If you have underpaid, or understated (the difference between what you paid in taxes and what the IRS deems you actually owed in taxes), your taxes and owe for back taxes, you may qualify for equitable relief from the IRS.

 

In order to qualify for equitable relief from the IRS, and therefore not be held liable for the back taxes owed, you must meet several conditions. These conditions are defined by the IRS, as follows:

 

      " 1.      You are not eligible for innocent spouse relief, relief by separation of liability, or relief from liability arising from community property law.

 

        2.      You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, ex-spouse, or business partner.

 

        3.      Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. See Transfers of Property To Avoid Tax, earlier, under Relief by Separation of Liability.

 

        4.      You did not file or fail to file your return with the intent to commit fraud.

 

        5.      You did not pay the tax. However, see Refunds, later, for situations in which you are entitled to a refund of payments you made.

 

        6.      You establish that, taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement or underpayment of tax. See Factors for Determining Whether To Grant Equitable Relief, later.

 

        7.      The income tax liability from which you seek relief must be attributable to an item of the spouse (or former spouse) with whom you filed the joint return, unless one of the following exceptions applies:

                a.     The item is attributable or partially attributable to you solely due to the operation of community property law. If you meet this exception, that item will be considered attributable to your spouse (or former spouse) for purposes of equitable relief.

                b.     If the item is titled in your name, the item is presumed to be attributable to you. However, you can rebut this presumption based on the facts and circumstances.

                c.      You did not know, and had no reason to know that funds intended for the payment of tax were misappropriated by your spouse (or former spouse) for his or her benefit. If you meet this exception, the IRS will consider granting equitable relief although the underpayment may be attributable in part or in full to your item, and only to the extent the funds intended for payment were taken by your spouse (or former spouse).

                d.     You establish that you were the victim of abuse before signing the return, and that, as a result of the prior abuse, you did not challenge the treatment of any items on the return for fear of your spouse's retaliation. If you meet this exception, relief will be considered although the deficiency or underpayment may be attributable in part or in full to your item.

                e.      You established that your spouse's (or former spouse's) fraud is the reason for the erroneous item causing the understatement of tax."

 

In addition to meeting the above conditions to qualify for equitable relief, the IRS will also weigh relevant factors in their determination of liability for back taxes.

 

Qualifying for equitable relief is a complicated process with many conditions and relevant factors to be considered. Our Denver tax attorney will consult with you regarding the facts and circumstances surrounding your case, and determine your eligibility  for equitable tax relief.

 

If you are not eligible for equitable tax relief, there may be other legal tax relief remedies. Our Denver tax attorney will review all of your tax debt relief options. Our Denver tax attorney is skilled in all areas of tax law, including tax audits, tax appeals, tax litigation, civil tax fraud, repayment plans, offers in compromise and tax planning.

 

Our tax attorney is located in Denver and serves all of Colorado. To schedule a consult, call 303-618-2122.