When you file a joint federal income tax return, both spouses are liable for the tax, interest and any penalties. If one of you makes a tax error, the IRS can legally collect the entire amount from either spouse. You may face financial consequences regardless of who earned the income or who caused the error.
When this happens, you have a powerful tool on your side. Innocent spouse relief can help you if you wrongly face responsibility for a spouse’s tax mistakes. However, obtaining this relief is difficult. The IRS scrutinizes these applications heavily and many taxpayers like you find their claims denied. Here are the most common reasons for denial.
Knowledge of the error
The most frequent reason is the IRS determining that you knew (or had reason to know) about the tax error. When you sign a joint return, you are vouching for its accuracy. The IRS may argue you have “reason to know” if the agency believes a reasonable person would question the error.
In Ohio cases, the IRS scrutinizes your education level, business involvement and financial awareness. Simply signing a return without reviewing it typically isn’t enough to prove innocence.
Incomplete documentation
Most requests for innocent spouse relief use IRS Form 8857. You may receive a denial because the form is incomplete or lacking supporting documentation. To have your relief approved, you must provide sufficient supporting evidence and complete financial records. Helpful supporting documents may include divorce decrees, bank statements or even police reports if applicable.
Missing the deadline
For Traditional Innocent Spouse Relief and Separation of Liability Relief, you must generally file Form 8857 within two years of the IRS’s first collection activity. However, for Equitable Relief, you generally have until the expiration of the IRS’s 10-year collection statute of limitations to file.
Navigating legal processes
Ohio taxpayers are subject to both federal oversight and state tax laws. Because of this, a denial from the IRS can have a domino effect on your financial standing. If you plan to file for relief or address a denial, it is essential to reach out to a legal representative to build a compelling case for innocent spouse relief.