Beginning July 25, 2011, the IRS will no longer apply the two year limit to new equitable relief requests or requests that are currently under consideration.
Innocent spouse relief is designed to help taxpayers who did not know, or have reason to know, that his or her spouse understated or underpaid income tax liabilities. Where married individuals who file joint returns, each spouse is jointly and severally liable for taxes that are due for the tax year in which the joint return is filed. Section 6015 of the Internal Revenue Code provides for relief in certain circumstances.
Previously, the existing regulations required that innocent spouse requests were filed within two years after the IRS first takes collection action against the requesting spouse. Similarly, circuit court decisions have upheld the validity of the two year deadline as set forth in the regulations.
Taxpayers whose equitable relief application was previously denied solely to the two year limit and were not previously litigated may now reapply for relief if the statute of limitations for collections has not expired.
