IRS ‘innocent spouse’ rules can be tough

usatoday front page IRS tax lawyer story.When Valarie Stephenson tried to leave her husband in 2003, he put a gun to her head and threatened to kill her. She was so terrified that she remained in the marriage until 2007, when a friend — who noticed the bruises on her body — helped her escape to her mother’s home in Phoenix. Stephenson then contacted an attorney and filed for divorce.

After the divorce was finalized in 2008, Stephenson learned that she was liable for more than $66,000 in unpaid taxes stemming from a joint tax return filed in 1999.

Stephenson asked the IRS for relief under the “innocent-spouse” rule. Taxpayers who are granted innocent-spouse status aren’t responsible for a spouse’s unpaid taxes, even if they signed a joint tax return.

Stephenson said her former husband kept financial documents in a locked file cabinet, and threatened to hit her when she asked questions about documents he told her to sign.

While Stephenson seems like a textbook example of the type of individual the innocent-spouse rule is designed to help, the IRS said she was responsible for unpaid taxes related to a 1999 joint tax return. The reason: Stephenson failed to apply for relief within two years after receiving a collection notice from the IRS.

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