- 25.15.6 Field Examination Procedures
- 18.104.22.168 Overview
- 22.214.171.124 Resources and References
- 126.96.36.199.1 Definitions
- 188.8.131.52 General Information
- 184.108.40.206 Examiner Responsibilities
- 220.127.116.11 Taxpayers Rights
- 18.104.22.168 Request for Innocent Spouse Relief
- 22.214.171.124.1 Form 8857 - Not Processable
- 126.96.36.199.2 Form 8857 - Received from PSP
- 188.8.131.52.3 Form 8857 - Received from Taxpayer
- 184.108.40.206 Non-Innocent Spouse Issues
- 220.127.116.11 IDRS Review
- 18.104.22.168 Initial Contact Regarding the Innocent Spouse Claim
- 22.214.171.124 Full and Objective Consideration of All Relief Provisions
- 126.96.36.199 Communicate the Determination
- 188.8.131.52.1 Pre-Assessment Determination and Report Writing
- 184.108.40.206.2 Post-Assessment Determination
- 220.127.116.11.3 Appeal Rights of RS and NRS
- 18.104.22.168 Workpaper Documentation
- 22.214.171.124 Addressing and Issuing Correspondence
- 126.96.36.199 Alleged Abuse
- 188.8.131.52 Deceased NRS
- 184.108.40.206 Claims for Refund with Innocent Spouse Issue
- 220.127.116.11 Installment Agreement in Effect when Innocent Spouse Claim is Filed
- 18.104.22.168 Account Problems
- 22.214.171.124 Closing Procedures
Part 25. Special Topics
Chapter 15. 5 Relief from Joint and Several Liability
Section 6. Field Examination Procedures
June 19, 2017
(1) This transmits revised procedures for IRM 25.15.6, Relief From Joint and Several Liability, Field Examination Procedures.
(1) Minor editorial changes have been made throughout this IRM. Website addresses, legal references, and IRM references were reviewed and updated as necessary.
(2) Significant changes to this IRM are listed below:
|Prior Reference||New Reference||Description of Change|
|IRM 126.96.36.199||IRM 188.8.131.52||Revised to delete outdated information.|
|IRM 184.108.40.206.1||IRM 220.127.116.11||Moved content into a new section.|
|N/A||IRM 18.104.22.168||Added new section containing resources and references.|
|IRM 22.214.171.124.2||IRM 126.96.36.199||Section removed and content moved to new section and clarified.|
|IRM 188.8.131.52.3||IRM 184.108.40.206||Moved, renumbered and updated IDRS guidance.|
|IRM 220.127.116.11.3.1||N/A||Section removed as information no longer applies.|
|IRM 18.104.22.168.4||IRM 22.214.171.124.1 and IRM 126.96.36.199.2||Content has been updated and moved to specific IRM cites for post-assessment and pre-assessment.|
|IRM 188.8.131.52||IRM 184.108.40.206 and IRM 220.127.116.11||Moved, renumbered and clarified content. The content has been split up in two separate IRM cites.|
|IRM 18.104.22.168.1||IRM 22.214.171.124.1 and IRM 126.96.36.199||Added definitions to this section and moved, renumbered and clarified guidance for addressing correspondence in new section.|
|IRM 188.8.131.52.2||IRM 184.108.40.206||Moved, renumbered and revised content to ensure taxpayer rights are clear.|
|IRM 220.127.116.11.3||IRM 18.104.22.168||Moved, renumbered and revised section to ensure guidance for documenting the conversation with the taxpayer is clear.|
|IRM 22.214.171.124.4||IRM 126.96.36.199||Moved, renumbered and clarified guidance for separate notices..|
|IRM 188.8.131.52||IRM 184.108.40.206||Moved, renumbered, revised and added content to clarify the procedures the examiner must follow on IS claims.|
|IRM 220.127.116.11.1||IRM 18.104.22.168||Moved and renumbered content.|
|IRM 22.214.171.124.1.1||IRM 126.96.36.199.3||Moved, renumbered and revised content to clarify the rights of the non requesting spouse.|
|IRM 188.8.131.52.1.2||IRM 184.108.40.206||Moved and renumbered content.|
|N/A||IRM 220.127.116.11||New section created for deceased non requesting spouse.|
|IRM 18.104.22.168.2||IRM 22.214.171.124||Moved content and renumbered. Updated guidance for clarity.|
|IRM 126.96.36.199||IRM 188.8.131.52.3||Title changed, moved content and renumbered. Updated guidance for receiving Form 8857 from the taxpayer.|
|IRM 184.108.40.206.1||IRM 220.127.116.11.1||Title changed, moved content and renumbered. Updated guidance for preparing reports.|
|IRM 18.104.22.168.2||IRM 22.214.171.124.1.1||Moved, renumbered and clarified guidance for agreed and partial agreed cases.|
|IRM 126.96.36.199.2.1||N/A||Section removed as information no longer applies.|
|IRM 188.8.131.52.3||IRM 184.108.40.206.1.2||Moved, renumbered and clarified guidance for unagreed cases.|
|IRM 220.127.116.11.4||IRM 18.104.22.168.2||Moved, renumbered and clarified guidance for post-assessment cases going to Appeals.|
|IRM 22.214.171.124.5||IRM 126.96.36.199||Moved, renumbered and clarified guidance for closing procedures.|
|IRM 188.8.131.52||IRM 184.108.40.206.2||Moved, renumbered and clarified post-assessment innocent spouse claim guidance.|
|IRM 220.127.116.11.1||N/A||Deleted this section as Form 870-IS is no longer used.|
|IRM 18.104.22.168.2||IRM 22.214.171.124||Moved, renumbered and revised title.|
|IRM 126.96.36.199||N/A||Deleted this section as it was duplicated content and refer to IRM site where content can be found.|
|N/A||IRM 188.8.131.52.2||Added new section and guidance on receiving Form 8857 from PSP.|
|IRM 184.108.40.206||N/A||Removed content as all cases must be established on AIMS. Guidance on establishing AIMS is provided in IRM 220.127.116.11.|
|IRM 18.104.22.168||N/A||Removed this section and provided case file assembly guidance in IRM 22.214.171.124.|
|IRM 126.96.36.199||IRM 188.8.131.52.1||Moved, renumbered and clarified Technical Services Responsibilities.|
|IRM 184.108.40.206.1||IRM 220.127.116.11||Moved content to new section.|
|IRM 18.104.22.168.2||IRM 22.214.171.124.1||Moved content to new section.|
|IRM 126.96.36.199||IRM 188.8.131.52||Moved and renumbered guidance for account problems.|
|N/A||IRM 184.108.40.206||New content added to provide guidance on communicating the determination. Guidance provided for Innocent Spouse Coordinators is provided in IRM 220.127.116.11.13.7, Innocent Spouse Coordinator, and has been removed.|
|N/A||IRM 18.104.22.168||Moved and updated content.|
|N/A||IRM 22.214.171.124||Added new content to provide guidance on deceased non requesting spouse.|
|IRM 126.96.36.199||IRM 188.8.131.52||Moved and updated references from IRM 184.108.40.206.|
|IRM 220.127.116.11||IRM 18.104.22.168||Moved content from obsolete IRM 4.11.34.|
|IRM 22.214.171.124.1||IRM 126.96.36.199||Moved and clarified content from IRM 188.8.131.52.1.|
|IRM 184.108.40.206.2||IRM 220.127.116.11||Moved and updated resources from IRM 18.104.22.168.2.|
|IRM 22.214.171.124||IRM 126.96.36.199||Moved and clarified content IRM 188.8.131.52.|
|IRM 184.108.40.206.1||N/A||Content has been made obsolete as it no longer applies.|
|IRM 220.127.116.11.1.1||IRM 18.104.22.168||Moved and updated the guidance from IRM 22.214.171.124.1.1.|
|IRM 126.96.36.199.1.2||IRM 188.8.131.52.1||Moved and updated the guidance from IRM 184.108.40.206.1.2.|
|IRM 220.127.116.11.2||IRM 18.104.22.168||Moved and updated the guidance from IRM 22.214.171.124.2.|
|IRM 126.96.36.199.3||IRM 188.8.131.52.1||Moved and clarified content from IRM 184.108.40.206.3.|
|IRM 220.127.116.11.4||IRM 18.104.22.168.1 and IRM 22.214.171.124.2||Moved and clarified content from IRM 126.96.36.199.4.|
|IRM 188.8.131.52.5||IRM 184.108.40.206||Moved and updated content from IRM 220.127.116.11.5.|
|IRM 18.104.22.168||IRM 22.214.171.124.2||Moved and clarified the guidance from IRM 126.96.36.199.|
|IRM 188.8.131.52.1||IRM 184.108.40.206||Moved and updated the guidance from IRM 220.127.116.11.1.|
|IRM 18.104.22.168.2||IRM 22.214.171.124.2||Moved and clarified the guidance from IRM 126.96.36.199.2.|
|IRM 188.8.131.52.3||IRM 184.108.40.206||Moved and clarified the guidance from IRM 220.127.116.11.3.|
|IRM 18.104.22.168.4||IRM 22.214.171.124||Moved and clarified the guidance from IRM 126.96.36.199.4.|
|IRM 188.8.131.52||IRM 184.108.40.206||Deleted this section and moved and clarified content.|
|IRM 220.127.116.11||IRM 18.104.22.168||Deleted this section and moved and clarified content.|
|IRM 22.214.171.124||IRM 126.96.36.199||Moved content from IRM 188.8.131.52.|
|IRM 184.108.40.206||IRM 220.127.116.11.2||Moved and clarified content from IRM 18.104.22.168.|
Michael W. Damasiewicz
Director, Examination–Field and Campus Policy
Small Business/Self-Employed Division
The purpose of this IRM is to provide technical and procedural guidance for examining and processing claims for relief from joint and several liability, also referred to as innocent spouse (IS) claims, when taxpayers file a joint tax return. See IRM 22.214.171.124(7) for guidance on IS claims when taxpayers reside in a community property state and file separate returns.
Taxpayers filing joint returns can request relief under IRC 6015. It is the Service’s responsibility to ensure the provisions of IRC 6015 are implemented fairly and that each claim receives timely and consistent treatment in accordance with the law. See IRM 25.15.1, Introduction, for a more in-depth introduction to relief from joint and several liability.
IRC 6015 provides three types of relief from joint and several liability to spouses who filed a joint return. The three types of relief are:
Innocent Spouse Relief - IRC 6015(b)
Election to Allocate a Deficiency - IRC 6015(c)
Equitable Relief - IRC 6015(f)
Taxpayers request relief from joint and several liability on Form 8857, Request for Innocent Spouse Relief, or a similar statement containing the same information signed under the penalties of perjury.
A duly authorized representative may sign Form 8857 on behalf of a taxpayer. A representative becomes authorized by submitting a properly completed Form 2848, Power of Attorney and Declaration of Representative, or equivalent documentation to the IRS. See IRM 126.96.36.199(6), Introduction IRC 6015, for additional information.
Both taxpayers are jointly and severally responsible for the tax, interest and penalties due on the joint return even if they later divorce. If, however, relief under section 6015 is granted, a spouse can be relieved of all, or part, of the joint liability.
Given the implications of joint and several liability, each spouse is responsible for:
The accuracy and completeness of the joint return; and
The payment of the tax liability as reported on the return, as well as any additional tax, penalties and interest that may be assessed.
Married taxpayers living in community property states filing separate returns may still be liable for income tax items attributable to their spouse under community property law. Form 8857 (or a similar statement) is used to make a claim in these type of cases. See IRM 25.15.5, Relief from Community Property Laws/Community Property States, for additional guidance.
All requests for relief from joint and several liability cases are priority cases and require prompt consideration.
Examiners will consider and make a determination on an IS claim received during the examination of a joint return or as it relates to a prior audit, which can also include prior and/or subsequent years not previously examined.
MySB/SE Innocent Spouse website at http://mysbse.web.irs.gov/exam/tip/innocentspouse/default.aspx.
MySB/SE Find an Expert website for Technical Services Innocent Spouse Reviewers at http://mysbse.web.irs.gov/examination/tip/innocentspouse/contacts/11883.aspx.
MySB/SE Find an Expert website for area Planning and Special Programs (PSP) Innocent Spouse Coordinators at http://mysbse.web.irs.gov/examination/examorg/hq/ecs/fieldexamretsel/31466.aspx.
IRM 25.15.1, Introduction, provides a basic overview of relief from joint and several liabilities.
IRM 25.15.2, General Procedures/Employees With Taxpayer Contact, provides miscellaneous general guidance.
IRM 25.15.3, Technical Provisions of IRC 6015, provides detailed information regarding the application of the law pertaining to the request for relief from joint and several liability.
Rev. Proc. 2013-34 provides additional guidance and clarification when considering relief under IRC 6015(f).
IRM 25.15.5, Relief from Community Property Laws/Community Property States, provides guidance for claims involving taxpayers in community property states.
Refer to IRM 25.15.19, Non-Qualifying Claims & Complex Account Issues, provides guidance on non-qualifying claims.
Terms and acronyms used throughout this section:
Terms and Acronyms Definition Innocent Spouse Coordinator (ISC) Individual in Planning and Special Programs (PSP) assigned responsibility for building innocent spouse case files, assigning claims to field groups, and acting as resource for field groups. For additional information see IRM 188.8.131.52.13.7, Innocent Spouse Coordinator. Innocent Spouse Reviewer (ISR) Individual in Technical Services (TS) assigned responsibility for mandatory review of IS claim cases, issuing post-assessment determination letters and statutory notices of deficiency, preparing cases for disposition to Centralized Case Processing (CCP) and Appeals, and acting as resource for field groups. For additional information, refer to IRM 184.108.40.206.1. Cincinnati Centralized Innocent Spouse Operation (CCISO) Centralized group at Cincinnati campus that handles claims not assigned to or worked by Field Examination. Innocent Spouse Tracking System (ISTS) System designed as a means to track an IS claim from receipt to closing. An employee with access to the Integrated Data Retrieval System (IDRS) command code (CC) ISTS series can retrieve current claim status information. Contact your area PSP ISC or your local TS ISR with questions regarding ISTS. MFT 31 Account May be established due to an IS claim and used when an assessment is required against an individual taxpayer on a joint module. In cases where innocent spouse relief is granted in full or in part, MFT 31 is used to assess the liable spouse. Refer to IRM 220.127.116.11.3, Separate Assessment on Joint Taxpayers, for additional information. Requesting Spouse (RS) Taxpayer that filed a request for relief from joint and several liability. Non-requesting Spouse (NRS) Spouse of taxpayer that filed an IS claim.
It is possible that each spouse may file a claim requesting relief from joint and several liability thereby making each spouse a RS and a NRS. In these cases, each spouse’s claim must be considered separately and simultaneously and include separate determination workpapers. It is possible to have a portion of the liability attributed jointly and assessed on MFT 30, a portion attributed to the NRS for one claim and assessed on that respective spouse’s individual MFT 31 account, and a portion attributed to the NRS on the other claim and assessed on that respective spouse’s individual MFT 31 account.
Underpayment (UP) An underpayment is a balance due from either an original filed return or an amended return when a statutory notice of deficiency was not issued. Relief from an underpayment may only be considered under IRC 6015(f). See IRM 18.104.22.168, Terms and Definitions, for additional information. Understatement (US) An understatement is the excess amount of tax required to be shown on a return for a taxable year over the amount of tax imposed, which was reported on the return, reduced by any rebate. For purposes of IRC 6015, an understatement and a deficiency are the same. Relief from an understatement can be considered under IRC 6015(b), IRC 6015(c), and IRC 5015(f).
Some IS claims including Collection Referrals, Collection Due Process, and Taxpayer Advocate Service (TAS) cases, are worked by Cincinnati Centralized Innocent Spouse Operation (CCISO) at the Covington Campus, however, field examiners will receive IS claims:
From Planning and Special Programs (PSP), see IRM 22.214.171.124.2, for guidance.
Directly from the taxpayer during an open examination, see IRM 126.96.36.199.3, for guidance.
IS claims can be stand-alone claims (post-assessment) and/or related to an open examination (pre-assessment). Pre-assessment and post-assessment claims have different procedures to consider and communicate the claim determination to the taxpayer. Certain procedures, such as notifying the NRS and giving full consideration to all applicable relief provisions, must be followed in both pre-assessment and post-assessment cases.
A pre-assessment claim occurs when a claim is filed during an open examination, prior to an assessment of a tax liability. The IS claim is considered an additional examination issue and must be worked concurrently with other examination issue(s). The examiner will generally communicate the determination in the examination report that must be issued to each taxpayer.
A post-assessment claim occurs when a claim is filed on a liability that is already assessed. The liability may relate to an underpayment, an understatement, or both. The claim may relate to a year under examination or a prior or subsequent year where a liability remains unpaid from an original filed return or from an additional assessment. In post-assessment cases, the IS claim may be the only issue examined. The post-assessment determination will be communicated to the taxpayer by TS with a preliminary determination letter.
All requests for relief from joint and several liability that are examined must be established on Audit Information Management System (AIMS).
This section provides a summary of actions the examiner must take for an IS claim. These actions are discussed in further detail in the referenced IRM cites provided.
Confirm taxpayers have received their rights. See IRM 188.8.131.52.
Review Form 8857, or similar statement, and determine if the claim is processable. See IRM 184.108.40.206, for additional guidance.
Ensure claim does not relate to a non-innocent spouse issue. See IRM 220.127.116.11, for information regarding non-innocent spouse issues.
Review the taxpayer’s account on IDRS for each year listed on the claim for items that must be considered. See IRM 18.104.22.168, for additional guidance.
Determine for each claim year that will be examined whether the claim is timely filed. The examiner must determine the time period for making the request and identify the date of first collection activity. See IRM 22.214.171.124.1, Collection Activity, for details regarding what actions constitute collection activity and IRM 126.96.36.199.2, Time Period for Making the Request.
Initiate contact regarding the innocent spouse claim, see IRM 188.8.131.52.
Give full and objective consideration of the IS claim and address all available relief provisions. The facts, law, taxpayer’s position, and conclusion must be documented on the Innocent Spouse Lead Sheet, or on the job aids and supporting workpapers indexed to the lead sheet. Refer to IRM 25.15.3, Relief from Joint and Several Liability, Technical Provisions of IRC 6015, regarding the application of the law and IRM 184.108.40.206, for additional guidance. Each year must be considered and documented separately on its own merits.
Communicate the pre-assessment determination under IRC 6015 to both taxpayers and/or their representative(s). In post-assessment determinations examiners are responsible for informing each spouse that the determination will be communicated in a forthcoming letter (issued by TS). See IRM 220.127.116.11 for guidance on how to communicate the determination to each spouse. In all cases involving relief from joint and several liability, correspondence must be sent separately to each spouse, see IRM 18.104.22.168 for guidance.
The presence of the same representative for both parties in any IS claim may be considered a conflict of interest for the representative under Circular 230. The examiner should advise the parties of this potential conflict. The examiner should also confirm that each spouse has properly received their rights to relief and appeal regarding the claim. Circular 230, 31 CFR 10.29, Conflicting interests, provides additional guidance.
Prepare case for closing to TS. When closing an IS claim case, the examiner must complete Form 3198, Special Handling Notice for Examination Case Processing, and Form 5344, Examination Closing Record, to indicate the case includes an IS claim determination and specific details regarding assessment. See IRM 22.214.171.124 for additional guidance.
Forward all innocent spouse cases through TS for mandatory review whether agreed, unagreed or appealed. This includes both pre-assessment and post-assessment cases. TS is responsible for sending the case forward to Appeals when necessary, issuing a statutory notice of deficiency, issuing post-assessment determination letters or closing to CCP. See IRM 126.96.36.199.1 for TS responsibilities.
In every examination involving a joint return or where spouses domiciled in a community property state have filed separately, the examiner must explain joint and several liability and relief provisions available under IRC 6015. Pub 1, Your Rights as a Taxpayer, provides a brief description of innocent spouse relief. See IRM 188.8.131.52, Notification Requirements, for additional guidance.
The examiner may provide the taxpayers or representative(s) with the following:
Pub 971, Innocent Spouse Relief, which explains the IS provisions in detail
Form 8857, Request for Innocent Spouse Relief
Pub 504, Divorced or Separated Individuals
The examiner must fully document the discussion(s) regarding innocent spouse relief. Revenue agents (RAs) document the discussion on Lead Sheet 120-1, Initial TP Contact, or a workpaper indexed to Lead Sheet 120-1. Tax Compliance Officers (TCOs) document the discussion on Lead Sheet 125-1, Initial TP Contact - TCO, or a workpaper indexed to Lead Sheet 125-1. The documentation should contain the following:
Date of discussion,
Persons present during the discussion,
Actions taken to explain IRC 6015, and
If the taxpayer indicates that relief will be requested.
Taxpayers may request relief from joint and several liability on Form 8857, or by providing a similar statement (containing the same information required in Form 8857) signed under penalties of perjury.
Any claim for relief filed on or after December 20, 2006, regardless of the revision date of Form 8857 used by the RS, will be treated as a claim for relief under all subsections of IRC 6015 and will prohibit collection action against the RS and suspend the CSED on the RS from the date the claim is received until the expiration of the 90-day period for filing a Tax Court petition or if a Tax Court petition is filed, until the date a Tax Court decision becomes final.
One Form 8857 (or similar statement) may be used to request relief for multiple years. See IRM 184.108.40.206, Form 8857, Request for Innocent Spouse Relief.
When Form 8857 (or similar statement) is filed by a taxpayer, the receiving office will date stamp the form upon receipt.
In any case where the taxpayer is currently under examination for at least one year listed on the Form 8857 (or similar statement), the claim will be worked for all years listed.
If a taxpayer only requests relief for one year on Form 8857 (or similar statement), but an additional year could be considered; work the year on Form 8857 and advise the RS via Letter 3659, Requesting Spouse Initial Contact Letter, that there is another year the Service could consider.
If the research shows an additional tax year could be considered for relief, but the relief year requested was disallowed or did not qualify, advise the RS another year could be considered. Use Letter 3657, Non-qualifying Innocent Spouse Claim, or Letter 3658, Unprocessable Innocent Spouse Claim.
A processable Form 8857 (or similar statement) must contain all of the following:
A valid signature signed under penalties of perjury,
Taxpayer identification numbers (TINs), and
Information to explain the request for relief.
A valid signature means the Form 8857 (or similar statement) contains an original signature of the RS or their duly authorized Power of Attorney. The service accepts photocopy signatures and fax signatures in some situations. See IRM 220.127.116.11.4, Specific Guidance on Use of Faxes in Tax Administration Processes, for additional guidance.
A Form 8857 (or similar statement) missing any of these items is not processable. See IRM 18.104.22.168.1 for additional guidance.
The examiner will take the following action(s) within ten business days of receipt to perfect the Form 8857 (or similar statement) if it is not processable:
Contact the RS and request the Form 8857 or equivalent request for relief be corrected to make it processable, and
Return the original form with the received date circled in red along with Letter 3658, Unprocessable Innocent Spouse Claim Letter, explaining the reason for the return. Letter 3658 has selectable paragraphs that explain what is needed for the form to be processable.
Allow a minimum of 15 calendar days (includes time for mailing) for the taxpayer to perfect the claim for relief.
If the claim cannot be perfected or RS does not respond within 15 calendar days, notate in the case file why the claim could not be considered, and notify the PSP ISC that the claim has been received and has been determined as not processable. If the taxpayer submits a new or revised claim after the original claim has been updated as not processable, the examiner must notify PSP ISC of the new claim. The examiner must determine if the new Form 8857 is processable, see IRM 22.214.171.124.
When a claim is forwarded from PSP, the PSP ISC will have established AIMS controls on all years listed on the claim that are not already open for examination.
For years that controls were established by PSP, the examiner will ensure the PSP ISC has input the following:
Source Code “73”,
Project Code “0014” (unless the current project code has greater priority),
Freeze Code “12” (claims received prior to 8/11/2014 may have a local freeze code for innocent spouse),
Transaction Code (TC) 971 with Action Code (AC) 065. See IRM 126.96.36.199.2, Innocent Spouse Indicator Transaction Code (TC) 971/972, for information regarding the IDRS transaction codes for IS claims,
TC 130 on entity module for the NRS. Use command code ENMOD to review. See IRM 188.8.131.52.3, TC 130 Entire Account Frozen From Refunding, and
Updated the statute to alpha code, if applicable.
If the items listed in (2) above are not correct, the examiner must contact the PSP ISC to request input.
If the taxpayer raises the issue of relief from joint and several liability during an audit, the examiner will secure a completed Form 8857, or a similar statement containing the same information, signed under penalties of perjury. In addition, the following must be completed:
Date stamp Form 8857 (or similar statement) upon receipt,
Determine if the request is processable within 10 days of receipt. For additional guidance to determine if the claim is processable, see IRM 184.108.40.206, and
Identify all years shown on Form 8857 and determine for each year whether the claim needs to be examined (e.g. any tax year that has a balance due or a potential liability or RS is potentially eligible for a refund). All years listed on the form must be addressed. See IRM 220.127.116.11.
If the examiner determines a claim year will not be examined (e.g. no balance due and no potential deficiency or RS is not eligible for any refund), the examiner must document the case file as to why the claim year will not be examined and notify the taxpayer using Letter 3657. The examiner should contact the PSP ISC or the local TS ISR if unsure whether the claim year needs to be examined.
To establish additional claim years on AIMS, the examiner must:
Identify the statute of limitations for each year listed on Form 8857 and determine if the examination will be opened solely for the innocent spouse issue (no additional tax will be assessed) or if the statute is sufficient for a full examination.
Prepare and submit Form 5345-D, Examination Request-ERCS (Examination Returns Control System) Users, and request Source Code “73” and Project Code “0014”.
When the claim for relief year(s) is already open on AIMS the examiner must update the Project Code to "0014" (unless the current project code has greater priority) using Form 5348, AIMS/ERCS Update (Examination Update).
Examiners must send a copy of Form 8857 to the PSP ISC to notify that a processable IS claim has been received and to request input of all applicable IS codes (ie., TC 971, AC 065, TC 130 for the NRS (See IRM 18.104.22.168.3 for TC 130 guidance), freeze code, and ISTS updates). See IRM 22.214.171.124(3) which provides a link to identify the appropriate PSP ISC.
Examiners are responsible for verifying all of the appropriate codes are entered on the taxpayer’s account(s) before closing the case from the group. If the freeze code, and/or TC 971, AC 065 and TC 130 codes (See IRM 126.96.36.199.3 for TC 130 guidance) have not been entered or are incorrect, the examiner should contact the PSP ISC and ensure the codes are entered/corrected.
Relief from joint and several liability should not be confused with other provisions that provide relief to joint filers. The Service has the responsibility to inform taxpayers of relief provisions even if the taxpayers do not specifically raise them due to their own limited knowledge of the law.
If a joint return is invalid, it cannot be considered for innocent spouse relief. There are three situations where a joint return is invalid:
Invalid election - One spouse did not elect to file a joint return. See IRM 188.8.131.52.3.2, Determining if Joint Election is Valid, for additional information.
Forgery - One spouse did not sign the return. See IRM 184.108.40.206.4, Forgery, for additional information.
Unlawful - Taxpayers had no legal right to file jointly. See IRM 220.127.116.11.5, Unlawful, for additional information.
The following issues should not be confused with innocent spouse relief:
Issue Explanation and IRM Reference Injured Spouse Claims (Claim to recover part or all of a joint refund transferred to pay the separate liabilities of the other spouse.) If the taxpayer mistakenly files Form 8857 instead of an injured spouse claim, see IRM 18.104.22.168.5, Injured Spouse Claims. Offer in Compromise If the taxpayer filed an offer in compromise, see IRM 22.214.171.124.7, Offer in Compromise (OIC). Tax Equity and Fiscal Responsibility Act (TEFRA) Settlement Agreements For TEFRA issues, see IRM 126.96.36.199.8, Tax Equity and Fiscal Responsibility Act (TEFRA) Settlement Agreements. Fraud Penalty Where the fraud penalty is assessed against a spouse without appropriate development and documentation, that spouse should be relieved of such assessment pursuant to IRC 6663(c) and not IRC 6015. IRC 6015 does not provide for relief from penalties and interest separate from tax. See IRM 188.8.131.52.184.108.40.206, Documentation of Culpable Spouse, for additional information.
There are additional situations that may prevent filing a claim for relief or result in a non-qualifying claim. See IRM 220.127.116.11 for additional details.
A thorough review of the taxpayers’ account on IDRS is required for every IS claim to determine the relevant factors that may affect processing the claim and/or making a determination on the request for relief.
The examiner must review IDRS for each claim year for the following:
The existence of any unpaid balance due, whether from an original filed return (underpayment), an amended return (underpayment or understatement), or an additional assessment (understatement) made by the Service,
Payments made to determine if the RS is eligible for a refund, and
The examiner must pay special attention to statute of limitations implications.
In pre-assessment cases, as in all open examination cases, the assessment statute expiration date (ASED) is important. A claim that cannot be fully worked before the statute expires (because one or both taxpayers have not agreed to extend the statute under normal examination procedures) must be postponed and considered under post-assessment procedures. See IRM 18.104.22.168.1, for additional guidance.
In post-assessment cases, both the refund statute expiration date (RSED) and the collection statute expiration date (CSED) are important. See IRM 22.214.171.124.2, Time Period for Making the Request, and IRM 126.96.36.199, Statute of Limitations on Collection.
For each claim year, the examiner must review IDRS of the joint MFT 30 account and of the individual MFT 31 account when an MFT 31 account is present. A list of IDRS command codes and detailed information can be found on the MySBSE Innocent Spouse website at: IDRS Command Codes for Innocent Spouse.
Initial contact for all examinations must be made by mail using approved form letters and not by telephone. Letter 3659, Requesting Spouse Initial Contact Letter, can be used to make initial contact and notify the RS of receipt of the IS claim or to request additional information from the RS.
When an IS claim is received and determined to be processable, the examiner must notify the NRS by issuing Letter 3284, Letter to Non-requesting Spouse, and allow 30 days for the NRS to respond. IRM 188.8.131.52, Notification to NRS, provides guidance on contacting the NRS.
Examiners must not release one spouse’s personal information to the other spouse. For example, do not release either spouse’s new name, home address, telephone number, place of employment, etc., to the other spouse.
Information with respect to the joint return account module, such as balance due, may be released to both spouses. If in doubt as to what may or may not be disclosed, follow IRM 11.3.2, Disclosure to Persons with a Material Interest, established guidelines or check with the local disclosure officer at: http://discl.web.irs.gov/Default.asp.
The examiner must fully develop the facts, analyze the evidence for each claim year and apply the innocent spouse law objectively, using the guidance provided in IRM 25.15.3 to determine if relief from joint and several liability applies. This includes contacting both spouses to obtain information and their positions. See IRM 184.108.40.206, Case Development, for additional guidance on case development.
Examiners must base the determination for each claim year on the facts and circumstances specific to the respective tax year. A separate determination may be necessary for each year if the facts and circumstances differ. In addition, it may be necessary to make a separate determination for an understatement (pre-assessment), an understatement (post-assessment), and/or underpayment (post-assessment) in the same tax year.
Generally, pre-assessment and post-assessment determinations should not be documented on the same workpaper and multiple years should not be combined on the same workpaper unless the exact same facts and circumstances, and the same area of law under IRC 6015 apply.
The examiner must consider all possible relief provisions that apply.
If the RS requests relief under IRC 6015(b) and this relief provision does not apply, the examiner must consider IRC 6015(c), election to allocate a deficiency; and IRC 6015(f), equitable relief, provisions.
Once a determination is made on a pre-assessment claim, the examiner must fully document the determination by completing the Innocent Spouse Lead Sheet and/or Form 886-A, Explanation of Items, and prepare an examination report that includes the innocent spouse determination in the "Other Information" section of the report. See IRM 220.127.116.11.1 for rules regarding the examination report and the pre-assessment innocent spouse determination.
Once a determination is made on a post-assessment claim, the examiner must fully document the determination by completing the Innocent Spouse Lead Sheet and/or Form 886-A and enclose it in the case file. TS is responsible for issuing the determination on all post-assessment cases. See IRM 18.104.22.168.2 for post-assessment guidance.
The innocent spouse determination must be communicated to both the RS and NRS. Communicating the determination is different for a pre-assessment IS claim and post-assessment IS claim:
Pre-Assessment - The examiner should verbally discuss the determination with both spouses to determine if the case will be agreed, partially agreed or unagreed. Based on the agreement status, the examiner will follow the report writing procedures in IRM 22.214.171.124.1.
Post-Assessment - Determination should not be communicated by the examiner, however the examiner must inform the taxpayers the determination will be communicated in a forthcoming letter, see IRM 126.96.36.199.2. TS will issue the determination letters.
The examiner will include the innocent spouse determination in the examination report for all pre-assessment cases when sufficient time remains on the statute to grant appeal rights to both spouses. The examination report must be hand delivered or mailed to the taxpayers separately with the appropriate 30-day letter, when needed.
The examination report must include only pre-assessment years and be prepared using report writing procedures found in IRM 4.10.8, Report Writing, with the following additions:
Special language regarding appeal rights as well as the relief determination must be included in the "Other Information" section of the examination report as shown in (3) below.
Form 886-A or the taxpayer’s copy of the redacted Innocent Spouse Lead Sheet explaining the determination must be attached to the examination report. The explanation detailed on the Form 886-A or lead sheet should contain sufficient information to allow either spouse the ability to provide an adequate protest to the determination.
When a partial relief determination is made, a computation of the allocation of adjustments must be attached to the examination report. The examiner will prepare separate computations for joint liability amounts and individual liabilities when a deficiency is allocated under IRC 6015(c) or apportioned under IRC 6015(b) or IRC 6015(f). When partial relief is allowed, the RS remains liable for a portion of the liability. For example, if the RS had actual knowledge regarding two of the three adjustments displayed on the examination report, the examiner may deny relief for those adjustments and grant relief for the adjustment due to an item the RS did not know about. See the procedures for allocating a deficiency under IRC 6015(c) at IRM 188.8.131.52.3, Allocating a Deficiency. See IRM 25.15.3, Technical Provisions of IRC 6015, for granting relief in full or in part under IRC 6015(b) and IRC 6015(f).
The examiner must include both of the following statements in the "Other Information" section of the examination report:
This examination includes a claim for Innocent Spouse Relief. If either the Requesting Spouse or the Non-Requesting Spouse disagree with the relief determined, the decision can be appealed. Follow the instructions in Letter ___ (insert the 30-day letter issued, e.g. Letter 950, Letter 915, etc.) to request an appeal. For additional information, consult Publication 556 and Publication 971, and
(RS’s Name), TIN (XXX-XX-XXXX), requested Innocent Spouse relief under IRC 6015(b), IRC 6015(c) or IRC 6015(f) for the tax year(s) ending December 31, 20XX. (Additional language must be added based on the relief determination to communicate the liability to both the RS and NRS (as bolded and reflected in the examples below.))
Relief Determination Example Appeals Language Determination Language Full Jennifer Oak (RS) has been granted full relief of the $10,000 deficiency. This examination includes a claim for Innocent Spouse Relief. If either the Requesting Spouse or the Non-Requesting Spouse disagree with the relief determined, the decision can be appealed. Follow the instructions in Letter ___ (insert the 30-day letter) issued to request an appeal. For additional information, consult Pub 556 and Pub 971. Jennifer Oak, TIN XXX-XX-XXX, requested Innocent Spouse relief under IRC 6015(b), IRC 6015(c) or IRC 6015(f) for the tax year ending December 31, 2015. Relief has been granted. Jennifer Oak is jointly and severally liable for $ 0.00 including any penalties or interest. Jack Oak, TIN XXX-XX-XXXX, is individually liable for $10,000 plus penalties and interest. Partial Sally Trout (RS) has been granted partial relief for $7,000 of the total deficiency of $12,000. This examination includes a claim for Innocent Spouse Relief. If either the Requesting Spouse or the Non-Requesting Spouse disagree with the relief determined, the decision can be appealed. Follow the instructions in Letter ___ (insert the 30-day letter) to request an appeal. For additional information, consult Pub 556 and Pub 971. Sally Trout, TIN XXX-XX-XXXX, requested Innocent Spouse relief under IRC 6015(b), IRC 6015(c) or IRC 6015(f) for the tax year ending December 31, 2015. Relief has been granted in part. Sally Trout is jointly and severally liable for $5,000 plus penalties and interest. See attached statement.
Sam Trout, TIN XXX-XX-XXXX is jointly and severally liable for $5,000 plus penalties and interest and individually liable for $7,000 plus penalties and interest. See attached statement.
Denied Betty Birch (RS) has been denied relief for the total deficiency of $15,000. This examination includes a claim for Innocent Spouse Relief. If either the Requesting Spouse or the Non-Requesting Spouse disagree with the relief determined, the decision can be appealed. Follow the instructions in Letter ___ (insert the 30-day letter) to request an appeal. For additional information, consult Pub 556 and Pub 971. Betty Birch, TIN XXX-XX-XXXX, requested Innocent Spouse relief under IRC 6015(b), IRC 6015(c) or IRC 6015(f) for the tax year ending December 31, 2015. Relief has been denied. Robert Birch and Betty Birch are jointly and severally liable for the deficiency of $15,000.00 including any penalties and interest.
Examiners should follow IRM guidelines to solicit an agreement to an examination report that includes an IS claim relief determination.
Agreement to income tax adjustments is secured on the following forms:
Form 4549, Income Tax Examination Changes Report - See IRM 184.108.40.206.1, or
Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment - A statement regarding the relief determination similar to the statement required on Form 4549 should be included on this form. See IRM 220.127.116.11.1.
The agreement status of each taxpayer (agreed or unagreed) and relief type (full, partial, or denied) determines the additional procedures required. The examiner must request assessment of any agreed portion of the liability. For example when both spouses agree to a joint liability, the assessment will be requested on the joint MFT 30 account. When the agreed liability is determined to be an individual liability assessment on MFT 31 will be required, see IRM 18.104.22.168.3, Separate Assessments on Joint Taxpayers. This also includes cases where one spouse agrees to a liability and one does not.
In an agreed case where relief is granted in full for the entire deficiency, a signed agreement is not required from the RS; only the NRS must sign the agreement.
In an agreed case where relief is granted in part or denied, a signed agreement is required from both spouses.
Partial agreement does not mean partial relief. If the case is partially agreed, meaning a spouse has agreed to some adjustments but remains unagreed on other adjustments (not including the relief determination), use established guidelines for partial agreements. See IRM 22.214.171.124, Partially Agreed Cases, for additional guidance. In cases where a partial agreement is obtained, the relief determination will be made under post-assessment procedures. See IRM 126.96.36.199.2 for guidance on post-assessment determinations. The examiner is responsible for notifying both spouses that a relief determination will not be made under pre-assessment procedures.
The examiner must close all IS cases to TS for review in status 21. See IRM 188.8.131.52.1 for a list of TS responsibilities.
If there will be 60 days or less remaining on the statute when an agreed case is received in TS, the examiner must complete quick assessment procedures, see IRM 184.108.40.206.1, Quick Assessments, and close the case to TS not CCP. The examiner must always request assessment on an individual MFT 31 account when only one spouse is to be assessed all or a portion of the agreed liability. Some cases will require assessment on both MFT 30 and MFT 31 accounts when a portion of the liability is joint and a portion of the liability is individual. See IRM 220.127.116.11.3, Separate Assessments on Joint Taxpayer, for guidance on completing the partial assessment documents.
When the examiner determines the case will be unagreed and there is sufficient time remaining on the statute to grant appeal rights to both spouses, the examiner must prepare an unagreed report following the procedures in IRM 18.104.22.168.1, issue the report with the appropriate 30-day letter and suspend the case for 45 days as required by Rev. Proc. 2003-19.
If the examiner determines the case will be unagreed and the taxpayer(s) are not eligible for an appeal because the statute of limitations is fewer than 365 days, the examiner will issue the unagreed report by following the normal unagreed procedures for all other examination adjustments. The examiner must check the "Innocent Spouse" box on Form 3198 and write "Post-assessment IS procedures apply" in the "Other Information" section and forward the case to TS for issuance of a statutory notice of deficiency. The examiner will verbally inform the taxpayers the relief determination will be completed separately under post-assessment procedures following completion of the statutory notice of deficiency procedures and notifying the RS that no collection action will be taken against the RS while the claim is pending. The case should be returned to the group after assessment, unless the taxpayer petitions Tax Court and the innocent spouse issues are resolved in Tax Court. The innocent spouse determination for all post-assessment cases will be issued by TS.
If the only unagreed issue is the innocent spouse determination, the examiner should solicit agreement on the other examination issue(s) and notify both spouses that the relief determination will be processed under post-assessment procedures.
When no protest is received in response to the 30-day letter, the examiner must forward the case to TS for statutory notice of deficiency procedures.
If a valid protest is received within 45 days:
The examiner must consider new information and arguments raised in the protest and prepare (if warranted) a rebuttal to the protest.
If the initial determination of the IS claim changes due to additional information, the examiner must issue revised examination reports to the RS and NRS allowing an additional 30 days to appeal the revised determination.
The case must be closed to TS in status 21 and flagged, "Expedite—Innocent Spouse Case—Appeal Requested" .
TS will update the ISTS, perform mandatory review of the relief determination, complete required deficiency procedures on a non-appealing spouse when needed, and forward the case to Appeals (following statutory notice of deficiency procedures) using established guidelines.
For post-assessment determinations, TS is responsible for communicating the examiner’s determination to each spouse; however, the examiner is responsible for making the determination and informing each spouse that the determination will be communicated in a forthcoming letter issued by TS.
All post-assessment claims must be established on AIMS. The examiner is responsible for ensuring AIMS are established. If AIMS is not established, the examiner must take appropriate actions to establish them for all applicable year(s). See IRM 22.214.171.124.3, for guidance on establishing an IS claim on AIMS.
An examination report is not issued to the taxpayers for a post-assessment claim determination.
For post-assessment claim determinations, the examiner must follow all procedures for making a claim determination. See IRM 126.96.36.199 for a basic summary of responsibilities.
The examiner must complete the Innocent Spouse Lead Sheet for a post-assessment relief determination. A separate Innocent Spouse Lead Sheet must be prepared for each post-assessment determination, even if the same claim year has a pre-assessment determination.
Once a determination is made, the examiner must prepare the required closing documents, see IRM 188.8.131.52, for guidance. Examiners must use disposal code 01 for all post-assessment claim cases.
If a claim year includes both a pre-assessment and a post-assessment determination, the examiner must use the disposal code applicable to the pre-assessment claim. The examiner must clearly notate the Form 3198, Special Handling Notice, that the case file includes both a pre-assessment and a post-assessment claim determination.
The examiner must forward the closed case to TS in status 21. The TS ISR will review the case, and prepare and issue the preliminary (30 day) and final (90 day) determination letters to the RS and NRS.
Spouses have appeal rights with respect to the relief determination in all pre-assessment and post-assessment cases, as follows:
The RS has administrative appeal rights if the request for relief from liability under the innocent spouse provisions is denied in whole or in part.
The NRS has administrative appeal rights if the request for relief from liability under the innocent spouse provisions is granted in whole or in part.
Examiners must consider the statute of limitations to determine if a pre-assessment case is eligible for an Appeals conference.
When a case is initially received in Appeals, there must be at least 365 days remaining on the statute. The group must allow a minimum of 30 days for shipping and processing a case through TS. Therefore, a case should have a minimum of 395 days on the statute when it is closed from the group.
If a pre-assessment case is unagreed and there is not enough time remaining on the statute for the case to go to Appeals, the examiner cannot include the relief determination on the examination report, unless the both spouses consent to extend the statute of limitations. If both spouses do not consent to extend the statute of limitations, the examiner must close the case to TS for issuance of the notice of deficiency and notate the Form 3198. See IRM 184.108.40.206.1(1) for additional guidance on completing Form 3198.
- If the notice of deficiency defaults, the case will be returned to the field after assessment and the examiner will complete the IS determination and process it as a post-assessment claim. (See IRM 220.127.116.11.2). The taxpayers will be granted appeal rights for the post-assessment relief determination (See IRM 18.104.22.168.3(1).
- If the taxpayer petitions tax court, Counsel or Appeals may contact the examiner for assistance with the IS determination.
If either spouse requests an Appeals conference and there’s enough time on the statute, the case will be forwarded to Appeals following mandatory review by the TS ISR.
The Appeals decision is final for the NRS. The NRS does not have the right to petition Tax Court.
After Appeals issues a final determination, the RS must petition the Tax Court to contest the determination. If the RS petitions the Tax Court, the NRS has the right to intervene in the Tax Court proceeding.
The consideration of all relevant code sections, (ie., IRC 6015(b), IRC 6015(c), and/or IRC 6015(f)) must be fully documented in the case file. Refer to IRM 25.15.3 for information regarding the relevant factors that must be addressed under each section. Innocent spouse job aids for all relevant code sections are linked to the Innocent Spouse Lead Sheet in the "Audit Steps" section of the lead sheet. The job aids can also be found at: http://mysbse.web.irs.gov/examination/tip/innocentspouse/jobaids/default.aspx.
The Innocent Spouse Lead Sheet or Form 886-A supporting the innocent spouse determination is needed for each determination (e.g., pre-assessment, post-assessment, underpayment and/or understatement) made.
The request for relief is treated as a separate issue and should be indexed to Form 4318, Examination Workpapers Index, for RAs and on Form 4318-OA, Examination Workpapers Index - Office Audit, for TCOs. Refer to http://mysbse.web.irs.gov/examination/rgs/rgs/33210.aspx for instructions to add the IS claim issue to the RGS case file and download the Innocent Spouse Lead Sheet. At a minimum, the lead sheet and workpapers must document:
Statement of determination for each year
Summary of pertinent facts; cross-referenced as needed
Basis for determination; including the development and analysis of all relevant factors and the code section(s) addressed
Taxpayer’s position if case is unagreed
The Innocent Spouse Lead Sheet or Form 886-A should contain an index reference to all supporting workpapers associated with or regarding the IS claim issue.
Copies of all correspondence issued must be retained in the case file and noted in the activity record.
There must be documentation supporting how the liability was allocated or apportioned if relief is partially allowed. A computational worksheet for underpayment or understatement is required. The computational worksheet detailing the allocation or apportionment must be provided to the RS and NRS by attaching a copy to the examination report.
In all examinations of a joint return, the examiner must verify the last known mailing address for each spouse. Form 8857 may indicate a different address than shown on IDRS. The examiner must verify the current address and document the actions taken in the activity record. See IRM 22.214.171.124.2, Contacting the Taxpayer or Representative by Letter, for additional information.
Examiners must send all correspondence separately to each spouse, at each spouse’s last known address, in every case involving a claim for relief from joint and several liability whether or not the spouses reside at the same address.
The examiner must not update an address for the NRS based on information provided on Form 8857 by the RS, without clear and concise notification from the NRS, as the NRS is not the one completing the Form 8857. Examiners must follow the guidance in IRM 126.96.36.199, Taxpayer Change of Address, when determining if the taxpayer has provided clear and concise notification of a new address.
Letters should be addressed to the name (separately) as it appears on IDRS, however examiners should confirm the taxpayer's current name as it may differ from that shown on IDRS. Refer to Form 8857, "current name" to confirm if the RS spouse’s name has changed and address the correspondence accordingly.
When a taxpayer is deceased, additional care must be taken when addressing correspondence. See IRM 188.8.131.52 for guidance on how to address correspondence for a deceased spouse.
If mail is returned undeliverable, follow the guidance provided in IRM 184.108.40.206.4, Undeliverable Initial Contact Letters. If a new address is located, re-issue the correspondence to the new address. If a new address cannot be located, the correspondence must be mailed to the last known address.
Form 8857 and instructions inform the RS that the NRS will be notified and given an opportunity to participate. If the RS alleges abuse by the NRS, or fears retaliation or harassment, the examiner should remind the RS the NRS will be notified, to allow the RS the option to proceed or withdraw the claim. Letter 3659, Requesting Spouse Initial Contact Letter, may be used to obtain the RS’s decision regarding whether to proceed or withdraw the claim. See IRM 220.127.116.11.1, Alleged Abuse, for additional guidance.
If abuse is alleged, the examiner should attempt to contact the RS to determine if it is necessary to take additional precautions to conceal the location of the RS and document any actions taken in the activity record.
In any case when the NRS is deceased, the relief determination must still be completed.
The examiner may be told the NRS is deceased by the RS or IDRS may identify the NRS as deceased. If there is no indication on IDRS that the NRS is deceased, request the following information from the RS or representative:
Date of death and copy of death certificate,
County in which the taxpayer died,
County in which the taxpayer resided at time of death,
A will or letters of testamentary, validated through the court, and
Name, address and telephone number of the fiduciary (executor, executrix, or administrator of the taxpayer’s estate), if any.
It is important to determine the proper person to contact on behalf of the NRS because that person is responsible for protecting the rights of the deceased NRS by providing relevant information and presenting the NRS’s position.
There may be an estate or a fiduciary for the deceased NRS. Ask the RS if they know whether the NRS has an estate. In addition, research IDRS using CC INOLE with definer G, to determine if the Service is aware of an estate. If yes, research using CC CFINK for POA information under the EIN of the estate.
A fiduciary (trustee, executor, administrator, receiver, or guardian) stands in a position of and acts as the taxpayer, not as an appointee or representative. A fiduciary does not need to complete a third party authorization unless the fiduciary wishes to authorize someone else to act in place of the decedent. If necessary, obtain the following:
Form 56, Notice Concerning Fiduciary Relationship, when necessary to prove the creation or termination of a fiduciary relationship,
Court papers naming the person as the court-appointed or court certified personal representative for the deceased taxpayer, and
Authorized representative forms, when necessary to verify an authorized representative
See IRM 18.104.22.168.1(8), Deceased Non-Requesting Spouses, for guidance on how to address correspondence to the deceased NRS.
All actions and discussions with affected taxpayers and/or representatives must be noted on the activity record and fully documented in the case file.
If a taxpayer’s claim for refund (or request for abatement) includes an innocent spouse claim, follow normal claim/abatement procedures. The examiner must prepare, but not issue, the examination report and any forms or letters. Include any claim for refund/abatement comments as required in the “Other Information” section of the examination report in addition to the statement that conveys the innocent spouse determination as shown in IRM 22.214.171.124.1.
Forward the case to TS for mandatory review. TS will issue the normal claim for refund or abatement letter, IS claim determination letters and the examination report.
If the RS has an installment agreement in effect when an innocent spouse claim is filed, they must decide whether or not to continue making payments while the request for relief is considered. Inform the taxpayer of the following consequences:
If the taxpayers default on the installment agreement, the Service may terminate it. If the request for relief is denied, the Service may resort to other collection actions to collect the liability in full.
If the RS makes installment payments and relief is granted under IRC 6015(b) or IRC 6015(f), the RS may be entitled to a refund of the payments.
If the RS makes payments and the request for relief is granted under IRC 6015(c), the RS will not be entitled to a refund of the payments. IRC 6015(g)(3) prohibits credits or refunds for an election under IRC 6015(c).
Before a case is forwarded to TS for review, all account problems must be resolved. Account problems are problems with the account not related to the request for relief.
The function with jurisdiction over the issue has the responsibility to resolve any account problems that affect the determination of relief by Examination. Field Examination is not to resolve the account problems of issues under the jurisdiction of another function unless local agreements are reached with the functions. See Problem Solving in IRM 4.10.1, for additional guidance.
When a request for relief from joint and several liability is considered in an examination; additional information is required on Form 3198 and Form 5344:
Form 3198, Special Handling Notice - Examiners must check the box for "Innocent Spouse" and annotate in the "Other" box the applicable IRC section, relief granted in whole, part, or denied to the RS and/or NRS, for example "IRC 6015(b) Relief Case – Relief granted in whole to the RS" . In addition, the examiner must check other applicable boxes, for example in the "Special Features" section check the "MFT 31 Adjustment" box, when applicable.
Form 5344, Examination Closing - This form is used to direct the AIMS closing and provide adjustment information to be made to the Master File account, including whether the assessment should be assessed on MFT 30, MFT 31, or split between the spouse’s accounts, for a pre-assessment case. See IRM 126.96.36.199.3, Separate Assessments on Joint Taxpayers, for additional guidance on preparing the Form 3198 and Form 5344 when making separate assessments.
Examiners must follow the guidance in IRM 188.8.131.52, Case File Assembly for Closing. Form 8857 and attachments should be placed behind and indexed to the Innocent Spouse issue section.
TS is responsible for:
mandatory review of the claim determination,
necessary deficiency procedures,
issuing required determination letters,
forwarding cases to Appeals when appropriate, and
closing cases to CCP with special closing instructions.
The reviewer will take the following actions on pre-assessment cases:
Ensure the closing instructions for all agreed cases are correct and close to CCP,
Send to the 90 day clerk for issuance of the Statutory Notice of Deficiency, when the case is unagreed (not appealed),
Input the appropriate closing codes and then forward to Appeals, when the case is appealed, and
Make all necessary updates to the ISTS.
The reviewer will take the following actions for post-assessment cases:
Prepare and issue the preliminary and/or final determination letters as necessary,
Retain the case for the 30/90 day period,
Send the case to Appeals, or CCP as necessary, and
Make all necessary updates to the ISTS.
The reviewer will return a case to the group when:
Facts and circumstances do not support the examiner’s determination
Law does not support the examiner’s determination, or
Account problems are not resolved. See IRM 184.108.40.206 for additional guidance.
The ISTS is designed to track an innocent spouse claim from receipt to closing. When innocent spouse claims are received they must be put on the ISTS by the PSP ISC and a TC 971 with an AC 065 must be input to suspend collection activity while the claim is being examined. Therefore, examiners must promptly notify the PSP ISC upon receipt of an IS claim directly from the taxpayer in order that the claim be input timely in the ISTS. See IRM 220.127.116.11, Introduction, for additional information on the ISTS.
If the tracking system is not updated timely, Collection suspensions may not get input and released timely. This is why it is extremely important the system be updated timely and validated for accuracy.