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Part 25. Special Topics

Chapter 15. Relief from Joint and Several Liability

Section 3. Technical Provisions of IRC § 6015 (Cont. 1)

25.15.3  Technical Provisions of IRC § 6015 (Cont. 1)

25.15.3.7 
IRC 6015(c) – Election to Allocate a Deficiency

25.15.3.7.2 
Allocating a Deficiency Under IRC § 6015(d)

25.15.3.7.2.2 
Special Rules and Exceptions

25.15.3.7.2.2.1  (09-01-2006)
Separate Treatment Items

  1. Separate treatment items are (nonrefundable) credits and taxes only. They affect the deficiency dollar for dollar in the allocation computation. Examples include:

    1. Child and Dependent Care Credit,

    2. Child Tax Credit,

    3. Education Credits, and

    4. Self-employed (SE) Tax and the 10% penalty for early withdrawal of an Individual Retirement Account (IRA) Tax. This does not include income tax or alternative minimum tax under IRC 1 and IRC 55.

  2. Because separate treatment items affect the deficiency dollar for dollar, they are allocated separately from the other adjustment items. The separate treatment items that were adjusted should be totaled and subtracted from the total deficiency to arrive at a figure that represents only income tax. After the proportionate deficiency (the "only" income tax figure) is allocated between the spouse, then the separate treatment items are allocated between the spouses based on who they belong to and added to their share of the proportionate deficiency.

  3. Underpayment - Separate treatment items creating a balance due are allocated based on who they belong to. See Exhibit 25.15.3-2 on instructions for allocating an underpayment.

25.15.3.7.2.2.2  (09-01-2006)
Actual Knowledge

  1. No relief is available under IRC 6015(c) for any item(s) (or portion of an item) for which the Service establishes that the RS had actual knowledge. Therefore, such item(s) remain a joint and several liability and should not be allocated to either spouse individually. See IRM 25.15.3.7.1 for additional information.

  2. If a RS establishes he or she was the victim of domestic abuse prior to the time the return was signed, but did not sign the return under duress (which might invalidate the joint election), and as a result of the prior abuse, did not challenge any of the items on the return for fear of retaliation, the actual knowledge limitation of subsection (c) will not apply. This exception only applies if the Service first establishes actual knowledge of the item giving rise to the deficiency. See IRM 25.15.3.7.1 regarding the Service's burden to establish actual knowledge. See Treas. Reg. § 1.6015–3(c)(2)(v).

25.15.3.7.2.2.3  (05-01-2005)
Fraudulent Transfers

  1. Taxpayers are not eligible for relief under IRC 6015(c) if assets were transferred between spouses as part of a fraudulent scheme.

  2. IRS bears the burden of showing assets were transferred as part of a fraudulent scheme.

25.15.3.7.2.2.4  (09-01-2006)
Taxpayer Burden of Proof to Establish Their Allocated Portion of the Liability

  1. The RS bears the burden of proof in establishing his or her allocated portion of the liability per IRC 6015(c)(2). The spouse must prove that the items giving rise to an understatement are attributable to the NRS. If efforts to retrieve the administrative file are unsuccessful, and no other corroborating evidence is available to determine attribution of the erroneous items, examiners should base their determination on the credibility of the RS. Subsection (c) requires the Service prove actual knowledge of each item giving rise to a deficiency in order to invalidate an allocation to the NRS. In addition, the Service must prove the extent of actual knowledge for each item. See IRM 25.15.3.7.1.1 for additional information.

25.15.3.7.2.2.5  (05-01-2005)
Allocate as if Spouses Filed Separate Returns

  1. In the allocation computation, adjustment items are allocated to each spouse in the same manner as they would have been had the spouses filed separate returns ignoring separate return limitations. See IRM 25.15.3.7.2.2.6 for additional information.

25.15.3.7.2.2.6  (03-21-2008)
Ignore Separate Return Limitations

  1. Under IRC 6015(d)(4) if a deduction or credit would be disallowed had the taxpayer filed a separate return, the deduction should be computed as it would for a joint return and then allocated between spouses.

  2. If a credit would not be allowed on a separate return, the credit should be computed as it would for a joint return and then allocated between spouses. Examples of credits generally not allowed on separate returns are the child and dependent care credit, the Hope and Lifetime Learning credits, and the Earned Income credit.

  3. A similar rule applies to income and deductions (such as taxable social security and railroad retirement benefits and the IRA deduction) subject to special limitations on a joint return. The items should be computed based on a joint return and then allocated between spouses.

25.15.3.7.2.2.7  (09-01-2006)
Rules Regarding Relief for Items Attributable to RS

  1. Generally, the RS may not be relieved of any part of the deficiency which relates to an item attributable to the RS. A RS can obtain relief from his or her own item to the extent that the RS does not receive a tax benefit from the item and the item offsets the NRS's income. In these instances, the Service must establish that the RS had actual knowledge to invalidate the allocation to the NRS, or the RS will be able to obtain relief.

25.15.3.7.2.2.8  (09-01-2006)
Tax Benefit Limitation

  1. An erroneous item that would otherwise qualify for relief does not qualify to the extent the RS received a tax benefit from that item on the original return. Likewise, to the extent the RS did not receive a tax benefit from the item and the NRS does (offset of NRS's income), then the amount that the RS does not receive a benefit from is allocated to the NRS. Examples of items that could result in such a benefit include deductions, losses, and credits attributable to the NRS (or joint items allocated 50–50) that reduce taxable income of the RS or vice-versa.

  2. The RS received a tax benefit on the return to the extent the NRS’s erroneous items (or joint items allocated 50–50) offset the RS’s income or vice-versa.

  3. For separate treatment items of nonrefundable credits and refundable credits, benefit is derived from the lesser of:

    • The total of such credits per return, or

    • The excess of such credits over the NRS’s share of the original return liability including other taxes.

    Example:

    A joint return shows $50,000 of wages from W. The return reflects a Schedule C attributable to H with gross receipts of $15,000 and one deduction of $20,000 for a net loss of $5,000. The return also reflects $1,000 of Lifetime Learning Credit attributable to H. Personal exemptions of $2,500 each were claimed along with the standard deduction of $7,000. Upon examination the $20,000 deduction and $1,000 credit are disallowed.

    In this case H has unused deductions that offset W’s income of $11,000 computed as follows:
    Gross receipts   $15,000  
    Personal exemptions   ( 2,500)  
    Standard Deduction   ( 3,500)  
        - - - - - - - - -
    Taxable Income before erroneous item   $9,000  
    Erroneous item   (20,000)  
        - - - - - - - -
    Taxable income   ($ 11,000)  
    The unused deductions of H equals the tax benefit to W. Since H only used $9,000 of the erroneous item to reduce his taxable income to $-0- the balance of $11,000 benefitted W. W’s potential relief of the $20,000 item would be reduced by $11,000 to $9,000. In addition, since W received the benefit of the $1,000 credit reported on the return, relief is not available for that item.

25.15.3.7.2.2.9  (05-01-2005)
Fraud

  1. IRC 6015(d)(3)(C) provides an exception to the allocation method if the IRS establishes fraud by one or both spouses. The IRS may use an alternative allocation it deems appropriate based on the facts and circumstances.

25.15.3.7.2.2.10  (03-21-2008)
Earned Income Credit and Additional Child Tax Credit

  1. For underpayment cases the Earned Income credit and Additional Child Tax credit is allocated to each spouse in proportion to their share of the modified AGI.

  2. For deficiency cases the RS will remain jointly and severally liable for the disallowed credit, to the extent any refund was issued. However, if the RS establishes he or she did not receive or benefit from any portion of the refund, it is allocated to the NRS. The portion of the disallowed credit not refunded is allocated either 50% to each spouse or in proportion to each spouse’s share of the "corrected " modified AGI whichever is more appropriate.

  3. The RS can be held jointly liable for the EITC and Additional Child Tax Credit recapture if he/she benefited by receiving a refund even though he/she may not have had actual knowledge of the erroneous items causing the tax adjustment.

25.15.3.7.2.2.11  (09-01-2006)
Disqualified Assets

  1. A disqualified asset is any property or right to property transferred to the RS by the NRS, if the principal purpose of the transfer was the avoidance of tax or payment of tax (including additions to tax, penalties and interest) IRC 6015(c)(4)(B)(i).

    1. IRS bears the burden of establishing disqualified assets were transferred.

    2. All assets transferred during the 12 month period before or any time after the mailing date of the first letter of proposed deficiency (the 30 day letter), are presumed to be disqualified assets. See IRC 6015(c)(4)(B)(ii)(l) and Treas. Reg. 1.6015–3(c)(3)(iii). The RS may rebut this presumption.

  2. Under IRC 6015(c)(4)(B)(ii)(ll), the presumption that a transfer within 1 year of the first letter or proposed deficiency (30 day letter) is a disqualified asset may be rebutted where:

    1. The RS establishes the transfer was pursuant to a divorce decree or separate maintenance agreement or a written instrument incident to such a decree; or

    2. The RS establishes the principal purpose of the transfer was not the avoidance of tax or payment of tax.

25.15.3.7.2.2.12  (09-01-2006)
Household Employment Taxes

  1. Household employment taxes (reported on Form 1040, Schedule H) are employment taxes, not income taxes under Subtitle A. Only Subtitle A taxes are subject to relief.

25.15.3.7.2.2.13  (03-21-2008)
Child’s Liability

  1. The liability of a child, included on a joint return, is disregarded in computing the separate liability of either spouse. IRC 6015(d)(5). It should be allocated jointly between the spouses. For purposes of this paragraph, a child does not include the taxpayer's stepson or stepdaughter, unless such child was legally adopted by the taxpayer. If the child is the child of only one of the spouses, and the other spouse had not legally adopted such child, any portion of a deficiency relating to the liability of such child is allocated solely to the parent spouse. See Treas. Reg. § 1.6015–3(d)(4)(iii). See Form 8615 , Tax for Children Under Age 18 With Investment Income of More Than $1,700.00 and Form 8814, Parents' Election to Report Child's Interest and Dividends.

25.15.3.7.3  (09-01-2006)
Worksheet

  1. See Exhibit 25.15.3-1 for the worksheet with instructions for allocating a deficiency.

  2. See Exhibit 25.15.3-2 for the worksheet with instructions for allocating an underpayment.

25.15.3.8  (09-01-2006)
IRC 6015(f) Equitable Relief

  1. IRC 6015(f) was enacted to provide relief from joint and several liability where, taking into consideration all the facts and circumstances, it is inequitable to hold the spouse liable for an understatement or underpayment when other relief provisions do not apply.

  2. The Service issued revised guidance on this relief provision in Rev. Proc. 2003–61, 2003–2 C.B. 296. This supersedes Rev. Proc. 2000–15, 2000–1 C.B. 447.

  3. Rev. Proc. 2003–61 is effective for requests for relief filed on or after November 1, 2003. In addition, this revenue procedure is effective for requests filed before that date where a preliminary determination letter was not issued as of November 1, 2003. For claims that do not fit this criteria, i.e., claims for which a preliminary determination letter was issued prior to November 1, 2003, the examiner should continue to follow Rev. Proc. 2000–15.

  4. The guidelines should be applied in a consistent and nondiscriminatory manner. Decisions to grant relief should not be based on the subjective personal and social beliefs of the IRS employee or any other inappropriate grounds.

25.15.3.8.1  (03-21-2008)
Understatements and Underpayments

  1. This provision applies to understatements (liabilities from deficiency assessments) and underpayments (unpaid self-assessed taxes on original or amended returns).

  2. This is the only provision under IRC 6015 that provides relief for underpayments. See IRM 25.15.3.4.2 for a further explanation of underpayment.

  3. Underpayment cases meeting the basic qualifying factors, ( See IRM 25.15.3.8.2), will first be evaluated using the Tier I factors discussed in Section 4.02 of Rev. Proc. 2003–61. See IRM 25.15.3.8.3.

  4. Underpayment cases that do not meet all the Section 4.02 factors will be evaluated using the Tier II factors discussed in Section 4.03 of Rev. Proc. 2003–61. See IRM 25.15.3.8.4.

  5. Understatement cases where relief was denied under IRC 6015(b) and/or IRC 6015(c) will be evaluated using the 4.03 factors. See IRM 25.15.3.8.4.

  6. This provision also applies to unpaid penalties, additions to tax, and interest where relief is granted for the underlying tax. If penalties and interest are the only unpaid amounts left, reasonable cause or other penalty relief provisions may be considered, if appropriate, for the penalties. Otherwise the analysis of the Tier I or II factors should focus on the underlying tax. If relief would have been appropriate for the underlying tax, then relief is appropriate for the penalties and interest.

    Note:

    If there was no underpayment of tax on the tax return then no relief is available under IRC 6015.

    Example:

    Taxpayers filed a joint return late, paid the tax but still owed penalties and interest for filing late, relief is not available under IRC 6015.

  7. See IRM 25.15.3.8.2.2 for refund limitations.

25.15.3.8.2  (03-21-2008)
Eligibility Threshold Requirements

  1. For a list of requirements that must be met for the Service to consider relief under IRC 6015(f), See IRM 25.15.3.8.2.1.

    Note:

    See IRM 25.15.3.8.2.1.(1) and (2) are not relevant for requests for relief under IRC 66(c) relating to taxpayers who file separate returns in community property states. For more information about relief under IRC 66, see IRM 25.15.5.9.

25.15.3.8.2.1  (03-21-2008)
Eligibility Threshold Conditions - Defined

  1. Joint Return Filed — The individual filed a joint return for the year in which relief is requested.

  2. Unavailability of IRC 6015(b) and IRC 6015(c) — Relief is not available under IRC 6015(b) or IRC 6015(c).

  3. Time Limitation — The individual requested relief within 2 years from the date of the first collection activity with respect to the RS after July 22, 1998. See IRM 25.15.3.4.4 for a further explanation of collection activity.

  4. Attributable to the NRS — Equitable relief will not be considered if the liability is solely attributable to the RS unless one of the following exceptions applies. If liability is attributable to both the RS and NRS, equitable relief will only be considered for the portion attributable to the NRS.

    1. Attribution solely due to the operation of community property law. If an item is attributable or partially attributable to the RS solely due to the operation of community property law, then that item (or portion thereof) will be considered to be attributable to the NRS.

    2. Nominal ownership. If the item is titled in the name of the RS, the item is presumptively attributable to the RS. This presumption is rebuttable. For example, H opens an individual retirement account (IRA) in W's name and forges W's signature on the IRA in 1998. Thereafter, H makes contributions to the IRA and in 2002 takes a taxable distribution from the IRA. H and W file a joint return for the 2002 taxable year, but do not report the taxable distribution on their joint return. The Service later proposes a deficiency relating to the taxable IRA distribution and assesses the deficiency against H and W. W requests relief from joint and several liability under IRC 6015. W establishes that W had no knowledge of the IRA account, did not contribute to the IRA, sign paperwork relating to the IRA, or otherwise act as if W were the owner of the IRA. W thereby rebutted the presumption the IRA is attributable to W.

    3. Misappropriation of funds. If the RS did not know and had no reason to know that funds intended for the payment of tax were misappropriated by the NRS for the NRS's benefit, the Service will consider granting equitable relief in this case only to the extent that the funds intended for the payment of tax were taken by the NRS.

    4. Abuse not amounting to duress. If the RS establishes he or she was the victim of abuse prior to the time the return was signed, and that, as a result of the prior abuse, the RS did not challenge the treatment of any items on the return for fear of the NRS's retaliation, the Service will consider granting equitable relief although the deficiency or underpayment may be attributable in part or in full to an item of the RS.

  5. No Fraudulent Transfers — Equitable relief will not be considered if assets were transferred between spouses as part of a fraudulent scheme to avoid tax or payment of tax. Acts which would disqualify the RS from requesting allocation under IRC 6015(c)(3)(A)(ii) also disqualify the RS from equitable relief. See IRM 25.15.3.7.2.2.3 for a further explanation of fraudulent transfers.

  6. No Transfers of Disqualified Assets — Equitable relief will not be considered to the extent of the value of disqualified assets which were transferred to the RS, similar to IRC 6015(c)(4)(B) . See IRM 25.15.3.7.2.2.11 for a further explanation of disqualified assets.

  7. No Fraudulent Return — Equitable relief will not be considered if the RS filed the joint return with fraudulent intent.

25.15.3.8.2.2  (09-01-2006)
The Availability of Refunds under IRC 6015(f)

  1. Deficiency cases— RS is eligible for a refund of certain payments made pursuant to an installment agreement if the RS has not defaulted on the installment agreement. Only installment payments made after the date the request for relief was filed are eligible for refund. Additionally, the RS must establish that he or she provided the funds for which he or she seeks a refund.

    Note:

    An installment agreement is not in default if the Service did not issue a notice of default to the RS or take any action to terminate the installment agreement.

  2. Underpayment cases— The RS is eligible for a refund of separate payments that he or she made after July 22, 1998, if the RS establishes that he or she provided the funds used to make the payment for which he or she seeks a refund. RS is not eligible for refunds of payments made with the joint return, joint payments with the NRS, or payments made solely by the NRS.

  3. Payments made jointly with a spouse that was not the spouse that signed the joint return at issue can be refunded to the RS as if he/she solely made the payments.

  4. Other limitations— The availability of refunds is subject to IRC 6511. For more rules regarding refunds, see IRM 25.15.9.1.16(2).

25.15.3.8.3  (09-01-2006)
Underpayment Cases (Section 4.02 Qualifying Factors)

  1. If all the threshold conditions discussed in See IRM 25.15.3.8.2. are met in underpayment cases, and the RS meets all of the following conditions, relief will ordinarily be granted:

    1. The spouse is divorced, legally separated, or living apart for the 12 month period prior to the date the request was filed;

    2. The RS had a reasonable belief at the time the return was signed that the tax was to be paid; and

    3. Economic hardship (within the meaning of IRC 6343) will result if relief is not granted.

  2. Relief under this section is subject to the following limitations and considerations:

    1. If the return is or has been adjusted to reflect an understatement of tax, relief under Section 4.02 will be available only to the extent of the liability shown on the return prior to any such adjustment.

    2. If relief is not granted due to failure to meet one of the factors in Section 4.02 then the examiner must consider the Tier II factors in Section 4.03. See IRM 25.15.3.8.4 discussed below.

25.15.3.8.3.1  (09-01-2006)
Divorced or Separated

  1. The spouse must be either divorced, legally separated, or living apart for the 12 month period prior to the date the request was filed. Temporary absences do not meet this requirement. Examples of temporary absences include, but are not limited to, incarceration, hospitalization, business travel, vacation travel, military service or away from home for education. This factor has the same meaning as IRC 6015(c)(3)(A)(i) except for the fact that being a widow(er) will not satisfy this factor. For purposes of this section, the meaning of divorced and legally separated will be made in accordance with IRC 7703.

    Note:

    Being a widow or widower does not count as being divorced or separated for IRC 6015(f).

25.15.3.8.3.2  (09-01-2006)
Belief That Tax was to be Paid

  1. The RS must prove he or she had a reasonable belief, at the time the return was signed, that the tax was going to be paid.

  2. A belief the tax would be paid is not reasonable if the RS knew or had reason to know the NRS was not in an economic position, and was not expected to be in an economic position within the foreseeable future, to pay those taxes. A similar position is taken where the RS knew the NRS had a history of not paying the IRS or other creditors.

  3. If there was a reasonable belief some of the liability would be paid, but not all of it, then relief may be available to the extent there was a reasonable belief the liability would be paid.

  4. The examiner making the determination must be satisfied the RS had a bona fide reasonable belief the tax would be paid by the NRS. The examiner should consider requesting a sworn statement under penalty of perjury from the RS.

  5. The examiner should also look to prior years to determine payment history. A consistent history of underpayments that the RS was aware of may show that there was not a reasonable belief the tax would be paid.

25.15.3.8.3.3  (09-01-2006)
Economic Hardship

  1. For purposes of IRC 6015(f) , "economic hardship" has the same meaning as applied under Treas. Reg. § 301.6343-1(b)(4) of the Regulations on Procedure and Administration.

  2. Economic hardship is present where the RS is unable to pay his or her reasonable basic living expenses. The determination of a reasonable amount of basic living expenses will vary according to the circumstances of the individual taxpayer. These circumstances, however, do not include the maintenance of an affluent or luxurious standard of living.

  3. In determining a reasonable amount for basic living expenses the Service will consider any information provided by the taxpayer including:

    1. The taxpayer’s age, employment status and history, ability to work, number of dependents, and status as a dependent of someone else.

    2. The amount reasonably necessary for food, clothing, housing (including utilities, home-owner insurance, home-owner dues, and the like), medical expenses (including health insurance), transportation, current tax payments (including federal, state, and local), alimony, child support, or other court-ordered payments, and expenses necessary to the taxpayer’s production of income (such as dues for a trade union or professional organization, or child care payments which allow the taxpayer to be gainfully employed).

    3. The cost of living in the geographic area in which the taxpayer resides.

    4. The amount of property exempt from levy which is available to pay the taxpayer’s expenses.

    5. Any extraordinary circumstances such as special education expenses, a medical catastrophe, or natural disaster.

25.15.3.8.3.4  (03-21-2008)
Underpayment and Understatement Both at Issue in IRC 6015(f) Claim

  1. Generally, if the return is adjusted to reflect an understatement, relief under Section 4.02 of Rev. Proc. 2003–61will be available only to the extent of the unpaid liability shown on the return, prior to any such adjustment for an understatement. Relief for any unpaid understatement shall be considered under Section 4.03.

    Example:

    Original return reflects an underpayment of $1,000. Due to a math error, the amount due is increased to $1,500. The examiner should consider the $1,000 underpayment under Rev. Proc. 2003–61, Section 4.02 and 4.03. The $500 understatement would be considered under Section 4.03 only.

    Note:

    With respect to the understatement, consider whether the RS is entitled to relief under IRC 6015(b) or IRC 6015(c). For rules regarding these subsections See IRM 25.15.3.6. and See IRM 25.15.3.7. . Additionally, in these circumstances the RS may not have elected IRC 6015(b) and/or IRC 6015(c). If this is the case, See IRM 25.15.3.2. which explains how to handle a case where the RS elected only IRC 6015(f) relief and IRC 6015(b) and/or IRC 6015(c) appear to apply.

25.15.3.8.4  (09-01-2006)
Underpayment and Understatement Cases — Section 4.03

  1. In some instances, a RS with an underpayment liability who meets the threshold requirements (See IRM 25.15.3.8.2) may not meet all of the Section 4.02 conditions (See IRM 25.15.3.8.3) to qualify for relief.

  2. The RS may still qualify for equitable relief from a tax liability, if taking into account all the facts and circumstances, it is clearly inequitable to hold the RS liable for the underpayment or, less frequently, for a liability arising from an understatement adjustment.

  3. Equitable relief is not available for an understatement if relief is available under IRC 6015(b) or IRC 6015(c).

  4. Various factors, discussed below, should be taken into consideration for all cases. All factors should be considered to determine whether relief is consistent with Congressional intent and equitable tax administration.

  5. No one factor, or group of factors, is determinative. The weight given to any one factor depends on the facts and circumstances of the case.

  6. The list of factors is found below. See IRM 25.15.3.8.4.1. These factors are not intended to be exhaustive.

25.15.3.8.4.1  (03-21-2008)
Equitable Relief Factors (Rev. Proc. 2003–61– Section 4.03)

  1. Factors weighing in favor or against relief include, but are not limited to:

    1. Marital Status — Whether the RS is separated (whether legally separated or living apart) or divorced from the NRS. A temporary absence such as an absence due to incarceration, illness, business, vacation, military service, or education, shall not be considered separation for this purpose if it is reasonably expected that the absent spouse will return to the household maintained in anticipation of his or her return. Being a widow will not satisfy this factor.

    2. Economic Hardship —Whether the RS would suffer economic hardship (not be able to pay basic reasonable living expenses) if not granted relief. There can be no hardship if the RS is deceased.

    3. Knowledge or reason to know—
      Underpayment Cases - Whether the RS did not know and had no reason to know the NRS would not pay the income tax liability when the return was filed.
      Deficiency Cases - Whether the RS did not know and had no reason to know of the item giving rise to the deficiency. Reason to know of the item giving rise to the deficiency will not be weighed more heavily than other factors. Actual knowledge of the item giving rise to the deficiency is a strong factor weighing against relief. This strong factor may be overcome if the factors in favor of equitable relief are particularly compelling.

      Note:

      For purposes of determining reason to know, consider the RS's level of education, any deceit or evasiveness of the NRS, the RS's degree of involvement in the activity and household financial matters, the RS's business or financial expertise, and any lavish or unusual expenditures compared with past spending levels.

    4. NRS’s Legal Obligation to Pay — Whether the NRS had a legal obligation to pay the outstanding tax liability pursuant to a divorce decree or agreement. This will not be a factor weighing in favor of relief if the RS knew or had reason to know, at the time the divorce decree or agreement was entered into, the NRS would not pay the liability.

    5. Significant Benefit— Whether the RS received significant benefit, beyond normal support, from the unpaid income tax liability or item giving rise to the deficiency.

    6. Compliance with Income Tax Laws - Whether the RS has made a good faith effort to comply with the income tax laws in the taxable years following the taxable year or years to which the request for relief relates.

  2. Factors weighing in favor of equitable relief when present but which will not weigh against equitable relief if not present, include, but are not limited to the following:

    1. Abuse - Whether the NRS abused the RS. The presence of abuse is a factor favoring relief. The absence of abuse is not weighted. A history of abuse by the NRS may mitigate a RS's knowledge or reason to know.

    2. Mental or Physical Health - Whether the RS was in poor mental or physical health on the date the RS signed the return or at the time the RS requested relief. Consider the nature, extent, and duration of illness when weighing this factor.

25.15.3.8.4.2  (09-01-2006)
Section 4.03 - Other Factors

  1. Other factors bearing (not only to justify relief, but perhaps to deny relief) on relief shall be considered.

25.15.3.9  (03-21-2008)
Determination Letters

  1. The following is a list of letters to be issued to the RS and NRS. IDRS letters are known as the "C" letters and are to be used by CCISO. All other letters are to be used by field personnel. See Exhibit 25.15.3-3. for a summary of letters and their intended use.

25.15.3.9.1  (03-21-2008)
Preliminary Determination Letters

  1. Letter 3660 — Advises the NRS of the preliminary determination and gives the opportunity to appeal the decision.

  2. Letter 3660A — Advises the NRS of our determination based on additional information submitted by the RS and/or NRS. This letter allows for an additional 30 days to appeal. Do not give appeal rights if the claim is disallowed in full.

  3. Letter 3660C — Advises the NRS of the determination made and allows 30 days to appeal. It will also be issued to advise the NRS of our determination based on additional information submitted by the RS and/or NRS and allows an additional 30 days to appeal. Do not give appeal rights if the claim is disallowed in full.

  4. Letter 3661 — Advises the RS of the preliminary determination and gives them the opportunity to appeal the decision.

  5. Letter 3661A — Advises the RS of our determination based on additional information they submitted. This letter allows for an additional 30 days to appeal.

  6. Letter 3661C — Advises the RS of the determination made and allows 30 days to appeal on disallowed and partial disallowed cases.

25.15.3.9.2  (03-21-2008)
Final Determination Letters

  1. Letter 3279 — Advises the RS of our final determination. Informs RS of their Tax Court rights when applicable.

  2. Letter 3279C — Advises the RS of our final determination. Informs RS of their Tax Court rights when applicable.

25.15.3.9.3  (03-21-2008)
Other Letters

  1. Letter 3284 — Notice to the NRS of their opportunity to participate in administrative proceedings.

  2. Letter 3284C — Notice to the NRS of their opportunity to participate in administrative proceedings.

  3. Letter 3323 — Advises the NRS of the Service’s determination.

  4. Letter 3323C — Advises the NRS of the Service’s determination.

  5. Letter 3388 — Acknowledges the RS’s withdrawal of their innocent spouse claim.

  6. Letter 3388C — Obsolete as of November 1, 2003.

  7. Letter 3657 — Advises the RS that the Service is unable to process the claim since they do not meet the basic eligibility requirements for relief. It informs them their claim is being closed.

  8. Letter 3657A— Advises the RS that their claim is not necessary and we will be closing their claim.

  9. Letter 3657C — Advises the RS that their claim is not necessary or it is unprocessable since they do not meet the basic eligibility requirements for requesting relief. It informs the RS that their claim is being closed.

  10. Letter 3658 — Advises the RS that their claim is unprocessable.

  11. Letter 3658C — Advises the RS that their claim is unprocessable.

  12. Letter 3659 — Non-PANES initial contact letter to advise the RS of receipt of their claim and provide information on the claim process.

  13. Letter 3659A — PANES initial contact letter to advise the RS of receipt of their claim and provide information on the claim process.

  14. Letter 3659C — Non-PANES and PANES initial contact letter to advise the RS of receipt of their claim and provide information on the claim process.

  15. Letter 4144C— Advises the RS and NRS the case has been transferred to Appeals. It also advises the RS that Form 870–IS was received late and could not be accepted, when applicable.

    Note:

    Use RA 52 on all letters. This will ensure the correct return address is printed on each letter. All letters issued through Desktop Integration automatically selects RA 52.

25.15.3.10  (03-21-2008)
Waivers

  1. IRC 6015(e)(5) allows a RS who agrees with the Service's determination under IRC 6015(b), IRC 6015(c), or IRC 6015(f) (for claims filed after 12–19–2006) to waive, in writing, the collection restrictions imposed by IRC 6015(e)(1)(B). These waivers are only applicable in post-assessment cases, because in pre-assessment proposed deficiency cases there is no collection, and thus, no need for restrictions on collection, nor any need to waive those restrictions. In these cases, it is anticipated that the RS will not petition the Tax Court. It should be noted, however, that Form 870–IS, Waiver of Collection Restrictions in Innocent Spouse Cases, is not a final determination letter. Thus, even if the RS signs the Form 870–-IS, the RS may petition the Tax Court at any time after six months from filing her claim or within 90 days from the date the Service issues a final determination letter. Nonetheless, once the IRS receives the signed Form 870–IS , the Service may resume collection against the RS. It should also be noted that the suspension of the CSED stops 60 days after the IRS receives the signed Form 870–IS.

  2. Form 870-IS can be found at http://publish.no.irs.gov/catlg.html . The catalog number is 35518X.

  3. The waiver is available for fully and partially disallowed preliminary determination letters upon request by the RS.

  4. A faxed signature can be accepted if contact was made with the RS and case file has been documented with the date of contact and the RS's request to submit a faxed Form 870-IS unless tax assessed is in excess of $25,000, then an original signature is required.

  5. When a signed Form 870-IS is received from the RS ensure there has been no alteration of the original and then make a copy.

    IF Signed Form 870-IS is received AND Then