Tax Brake with Robert G. Nath, Esq.

Tax regulations are intended to explain or amplify the tax laws and fill in the gaps on language Congress used in those laws. In this case, the IRS proposed regulations are helpful. They re-affirm the 1998 changes, explaining that relief is available under one of three possibilities: (1) you are an innocent spouse, or (2) you elect to report your liability separately from that of your spouse, or (3) there are equitable circumstances under which you should be held non-liable for jointly reported taxes.

To elect separate liability, the proposed regulations make it clear that you and your spouse must not have been members of the same household for at least 12 months. The regulation discussed separate dwellings and what happens if there are temporary absences. Remember that you have the burden, so save anything that proves the separate dwelling facts.

If one spouse seeks relief in the courts, the other is required to be notified and has the right to participate (“intervene”). To protect against retaliation, the proposed regulations allow the IRS to withhold information about your new name, address, employer, etc., so that the chances of retaliation are lessened.

Finally, the regulations make you go through options (1) and (2) before being considered for equitable relief. That is a paperwork burden, but well worth it to avoid liability if you have an equitable case.

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