Separation of Liability Relief

Qualifications for Separate Liability Election (Sec 6015)

separation of liabilityUnder the separation of liability election under innocent spouse relief, the underpayment of tax can be separated between you and your spouse. This means that that different amounts can be allocated to each spouse instead of both of them being held equally liable for the entire amount of tax owed. Under this form of relief there are no refunds, so if you have already paid the amount owed, there will be no way to get it back. Under separation of liability there must be unpaid taxes that were caused from erroneous items. In order to qualify for this type of relief you must have filed a joint return with the person you seek the relief. When you make the actual filing for separation of liability you must meet either of the two following requirements:

  1. You are not married to, or you are legally separated from the spouse with whom you seek this form of tax relief. If you are widowed it is considered that you are no longer married.
  2. You were not a member of the same household with the spouse that you filed the joint return with at any time during the twelve month period ending prior to the date you make or made the filing for this type of tax relief. Being a member of the same household is defined by the IRS as living apart and are estranged.

In order to qualify you will need to show proof to the IRS that you do meet the requirements that they specify. Even if you do meet the requirements for separation of liability there are some limitations to receiving the relief. The IRS will not grant relief by separation of liability in any of the following situations:

  1. If the IRS can prove that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. The fraudulent scheme doesn’t need to be done just to defraud the IRS but can be to defraud any other third party, such as a creditor, ex-spouse, or business partner.
  2. The IRS finds that at the time the joint return was filed you had knowledge of the erroneous items that you are seeking relief from.
  3. It is found that your spouse (or former spouse) transferred property to you in order to avoid taxes or to avoid the payment of tax.