Purpose- This IRM provides technical and procedural guidance for examining and processing claims for relief from joint and several liability, also referred to as innocent spouse (IS) claims, when taxpayers file a joint tax return. In addition, it provides guidance on relief provisions under IRC 66(c) on IS claims when taxpayers reside in a community property state and file separate returns.

Audience- These procedures apply to examiners and managers in Small Business/Self-Employed (SB/SE) Field Examination and Large Business and International (LB&I).

Policy Owner- The Director, Examination - Field and Campus Policy, who is under the Director, Headquarters Examination.

Program Owner- Field Examination General Processes (FEGP), which is under the Director, Examination - Field and Campus Policy.

Primary Stakeholders- SB/SE Field Examination, LB&I, Appeals, and Office of Chief Counsel.

Contact Information- To recommend changes or make any other suggestions related to this IRM section, see IRM 1.11.6.5, Providing Feedback About an IRM Section - Outside of Clearance.

Taxpayers filing joint returns request relief from joint and several liability on Form 8857, Request for Innocent Spouse Relief, or a similar statement containing the same information signed under the penalties of perjury.

A duly authorized representative may sign Form 8857 on behalf of a taxpayer. A representative becomes authorized to represent a taxpayer for innocent spouse relief by submitting a properly completed Form 2848, Power of Attorney and Declaration of Representative, or equivalent documentation to the IRS that includes the following:

Both taxpayers are jointly and severally responsible for the tax, interest and penalties due on the joint return even if they later divorce. If, however, relief under section 6015 is granted, a spouse can be relieved of all, or part, of the joint liability.

Given the implications of joint and several liability, each spouse is responsible for:

Married taxpayers living in community property states filing separate returns may still be liable for income tax on items attributable to their spouse under community property law. Form 8857 (or a similar statement) is used to make an innocent spouse claim in these cases. See IRM 25.15.5, Relief from Community Property Laws, for additional guidance.

All requests for relief cases are priority cases and require prompt consideration.

Examiners will consider and make a determination on an IS claim received during the examination, and include all years reflected on Form 8857.

Some IS claims including Collection Referrals, Collection Due Process, and TAS cases, are worked by CCISO at the Cincinnati Campus, however, field examiners will receive IS claims:

IS claims can be stand-alone claims (post-assessment) and/or related to an open examination (pre-assessment). Pre-assessment and post-assessment claims have different procedures to consider, including how to communicate the claim determination to the taxpayer. Certain procedures, such as notifying the NRS and giving full consideration to all applicable relief provisions, must be followed in both pre-assessment and post-assessment cases.

A pre-assessment claim occurs when a claim is filed during an open examination, prior to an assessment of a tax liability. The IS claim is considered an additional examination issue and must be worked concurrently with other examination issue(s). The examiner will generally communicate the determination in the examination report that must be issued to each taxpayer.

A post-assessment claim occurs when a claim is filed on a liability that is already assessed. The liability may relate to an underpayment, an understatement, or both. The claim may relate to a year under examination or a prior or subsequent year where a liability remains unpaid from an original filed return or from an additional assessment. In post-assessment cases, the IS claim may be the only issue examined. The post-assessment determination will be communicated to the taxpayer by TS with a preliminary determination letter.

All requests for relief from joint and several liability that are examined must be established on Audit Information Management System (AIMS).

This section provides a summary of actions the examiner must take for an IS claim. These actions are discussed in further detail in the referenced IRM cites provided.

In every examination involving a joint return or where spouses domiciled in a community property state have filed separately, the examiner must explain that relief may be available under IRC 6015 or IRC 66(c), respectively. Pub 1, Your Rights as a Taxpayer, provides a brief description of IS relief. See IRM 25.15.1.9, Notification Requirements, for additional guidance.

The examiner may provide the taxpayers or representative(s) with the following:

The examiner must fully document the discussion(s) regarding IS relief. SB/SE Field Examination revenue agents (RAs) document the discussion on Lead Sheet 100-3_RA_Initial_Discussion, or a workpaper indexed to Lead Sheet 100-3. SB/SE Field Examination tax compliance officers (TCOs) document the discussion on Lead Sheet 100-3_TCO_Initial_Discussion, or a workpaper indexed to Lead Sheet 100-3. See IRM 25.15.6.11, Workpaper Documentation, for LB&I documentation procedures. The documentation must contain the following:

Taxpayers may request IS relief on Form 8857, or by providing a similar statement (containing the same information required in Form 8857) signed under penalties of perjury.

Any claim for relief filed on or after December 20, 2006, regardless of the revision date of Form 8857 used by the RS, will be treated as a claim for relief under all subsections of IRC 6015 and will prohibit collection action against the RS and suspend the CSED on the RS from the date the claim is received until the expiration of the 90-day period for filing a Tax Court petition or if a Tax Court petition is filed, until the date a Tax Court decision becomes final.

One Form 8857 (or similar statement) may be used to request relief for multiple years. See IRM 25.15.1.6, Form 8857, Request for Innocent Spouse Relief.

When Form 8857 (or similar statement) is filed by a taxpayer, the receiving office will date stamp the form upon receipt.

In any case where the taxpayer is currently under examination for at least one year listed on the Form 8857 (or similar statement), the claim will be worked for all years listed.

If a taxpayer only requests relief for one year on Form 8857 (or similar statement), but an additional year could be considered; work the year on Form 8857 and advise the RS via Letter 3659, Requesting Spouse Initial/Follow-up Contact, that there is another year the Service could consider. For relief requested under IRC 66(c), use Letter 3662, Requesting Spouse Initial/Follow-up Contact IRC Section 66(c).

If the research shows an additional tax year could be considered for relief, but the relief year requested was disallowed or did not qualify, advise the RS another year could be considered. Use Letter 3657, No Consideration Innocent Spouse, or Letter 3658, Unprocessable Innocent Spouse Claim. For relief requested under IRC 66(c), use Letter 3666, IRC section 66(c) Unprocessable/Transferred Claim.

A processable Form 8857 (or similar statement) must contain all of the following:

A Form 8857 (or similar statement) missing any of these items is not processable. See IRM 25.15.6.5.1 for additional guidance.

Relief from joint and several liability should not be confused with other provisions that provide relief to joint filers. The Service has the responsibility to inform taxpayers of relief provisions even if the taxpayers do not specifically raise them due to their own limited knowledge of the law.

If a joint return is invalid, it cannot be considered for IS relief. There are three situations where a joint return is invalid:

The following issues should not be confused with IS relief:

There are additional situations that may prevent filing a claim for relief or result in a non-qualifying claim. See IRM 25.15.3.6 for additional details.

A thorough review of the taxpayers’ account on IDRS is required for every IS claim to determine the relevant factors that may affect processing the claim and/or making a determination on the request for relief.

The examiner must review IDRS for each claim year for the following:

The examiner must pay special attention to statute of limitations implications.

For each claim year, the examiner must review IDRS of the joint MFT 30 account and of the individual MFT 31 account when an MFT 31 account is present (review IMFOLI for each spouse for MFT 31 account information).

Initial contact for all examinations must be made by mail using approved form letters and not by telephone. When the taxpayer requests relief under IRC 6015, Letter 3659, Requesting Spouse Initial/Follow-up Contact , is used to make initial contact and notify the RS of receipt of the IS claim or to request additional information from the RS. For relief requested under IRC 66(c), use Letter 3662, Requesting Spouse Initial/Follow-up Contact, IRC Section 66(c).

When an IS claim is received and determined to be processable, the examiner must notify the NRS. When the taxpayer requests relief under IRC 6015, issue Letter 3284, Notification to Non-Requesting Spouse – Initial Contact Letter, and allow 30 days for the NRS to respond (see IRM 25.15.3.4, Notification to NRS). For relief requested under IRC 66(c), use Letter 3665, Nonrequesting Spouse Initial Contact, IRC section 66(c).

Examiners must not release one spouse’s personal information to the other spouse. For example, do not release either spouse’s new name, home address, telephone number, place of employment, etc., to the other spouse.

Information with respect to the joint return account module, such as balance due, may be released to both spouses. If in doubt as to what may or may not be disclosed, follow IRM 11.3.2.4.1.1, Disclosure of Collection Activities with Respect to Joint Returns, established guidelines or check with the local disclosure officer at: Disclosure Knowledge Base.

The examiner must fully develop the facts, analyze the evidence for each claim year and apply the IS law objectively, using the guidance provided in IRM 25.15.3 to determine if relief from joint and several liability applies. This includes contacting both spouses to obtain information and their positions. See IRM 25.15.3.12, Case Development, for additional guidance on case development.

Examiners must base the determination for each claim year on the facts and circumstances specific to the respective tax year. A separate determination may be necessary for each year if the facts and circumstances differ. In addition, it may be necessary to make a separate determination for an understatement (pre-assessment), an understatement (post-assessment), and/or underpayment (post-assessment) in the same tax year.

The examiner must consider all possible relief provisions that apply.

Once a determination is made on a pre-assessment claim, the examiner must fully document the determination by completing the Innocent Spouse Lead Sheet (see IRM 25.15.6.11 (2)) and/or Form 886-A, Explanation of Items, and prepare an examination report that includes the IS determination in the "Other Information" section of the report. See IRM 25.15.6.10.1 for rules regarding the examination report and the pre-assessment IS determination.

Once a determination is made on a post-assessment claim, the examiner must fully document the determination by completing the Innocent Spouse Lead Sheet (see IRM 25.15.6.11 (2)) and/or Form 886-A and enclose it in the case file. TS is responsible for issuing the determination on all post-assessment cases. See IRM 25.15.6.10.2 for post-assessment guidance.

The IS determination must be fully developed, properly documented in the case file, and communicated to both the RS and NRS. Communicating the determination is different for a pre-assessment determination and a post-assessment determination:

The IS request for relief is an issue and must be indexed to Form 4318, Examination Workpapers Index. For instructions on how to add the IS issue to the RGS case file, refer to the OTHER ISSUES section of the RGS Issue Reference Guides (1040).

SB/SE Examiners must create an IS issue lead sheet by adding the Innocent Spouse audit steps from the Lead Sheet Issue Reference Guide (LSIRG). The generic lead sheet title and file name must be changed to identify the innocent spouse issue in accordance with established file naming conventions specified in IRM 4.10.15.

The audit steps for the innocent spouse issue are located in the "MISCELLANEOUS" section of the Lead Sheet Issue Reference Guide. They should be added to the innocent spouse lead sheet.

Examiners must save a copy of Form 8857 in the electronic case file. The examiner may need to scan a paper Form 8857 to create a PDF.

RGS users must save Form 8857 with the IS issue in Office Documents using the naming format: "Reference Code - Document Number - Descriptive Name." See IRM 4.10.15.7.19(4), Office Documents and Case File Documents.

LB&I IMS users must follow the Mandatory Standard Naming Convention as described in IRM 4.46.6.2(3), Workpaper Organization and Considerations.

The examiner’s consideration of all relevant code sections (i.e., IRC 6015(b), IRC 6015(c), IRC 6015(f) and IRC 66(c)) must be fully documented in the case file. For IRC 6015 relief cases, refer to IRM 25.15.3 for detailed information regarding the relevant factors that must be addressed under each section. IS job aids for all relevant code sections are linked to the Innocent Spouse Lead Sheet in the "Audit Steps" section of the lead sheet. The job aids can also be found at: Exam Procedures Knowledge Base for Innocent Spouse.

Examiners must complete all IS job aids and save them in RGS Office Documents as supporting workpapers using proper naming conventions as described in the example above. If not saved separately, the examiner’s work within the job aid will be lost.

The Innocent Spouse Lead Sheet supporting the IS determination is needed for each determination (e.g., pre-assessment, post-assessment, underpayment and/or understatement) made.

The Tax Court’s scope of review under IRC 6015(e)(7) is limited to the workpapers and documents established at the time of the final determination, and any newly discovered or previously unavailable evidence. Therefore, examiners must ensure the administrative case file is properly maintained and complete. For the IS issue, the case file must include:

The Innocent Spouse Lead Sheet should contain an index reference to all supporting workpapers associated with or regarding the IS claim issue.

There must be documentation supporting how the liability was allocated or apportioned if relief is partially allowed. A computational worksheet for underpayment or understatement is required. The computational worksheet detailing the allocation or apportionment must be provided to the RS and NRS by attaching a copy to the examination report.

In all examinations of a joint return, the examiner must verify the last known mailing address for each spouse. Form 8857 may indicate a different address than shown on IDRS. The examiner must verify the current address and document the actions taken in the activity record. See IRM 4.10.2.8.1, Making Initial Contact, for additional information.

Examiners must send all correspondence separately to each spouse, at each spouse’s last known address, in every case involving a claim for relief from joint and several liability whether or not the spouses reside at the same address.

The examiner must not update an address for the NRS based on information provided on Form 8857 by the RS, without clear and concise notification from the NRS, as the NRS is not the one completing the Form 8857. Examiners must follow the guidance in IRM 4.10.2.11, Taxpayer Change of Address, when determining if the taxpayer has provided clear and concise notification of a new address.

Letters should be addressed to the name (separately) as it appears on IDRS, however examiners should confirm the taxpayer's current name as it may differ from that shown on IDRS. Refer to Form 8857, "current name" to confirm if the RS spouse’s name has changed and address the correspondence accordingly.

When a taxpayer is deceased, additional care must be taken when addressing correspondence. See IRM 25.15.6.14 for guidance on how to address correspondence for a deceased spouse.

If mail is returned undeliverable, follow the guidance provided in IRM 4.10.2.8.4, Undeliverable Initial Contact Letters. If a new address is located, re-issue the correspondence to the new address. If a new address cannot be located, the correspondence must be mailed to the last known address.

Form 8857 and instructions inform the RS that the NRS will be notified and given an opportunity to participate. If the RS alleges abuse by the NRS, or fears retaliation or harassment, the examiner should remind the RS the NRS will be notified, to allow the RS the option to proceed or withdraw the claim. See IRM 25.15.3.12.1, Alleged Abuse, for additional guidance.

If abuse is alleged, the examiner should attempt to contact the RS to determine if it is necessary to take additional precautions to conceal the location of the RS and document any actions taken in the activity record.

In any case when the NRS is deceased, the relief determination must still be completed.

The examiner may be told the NRS is deceased by the RS or IDRS may identify the NRS as deceased. If there is no indication on IDRS that the NRS is deceased, request the following information from the RS or representative:

It is important to determine the proper person to contact on behalf of the NRS because that person is responsible for protecting the rights of the deceased NRS by providing relevant information and presenting the NRS’s position.

There may be an estate or a fiduciary for the deceased NRS. Ask the RS if they know whether the NRS has an estate or heirs as dictated by state law. In addition, research IDRS using CC INOLE with definer G, to determine if the Service is aware of an estate. If yes, research using CC CFINK for POA information under the EIN of the estate.

A fiduciary (trustee, executor, administrator, receiver, personal representative, or guardian) stands in the position of and acts as the taxpayer, not as an appointee or authorized representative. A fiduciary does not need to complete a third party authorization unless the fiduciary wishes to authorize someone else to act in place of the decedent. If necessary, obtain the following:

See IRM 8.7.12.6.2(5), Deceased Non-Requesting Spouse, for guidance on how to address correspondence to the deceased NRS.

All actions and discussions with affected taxpayers and/or personal or authorized representatives must be noted on the activity record and fully documented in the case file.

If a taxpayer’s claim for refund (or request for abatement) includes an IS claim, follow normal claim/abatement procedures with regard to the preparation of the report, forms and letters but do not issue them to the taxpayer. Include any claim for refund/abatement comments as required in the “Other Information” section of the examination report in addition to the statement that conveys the IS determination as shown in IRM 25.15.6.10.1.

Forward the case to the designated TS ISR for mandatory review. TS will issue the claim for refund or abatement report, forms or letters, and the IS claim determination letters.

If the RS has an installment agreement in effect when an IS claim is filed, they must decide whether or not to continue making payments while the request for relief is considered. Inform the taxpayer of the following consequences:

Before a case is forwarded to the designated TS ISR for review, all account problems must be resolved. Account problems are problems with the account not related to the request for relief.

The function with jurisdiction over the issue has the responsibility to resolve any account problems that affect the determination of relief by Examination. Field Examination is not to resolve the account problems of issues under the jurisdiction of another function unless local agreements are reached with the functions. See IRM 4.10.1.4.6, Problem Solving, for additional guidance.

When a request for relief is considered in an examination, additional information is required on Form 3198 and Form 5344:

Examiners must follow the guidance in IRM 4.10.9.9, Case File Assembly for Closing. Form 8857 and attachments should be placed behind and indexed to the IS issue section.