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

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

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.

However, according to yesterdays release of (IR-2011-80) Notice 2011-70, the IRS will no longer apply the two-year limit to new equitable relief requests or requests currently being considered by the agency.

Furthermore, 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.

For help with your innocent spouse claim, contact San Francisco Tax Attorney Aubrey Hone today at 415.765.1754.

Disclaimer: Hone Maxwell LLP articles and blogs are not intended as legal advice. Additional facts, facts specific to your situation or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.

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