blogger visitor

Wednesday, December 06, 2006

LEGISLATION PASSED TO ALLOW TAX COURT REVIEW OF EQUITABLE INNOCENT SPOUSE CLAIMS

There are a number of ways that a spouse can get relief from tax liabilities arising from a joint tax return. One method relates to a separate liability election under Code Section 6015(c). Another relates to qualifying for innocent spouse relief under Code Section 6015(b). Lastly, a spouse can seek equitable relief from the IRS under Code Section 6015(f).

Due to statutory changes made in 2001, the IRS has argued that its denial of equitable relief under Code Section 6015(f) is not subject to Tax Court review if no deficiency assessment was made in the particular case. A spouse may want to seek this equitable relief even in the absence of a deficiency assessment - for example, if the spouse was liable for tax declared on a joint tax return but which was not paid. There is case law support for the IRS' position of no Tax Court review in such circumstances.

To allow for review, on December 5 the House of Representatives passed by voice vote H.R. 6111, a bill allowing the Tax Court to review claims for equitable innocent spouse relief, and suspending the running of the limitations period while such claims are pending. This bill is identical to S. 3523, which was passed by the Senate by unanimous consent on Sept. 30, 2006. As a procedural matter, H.R.6111 will have to go back to the Senate for approval. Since the text is identical to S. 3523, it should easily be approved in the Senate and then sent to the President for his signature.

No comments: