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IRS announces it will end the two-year innocent spouse limit

Most married couples in Orange County file a joint tax return. Although both spouses filing a joint return are legally responsible for ensuring the accuracy of their return, the most common practice is for one spouse to take primary control for filing the return. The less-involved spouse may look over the return before signing it, but frequently spouses will sign returns prepared by their partners without much thought.

This practice works for many couples, but problems arise if the spouse in charge of the return files a false return or has resubmitted a return with significant errors. In such cases the IRS will go after both spouses for any fees, back taxes, and penalties related to the return. The IRS does grant relief to innocent spouses in certain cases and the IRS recently announced changes to the two-year time limit that barred many innocent spouse relief requests.

"In recent months, it became clear to me that we need to make significant changes involving innocent spouse relief," said IRS Commissioner Doug Shulman. "This change is a dramatic step to improve our process to make it fairer for an important group of taxpayers. 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."

Important changes to the IRS innocent spouse policy include an elimination of the two-year limit to equitable relief requests, the elimination of the limit in pending litigation, and a policy that allows individuals denied solely because of the limit to reapply using IRS Form 8857.

Source: IRS.gov, "Two-Year Limit No Longer Applies to Many Innocent Spouse Request," IR-2011-80, July 25, 2011

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