonrequesting spouses never consider. The joint return may contain errors that are your former spouse's, not yours. If so, you may be entitled to relief too.

Treasury Regulation 1.6015-3(a) says separation of liability can be available to both spouses if each is eligible and elects. Under Treasury Regulation 1.6015-3(d)(5), when both spouses elect, each is liable only for the portion allocated to him or her, though some portion may remain joint, for example items both spouses actually knew about. See the guide to separation of liability.

The deadline rules apply to you the same way. If the IRS has taken collection action against you, your two-year window for (b) and (c) may already be running.

Appealing a grant of relief

If the IRS's preliminary determination grants relief to your former spouse, you can push back. The IRS appeals procedures in IRM 8.7.12 state that the nonrequesting spouse may appeal the preliminary determination to the extent relief is granted. The same section says the nonrequesting spouse cannot appeal a decision to deny relief to the requesting spouse, which makes sense: a denial does not hurt you.

IRM 8.7.12 also says that if Appeals is considering increasing the relief beyond what was initially recommended, the nonrequesting spouse must be notified and given an opportunity to present further arguments and information.

The Tax Court: intervention, not a petition

What you cannot do is start your own Tax Court case to overturn a grant of relief. IRM 8.7.12 states that the nonrequesting spouse does not have the right to petition the Tax Court to review the IRS's administrative determination to grant relief to the requesting spouse.

But if your former spouse petitions the Tax Court because relief was denied, you have a right to participate. Section 6015(e)(4) requires the Tax Court to establish rules giving the non-electing spouse adequate notice and an opportunity to become a party. Tax Court Rule 325 implements it:

• The IRS must serve notice of the petition on you within 60 days from the date the petition is served, and the notice must tell you about your right to intervene.
• If you want to intervene, you file a notice of intervention with the Tax Court no later than 60 days after the IRS serves that notice on you, unless the court directs otherwise.

Intervention makes you a party. You can present evidence and argument. That is a significant commitment, and it can be worth it when your former spouse's claim rests on a story you know is not true.

A practical response plan

If you decide to participate, here is how I approach it.

1. Read the IRS letter closely. Note the tax years, the response date, and how the IRS wants information submitted.
2. Get your own transcripts. Know what is owed for each year and what has been paid.
3. Gather documents, not just opinions. Statements showing who handled the accounts, who ran the business, who received the income, and how money was spent are far more persuasive than characterizations of your former spouse.
4. Stick to the factors. The regulation tells you what the IRS considers. Address those points.
5. Consider your own claim at the same time. If some of the liability is attributable to your former spouse, your response and your own Form 8857 should tell a consistent story.
6. Calendar every date. Preliminary determination, appeal window, and if your former spouse goes to Tax Court, the 60-day intervention window under Rule 325.

Where you stand financially

Regardless of the outcome of your former spouse's claim, you remain jointly and severally liable for the joint return under section 6013(d)(3) unless you obtain relief yourself. If your former spouse is relieved, the IRS will collect from you. Start planning now: find out exactly what is owed for each year, whether any of it is attributable to your former spouse, and what your options are for resolving it.

If you have a divorce decree assigning the tax debt to your former spouse, that matters. It does not bind the IRS, but it is relevant to the legal obligation factor in your former spouse's equitable relief claim, and it is a document your family law attorney should review with this IRS claim in mind. See the guide on why a divorce decree does not bind the IRS.