IRS eases liability rule for spouse's tax debt

WASHINGTON — The Internal Revenue Service is making it easier for some "innocent spouses" to escape liability for their husband's or wife's tax debt.

Under the law, taxpayers who file joint returns are generally liable for the tax debts of their partners. However, spouses who are unaware that their partners have underpaid federal income taxes or underreported their tax liability may qualify for relief from the IRS.

The IRS had required innocent spouses to apply for relief within two years of the agency starting a collection action. On Monday, the IRS eliminated the two-year time limit for some applications after lawmakers and advocates complained that many abused or divorced spouses may not become aware of IRS collection efforts for years.

"This change is a dramatic step to improve our process to make it fairer for an important group of taxpayers," said IRS Commissioner Doug Shulman. "We know these are difficult situations for people to face, and today's change will help innocent spouses victimized in the past, present and the future."

To qualify for relief, taxpayers must apply for an "innocent spouse" designation. The IRS said it will no longer apply the two-year limit on new applications or pending ones. People who had their applications denied in the past because of the time limit can reapply, the agency said.

Nina E. Olson, the National Taxpayer Advocate, had been pushing for the change for years, arguing that the time limit hurt people who had been misled or intimidated by their spouses.

"In practice, many individuals who otherwise qualified for equitable innocent spouse relief had no idea the IRS had initiated collection activity because the other spouse had concealed that information," said Olson, who runs an independent office within the IRS. "As a consequence, it was impossible for these individuals to bring a claim for relief before the two-year deadline to obtain consideration of the merits of their claims."