Celebrating Valentine’s Day with Comments on the Innocent Spouse Regulations


Today’s guest blogger, Jamie Andree, works in the low income taxpayer clinic in Indianapolis at Indiana Legal Services.  She was one of the commenters on the innocent spouse regulations sent out by the IRS last fall.  She regularly represents individuals with innocent spouse issues in her practice.  She will co-author, with Kathryn Sedo of the University of Minnesota, a new chapter on the Earned Income Tax Credit in the upcoming 6th Edition of “Effectively Representing Your Client before the IRS.”

Valentine’s Day arrives at the midpoint of winter, and lovers celebrate by exchanging cards, candy, flowers, and other gifts.  Although February has long been thought of as a month for romance, the origin of the holiday itself is uncertain but likely reflects some of the darker aspects of human behavior.  It is generally believed that Valentine’s Day contains vestiges of both Christian and pagan traditions.   At least three different saints named Valentine were martyred.  In one legend, Valentine was a priest who died defying an imperial order that prohibited soldiers from marrying; he was killed after he refused to stop performing marriage ceremonies for those headed off to war.  Another story suggest that a Valentine was killed for attempting to help Christians escape brutal Roman prisons.  In a third story, an imprisoned Valentine sent the first “valentine” to a paramour as a way to say goodbye before his execution.   Others claim that our holiday has its origins in a Roman fertility festival where young women would be whipped with strips of animal hides to promote fertility.

So what does any of this have to do with tax?  Well for one thing, Valentine’s Day falls near the beginning of tax filing season.  Married taxpayers have long been permitted to file jointly, and lots of married couples use this option because of certain benefits it allows.  For background information on this see Decoupling Taxes and Marriage: Beyond Innocence and Income Splitting, 4 Colum. J. Tax L. 94 (2012). Unfortunately, selecting this filing status turns out to be an unhappy choice for some taxpayers who find themselves jointly and severally liable for an unexpected tax liability caused by the misdeeds of their spouses, misdeeds of which the innocent taxpayer was unaware and had no reasonable chance of discovering prior to filing the joint return.   Fortunately, IRC §6015 sets out a remedy under which spouses who are able to demonstrate certain conditions and satisfy certain procedural requirements will be entitled to relief from  joint and several liability.  For simplicity’s sake, we can refer to this for today’s discussion as “innocent spouse relief.”

Sadly, many taxpayers seeking innocent spouse relief have failed to qualify because they did not make their requests within the established time limits, often through no fault of their own.  Pursuant to regulations adopted by the Service, to be eligible for any type of relief, including equitable relief under §6015(f), taxpayers had to make their request no later than two years from the date of the first collection activity.  Collection activity was defined by the service to include the mailing of a section 6330 notice to the taxpayer’s last known address regardless of whether that notice was actually received by the taxpayer.  Some taxpayers never received the notice because it was intercepted and hidden by the culpable spouse or because they had left the marital home fleeing domestic abuse.   Even taxpayers who sought innocent spouse relief within the required time period faced an uphill battle, particularly if they were unrepresented.


This state of affairs improved significantly when the Service issued Notice 2011-70 in which it announced that the two-year deadline no longer applied to requests for equitable relief under section 6015(f).  In place of that deadline, Notice 2011-70 provided that to be considered timely, a request for equitable relief had to be filed within the period of limitation for collection of tax in section 6502.  The Service later issued Rev. Proc. 2013-34 in which, among other important changes, it gave greater deference to the presence of abuse and financial control of the requesting spouse by the non-requesting spouse.

Now, having issued notice of proposed rulemaking and received comments, IRS is contemplating amendments to section 1.6015-5 on the time and manner for requesting relief from joint and several liability under 6015.  One significant improvement is a substantial decrease in the number of situations where a timely election within the two year period under section 6015(b) and (c) is necessary.  The Service has extended the period to request equitable relief under 6015(f) to taxpayers who do not qualify under (b) or (c) including those who have missed the two year deadline.  But there is still a group of taxpayers subject to the two year deadline on requesting relief: those who might not qualify under (f) because it was not inequitable to hold them liable (e.g. they would suffer no hardship in paying the deficiency and significantly benefitted from the deficiency) but who would have qualified under (c) because of their marital status and lack of actual knowledge.

Among the responses received by IRS to these proposed regulations were comments submitted jointly by four individuals working in low income taxpayer clinics:  Professor Keith Fogg, Villanova Law School; Professor Kathryn Sedo, University of Minnesota Law School; retired Professor Carl Smith, Cardozo Law School; and this writer.   (What a terrific opportunity for the only non-professor in the group!)  Here are the main points we made in our comments.

First, we proposed that the definition of “collection activity” used by IRS to start the 2-year period for requesting relief not include the mailing of the notice of intention to levy.  In keeping with what we believe was the intent of Congress, IRS should adopt an actual seizure rule rather than a rule that relies on what amounts to just another threatening notice.  Alternatively, IRS should at least clarify that the 2-year period starts from the actual receipt of that notice.   For a whole host or reasons, many of which relate to the financial control or domestic abuse perpetrated by the culpable spouse upon the requesting spouse, notices will frequently not reach the potential innocent spouse.  A notice that does not reach its intended recipient is no better than no notice at all.

Second, we proposed that, for purposes of innocent spouse relief, the Service should consider claims for refund that would otherwise be barred by section 6511 if during the period for making a timely refund claim, the requesting spouse was subject to physical, emotional, psychological, or financial abuse.  IRS already recognizes the extent to which abuse adversely affects a taxpayer’s ability to manage financial affairs and, in Rev. Proc. 2013-34, has incorporated it into its policy for dealing with requests for equitable relief under (f).   Yet IRS’s existing unnecessarily stringent standard for applying section 6511(h) (contained in Rev. Proc. 99-21) effectively excludes abuse victims.  For a general discussion of the current limitations of 6511(h) and Rev. Proc. 99-21 see Fogg and Zuraw, Financial Disability for All, 62 Catholic University Law Rev. –(2013).

Finally, we proposed that IRS expand the circumstances for a second final innocent spouse determination notice that would include the opportunity to go to Tax Court.  Some taxpayers, particularly those who are low income, make the initial request for innocent spouse relief pro se.   They do not properly fill out Form 8857 or successfully respond to requests for additional information, and they fail to petition the Tax Court.  Later they arrive at a clinic whose staff ultimately determines that the taxpayer should qualify for innocent spouse relief either because of changed circumstances, a flaw in the initial request, or a failure of the taxpayer to properly follow through with the initial request.  These taxpayers should have the opportunity to petition the Tax Court.

None of these proposals would impose undue strain on the government or conflict with the Service’s recent steps to adapt the innocent spouse procedures to take into account the real life experiences and suffering of taxpayers who need this form of relief.  Indeed, adopting these proposals would close gaps in what is otherwise a much more humane procedure than what existed a few short years ago.   Perhaps this could be the Service’s valentine to those taxpayers who need such a missive the most.

Happy Valentine’s Day!