25.15.19. Non-Qualifying Requests for Relief & Complex Account Issues

(1) IRM 25.15.19 provides guidance for resolving taxpayer issues when the Form 8857 , Request for Innocent Spouse Relief, does not qualify for consideration, yet the taxpayer has other account issues which require resolution.

(2) CCISO specialists process taxpayer requests that do not qualify for innocent spouse relief under IRC 6015 or IRC 66(c), but require account corrections.

(3) IRM 25.15.18.5.1.11 lists conditions that cause a request to be non-qualifying, which means the request cannot be considered. Also see IRM 25.15.3.6, Special Considerations, for additional information on non-qualifying conditions.

(4) The specialists follow the procedures in IRM 25.15.18.5.1.11, Non-Qualifying Requests, to close the request for relief.

(5) The specialists follow the procedures in this IRM to correct accounts when needed.

(1) IRC 66(c), Spouse Relieved of Liability in Certain Other Cases.

(2) The Code of Federal Regulations (CFR) at 26 CFR sections 1.66-1 through -5, contains guidance on requests for relief from federal income tax liability resulting from the operation of community property law.

(3) IRC 6015, Relief from joint and several liability on joint return.

(4) 26 CFR sections 1.6015-1 through -9, and related proposed regulations, including 78 FR 49242 (issued on August 13, 2013) and 80 FR 72649-01 (issued November 20, 2015). These regulations provide guidance on requests for relief from joint and several liability.

(5) Rev. Proc. 2013-34, guidelines for taxpayers seeking equitable relief from income tax liability under section 66(c) or section 6015(f).

(1) The Director, Examination - Field and Campus Policy, reports to the Director, Headquarters Examination, and is responsible for the delivery of policy and guidance that impacts the field and campus examination process. See IRM 1.1.16.3.5.1, Field and Campus Policy, for additional information.

(2) Campus Exam and Field Support, which is under the Director, Examination - Field and Campus Policy, is the group responsible for providing Servicewide policy guidance on compliance processes that relate to campus examination operations and support Field Exam and Specialty Programs in SB/SE and Large Business & International (LB&I). See IRM 1.1.16.3.5.1.5, Campus Exam and Field Support, for additional information.

(3) CCISO falls under the responsibility of the Director, Examination - Campus, with the Director, Examination - Field and Campus Policy, providing oversight to the innocent spouse processing IRMs.

(4) The IRS adopted the Taxpayer Bill of Rights (TBOR) in June 2014. Employees are responsible for being familiar with and acting in accordance with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see the web page Taxpayer Bill of Rights FAQs.

(1) Management in CCISO oversees employees processing Forms 8857, including creating and updating the Innocent Spouse Tracking System (ISTS) records, creating and maintaining cases on the Accounts Management System (AMS)/Innocent Spouse Application (ISA) Database, and making account adjustments needed to resolve complex account issues, when requests for relief are non-qualifying. Management uses reports generated through IDRS, ISTS and AMS to account for cases within the operation, and measure program effectiveness.

(2) Policy does program reviews periodically on CCISO to evaluate whether case procedures comply with the IRM and to do risk analysis. Operational reviews are conducted periodically by Director, Examination - Campus.

(1) The following is a list of common terms used in this IRM section:

(1) The following table lists commonly used acronyms and their definitions used throughout this IRM:

(1) The table below includes references for related Internal Revenue Manuals (IRMs).

(1) Specific freeze codes require extra consideration before processing a request for relief. This section identifies some of the codes that require consideration.

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(1) Instructions to work erroneous refunds can be found in IRM 21.4.5, Erroneous Refunds.

(2) An erroneous refund is the receipt of money from the IRS to which the recipient is not entitled. Examples of erroneous refunds are:

• Misapplied payments that refunded.

• A credit refund the taxpayer is not entitled to receive.

• An incorrect tax assessment or adjustment causing an incorrect refund.

• Taxpayer files a claim for a lost refund, receives replacement check and then finds the original and keeps both.

• Barred statute refunds.

• A taxpayer makes an advance payment against a pending tax increase and the money refunds before the tax assessment posts.

• A taxpayer receives both a manual (TC 840) and computer generated (TC 846) refund for the same overpayment.

(1) This section of the IRM provides guidance to resolve invalidated joint returns.

(2) There are three situations where a joint return is invalid:

1. Invalid election - One of the individuals on the joint return did not elect to file a joint return.

2. Forgery - One spouse did not sign the return.

3. Unlawful - Taxpayers had no legal right to file jointly.

   Note: Tacit consent is a factor to consider for invalid elections and forgery allegations. See IRM 25.15.19.2.4.1, Tacit Consent Factors, for more information.

(1) Individuals who allege that their spouse forged an electronic return or signed a paper return on their behalf may not be true forgery cases, provided there is tacit consent. The individual, in the course of the relationship, provided their personal information to their spouse. Requests for relief involving a RS who alleges the other spouse forged their signature should be considered under IRM 25.15.19.2.4.1, Tacit Consent Factors, IRM 25.15.19.2.4.2, Determining if a Joint Election is Valid, and IRM 25.15.19.2.4.3, Joint Election is Invalid, but not IRM 25.15.19.2.5.1, Forgery with Elements of Fraud.

(2) The burden of proof is on the taxpayer to prove forgery and no intent to file a joint return.

• Compare the signature on the return or assessment document with the signature on Form 8857, Request for Innocent Spouse Relief. If the return was filed electronically and the signature comparison cannot be done, "tacit consent" factors should be considered. Refer to IRM 25.15.19.2.4.2, Tacit Consent Factors.

• If it appears that the taxpayer alleging forgery signed the return or assessment document, or if the taxpayer intended to file a joint return (due to tacit consent), then advise the taxpayer and continue processing the claim for relief.

  Note: Signatures often change over the years. Documentation can be requested showing signatures; for example, a copy of a driver’s license, social security card or other documents containing the taxpayer’s signature. If "tacit consent" factors apply, however, this may not be necessary.

(3) There is a distinction between alleged forgery between two spouses and forgery with criminal intent, described below.

(1) Unlawful returns are returns filed when the taxpayers were not legally married at the end of the tax year, but both parties willingly filed using the joint filing status. This distinguishes these types of returns from invalid joint election returns.

(2) Obtain the following information if available:

• ESTAB for all tax returns identified on the claim for relief.

• Secure copy of court or legal documents showing that the couple was divorced, or the marriage was invalid or annulled.

• Consider alternative documentation that might support the taxpayer’s signed statement that there was no marriage or no valid marriage. For example, look at ACCURINT to determine if property is in both names, marriage certificates, divorce decrees, or other information that may be available for that taxpayer.

(3) Once established that the return is unlawful, tax returns showing an underpayment can be allocated between the two taxpayers and adjusted. Refund returns should not be adjusted, only subsequent assessments. Allocate subsequent assessment items between the two taxpayers.

• Allocate items of income and expense using CC IRPTR when possible.

• Attribution of property generating income (for example rental property, farms, partnerships, capital gains/losses) may be resolved by using ACCURINT when possible. If unknown, allocate items fifty percent to each taxpayer.

• Income from jointly owned assets can be divided evenly unless there is an indication that one individual owns a higher percentage, or a court document assigns the asset to one of the taxpayers.

• Once the tax liability of each taxpayer is computed. Adjust accounts or initiate account transfers accordingly. Refund returns should not be adjusted.

Caution: When correcting the account on the primary taxpayer the filing status must be changed to a status other than Married Filing Joint (filing status 2). The entity information must be changed concurrently as needed. For the secondary taxpayer an entity account must be present, or established, prior to any needed account transfer.

(1) Married taxpayers who live in community property states report income based on state law. If separate returns are filed each spouse reports 50% of the total community property income regardless of which spouse acquired the income. In addition, each spouse is taxed on 100% of their separate property income. If the taxpayers filed a joint return, then relief under IRC 66(c) is not an issue. See Treas. Reg. 1.66-4(a)(1)(i) for more information.

(2) If the RS requested relief for a year for which there is no issue to consider under IRC 66(c), then non-qualify case for filing status. See IRM 25.15.18.5.1.11, Non-Qualifying Requests, for more information.

• Update ISTS and ISTSR Input Record through Stage 29 with Activity Code "FS" and a history item "NO COMM PROP.", or something similar.

• These cases require a TC 290 for .00. See IRM 25.15.9, Account Processing of Requests for Relief from Joint and Several Liability, for more information.

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(1) If unable to secure the administrative file:

1. Request a special search for the administrative file.

2. Research IDRS and ACCURINT for the information to determine ownership of income or expenses.

3. If unable to obtain the information and the claim cannot be worked without it, attempt to secure the information from the RS.

4. If still unable to determine whom the income or deductions are attributable to, leave the item(s) on the joint account. The RS has the burden to establish to whom the income or deduction belongs.