No Two-Year Limit on Equitable Innocent Spouse Claims

The IRS announced that it will no longer impose a 2-year limit for a taxpayer to claim equitable innocent spouse relief. A taxpayer whose equitable relief request was previously denied solely due to the 2-year limit can reapply using Form 8857, Request for Innocent Spouse Relief, if the collection statute of limitations for the tax years involved has not expired. Taxpayers with cases currently in suspense will be automatically receive the benefit of the new rule and do not have to reapply.

The IRS will not apply the 2-year limit in any pending litigation involving equitable relief. Where litigation is final, the IRS will suspend collection action under certain circumstances.

Finally, the IRS will revise the current regulations that include the 2-year rule so that it no longer applies to equitable relief.

The new IRS position is effective immediately.

Source: IR-2011-80, July 25, 2011