In Part I of this article, we discussed factors the IRS considers in determining whether innocent spouse relief under IRC § 6015(f) will protect one spouse from the other spouse’s failure to pay federal income tax. (https://crowleyfleck.com/what-to-do-when-your-spouse-doesnt-pay-the-tax-bill-part-1-of-2-2/)
In Part 2, we will review the obligations of a taxpayer to prove that the spouse qualifies for innocent spouse relief. The Eleventh Circuit Court of Appeals recently ruled against innocent spouse relief for a wife whose husband generally was in charge of the finances and taxes and had failed to pay many years’ worth of income taxes. The factors cutting against the purported innocent spouse, and the reasoning for denial of innocent spouse relief, are enlightening. The two factors the innocent spouse failed were:
- Economic Hardship. The Court looked at assets, income and potential income of the putative innocent spouse. The putative innocent spouse failed to provide evidence of any income and assets. This utter failure by the innocent spouse to demonstrate economic hardship compelled the court to rule that the putative innocent spouse had not met the burden of proving economic hardship and thereby failed the “economic hardship” factor. Thus, it is imperative that the innocent spouse provide evidence to the court that the innocent spouse lacks the income and assets to repay the tax.
- Reason to Know. The putative innocent spouse failed the “reason to know” factor due to the late filed return the innocent spouse had signed, the significant amount of tax owed compared to income, the repossession of the house, sharing of finances, failure to pay taxes in the past and meeting with the IRS about those taxes, and having no evidence that the guilty spouse had been dishonest with innocent spouse about finances. Thus, the putative innocent spouse had reason to know that the taxes were going unpaid. It was not enough that the innocent spouse “assumed the taxes would be paid.” Thus, it is imperative that the innocent spouse provide a good explanation for why the spouse was justified in not having reason to know that the taxes would be paid.
Practice Point: Seeth demonstrates the critical importance of the putative innocent spouse to provide substantial evidence of the innocent spouse factors mentioned in Part 1 of this article. The spouse cannot rely on supposition and hope. Detailed work is required to prove the case. Innocent spouse applications can be time consuming and require careful and creative thinking.
Taxpayers who believe they have been wronged by their spouse in the preparation of a tax return or payment of taxes are urged to contact Jared Le Fevre to see if innocent spouse relief may be pursued.
About the Author. Jared M. Le Fevre is a tax attorney and received a Tax LLM degree from the University of Alabama College of Law and a Juris Doctorate from the University of Utah College of Law. Mr. Le Fevre is a Partner in the Tax, Trusts and Estates Practice Group of Crowley Fleck PLLP. Mr. Le Fevre represents taxpayers before the IRS, IRS Independent Office of Appeals, Tax Court, Federal District Court and state tax agencies throughout Montana, Wyoming, North Dakota, Idaho, and Utah. Mr. Le Fevre is involved in federal, state and local tax audits, appeals, and tax resolution throughout these western states. Mr. Le Fevre also advises clients on the tax effects of business and real estate transactions.
Date of information: January 25, 2023.
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 Seeth, v. Commissioner of Internal Revenue, 2021 WL 1049815, at *2 (11th Cir. Mar. 19, 2021).
 Id. at *4.