Paul L. Caron

Monday, July 25, 2011

IRS Abandons Two-Year Statute of Limitations for Innocent Spouse Claims

IRS Logo The IRS today released (IR-2011-80) Notice 2011-70:

The IRS today announced that it will extend help to more innocent spouses by eliminating the two-year time limit that now applies to certain relief requests. ...

  • The IRS will no longer apply the two-year limit to new equitable relief requests or requests currently being considered by the agency.
  • A taxpayer whose equitable relief request was previously denied solely due to the two-year limit may reapply using IRS Form 8857, Request for Innocent Spouse Relief, if the collection statute of limitations for the tax years involved has not expired. Taxpayers with cases currently in suspense will be automatically afforded the new rule and should not reapply.
  • The IRS will not apply the two-year limit in any pending litigation involving equitable relief, and where litigation is final, the agency will suspend collection action under certain circumstances.

Existing regulations, adopted in 2002, require that innocent spouse requests seeking equitable relief be filed within two years after the IRS first takes collection action against the requesting spouse. The time limit, adopted after a public hearing and public comment, was designed to encourage prompt resolution while evidence remained available. The IRS plans to issue regulations formally removing this time limit.

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Tracked on Jul 26, 2011 6:23:27 AM


Man, I wonder what would have happened if the government had gone 3-0 or 4-0 on appeal instead of just 2-0. Maybe they would have granted (f) relief to everyone who applied for it without bothering to question it at all.

Why not do away with the Rev. Proc. with all those tough factors that can weigh against the spouse? In fact, why doesn't someone challenge the Rev. Proc. as invalid as 6015(f) only grants the IRS the authority to make procedures for (f) relief. That would seem to include the form, time to file, when to file, etc. and not substantive requirements/factors that count for or against relief. Factors that weigh for or against relief are not "procedures" so the IRS isn't authorized by statute to make them.

If the IRS is going to give up on the 6015(f) law that it is correct on, but is a political hot potato, why shouldn't it recall the Rev. Proc. that goes beyond the authority granted to it? Someone out there will want to try to argue that the Rev. Proc. invalid as far as it goes to substantive requirements for (f) relief. I have a Prof. in mind who might have the moxy to make such an argument to the Tax Court. I'll be interested to see if he does (or anyone else for that matter).

Posted by: tax guy | Jul 25, 2011 8:00:34 PM