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Monday, April 18, 2011

Stark, Lee and Others Urge IRS To Reform Innocent Spouse Relief

OVER 50 LAWMAKERS WANT IRS TO DROP ARBITRARY WINDOW AFFECTING MANY FEMALE JOINT FILERS
By Steven Tavares

Members of the tax-writing House Ways and Means Committee, including ranking member Rep. Pete Stark want the Internal Revenue Services to revisit a little-used tax code allowing spouses to apply for relief from liability of fraudulent joint tax returns filed by their partners.

Stark along with 48 members of the House, including Rep. Barbara Lee and three members of the U.S. Senate sent a letter to IRS Commissioner Douglas Shulman asking him to take another look at what is known as “innocent spouse relief.”

Every years over 50,000 spouses apply for the designation after learning their counterpart had claimed false income on their tax forms. The problem, according to Stark and others, is the 1998 rewriting of IRS code calls for an arbitrary two-year window to report such claims, but allows the IRS 10 years to investigate tax forms. The 8-year disparity, many believe, disproportionately affects women, including those who are the victims of domestic violence.

“In many cases, either because of intimidation or deception on the part of the joint filer, an innocent spouse is left holding the bag,” said Iowa Sen. Tom Harkin. “Allowing the truly innocent spouse the right to file for protection without an arbitrary deadline is crucial since, in many cases, they simply do not know what was done until the IRS informs them.”

According to the letter sent today, lawmakers believe the tax-collecting body improperly transferred the two-year limit over a decade ago from another section of the tax code. “When Congress created the “innocent spouse” protection in the Internal Revenue Code, we did not mandate a statute of limitation for equitable relief claims raised under IRC 6015(f) and 66(c). However, the IRS enacted regulations limiting this protection to two years.”

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