Taxing Lessons Case Summaries

Case — Innocent Spouse Relief

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TL Case Summ


At what point does a spouse’s knowledge of embezzlement income make innocent spouse relief unavailable?


Taxpayer Says:  Husband should not have to pay tax on wife’s embezzlement income because he did not know of it at the time the original joint tax return was filed.

Internal Revenue Service Says: Innocent spouse relief does not apply because husband knew of embezzlement when amended return was filed.


From IRC Section Sec. 6013(d)(3): A married couple who file their Federal tax return jointly are both responsible for the return’s accuracy and are both jointly and severally liable for the entire tax due.

From IRC Section 6015(b)(1)(C): An innocent spouse may seek relief from joint and several liability if he can show that he was justifiably ignorant of unreported income or inflated deductions.


The Internal Revenue Code (IRC) does not specify at what point the spouse must be ignorant of the incorrect information on the tax return—in this case, at the time of filing the original return, or when an amended return is filed—for the innocent spouse provision to apply. [Quote from the Tax Court: “Tax law is of course filled with such traps and has never been viewed as a garden of efficiency …”]


Make your selection, then hover over “The Court’s Decision” below for a full explanation





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For the taxpayer.

The IRS acted arbitrarily in choosing to assume the taxpayer’s knowledge of the embezzlement at the time of filing the amended return made him ineligible for relief under the innocent spouse provision.