The Internal Revenue Service has proposed new regulations for innocent spouse relief related to joint and several liability under the Tax Code.

The proposed rules reflect changes in the law made by the Tax Relief and Health Care Act of 2006 along with changes in the law arising from litigation. The regulations provide guidance to married individuals who filed joint returns and later seek relief from joint and several liability.

Section 6013(d)(3) of the Tax Code provides that spouses filing a joint income tax return are jointly and severally liable for liabilities for tax arising from that return, including additions to tax, additional amounts, penalties and interest. Joint and several liability allows the IRS to collect the entire liability from either spouse who signed the joint return, without regard to whom the items of income, deduction, credit, or basis that gave rise to the liability are attributable.

Prior to 1998, Section 6013(e) provided limited relief from joint and several liability. In 1998, Congress enacted the Internal Revenue Service Restructuring and Reform Act of 1998, which repealed Section 6013(e) and replaced it with Section 6015. Section 6015 applies to liabilities arising after July 22, 1998, and liabilities that arose on or before July 22, 1998, but remained unpaid as of that date.

Section 6015 provides three avenues for relief from joint and several liability—Sections 6015(b), (c) and (f). To be eligible for relief from joint and several liability, a spouse must request relief. Under Section 6015(b), a requesting spouse may be entitled to relief from joint and several liability for an understatement of tax attributable to erroneous items of the nonrequesting spouse. Section 6015(c) permits a taxpayer who is divorced, separated, widowed, or who had been living apart from the other spouse for 12 months to allocate his or her tax deficiency between the spouses as if separate returns had been filed.

Claims for relief under Section 6015(b) and (c) must be made within two years of the IRS’s first collection activity against the requesting spouse. Finally, Section 6015(f) confers discretion upon the IRS to grant equitable relief from joint and several liability for understatements and underpayments, based on all the facts and circumstances. Regulations under Section 6015 were first prescribed in 2002.

The newly proposed amendments are necessary to carry out the provisions of Section 6015 and to reflect changes in the law since the publication of TD 9003. On Dec. 20, 2006, Congress enacted the Tax Relief and Health Care Act of 2006, The 2006 law amended Section 6015 to provide the U.S. Tax Court with jurisdiction to review the IRS’s determination to deny equitable relief under section 6015(f) when the IRS has not determined a deficiency and to suspend the period of limitation for collection under Section 6502 when relief is requested only under section 60 15(f).

The proposed regulations also provide clarification and additional guidance on procedural and substantive issues related to the three types of relief from joint and several liability under Section 6015. Section 66 provides relief for a spouse who did not file a joint return in a community property state and did not include in gross income an item of community income that would be attributable solely to the nonrequesting spouse but for the operation of state community property law. Regulations under Section 66 were first prescribed in 2003

Recently, other amendments to the regulations under Section 6015 were proposed in a notice of proposed rulemaking in August 2013. Those regulations proposed changes to remove the two-year deadline for taxpayers to file requests for equitable relief under section 6015(f), and other changes related to the time and manner for requesting relief. In addition, in September, 2013, the IRS issued Rev. Proc. 2013-34, which revised the factors used in determining if a requesting spouse is eligible for equitable relief under Sections 66(c) and 6015(f).

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