What to do if my Innocent Spouse Relief Request is denied?

March 31, 2021 by Cheryl A.P. Patterson, EA, MSFS
Request Denied

Imagine receiving a bill from the IRS stating you owe tax on income you knew nothing about – income for which you suspect your spouse may be solely responsible. You respond by filing Form 8857 – an application for innocent spouse relief. After months of waiting for a decision from the IRS, you receive a response – and they deny your request.

So – what now? Do you have other options? What if you do not have resources to pay the additional tax that may not have been yours to begin with?

Keep in mind that a claim could be denied for any number of reasons, even a simple one, such as a missing signature or date, submitting an incorrect or incomplete application, or incomplete or missing supporting documentation.

Depending on your circumstances, you may have a right to appeal the decision. If you are the spouse who requested relief (known as the requesting spouse) and the IRS made a preliminary decision denying or only partially allowing your request, you may appeal the decision by filing Form 12509, Statement of Disagreement, within thirty days of receiving the preliminary determination letter from the IRS. If, upon appeal, the IRS partially or completely disallows the requesting spouse’s innocent spouse relief request, they may file a petition with Tax Court. Generally, a Tax Court petition is filed within ninety days from the date the IRS mails the final determination notice. (You will know it is the final determination notice because the IRS sends this notice certified or via registered mail.)
 

What if the requesting spouse already paid the tax liability and now wants to request innocent spouse relief?


Thankfully, they are not out of luck. If the entire tax due was paid in full, the requesting spouse may file a refund claim with the IRS by filling out Form 843, Claim for Refund and Request for Abatement. If the IRS denies the claim for refund, then the requesting spouse may file a refund lawsuit in Federal District Court or the Court of Federal Claims. It is important to remember that not all types of innocent spouse relief may request a claim for refund. If the requesting spouse was granted separate liability relief, they cannot submit a claim for refund for tax already paid. For more information on the types of innocent spouse relief available, please review the blog written by Richard Manies, MBA, EA, titled “What is IRS innocent spouse relief from taxes? How does it work?

If all your appeals have been exhausted and the Tax Court denied your request, there are options to pay the tax due over time or (depending on your financial status) being placed in a non-collectible status. You may also qualify for an Offer in Compromise. (More information about Offers in Compromise can be found here.)

However, if you’re tired of trying to tackle these IRS issues on your own, contact us, instead! We have a team of experts that are ready to guide you with the best approach to your unique situation, no matter what that may be. Please visit https://www.taxaudit.com/tax-debt-relief-assistance for more information.

Do you owe money to the IRS or State?

Get Professional Help Now!

SEARCH

 

Cheryl A.P. Patterson EA MSFS
Tax Analyst

 

Cheryl Patterson is an Enrolled Agent and a Certified Fraud Examiner. She currently serves as a Tax Analyst at TaxAudit, providing advice and education to the firm's members. Trained in detecting and reporting on incidences of financial fraud, Cheryl applies her skills in the investigation of senior financial exploitation cases for the Texas Adult Protective Services agency, where she volunteers. Cheryl's experience in the private sector includes preparing tax returns, providing bookkeeping services, and forensic financial analysis. She holds a Bachelor of Science Degree in Accounting and a Master’s Degree in Forensic Studies focusing on Forensic Accounting and Investigation.


 

Recent Articles

Cash, IRS check, and Social Security Card
Taxpayers who are behind on their federal taxes may be surprised to know that their Social Security benefits are ripe for the picking by the IRS.
Definitely Worth It
Yes, TurboTax Audit Defense It is absolutely worth it. Those who have audit defense do not have to panic or make frantic calls upon receipt of IRS tax notices.
Doing Taxes
The most important thing about having audit defense, in my opinion, is peace of mind. Your tax professional will help you navigate the waters of a tax audit.
Net Operating Loss
If you are a small business owner, you may have heard about net operating losses. If you have one, it may create a reduction in your taxes in other years.
This blog does not provide legal, financial, accounting, or tax advice. The content on this blog is “as is” and carries no warranties. TaxAudit does not warrant or guarantee the accuracy, reliability, and completeness of the content of this blog. Content may become out of date as tax laws change. TaxAudit may, but has no obligation to monitor or respond to comments.