It is a very common practice to have one spouse manage household finances while the other simply signs the paperwork for taxes and banking. It doesn’t technically take two people to file an income tax return, and dividing household work is more efficient when each partner specializes.
The person not usually responsible for filing the income tax returns might feel intense fear when they realize that the Internal Revenue Service (IRS) has identified the tax issue for their household. Can one spouse who was not involved in the tax return qualify for innocent spouse relief in Illinois?
Illinois is not a community property state
The IRS does allow one spouse to assert that they were unaware of and played no role in income tax evasion or fraud. The spouse who did not file the tax return could potentially request innocent spouse relief from the IRS.
Illinois is an equitable distribution state when it comes to handling marital resources, so innocent spouse relief is not available. Thankfully, there is an equitable relief program that may benefit those who do not qualify for innocent spouse relief. One spouse can potentially demonstrate through financial records that they did not know about or directly profit from the tax misconduct of the spouse filing the tax return. Those who separate or file for divorce may qualify for relief by separation of liability.
Both of these options could be available to certain people who filed a joint tax return in Illinois. Those seeking relief need to file paperwork with the IRS. They can only qualify if they were unaware of the misconduct or fraud that occurred. Someone who knew they spouse engaged in intentional tax underpayment will not qualify.
The IRS reviews each relief case on an individual basis. Factors ranging from someone’s education to changes in someone’s spending habits can impact how the IRS responds to such requests. The non-filing spouse may sometimes be able to avoid culpability for certain tax debts and criminal prosecution for misconduct on the part of their spouse.