Amendments to Innocent Spouse Rules Proposed (NPRM REG-132251-11) [feedly]

 
 

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Amendments to Innocent Spouse Rules Proposed (NPRM REG-132251-11)

The IRS has issued proposed amendments to the rules governing when and how to request innocent spouse relief under Code Sec. 6015 and relief from federal tax liability resulting from the operation of state community property laws under Code Sec. 66. The regulations are proposed to revise Reg. §1.6015-5(a) to reflect that a requesting spouse may elect the application of Code Sec. 6015(b) or (c) or request equitable relief under Code Sec. 6015(f).

The proposed regulations retain the two-year deadline, measured from the date of the first collection activity, to elect the application of Code Sec. 6015(b) or (c). In accordance with Notice 2011-70, I.R.B. 2011-32, 135, the deadline to request equitable relief under Code Sec. 6015(f) must be filed with the IRS within the Code Sec. 6502 collections limitations period or the Code Sec. 6511 limitations period for credit or refund of tax. A similar rule is added to Reg. §1.66-4(j)(2)(ii) for claims for equitable relief from the federal income tax liability resulting from the operation of state community property law.

The proposed regulations explain that, when a request for equitable relief under Reg. §1.6015-4 is filed within the collection limitation period, the IRS will consider the request, but any relief in the form of a tax credit or refund depends on whether the limitations period for credit or refund is also open as of the date the claim for relief is filed and the other requirements relating to credits or refunds are satisfied. When the limitation period for credit or refund is open when a request for equitable relief is filed, the request can be considered for a potential refund or credit of any amounts collected or otherwise paid by the requesting spouse during the applicable look-back period of Code Sec. 6511(b)(2), even if the collection period is closed.

When a request for equitable relief is filed after the expiration of the limitations period for collection of a joint tax liability, the IRS is barred from collecting any remaining unpaid tax from the requesting spouse. Similarly, when a request for equitable relief under Reg. §1.6015-4 is filed after the expiration of the limitations period for a credit or refund of tax, Code Sec. 6511(b)(1) bars the IRS from allowing a credit or refund. Therefore, the proposed regulations provide that the IRS will not consider an individual's request to be equitably relieved from a tax that is no longer legally collectible.

The proposed regulations clarify what constitutes collection activity for purposes of starting the two-year period that continues to apply to Reg. §§1.6015-2 and 1.6015-3. A notice of intent to levy and right to request a CDP hearing is a collection activity that starts the two-year period applicable to applications to elect relief under Reg. §§1.6015-2 and 1.6015-3. The proposed regulations clarify that the two-year period will start irrespective of a requesting spouse's actual receipt of the notice, if the notice was sent by certified or registered mail to the requesting spouse's last known address.

The proposals are effective as of the date final regulation are published, and the rules for determining the timeliness of an election are generally applicable to any request for relief filed on or after July 25, 2011, the date Notice 2011-70 was made available to the public.

Comments Requested

Comments and requests for a public hearing must be received by November 13, 2013. Submissions should be sent to: CC:PA:LPD:PR (REG-132251-11), Room 5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8:00 a.m. and 4:00 p.m. to CC:PA:LPD:PR (REG-132251-11), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, D.C. Comments may also be submitted electronically via the federal eRulemaking Portal at www.regulations.gov (IRS REG-132251-11).

Proposed Regulations, NPRM REG-132251-11, 2013FED ¶49,580

Other References:

Code Sec. 66

CCH Reference – 2013FED ¶6050HC

CCH Reference – 2013FED ¶6050JC

Code Sec. 6015

CCH Reference – 2013FED ¶35,186A

CCH Reference – 2013FED ¶35,187CB

CCH Reference – 2013FED ¶35,188EB

Tax Research Consultant

CCH Reference – TRC INDIV: 18,052.10

CCH Reference – TRC INDIV: 18,058.05

CCH Reference – TRC INDIV: 24,154

 

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