Innocent spouse relief is relief from joint and several liability on a jointly filed federal income tax return, granted under section 6015 of the Internal Revenue Code, so that one spouse is not held responsible for tax, interest and penalties attributable to the other spouse (26 U.S.C. 6015). It is requested from the IRS on Form 8857, and the phrase covers three separate routes: relief from an understatement under subsection (b), separation of liability for a deficiency under subsection (c), and equitable relief under subsection (f) (IRS, Publication 971 (Rev. December 2021)).
Why the Liability Is Joint in the First Place
The relief exists because a joint return creates a liability neither spouse can limit. When a joint return is made, the tax is computed on the aggregate income and the liability for it is joint and several (26 U.S.C. 6013(d)(3)). That reaches not only the tax shown on the return but any additional tax the IRS later determines, even where the additional tax comes from the other spouse’s income, deductions or credits, and a divorce decree assigning the debt to one spouse does not move it (IRS, Instructions for Form 8857 (Rev. June 2021)).
Filing status is no escape after the fact. For any taxable year for which a joint return has been filed, separate returns cannot be made by the spouses once the time for filing the return of either has expired (26 CFR 1.6013-1(a)(1)). After that date, a relief request is the only way the tax liability gets split or lifted.
The Three Routes in Section 6015
Relief From an Understatement Under Subsection (b)
Subsection (b) is innocent spouse relief in the narrow sense, and it works on an understatement, not on a balance the couple reported and did not pay. Four things have to hold together: a joint return was made, it carries an understatement of tax attributable to erroneous items of one spouse, the other spouse establishes that in signing the return he or she did not know and had no reason to know of the understatement, and it is inequitable, taking into account all the facts and circumstances, to hold that spouse liable. The election has to be made no later than 2 years after the date the IRS began collection activities against the spouse making it, and partial relief is written in as well, since a spouse who knew of an understatement but not its extent is relieved of the part he or she had no reason to know about (26 U.S.C. 6015(b)).
Separation of Liability Under Subsection (c)
Subsection (c) does not erase the liability, it divides it. The electing spouse’s liability for an assessed deficiency is capped at the portion allocable to that spouse, and items are allocated the way they would have been had the couple filed separate returns. Eligibility turns first on the marriage rather than the return: when the election is filed the individual must be no longer married to or legally separated from the other spouse, or must not have been a member of the same household with that spouse at any time during the 12-month period ending on the filing date (26 U.S.C. 6015(c) and (d)).
Two limits matter. Where the IRS demonstrates that the electing spouse had actual knowledge, when the return was signed, of an item giving rise to a deficiency that is not allocable to that spouse, the election does not apply to that deficiency or portion, unless the spouse establishes the return was signed under duress. And no credit or refund is allowed as a result of a subsection (c) election at all (26 U.S.C. 6015(c)(3)(C) and (g)(3)).
One thing voids the election outright rather than limiting it. Where the IRS demonstrates that assets were transferred between the spouses as part of a fraudulent scheme, an election under subsection (c) by either spouse is invalid, and the joint and several liability of section 6013(d)(3) applies to the joint return (26 U.S.C. 6015(c)(3)(A)(ii)).
Equitable Relief Under Subsection (f)
Subsection (f) is the residual route, available only where relief is not available under (b) or (c), and it is the only one that reaches an unpaid tax as well as a deficiency. The IRS may relieve the individual where, taking into account all the facts and circumstances, it is inequitable to hold that individual liable for any unpaid tax or any deficiency, or any portion of either (26 U.S.C. 6015(f)(1)). That is the distinction worth holding on to: a correctly prepared return the other spouse simply never paid is an (f) case, because there is no understatement for (b) or (c) to work on.
The Two Filing Clocks
Elections under (b) and (c) run on a collection clock, not on the return. The deadline is 2 years after the first IRS attempt to collect the tax from the requesting spouse, and the instructions list collection activities that may start it, among them a refund offset applied against an amount owed on a joint return for another year where the IRS told the taxpayer about the right to file Form 8857, a claim filed by the IRS in a court proceeding involving the taxpayer or the taxpayer’s property including a proof of claim in bankruptcy, a suit by the United States to collect the joint liability, and a section 6330 notice of intent to levy with collection due process rights, usually issued as Letter 11 or Letter 1058 (IRS, Instructions for Form 8857 (Rev. June 2021)).
Equitable relief runs on the limitation periods instead, which is why applying the 2-year rule to it produces a wrong answer. A request covering a liability that has not been paid must be made before the period of limitation on collection expires, and a request covering a liability already paid must be made while a timely refund claim could still be filed (26 U.S.C. 6015(f)(2)). In everyday terms that is the collection statute, generally 10 years from assessment, for a balance due, and 3 years from the date the original return was filed or 2 years from the date the tax was paid, whichever is later, for a refund (IRS, Instructions for Form 8857 (Rev. June 2021)).
How Equitable Relief Is Decided
Revenue Procedure 2013-34 is the framework the IRS applies to a subsection (f) request. Seven threshold conditions in its section 4.01 come first: a joint return was filed, relief is not available under (b) or (c), the claim is timely, no assets were transferred between the spouses as part of a fraudulent scheme, the nonrequesting spouse did not transfer disqualified assets to the requesting spouse, the requesting spouse did not knowingly participate in filing a fraudulent joint return, and the liability is attributable to an item of the nonrequesting spouse or to an underpayment resulting from that spouse’s income (Revenue Procedure 2013-34).
A request that clears them can be granted on a streamlined basis, and that needs three things at once: the requesting spouse is no longer married to the nonrequesting spouse, would suffer economic hardship if relief were not granted, and did not know or have reason to know of the understatement or deficiency, or in an underpayment case did not know or have reason to know that the other spouse would not or could not pay. Abuse by the nonrequesting spouse, or control over the household finances exercised by restricting the requesting spouse’s access to financial information, satisfies that knowledge element even where the requesting spouse did know, but only where the abuse or control is the reason the requesting spouse could not challenge the return or question the payment, for fear of retaliation. Everything else goes to a factor test in which no one factor and no majority of factors controls the determination (Revenue Procedure 2013-34).
What Filing Form 8857 Sets in Motion
The request is not private. The IRS is required by law to notify the person named on line 6 of the form, and that person gets the opportunity to participate by completing a questionnaire about the years at issue, though the IRS will not disclose the requesting spouse’s current name, address, phone numbers or employers (IRS, Form 8857 (Rev. June 2021)).
Collection is restricted while the request is alive. Outside a termination or jeopardy assessment under sections 6851 and 6861, no levy or proceeding in court may be made, begun or prosecuted against the requesting spouse for the assessment the request relates to until the close of the 90th day after the final determination notice, or, where a petition is filed, until the Tax Court decision becomes final, and the collection limitation period is suspended for that whole time and for 60 days after it (26 U.S.C. 6015(e)(1)(B) and (e)(2)).
Review is narrow in both window and scope. A petition can be filed after the earlier of the final determination notice or the date 6 months after the request was made, and no later than the close of the 90th day after that notice, and the Tax Court reviews the determination de novo but on the administrative record established at the time of the determination plus any newly discovered or previously unavailable evidence (26 U.S.C. 6015(e)(1)(A) and (e)(7)). The record built at the IRS stage is the record the court reads.
What Innocent Spouse Relief Is Not
It is not injured spouse allocation. An injured spouse is one whose share of a joint overpayment was, or is expected to be, applied against the other spouse’s legally enforceable past-due debts, such as federal or state tax, child or spousal support, or a federal nontax debt like a student loan, and that claim goes on Form 8379 rather than Form 8857 (IRS, Publication 971 (Rev. December 2021)). One asks to be released from a liability; the other asks for a refund share back.
It is also not relief for a return that was never joint. A married taxpayer in a community property state who filed separately and left out an item of community income can seek relief under section 66(c) of the Code, which turns on the same did-not-know and inequitable tests (26 U.S.C. 66(c)). That request uses the same form on a different deadline: no later than 6 months before the period of limitations on assessment against the other spouse expires, or, where the IRS opens an examination inside that window, 30 days after its initial contact letter (IRS, Instructions for Form 8857 (Rev. June 2021)).
Where the Term Lands in a Firm’s Work
For a CPA or EA firm the subject usually arrives as a notice a client brings in, and three constraints shape what the firm can do next.
The first is the clock that notice may already have started. Because the 2-year period for subsections (b) and (c) runs from the first collection attempt rather than from the assessment or the examination, the letter in the client’s hand can be the event that set it running (IRS, Instructions for Form 8857 (Rev. June 2021)).
The second is conflict of interest, and it bites hardest where the firm prepared the joint return. A practitioner may not represent a client before the IRS where the representation is directly adverse to another client, and a request that asks the IRS to leave the liability with the other spouse is directly adverse to that spouse (Section 10.29(a) of the Treasury practice rules). A practitioner may act anyway only on conditions, and they are set out in how firms paper a conflict of interest.
The third is what the client is actually asking for. A separation of liability election cannot produce money back, so a client who wants a refund of what has already been paid is asking for relief under subsection (b) or subsection (f) (26 U.S.C. 6015(g)).
Firms absorbing relief-request documentation work in the middle of a filing season can add trained offshore tax preparers through Accountably, with a trial task so the firm’s own reviewer grades real work first.
Common Questions
The statute puts the work on the person asking, though not all of it. Under subsection (b) the requesting spouse must establish that in signing the return he or she did not know and had no reason to know of the understatement, and under subsection (c) each electing individual carries the burden of proof on the portion of the deficiency allocable to that individual (26 U.S.C. 6015(b)(1)(C) and (c)(2)). Knowledge runs the other way under subsection (c): the election stops applying to a deficiency only where the IRS demonstrates the electing spouse had actual knowledge, when the return was signed, of an item giving rise to it that is not allocable to that spouse (26 U.S.C. 6015(c)(3)(C)).
