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IRS to Extend Help to More Innocent Spouses

On July 25, 2011, the IRS announced in IR-2011-80 and in Notice 2011-70 that it will eliminate the two-year deadline for innocent spouses to request from the IRS equitable relief from tax liability.

The IRS’s announcements will have the following practical effects:

1) For Requests for Equitable Relief That the IRS Is Currently Considering: The IRS ceased applying the two-year deadline.
2) For Requests the IRS Had Rejected Solely Due to the Two-Year Statute of Limitations: Taxpayers may reapply by submitting Form 8857 (Request for Innocent Spouse Relief) to the IRS if the collection statute of limitations has not expired.
3) For Taxpayers Whose Cases Are in Pending Litigation: The IRS will not apply the two-deadline in any pending litigation involving equitable relief.
4) For Taxpayers Whose Litigation Is Final: The IRS will suspend collection under certain circumstances.

The IRS announcements follow numerous court battles between taxpayers and the government with regard to whether a Treasury regulation that established the two-year deadline was valid. In Notice 2011-70, the IRS stated that the Treasury regulations that address relief for innocent spouses should be revised.

*This document contains legal information, but does not contain legal advice.
*This document has examined laws in effect in August 2011.

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