On August 12th 2013, the US Internal Revenue Service issued ‘REG-132251-11’. This proposed rule would extend the amount of time from two to ten years within which a taxpayers can apply for the “Innocent Spouse” relief program. This rule also proposes to stop collection of taxes in certain situations, especially when an application is being processed. In an attempt to help keep the public informed, the chartered professionals at AG Tax have summarized some of the effects of the proposed legislation.
When a married couple files a joint return they are jointly and severally liable for any taxes owing as well as the penalties or fines that might arise from errors on the return. Often married taxpayers are not aware of the tax liabilities of their spouse and when separated, the tax liability of one partner falls equally on both. The innocent spouse relief program was designed to protect such innocent spouses from the tax debt of their estranged partners.
Under the current transitional rule, the two-year deadline does not apply to any request for equitable relief filed on or after July 25, 2011 (the date that the IRS issued the notice extending innocent spouse relief). The IRS has stated that those individuals who were earlier denied requests for equitable relief by the IRS as untimely under the two-year deadline, to reapply for this relief, unless the individual litigated the denial or the denial included a determination that the individual was not entitled to equitable relief based on the facts.
Every year, over 50,000 taxpayers (Fed) apply for the Innocent Spouse Relief. It is unclear when the rules will be finalized, but the proposed regulation will make the 10-year deadline permanent. It is currently open for public scrutiny and comments for 90 days (Fed) (comments should be sent by September 3, 2013 to be assured of consideration).
The IRS recognizes the fact that there are times when situations arise which a taxpayer is simply unaware of, yet they are held liable for the consequences. The proposed changes will make the Innocent Spouse Relief program more accessible to taxpayers in need.
AG Tax LLP Can Help
If you find yourself in a situation where you think the Innocent Spouse Relief program might be beneficial to your case, please contact an AG Tax professional for assistance.
Additionally, if you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of U.S. and Canadian tax laws as well as cross-border compliance.
As a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.
We can assist with:
- Canadian Personal and corporate tax returns
- Cross Border Taxation and Business Planning
- U.S. Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- State Sales Tax & E-commerce Taxation
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
- 416-238-5920 (Greater Toronto Area, ON)
- 604-538-8735 (Greater Vancouver Area, BC)
- 780-702-2732 (Greater Edmonton Area, AB)
Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
