Equitable relief is the only type of innocent spouse relief that can be used for unpaid taxes. The other two types of innocent spouse relief can only be used for understated taxes—amounts that were improperly reported on your return and were later adjusted by the IRS.
If you sent in your tax return, but didn’t send in full payment for your balance due, you have unpaid, rather than understated, taxes.
Equitable Relief Requirements
Equitable relief can be more flexible than the other types of innocent spouse relief. First, the statute of limitations for claiming relief is more generous. You can generally claim relief as long as the IRS can collect the tax from you. The collections period lasts ten years, with additional periods tacked on in some cases.
The unpaid tax liability must generally be attributable to your spouse or former spouse’s income. If the tax liability is attributable to your income, you may still be able to get relief in the following situations:
- You can establish that your spouse misappropriated the funds that were intended for payment of the tax.
- You can establish that you were a victim of domestic abuse.
When unpaid tax is partially attributable to your income and partially attributable to your spouse’s income, you can claim relief for the portion that is attributable to your spouse.
If you meet the threshold conditions for equitable relief, the IRS must look at several factors to determine whether it would be unfair to hold you responsible for the tax liability based on your circumstances.
Other Options for Unpaid Taxes
Equitable relief is one option available to resolve unpaid tax debt. Your tax relief attorney can go over other options, including:
- Penalty abatement
- Installment agreements
- Offers in Compromise
- Currently not collectible status
- Expiration of the collections statute of limitations
Each tax relief program has its own specific requirements, with some being more restrictive than others. You can often combine strategies together to get the best possible outcome.
You may be able to claim equitable relief for several years of joint tax debt, which significantly reduces your balance owed. Then, you claim abatement of penalties to further cut down your tax debt. Finally, your remaining balance is paid off using a monthly installment agreement.
A tax relief attorney can review your case to see which strategies or combination of strategies will work best for your situation.
The Gartzman Law Firm offers tax settlement help for both federal and state tax debt, including innocent spouse relief requests. Use our contact form to request a consultation with an Atlanta tax resolution attorney.