The IRS has released a new draft of Form 8857, Request for Innocent Spouse Relief, and accompanying draft instructions. Among other changes, the 2021 draft Form 8857 and draft instructions reflect the Taxpayer First Act’s (TFA; PL 116-25) limitation on the Tax Court’s review of IRS innocent spouse determinations.
When married individuals file a joint return ("joint filers"), they become jointly and severally liable for any tax due on that joint return. Joint and several liability means that the IRS can collect the entire amount of any tax due from either spouse who signed the joint return. (Instructions to Form 8857)
IRC Sec. 6015 provides different types of relief from this joint and several liability (innocent spouse relief). A joint filer uses Form 8857 to request innocent spouse relief. (Instructions to Form 8857)
Married people who did not file joint returns, but who lived in community property states, may request relief from liability for tax attributable to an item of community income. (Instructions to Form 8857)
The TFA added Code Sec. 6015(e)(7), which changed the scope of the Tax Court's review of requests for innocent spouse relief. Under Code Sec. 6015(e)(7), the Tax Court's review of an IRS determination denying a request for innocent spouse relief is limited to (a) the administrative record "established at the time of the determination," and (b) any additional newly discovered or previously unavailable evidence.
Both the 2021 draft of Form 8857 and the 2021 draft instructions alert requesting spouses that they need to make the administrative record as complete as possible because Code Sec. 6015(e)(7) limits the Tax Court's review of IRS denials of innocent spouse relief requests.
Both draft form and instructions also reference IRS Publication 971, Innocent Spouse Relief. Pub 971 contains descriptions of the factors the IRS considers when evaluating claims for innocent spouse relief, as well as other helpful information for requesting spouses.
Also, the 2021 draft Form 8857 :
allows requesting spouses to change their address of record by checking a box,
provides the requesting spouse with the ability to authorize the IRS to leave a voice message at the phone number they provided,
allows the requesting spouse to indicate their primary or preferred language for communicating with the IRS,
allows the requesting spouse to provide their "best or safest" phone number,
replaces various checkboxes with spaces for narrative descriptions and explanations about the requesting spouse's situation, and
modifies the question "did you sign a joint return" to read "did you intend to file a joint return."
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