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Innocent Spouse Relief

IRS Tax Relief Provided to Innocent Spouse

The IRS recently granted Innocent Spouse Relief to one of our Boca Raton clients.  In addition to receiving tax relief from back taxes she received a refund of a previous levy.

The case took almost 18 months to resolve as the initial request and appeal were both denied.  After a Tax Court petition was filed, we had the opportunity to work with IRS Counsel and obtain innocent spouse status for our client.

The rules relating to innocent spouse relief were put in place to help a spouse that files a joint return with a current or former spouse avoid liability for understated or unpaid taxes created as a result of the other spouse’s bad actions. Innocent spouse relief may be granted if the spouse requesting tax relief did not know or have reason to know of the actions of the other spouse or holding the requesting spouse liable would be unfair.

In our case the taxpayer requested IRS tax relief using the equitable relief rules as she believed it would be unfair to hold her liable for the joint income tax. The facts and circumstances in the case are as follows:

The taxpayer’s husband owned and operated a business and became involved in illegal activities which shut down his business for a short period of time and required him to incur substantial legal fees. They refinanced their home to help pay the legal expenses. When it came time to file their tax return the couple owed more than $30,000 as a result of the husband’s business income. He told the taxpayer he would pay the tax as he had done in prior years.  Since all the family expenses were being paid timely by the husband and the taxpayer knew he had more than enough money in his savings and stock portfolio she had no reason to doubt he would not pay the $30,000.  The taxpayer had no assets of her own to pay the taxes. The husband did not pay the $30,000 and the taxpayer did not become aware of this until the third or fourth IRS notice was issued. Strangely, he did pay the tax due on the following years return.

In determining whether to grant our client innocent spouse relief, the IRS attorney considered numerous factors and weighed them either in favor of granting relief, against granting relief or as neutral. Ultimately, we were able to demonstrate to him that our client had a reasonable expectation that the taxes would be paid by her husband. As a result we obtained IRS tax relief for our Boca Raton client.

If you’re receiving collection notices from the IRS for back taxes that were caused by your spouse or former spouse call East Coast Tax Consulting Group today at 561-826-9303 to learn if requesting innocent spouse relief may be the solution to your tax problems.

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You deserve the best in IRS tax representation, tax preparation, and tax planning services. At East Coast Tax Consulting Group, you’ll work with a licensed CPA who will handle your case from beginning to end. We invite you to contact our team to schedule a free, confidential consultation.