A taxpayer filed a joint return with their spouse and later discovered an understatement of tax attributable solely to the other spouse's unreported income. The IRS first took collection action against this taxpayer more than two years ago, and the taxpayer is now seeking relief under IRC Section 6015. Under current IRS procedures, which statement correctly describes the effect of that two-year gap on the taxpayer's available relief?
- The taxpayer is barred from all forms of relief under IRC Section 6015, because every category of innocent spouse relief must be requested within two years of the first collection activity
- The taxpayer may still be considered for equitable relief under IRC Section 6015(f), because the IRS eliminated the two-year filing deadline for equitable relief requests, even though traditional innocent spouse relief and separation-of-liability relief under Section 6015(b) and (c) generally still require a request within two years of the first collection activity
- The taxpayer may still be considered for traditional innocent spouse relief under Section 6015(b), because the two-year deadline was eliminated for all three categories of relief under Section 6015 at the same time
- The taxpayer's only remaining option is to request separation-of-liability relief under Section 6015(c), because that category of relief has never been subject to any deadline tied to collection activity
Why B? And why not the others?
Correct answer: B. The taxpayer may still be considered for equitable relief under IRC Section 6015(f), because the IRS eliminated the two-year filing deadline for equitable relief requests, even though traditional innocent spouse relief and separation-of-liability relief under Section 6015(b) and (c) generally still require a request within two years of the first collection activity
In 2011 the IRS announced, and later formalized through revised procedures, that it would no longer apply a two-year deadline measured from the first collection activity to requests for equitable relief under IRC Section 6015(f); such requests instead remain available within the applicable collection or refund statute of limitations. Traditional innocent spouse relief under Section 6015(b) and separation-of-liability relief under Section 6015(c), by contrast, generally still must be requested within two years of the first collection activity taken against the requesting spouse. Because this taxpayer is now outside that two-year window, equitable relief under Section 6015(f) remains the available avenue, not the other two categories. The option barring all relief outright is wrong because it ignores the specific elimination of the deadline for equitable relief. The option claiming the deadline was eliminated for all three categories simultaneously is wrong because only equitable relief lost its two-year filing deadline; the other two categories kept theirs. The option describing separation-of-liability relief as never subject to a collection-activity deadline is wrong because that category is one of the two that generally still carries the two-year requirement, unlike equitable relief.
Source: IRS, Innocent spouse relief (irs.gov/individuals/innocent-spouse-relief)