The Right to Intervene in Innocent Spouse Cases Disappears When the Affirmative Defense of Innocent Spouse Is Withdrawn

In 1998, Congress made it easier for innocent spouses to get relief from tax problems. The non-asking spouse has certain rights in Tax Court proceedings, including the right to be heard. This article will explain the innocent spouse law and the non-asking spouse’s rights in Tax Court. Married couples can choose to file their taxes together or separately. If they file jointly, they are both responsible for any taxes owed. This can be a problem if one spouse didn’t know about the other spouse’s actions that led to owing taxes. In this case, the innocent spouse can ask for relief from the tax bill. This is known as innocent spouse relief. It’s a way to make sure the innocent spouse isn’t unfairly held responsible for taxes owed by the other spouse. Before 1998, there were limitations on a nonrequesting spouse’s ability to challenge innocent spouse relief granted to their spouse. In one case, the Tax Court approved a settlement based on the ex-wife’s claim for innocent spouse relief without giving the ex-husband’s estate a chance to be heard. The Ninth Circuit court ruled that the estate couldn’t challenge the relief because the nonrequesting spouse would owe the same amount of money regardless. This is because they were both responsible for the debt, so whether or not the ex-wife was considered innocent, the IRS could still take the money owed from the ex-husband. In 1998, Congress changed the innocent spouse relief law to make it easier for one spouse to seek relief from joint tax liabilities. Now, if one spouse asks for relief, the other spouse has to be notified and given a chance to participate in the decision. The Tax Court can also review the denial of relief and the nonrequesting spouse can intervene in the case. The Tax Court has to treat both spouses fairly, whether the innocent spouse issue comes up in an administrative proceeding or in a Tax Court case. But, if the case goes to Tax Court, only the spouse who asked for relief can file a petition. The other spouse can only get involved if the case moves from the IRS to the Tax Court. If one spouse claims they shouldn’t be responsible for a tax debt, the other spouse can’t really do much about it. The Tax Court has the final say, and the non-claiming spouse can only participate in certain parts of the case. But even then, their rights are limited and they can’t appeal the decision. And if the claiming spouse changes their mind, the non-claiming spouse’s participation rights go away. This text talks about the tax laws for married couples. It discusses different sections of the Internal Revenue Code (I.R.C.) and court cases related to taxes. It explains that married couples can choose to file their taxes together or separately, and that the decision depends on their financial situation. It also mentions special rules for when one spouse is responsible for unpaid taxes. Overall, it gives a detailed explanation of tax laws for married couples. The IRS has rules about innocent spouse relief, where one spouse can be protected from the other’s tax problems. There are court cases where this relief was granted or denied, and different factors are considered. In some cases, government entities like the Virgin Islands can be involved, and there are specific rules that apply. Frances D. Sheehy is a tax lawyer in Coconut Creek, Florida. She used to work for the IRS and now helps people with tax problems. She is very experienced and has special certifications. This column is written on behalf of the Tax Law Section by the chair, Michael Allen Lampert, and the editors, Michael D. Miller and Benjamin Jablow.

Source: https://www.floridabar.org/the-florida-bar-journal/the-right-to-intervene-in-innocent-spouse-cases-disappears-when-the-affirmative-defense-of-innocent-spouse-is-withdrawn/