If you believe that your former spouse should be accountable for tax liability incurred during the marriage, you may want to pursue relief from the joint tax liability. One avenue for achieving relief from a joint tax liability incurred during a marriage is by filing Form 8857, Request for Innocent Spouse Relief, to request relief from the tax liability, penalties, and interest.
What is IRS Form 8857?
Form 8857 is the form that should be used by taxpayers who wish to request innocent spouse relief. It requests basic information about the taxpayer’s circumstances to evaluate a claim for relief. A single Form 8857 can be used for up to three (3) filing periods.
What happens after filing Form 8857?
After the IRS receives Form 8857, it will review the information reported on the form and issue a preliminary determination, which is not required by law, either granting or denying relief. If the preliminary determination denies relief, you have to option to seek review by the Appeals Office or do nothing.
Once the Appeals Office has reviewed the preliminary determination, or if you did nothing, they will issue a final determination letter. Upon receiving the notice of final determination and disagreeing with the Appeals Office’s determination, you can petition the Tax Court to review the determination no later than 90 days after the IRS mailed the determination.
Please take note that for requests for relief or election under IRC § 6015(c) (Separate Liability Election), the IRS should make a determination within six (6) months. If the IRS fails to do so, you can petition the Tax Court to determine the appropriate relief.
May an administrative review be sought multiple times?
Taxpayers are entitled only to one final administrative determination of relief, like in the case of Barnes v. Comm’r. (130 TC 248 (2008) where the Tax Court held that a second administrative request with essentially similar facts and circumstances will not be considered in a request for equitable relief (IRC § 6015(f).
However, the rule admits an exception. Suppose your marital status changed between the first and the second requests for relief. You would be eligible and could file for relief under § 6015(c).
Can Form 8857 be used when requesting a collection due process (CDP) hearing?
Suppose you received a Notice of Intent to Levy or a Notice of Tax Lien, and you wish to request a CDP hearing. You may still request innocent spouse relief by attaching a complete Form 8857 to Form 12153 within 30 days of receiving either of the notices. For unfavorable determinations during the CDP hearing, you may appeal the decision to the Tax Court.
After the final determination of the CDP hearing, you have 90 days to file a petition with the Tax Court concerning the IRS § 6015 spousal defenses raised in the hearing. You also have 30 days under Section IRS § 6330, to file a petition for a full review of all issues raised in the CDP hearing.