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Pennsylvania Family Law Updates, Events & Useful Tips Surrounding Family Law Issues

Short Deadline Prevents Battered Spouses from Raising “Innocent Spouse” Defense

Posted in Equitable Distribution

Not surprisingly, the two year rule has been coming under fire in Congress with the introduction of legislation by presidential candidate and Minnesota Representative Michele Bachmann, as well as a demand by Senate Finance Committee Chairman Max Baucus that the IRS review the two year deadline.

With respect to divorce, particularly in Pennsylvania where two years of separation is not an uncommon occurrence, people could easily sign a joint tax return as a routine action, without taking the time to carefully review the contents of the filing. Factor in abuse, fear, and intimidation and it is not a surprise that truly "innocent spouses" are being denied the right to raise that defense due to the two year limitation.

For most families, filing joint taxes is a routine affair – seldom is the time when filing under a different designation other than "married filing jointly" place a family in the most advantageous tax position. For couples who are separated, continuing to file jointly may continue to make the most sense.

There are times, however, when one spouse has no knowledge of the family’s financial affairs. If the situation warrants it, that spouse could claim relief from the IRS under the "innocent spouse" rule. This rule is designed to protect taxpayers who should not be responsible for the tax liability incurred by the culpable spouse, even in situation where a joint return was signed by the "innocent spouse."

A recent article, however, highlighted how the IRS has persistently struck down appeals by "innocent spouses" due to their failure to seek relief within two years of their receipt of an IRS tax collection notice. What makes these decisions particularly difficult to accept is that they are being made against battered spouses or other parties who were not in a position to know about the tax liability due to abuse or estrangement from the other spouse.  Consequently, they often do not even know there is a problem before the two year limit lapses.