IRS Appeals - Innocent Spouse Claims - John R. Dundon II, Enrolled Agent
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IRS Appeals – Innocent Spouse Claims

IRS Appeals – Innocent Spouse Claims

This is an overview of actions the Appeals Officer takes during IRS Appeals consideration of an innocent spouse case. It references the IRS IRM  The IRS Appeals Officer is to consider the facts and circumstances of the case and all pertinent information when making a determination.  In addition to this the IRS Appeals Officer considers whether the government faces litigating hazards under the following provisions:

  • IRC 6013(e), prior innocent spouse provision, for which the taxpayer may file suit with the United States District Court or the United States Court of Federal Claims.

  • IRC 6015(b), innocent spouse relief, for which the taxpayer may petition the Tax Court for a redetermination.

  • IRC 6015(c), election to allocate liability, for which the taxpayer may petition the Tax Court for a redetermination.

  • IRC 6015(f), equitable relief determinations, for which the taxpayer may petition the Tax Court for a redetermination and the Tax Court will review using an abuse of discretion standard for IRC 6015(f) determinations only for years which were not full paid prior to December 20, 2006.

If the requesting spouse (RS) elects only one subsection, (b) or (c), and relief is denied under the subsection specified, then the other subsection should be considered even though not specifically elected. When relief is denied under subsections (b) and (c), equitable relief under subsection (f) should be considered even if it was not specified by the RS. If it appears another subsection of IRC 6015 is likely to be applicable, the RS should be advised of those provisions and inquire whether the RS wishes to amend the innocent spouse request.

IRC 66(c), traditional or equitable relief for married taxpayers filing separate returns in community property states, does not allow the taxpayer to petition the Tax Court for a redetermination in a stand alone proceeding. See Bernal v. Commissioner, 120 T.C. 102 (2003) and IRM

Additionally the IRS Appeals Officer is obligated to:

  1. Fully explain joint and several liability and the criteria for relief under applicable IRC sections.
  2. Fully document the determination in work papers.
  3. Prepare required reports, letters, agreement forms, computations, etc.
  4. Send separate notices to each spouse as required by law. See Rev. Proc. 2003-19; Treas. Reg. § 1.6015-6; and IRC 6015(h)(2).
  5. Prepare a Customized Form 5402 for the Innocent Spouse case using ACDS APGolf.
  6. Fully explain the reasons for the determination to either grant or deny relief in the Appeals Case Memorandum (ACM), if needed, or on the Customized Form 5402, if the case is very simple or the taxpayer concedes in full. If all explanations fit in Item 11 of the Customized Form 5402, it can serve as the entire ACM.
Upon reaching a final decision Appeals is obligated to do the following:

  1. Solicits and executes a waiver from the RS, if appropriate.
  2. Issues the final determination letter to the RS if no waiver is signed or if required.
  3. Notifies the non requesting spouse (NRS) of the final determination.
  4. Completes processing of partially or fully allowed claims.
  5. Complete the required updates to the Innocent Spouse Tracking System (ISTS)