Innocent spouse relief protects you if your spouse has outstanding tax liability that you were unaware of. This occurs when your spouse misreports taxes without your knowledge. Typically, innocent spouse relief applies when you have no knowledge of and no reason to have knowledge of the outstanding taxes; separations and divorces are common reasons for relief. However, even if you are still married, you can use the same process to file for the relief, freeing you from any liability to pay the outstanding amount.
- Locate Form 8857
Form 8857 is the form you will fill out to report the taxes you believe you should not have to pay. This form should be submitted as soon as you receive notice of the taxes you are being held liable for. For example, if the IRS sends you a notice proposing to collect additional taxes based on income you are unaware of, you should begin filing the form immediately. The form must be filed within 2 years of the first attempt to collect the money from you.The IRS will review this form and send it back to you with a judgment on your liability. To prove you should not be held liable, you must provide information supporting the fact you did not know about the obligation to pay.
- Establish "Reason to Know"
The IRS will establish the likelihood of your knowledge of the tax liability based on a condition called "reason to know." If you prove you had no reason to know about the money, it is more likely you will not have to pay. The main factors considered are:
- Nature of the error and the amount of the error relative to other items on your return
- The financial situation you are in
- Your education and experience with tax filing
- Whether or not you participated in the activity that lead to the erroneous filing
- If you failed to ask questions that a reasonable person would ask
- If the error was a clear break from the taxes you filed in the years past
Basically, if the error should have been obvious to you, it is not likely you will be able to claim you had no reason to know or to question the tax return. In this case, you will not likely be granted exemption from liability.
- Prove Unfairness
The IRS will also question whether or not it is fair to hold you liable. Just because you did not know about the tax does not mean it is not fair to charge you. If you benefit from the error, you may be on the hook for the money. Provide evidence showing the following considerations:
- You did not receive any direct or indirect benefit from the income that was understated
- Your spouse deserted you (if applicable)
- You and your spouse are separated or divorced (if applicable)
- You received no benefit from the lesser tax obligation
In order for these circumstances to apply, your spouse must have made the money independently of you, spent the money independently of you and took advantage of the tax benefits independently of you.
- Divorce Decrees Do Not Count
In addition, courts have also held that the IRS is not bound by divorce decrees and other otherwise legally binding agreements reached by the spouses. The rationale behind this is that it would be unfair to limit the collection rights of the IRS by virtue of an agreement that it was not a party to. However, the Internal Revenue Code recognizes that it is not fair to hold innocent spouses responsible for liabilities in all circumstances.
Thus, it created several avenues where taxpayers can seek relief from IRS collection activities. Although commonly known as innocent spouse relief, these actually constitute three different ways that taxpayers can absolve themselves from past liability owed. Innocent spouse relief also has several nuances, which you need to be aware of in order to make a successful claim for relief.
Contact our tax law firm to discuss your tax matter today.
IRS TOPIC 205 - INNOCENT SPOUSE RELIEF (INCLUDING SEPARATION OF LIABILITY AND EQUITABLE RELIEF)
Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows them. When filing jointly, both taxpayers are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise from the joint return even if they later divorce. Joint and several liability means that each taxpayer is legally responsible for the entire liability. Thus, both spouses on a married filing jointly return are generally held responsible for all the tax due even if one spouse earned all the income or claimed improper deductions or credits. This is also true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. In some cases, however, a spouse can get relief from being jointly and severally liable.
Types of Relief
There are three types of relief from the joint and several liability of a joint return:
- Innocent Spouse Reliefprovides you relief from additional tax you owe if your spouse or former spouse failed to report income, reported income improperly or claimed improper deductions or credits.
- Separation of Liability Reliefprovides for the separate allocation of additional tax owed between you and your former spouse or your current spouse you're legally separated from or not living with, when an item wasn't reported properly on a joint return. You're then responsible for the amount of tax allocated to you.
- Equitable Reliefmay apply when you don't qualify for innocent spouse relief or separation of liability relief for something not reported properly on a joint return and generally attributable to your spouse. You may also qualify for equitable relief if the amount of tax reported is correct on your joint return but the tax wasn't paid with the return.
Note: You must request innocent spouse relief or separation of liability relief no later than 2 years after the date the IRS first attempted to collect the tax from you. For equitable relief, you must request relief during the period of time the IRS can collect the tax from you. If you're looking for a refund of tax you paid, then you must request it within the statute period for seeking a refund, which is generally three years after the date the return is filed or two years following the payment of the tax, whichever is later. See Publication 971, Innocent Spouse Relief, for additional restrictions on refunds available under innocent spouse relief, equitable relief, and relief based on community property laws. Refunds aren't available under separation of liability relief.
Innocent Spouse Relief
You must meet all of the following conditions to qualify for innocent spouse relief:
- You filed a joint return that has an understatement of tax (deficiency) that's solely attributable to your spouse's erroneous item. An erroneous item includes income received by your spouse but omitted from the joint return. Deductions, credits, and property basis are also erroneous items if they're incorrectly reported on the joint return
- You establish that at the time you signed the joint return you didn't know, and had no reason to know, that there was an understatement of tax and
- Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax
Separation of Liability Relief
To qualify for separation of liability relief, you must have filed a joint return and must meet one of the following requirements at the time you request relief:
- You're divorced or legally separated from the spouse with whom you filed the joint return
- You're widowed, or
- You haven't been a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you request relief
If you had actual knowledge of the item that gave rise to the understatement of tax at the time you signed the joint return, you don't qualify for separation of liability relief.
If you don't qualify for innocent spouse relief or separation of liability relief, you may still qualify for equitable relief. To qualify for equitable relief, you must establish that under all the facts and circumstances, it would be unfair to hold you liable for the understatement or underpayment of tax. In addition, you must meet the other requirements listed in Publication 971, Innocent Spouse Relief. See Revenue Procedure 2013-34 for information about how the IRS will take into account abuse and financial control by the nonrequesting spouse in determining whether equitable relief is warranted.
Form to File
To seek innocent spouse relief, separation of liability relief, or equitable relief, you should submit to the IRS a completed Form 8857 (PDF), Request for Innocent Spouse Relief, or a written statement containing the same information required on Form 8857, which you sign under penalties of perjury. You may also refer to Publication 971, Innocent Spouse Relief, for more information. If you request relief from the joint and several liability of a joint return, the IRS is required to notify the spouse you filed jointly with, of your request and allow him or her to provide information for consideration regarding your claim.
Community Property States
If you lived in a community property state and didn't file as married filing jointly, you might qualify for relief from the operation of state community property law. Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Refer to Publication 971 for more details.
Injured Spouse vs. Innocent Spouse
An injured spouse claim is for allocation of a refund of a joint refund while innocent spouse is for relief or allocation on a joint and several liability of a joint return. You're an injured spouse if all or part of your share of a refund from a joint return was or will be applied against the separate past-due federal tax, state tax, child support, or federal non-tax debt (such as a student loan) owed by your spouse. If you're an injured spouse, you may be entitled to recoup your share of the refund. For more information, see Form 8379 (PDF), Injured Spouse Allocation, or refer to Topic 203.
IRS OFFICIAL INNOCENT SPOUSE QUESTIONS & ANSWERS
- How do I request relief?
File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. You need not file multiple forms. One form can cover multiple years.
- Should I include a letter when filing Form 8857?
You may include a letter and any other information you would like IRS to consider.
- When should I file Form 8857?
You should file Form 8857 as soon as you become aware of a tax liability for which you believe only your spouse or former spouse should be held. The following are some of the ways you may become aware of such a liability.
- The IRS is examining your tax return and proposing to increase your tax liability.
- The IRS sends you a notice.
However, you generally must file Form 8857 no later than 2 years after the first IRS attempt to collect the tax from you that occurs after July 22, 1998. (But see the exceptions below for different filing deadlines that apply). For this reason, do not delay filing because you do not have the required documentation. See the answer to question 35, “What constitutes a collection activity for purposes of starting the two-year statute of limitations that cover the filing of Form 8857?” below.
Exception for equitable relief.
On July 25, 2011, the IRS issued Notice 2011-70 expanding the amount of time to request equitable relief. The amount of time to request equitable relief depends on whether you are seeking relief from a balance due, seeking a credit or refund, or both:
- Balance Due – Generally, you must file your request within the time period the IRS has to collect the tax. Generally, the IRS has 10 years from the date the tax liability was assessed to collect the tax. In certain cases, the 10-year period is suspended.
- Credit or Refund – Generally, you must file your request within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later. But you may have more time to file if you live in a federally declared disaster area or you are physically or mentally unable to manage your financial affairs. See Pub. 556, for details.
- Both a Balance Due and a Credit or Refund – If you are seeking a refund of amounts you paid and relief from a balance due over and above what you have paid, the time period for credit or refund will apply to any payments you have made, and the time period for collection of a balance due amount will apply to any unpaid liability.
Exception for relief based on community property laws.
If you are requesting relief based on community property laws, you must file Form 8857 no later than 6 months before the expiration of the period of limitations on assessment (including extensions) against your spouse or former spouse for the tax year for which you are requesting relief. However, if the IRS begins an examination of your return during the 6-month period the latest time for requesting relief is 30 days after the date of the IRS’ initial contact letter to you. The period of limitations on assessment is the amount of time, generally 3 years, that the IRS has from the date you filed the return to assess taxes that you owe. If you do not qualify for the relief described above and are now liable for an unpaid or understated tax you believe you should be paid only by your spouse or former spouse, you may request equitable relief. See the Exception for equitable relief above.
- Where should I file my Innocent Spouse claim?
If using the U.S. Postal Service, please mail the Form 8857, Request for Innocent Spouse Relief, to:
Internal Revenue Service P.O. Box 120053 Covington, KY 41012
If using a private delivery service, please mail the Form 8857, Request for Innocent Spouse Relief, to:
Internal Revenue Service 201 W. Rivercenter Blvd. Stop 840F Covington, KY 41011
You may fax the Form 8857 and attachments to the IRS at 855-233-8558.
Please write your name and social security number on any attachments
Note: Please do not file the Form 8857 with your tax return or Tax Court.
- Is there a toll free number to call if I have questions regarding an Innocent Spouse Claim or how to complete the Form 8857 Request for Innocent Spouse Relief?
If you need additional information on your Innocent Spouse Claim or on the Form 8857, Request for Innocent Spouse Relief, the toll free number is 1-855-851-2009.
- What type of documents do I need to submit with the Form 8857, Request for Innocent Spouse Relief?
You should carefully review the Form 8857, Request for Innocent Spouse Relief, and it will guide you on what documents to submit. For comprehensive information on Innocent Spouse, Publication 971, Innocent Spouse Relief, explains each type of relief, who may qualify, and how to request relief.
- I want to file, but I am afraid of what my ex-spouse will do, should I still file?
By law, the IRS must contact your spouse or former spouse. There are no exceptions, even for victims of spousal abuse or domestic violence. Therefore, you should consider all options including an Offer-in-Compromise Doubt as to Liability.
We will inform your spouse or former spouse that your filed Form 8857 and will allow him or her to participate in the process. We must also inform him or her of its preliminary and final determinations regarding your request for relief.
However, to protect your privacy, the IRS will not disclose your personal information (for example, your current name, address, phone number(s), information about your employer, your income or assets) or any other information that does not relate to making a determination about your request for relief from liability.
Caution: If you petition the Tax Court your spouse or former spouse may see your personal information.
- How long will the process take?
When a Form 8857, Request for Innocent Spouse Relief, is filed with the IRS, it may take up to 6 months before a determination is made. During the processing time, the Service is requesting your tax information and contacting the non-requesting spouse. By law, the IRS must contact your spouse or former spouse. There are no exceptions, even for victims of spousal abuse or domestic violence.
- Should I wait to file my current year tax return pending the outcome of my claim?
No, you should file your current return and we will not hold any refund you are due.
- I filed a joint tax return with my spouse and the entire refund was applied to my spouse’s back child support. Should I file a Form 8857, Request for Innocent Spouse Relief, to receive my portion of the refund?
This issue is generally not related to Innocent Spouse Relief. You may be eligible for injured spouse provisions, if you file a joint tax return and all or part of your portion of the overpayment was applied or offset to your spouse’s legally enforceable past-due federal tax, state income tax, child or spousal support, or a federal nontax debt such as a student loan. You should review the information on Injured Spouse and Form 8379 Injured Spouse Allocation.
- I received an Automated Underreporter Notice or CP 2000 Notice and the unreported income belongs to my former spouse. What should I do?
If you filed a joint tax return, you are jointly and individually responsible for the tax and any interest and penalty due on the joint return. This is true even if a divorce decree states that a former spouse will be responsible for any amounts due on a previously filed joint return.
In some cases, a spouse may be relieved of the tax, interest, and penalties on a joint tax return. You can ask for relief no matter how small the liability.
Three types of relief are available:
- Innocent Spouse Relief
- Separation of Liability
- Equitable Relief
You must file Form 8857, Request for Innocent Spouse Relief, to request any of the methods of relief. Publication 971, Innocent Spouse Relief, explains each type of relief, who may qualify, and how to request relief.
- My Innocent Spouse Claim was previously denied and I now have new additional information, can I file a claim again?
Yes, you can file a second claim, provide the new additional information and it will be reconsidered. However, you will not have tax court rights on this reconsideration.
- What is the effective date of the new innocent spouse rules under Internal Revenue Code 6015?
Internal Revenue Code 6015 innocent spouse rules are effective for:
- Unpaid balances as of July 22, 1998; and
- Liabilities arising after July 22, 1998
- What is joint and several liability?
Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows. Both taxpayers are jointly and individually responsible for the tax and any interest or penalty due on the joint return even if they later divorce. This is true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. One spouse may be held responsible for all the tax due.
- How can I get relief from joint and several liability?
Relief now falls into three categories: Innocent Spouse Relief; Separation of Liability; and Equitable Relief. Each of these kinds of relief has different requirements. They are explained separately below.
- Can both spouses request relief?
Yes, each spouse can file a Form 8857 to request relief from liability from tax, interest and penalties.
- Does the non-requesting spouse have any appeal rights?
Per Rev. Proc. 2003-19, the non-requesting spouse has the right to appeal the preliminary determination to grant partial or full relief to the requesting spouse when the preliminary determination letter is issued April 1, 2003 or later. However, the non-requesting spouse may not petition the Tax Court from the final determination letter. If relief is denied in part or in full, and the requesting spouse petitions the U.S. Tax Court, the non-requesting spouse, by law, will be given the opportunity to become a party in that proceeding.
For claims where a preliminary determination was issued prior to April 1, 2003, the non-requesting spouse had no appeal rights when the preliminary determination letter granted relief in part or in full to the requesting spouse. If relief was denied and the requesting spouse petitioned the U.S. Tax Court, the non-requesting spouse, by law, was given the opportunity to be a party in that proceeding.
- Will the other spouse be notified that I filed a claim for innocent spouse relief?
The IRS is required to notify the non-requesting spouse to allow them to participate. They will also be notified of the determination on your election and have the opportunity to appeal IRS’s preliminary determination to grant you full or partial relief.
- What are the rules for Innocent Spouse Relief?
To qualify for innocent spouse relief, you must meet all of the following conditions:
- You must have filed a joint return which has an understatement of tax;
- The understatement of tax must be due to erroneous items of your spouse;
- You must establish that at the time you signed the joint return, you did not know, and had no reason to know, that there was an understatement of tax;
- Taking into account all of the facts and circumstances, it would be unfair to hold you liable for the understatement of tax; and
- You must request relief within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998
- What are erroneous items?
Erroneous items are any deductions, credits, or bases incorrectly stated on the return, and any income not reported on the return.
- What is an understatement of tax?
An understatement of tax is generally the difference between the total amount of tax that should have been shown on your return and the amount of tax that was actually shown on your return. For example, you reported total tax on your 2009 return of $2,500. IRS determined in an audit of your 2009 return that the total tax should be $3,000. You have a $500 understatement of tax.
- Will I qualify for innocent spouse relief in any situation where there is an understatement of tax?
No. There are many situations in which you may owe tax that is related to your spouse, but not be eligible for innocent spouse relief. For example, you and your spouse file a joint return that reports $10,000 of income and deductions, but you knew or had reason to know that your spouse was not reporting $5,000 of dividends. You are not eligible for innocent spouse relief when you have knowledge or reason to know of the understatement.
- What are the rules for Separation of Liability?
Under this type of relief, you divide (separate) the understatement of tax (plus interest and penalties) on your joint return between you and your spouse. The understatement of tax allocated to you is generally the amount of income and deductions attributable to your earnings and assets. To qualify for separate liability, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857:
- You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. (Under this rule, you are no longer married if you are widowed.)
- You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12 month period ending on the date you file Form 8857.
- Why would a request for separate liability be denied?
Even if you meet the requirements listed above, a request for separate liability will not be granted in the following situations:
- The IRS proves that you and your spouse transferred assets for the main purpose of avoiding payment of tax.
- The IRS proves that at the time you signed your joint return, you had actual knowledge that any items giving rise to the deficiency and allocable to your spouse were incorrect.
- If a husband and wife are still married but separated for 12 months, prior to filing a claim for relief due to an involuntary reason such as incarceration or military duty, can separation of liability relief be granted?
Separation of liability applies to taxpayers who are (1) no longer married, (2) legally separated, or (3) living apart for the 12 months prior to the filing of a claim. Under this rule, you are no longer married if you are widowed.
Living apart does not include a spouse who is temporarily absent from the household. A temporary absence exists if it is reasonable to assume that the absent spouse will return to the household, or a substantially equivalent household is maintained in anticipation of such a return. A temporary absence may include absence due to incarceration, illness, business, vacation, military service, or education.
A claim can be filed if any of the three statutory requirements are met.
- What are the rules for Equitable Relief?
Equitable relief is only available if you meet all of the following conditions:
- You do not qualify for innocent spouse relief or the separation of liability election.
- The IRS determines that it is unfair to hold you liable for the understatement of tax taking into account all the facts and circumstances.
Note: Unlike innocent spouse relief or separation of liability, if you qualify for equitable relief, you can get relief from an understatement of tax or an underpayment of tax. (An underpayment of tax is an amount properly shown on the return, but not paid.)
- What factors are considered in determining whether or not to grant equitable relief?
The following factors may be considered, but the list is not all-inclusive:
- Current marital status
- Reasonable belief of the requesting spouse, at the time he or she signed the return, that the tax was going to be paid; or in the case of an understatement, whether the requesting spouse had knowledge or reason to know of the understatement
- Current financial hardship/inability to pay basic living expenses
- Spouses' legal obligation to pay the tax liability pursuant to a divorce decree or agreement to pay the liability
- To whom the liability is attributable
- Significant benefit received by the requesting spouse
- Mental or physical health of the requesting spouse on the date the requesting spouse signed the return or at the time the requesting spouse requested the relief
- Compliance with income tax laws following the taxable year or years to which the request for relief relates
- Abuse experienced during the marriage. The IRS understands and is sensitive to the effects of domestic violence and spousal abuse, and encourages victims of domestic violence to call 911 if they are in immediate danger. If you have concerns about your safety, please consider contacting the 24-Hour (Confidential) National Domestic Violence Hotline at 1-800-799-SAFE (7233), or 1-800-787-3224 (TTY), or 206-787-3224 (Video Phone Only for Deaf Callers) before you file this form.
- How do state community property laws affect my ability to qualify for relief?
Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Generally, community property laws require you to allocate community income and expenses equally between both spouses. However, community property laws are not taken into account in determining whether an item belongs to you or your spouse (or former spouse) for purposes of requesting any relief from liability.
- If I am denied innocent spouse relief, must I reapply if I believe I might qualify under one of the other two provisions?
No. The IRS will automatically consider whether any of the other provisions would apply. If you requested innocent spouse relief or separation of liability, IRS will automatically consider equitable relief.
The only time you can reapply for relief is if you were denied relief because you were considered still married at the time the request for relief was filed and you now satisfy the marital status requirements to elect to separate the liability. See the answer to question 25, “If a husband and wife are still married but separated for 12 months, prior to filing a claim for relief due to an involuntary reason such as incarceration or military duty, can separation of liability relief be granted?” above, for more information on satisfying the marital status requirement.
- Will the IRS deny me relief if I do not provide them with the information they request?
IRS will base their decision upon all the information available to them. If enough information is not available, it could adversely affect a request for relief.
- I filed a Form 656, Offer in Compromise, under doubt as to liability. The IRS accepted the Offer in Compromise. Can I still apply for innocent spouse relief?
No. We cannot consider your claim for any year in which an Offer in Compromise was accepted. Acceptance of an Offer in Compromise conclusively closes the tax year(s) compromised from any re-determination of the tax liability.
- I signed a Closing Agreement, can I still apply for innocent spouse relief?
It depends on the type of closing agreement you signed.
If you signed Form 866, Agreement as to Final Determination of the Tax Liability, the tax year is closed with finality and you cannot apply for innocent spouse relief.
If you signed Form 906, Closing Agreement on Final Determination Covering Specific Matters, only those matters covered in the closing agreement are conclusively closed. Innocent spouse relief may be requested for matters not covered in the closing agreement.
Note: If the closing agreement involved Tax Equity Fiscal Responsibility ACS (TEFRA) issues refer to Treas. Reg. 1.6015-1(c) for exceptions to this rule.
- I am currently undergoing an examination of my return. How do I request innocent spouse relief?
Prepare Form 8857, Request for Innocent Spouse Relief, and mail it to the address shown in question 4.
- What if the IRS has levied my account for the tax liability and I decide to request relief?
Upon receipt of your request for relief all collection activity against you will be suspended unless the liability is in jeopardy or the statute of limitation on collection will expire shortly.
- What constitutes a collection activity for purposes of starting the two-year statute of limitations that cover the filing of Form 8857?
The following are examples of collection activity: when the IRS (1) sends a notice under section 6330 of the Service’s intent to levy and of the taxpayer’s right to a collection due process (CDP) hearing, (2) offsets a refund from another tax year and you received a notice advising you of your rights under Section 6015, or (3) files a judicial suit or claim that puts the requesting spouse on notice the IRS intends to collect the joint tax liability from specific property belonging to that spouse. For further information on collection activity, see Treas. Reg. § 1.6015-5(b)(2).
- I filed a valid joint return with my spouse and have an installment agreement to pay the taxes. Can I still apply for relief?
The innocent spouse rules may apply in your situation. However, regarding the installment agreement, there are some important considerations:
If you do not continue to make payments while we consider your request for relief, your installment agreement will default and full payment will be due immediately if your request for relief is denied.
- My spouse forged my signature to a joint return. Am I eligible for innocent spouse relief? Should I file Form 8857?
You may be eligible for relief, but relief does not fall under the innocent spouse rules. If you can establish your signature was forged, and there was not tacit (implied) consent, the joint election is invalid and you will only be liable for your separate tax liability.
- What is the meaning of "economic hardship" for purposes of equitable relief of an underpayment of tax liability shown on a tax return?
"Economic hardship" means that you are unable to pay your basic living expenses, e.g. food, clothing, housing, utilities, medical expenses (including health insurance), transportation, child care, child support, etc.
- Will I receive a refund of all amounts I paid, if relief is granted?
It depends upon the provision under which relief is granted.
- If innocent spouse relief is granted under section 6015(b), refunds are allowable for amounts paid on or after July 22, 1998.
- If separation of liability is granted under section 6015(c), no refunds are allowable.
- If equitable relief is granted under section 6015(f), refunds are allowed for payments made after 7-22-98 unless the payments were made jointly with the nonrequesting spouse, payments were made with the return or payments were made by the nonrequesting spouse.
Note: All refunds are subject to Internal Revenue Code section 6511. This code section only allows refunds for payments made within 2 years after the tax was paid or 3 years after the return was filed whichever is later.
- Will I be granted innocent relief with respect to unreported income if I feel it is my accountant's fault that the income was not reported on the return?
Innocent spouse relief is in no way meant to transfer the liability to an accountant. If the income was yours (rather than your spouse's), or was your spouse's but you knew about it, you will probably not be relieved of liability.
- If an understatement is the result of signing an examination report that lists omissions of income, does this indicate there was knowledge of items giving rise to the deficiency?
No, innocent spouse provisions clearly state the knowledge has to do with what was known at the time the return was signed.