How Is Equitable Relief Advantageous to an Innocent Spouse? 

The IRC provides for three forms of relief from joint and several liability due to deficiencies or understatements in a joint return by a guilty spouse. First, married taxpayers may request traditional innocent spouse relief. Second, taxpayers who are no longer married (or are widowed), legally separated, or living separately for 12 months from their spouses may file for separate liability election relief. Finally, the IRS may grant “equitable relief.” 

What is Equitable Relief? 

Equitable relief is relief from joint or several liability from joint returns for a former or separated spouse who wishes to file a separate liability election but is ineligible because he or she has not been widowed, divorced, legally separated, or living apart for at least 12 months from the spouse whom he or she filed a joint return.   

What is an Innocent Spouse relieved from in Equitable Relief? 

A taxpayer who wishes to apply for the separate liability election, but is ineligible for such relief, may instead apply for equitable relief (IRC Section 6015(f).   

Under equitable relief, an innocent spouse may be given relief from any deficiency attributable to an erroneous item of the guilty spouse. Also, the relief provides the possibility of relief for understatements, unlike in traditional relief and separate liability election relief that only provide relief from a proposed or assessed deficiency. 

The relief under equitable relief comes in the form of being excused from joint and several liability for the joint tax due. However, the relief granted is different between deficiency cases and underpayment cases. In deficiency cases, the IRS will determine the percentage of adjustments to income attributable to the guilty spouse and then multiply it by the deficiency to come up with the amount of relief to be granted to the innocent spouse. In underpayment cases, the innocent spouse may be relieved of all liability for the year requested, even for tax relating to his or her income or items, or the IRS can grant relief on a pro-rata basis using the percentage of each spouse’s income multiplied by the underpayment in underpayment cases.   

What does the IRS consider in granting Equitable Relief to an Innocent Spouse? 

The IRS’ authority to grant relief to a spouse or former spouse from joint return liability is discretionary. In granting the relief, the IRS must find that: 

  • It is inequitable to hold the requesting innocent spouse liable for any unpaid tax or deficiency in tax after considering all of the facts and circumstances.   
  • Relief is not available for the requesting innocent spouse under the election procedures. 

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