The Not So Innocent Spouse

              Matrimonial lawyers often are required to deal with tax problems. Certainly the New Jersey case of Sheridan  has made a minefield of litigation in this area. When confronted with difficult tax revelations on filed joint tax returns the concept of the innocent spouse is often bandied about. While the law has existed for many years current code section is section 6015. This section provides three specific areas where relief may be sought. In subsection (b) known as the “traditional” innocent spouse section what the requesting spouse knew or should have known as well as benefit derived become difficult issues. In subsection (c) and election exists to in essence provide an opportunity for the electing spouse who is divorced or separated to get out of joint and several liability from a filed joint tax return. This section permits income deductions credits and losses to be credited to the electing spouse separately. Actual knowledge of problems with the joint tax return if demonstrated by IRS can deny relief here. An amended tax return can be attached with the election form requesting (c) treatment. Lastly, subsection (f) provides for equitable relief based on all the facts and circumstances. Taxpayers seeking to take advantage of the innocent spouse rules have two years to file Form 8857 after collection action has begun against them. That form is seven pages and must be cautiously approached both as to content and likely consequences to the electing spouse. The form also warns that the non-electing spouse will be contacted. The easiest way to avoid the problem is to NOT file a joint tax return if the relationship is headed to the rocks. No joint tax return; no joint tax liability.