Can I qualify for equitable relief from underpayment or understatement of tax on a jointly filed return with my ex-spouse?

When you were first married in Norman, Oklahoma, divorce was the furthest thing from your mind. After several years, things changed and you found yourself in the middle of a contentious divorce. For many couples, divorces and separations turn out messy—there is no doubt about that. Unfortunately, they can be made even more complicated when there was an understatement or underpayment of tax on a joint return filed as a couple. In some cases, one spouse can seek relief from the Internal Revenue Service (IRS) in an effort to avoid being held liable for the tax owed. One way to do this is to make a request for equitable relief.

Qualifying for Equitable Relief

In order to qualify for equitable relief, you must demonstrate that you meet the following conditions outlined by the IRS:

  1. You are not eligible for innocent spouse relief, relief by separation of liability, or relief from liability based on community property law.
  2. You did not transfer assets to your spouse in an effort to commit fraud.
  3. Your spouse did not transfer property to you for the main purpose of avoiding taxes.
  4. You did not file or avoid filing a tax return with the intent of committing fraud.
  5. You did not pay the tax.
  6. You can demonstrate that it would be unfair to hold you liable for the understatement or underpayment of tax.
  7. The income tax liability that you are seeking relief from is attributable to an item of your spouse with whom you filed the joint return, unless certain exceptions apply.

 

Equitable relief may be an excellent option for a separated or divorced spouse seeking an alternative solution to an underpaid or understated tax. To learn more about alternative solutions to tax problems, we encourage you to follow us on Twitter. We frequently tweet helpful tips and information that benefits taxpayers.