The IRS is reviewing the two-year limitations period on claims for equitable innocent spouse relief, Commissioner Douglas Shulman recently told members of Congress. The lawmakers had asked the IRS to withdraw the two-year limitations period, indicating it was contrary to Congress’ intent.
Innocent spouse relief benefits a spouse who did not know or benefit from fraudulent income tax claims made by his or her spouse on a joint return that they both signed under penalty of law. IRS regulations provide that a taxpayer requesting equitable innocent spouse relief must file Form 8857, Request for Innocent Spouse Relief, or other similar statement with the IRS no later than two years from the date of the first collection activity against the requesting spouse, with respect to the joint tax liability. The Tax Court have held the regulations invalid but several appellate courts have reversed that holding on appeal.
“The two-year limitations period on claims for equitable innocent spouse relief prevents innocent spouses from receiving the relief they deserve,” three senators wrote to Shulman in April. In a separate letter, 50 members of the House said that Congress did not intend to impose a two-year limitations period under Code Sec. 6015(f).
Shulman told lawmakers in a recent letter responding to their request that the IRS is reviewing the two-year limitations period; “The innocent spouse provisions provide important relief to taxpayers when it would be unfair to pursue collection actions.”
Shulman did not, however, say that the IRS would withdraw the regulation. One argument against withdrawal is that the IRS does not have the power to change the law; Congress must pass a change in the law to untie the IRS’s hands.
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