Innocent Spouse Defense

Married couples filing jointly may be jointly prosecuted for various federal tax offenses, as both spouses typically sign the tax returns at issue. However, where one spouse controls the knowledge and information pertaining to the return and its preparation, the other spouse may escape liability through assertion of the innocent spouse defense. The defense revolves around the fact that the innocent spouse did not act “willfully” in that he or she did not have the requisite intent to violate the law.

In a civil context, there are five elements of the Innocent Spouse Defense which must be met:

  • Joint tax return must be filed for each year in question
  • On each return there must be a substantial understatement of tax attributable to erroneous items listed by the non-innocent spouse
  • In signing the returns, the innocent spouse must not know and have no reason to know about the understatements
  • Holding the innocent spouse liable would be inequitable
  • Defense is asserted within two years after IRS has started collection activities