When Nevada spouses filed joint income tax returns during the marriage and one spouse underreported income, claimed improper deductions, or concealed business income, the IRS holds both spouses jointly and severally liable for the tax deficiency — regardless of who caused it. Joint and several liability means the IRS can collect the entire amount owed from either spouse, even the spouse who had no knowledge of the underreporting. For a Nevada spouse discovering tax problems during divorce — or being told by a former spouse that they owe back taxes from a joint return — IRS Innocent Spouse Relief under Internal Revenue Code § 6015 is the primary federal remedy. Hauser Family Law works with Las Vegas clients and their tax professionals to address IRS innocent spouse issues within the Nevada divorce proceeding.
Three Forms of IRS Innocent Spouse Relief
IRC § 6015 provides three distinct forms of relief for spouses who should not bear the full burden of a joint return’s tax liability. First, Classic Innocent Spouse Relief under § 6015(b) eliminates the liability entirely for a spouse who can show: a joint return was filed with an understatement of tax; the understatement was attributable to erroneous items of the other spouse; the innocent spouse did not know and had no reason to know of the understatement at the time of signing; and it would be inequitable to hold the innocent spouse liable given all the facts and circumstances. Second, Separation of Liability Relief under § 6015(c) is available for spouses who are divorced, legally separated, or who have not lived together for the past 12 months. This form allocates the joint return deficiency between the spouses based on who actually created the erroneous items — you pay only your share, not the other spouse’s share. The IRS presumes the requesting spouse had no knowledge of the other spouse’s items in a separation of liability case, which makes it somewhat easier to obtain than classic innocent spouse relief. Third, Equitable Relief under § 6015(f) is a catch-all for spouses who do not qualify for either of the above but where it would be inequitable to hold them liable — available for both understatements and underpayments (including cases where the tax was correctly reported but simply not paid by the other spouse). The IRS applies a multi-factor test for equitable relief including marital status, economic hardship, knowledge, significant benefit, and compliance with tax law going forward.
Timing, Strategy, and the Nevada Divorce Intersection
IRS innocent spouse relief must be requested within 2 years after the IRS first attempts to collect the tax deficiency from the requesting spouse under § 6015(b) and (c); the equitable relief period under § 6015(f) was extended to 10 years in 2011. Critically, the IRS can grant innocent spouse relief even if the Tax Court or a deficiency notice has already been issued. A Tax Court petition — filed within 90 days of a Notice of Deficiency — provides an important forum to raise innocent spouse relief if the IRS denies the Form 8857 claim administratively. In a Nevada divorce context, the marital settlement agreement should address the allocation of joint tax liabilities: which spouse is responsible for any audit adjustments from joint returns filed during the marriage; who pays the cost of the IRS response; and whether there is an indemnification obligation if one spouse’s underreporting creates a deficiency the IRS collects from the other. These contractual protections are important even if the innocent spouse files for § 6015 relief, because the IRS innocent spouse process can take 12-24 months and does not provide immediate protection from IRS collection during that period. Hauser Family Law coordinates with Las Vegas tax attorneys on innocent spouse strategy and ensures that joint tax liability allocations in Nevada divorce decrees protect the innocent spouse’s rights both within the IRS process and in the marital settlement agreement.