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Publication 971
taxmap/pubs/p971-004.htm#en_us_publink100098643

Equitable Relief(p8)

rule
If you do not qualify for innocent spouse relief or separation of liability relief, you may still be relieved of responsibility for tax, interest, and penalties through equitable relief. If you did not file a joint return but did not qualify for relief from liability for tax attributable to an item of community income, you may be eligible for equitable relief.
Unlike innocent spouse relief or separation of liability relief, you can get equitable relief from an understated tax (defined earlier under Innocent Spouse Relief) or an unpaid tax. An unpaid tax is an amount of tax you properly reported on your return but you have not paid. For example, your joint 2012 return shows that you and your spouse owed $5,000. You paid $2,000 with the return. You have an unpaid tax of $3,000.
taxmap/pubs/p971-004.htm#en_us_publink100098644

Conditions for Getting Equitable Relief(p8)

rule
In order to be considered for equitable relief from joint and several liability, you must meet all of the following threshold conditions. In order to be considered for equitable relief from liability for tax attributable to an item of community income, you must meet all of the following threshold conditions except for items 1 and 2.
  1. You are not eligible for innocent spouse relief or separation of liability relief.
  2. You filed a joint return for the tax year(s) at issue.
  3. You timely filed your claim for relief. See When To File Form 8857, earlier.
  4. 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, former spouse, or business partner.
  5. 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 Separation of Liability Relief.
  6. You did not knowingly participate in the filing of a fraudulent joint return.
  7. The income tax liability from which you seek relief is attributable (either in full or in part) to an item of your spouse (or former spouse) or an unpaid tax resulting from your spouse’s (or former spouse’s) income. If the liability is partially attributable to you, then relief can only be considered for the part of the liability attributable to your spouse (or former spouse). The IRS will consider granting relief regardless of whether the understated tax, deficiency, or unpaid tax is attributable (in full or in part) to you if any of the following exceptions apply.
    1. 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.
    2. 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.
    3. 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 unpaid tax 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).
    4. You establish that you were the victim of spousal abuse or domestic violence before the return was filed, 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 (or former spouse's) retaliation. If you meet this exception, relief will be considered even though the understated tax or unpaid tax may be attributable in part or in full to your item.
    5. The item giving rise to the understated tax or deficiency is attributable to you, but you establish that your spouse's (or former spouse's) fraud is the reason for the erroneous item.
taxmap/pubs/p971-004.htm#en_us_publink100098645

Factors for Determining Whether To Grant Equitable Relief(p9)

rule
If you meet all the threshold conditions, the IRS will grant equitable relief if you establish that it would be unfair to hold you liable for the understated or unpaid tax. The IRS will consider all facts and circumstances of your case in determining whether it is unfair to hold you liable for all or part of the unpaid income tax liability or deficiency, and whether full or partial equitable relief should be granted. The factors listed below are designed as guides and not intended to be an exclusive list. Other factors relevant to your case also may be considered. In evaluating your claim for relief, no one factor or a majority of factors necessarily determines the outcome. The degree of importance of each factor varies depending on your facts and circumstances. Abuse or the exercise of financial control by your spouse (or former spouse) is a factor that may impact the other factors, as described below. Factors the IRS will consider include the following.
taxmap/pubs/p971-004.htm#en_us_publink100012997

Marital Status(p9)

rule
The IRS will consider whether you are no longer married to your spouse as of the date the IRS makes its determination. If you are still married to your spouse, this factor is neutral. If you are no longer married to your spouse, this factor will weigh in favor of relief. You will be treated as being no longer married to your spouse only in the following situations.
taxmap/pubs/p971-004.htm#en_us_publink100012998

Economic Hardship(p9)

rule
The IRS will consider whether you will suffer economic hardship if relief is not granted. For purposes of this factor, an economic hardship exists if satisfaction of the tax liability in whole or in part will cause you to be unable to pay reasonable basic living expenses. The IRS will determine whether you meet this factor based on the information you provide in Part IV of Form 8857. If denying relief will cause you to suffer economic hardship, this factor will weigh in favor of relief. If denying relief will not cause you to suffer economic hardship, this factor will be neutral.
taxmap/pubs/p971-004.htm#en_us_publink100012999

Knowledge or Reason to Know(p10)

rule
taxmap/pubs/p971-004.htm#en_us_publink100013000

Understated tax on a joint return.(p10)

rule
The IRS will consider whether you knew or had reason to know of the item giving rise to the understated tax or deficiency as of the date the joint return (including a joint amended return) was filed, or the date you reasonably believed the joint return was filed. If you did not know and had no reason to know of the item giving rise to the understated tax, this factor will weigh in favor of relief. If you knew or had reason to know of the item giving rise to the understated tax, this factor will weigh against relief. Actual knowledge of the item giving rise to the understated tax or deficiency will not be weighed more heavily than any other factor. Depending on the facts and circumstances, if you were abused by your spouse or former spouse (as discussed later), or your spouse (or former spouse) maintained control of the household finances by restricting your access to financial information, and because of the abuse or financial control, you were not able to challenge the treatment of any items on the joint return for fear of your spouse’s (or former spouse’s) retaliation, this factor will weigh in favor of relief even if you knew or had reason to know of the items giving rise to the understated tax or deficiency.
taxmap/pubs/p971-004.htm#en_us_publink100013001

Understated tax on a return other than a joint return. (p10)

rule
The IRS will consider whether you knew or had reason to know of an item of community income properly includible in gross income, which, under item (3) discussed earlier under Relief From Liability for Tax Attributable to an Item of Community Income, would be treated as the income of your spouse (or former spouse).
taxmap/pubs/p971-004.htm#en_us_publink100013002

Unpaid tax.(p10)

rule
In the case of an income tax liability that was properly reported but not paid, the IRS will consider whether (as of the date the return was filed or the date you reasonably believed the return was filed) you knew or had reason to know that your spouse (or former spouse) would not or could not pay the tax liability at that time or within a reasonable period of time after the filing of the return. This factor will weigh in favor of relief if you reasonably expected your spouse (or former spouse) to pay the tax liability reported on the return. A reasonable expectation of payment will be presumed if the spouses submitted a request for an installment agreement to pay the tax reported as due on the return. To benefit from the presumption, the request for an installment agreement must be filed by the later of 90 days after the due date for payment of the tax, or 90 days after the return was filed. The request must detail the plan for paying the tax, interest, and penalties, satisfy the liability within a reasonable time, and it must not be unreasonable for you to believe that your spouse (or former spouse) will be able to make the payments contemplated in the requested installment agreement.
This factor will weigh against relief if, based on the facts and circumstances of the case, it was not reasonable for you to believe that your spouse (or former spouse) would or could pay the tax liability shown on the return. For example, if prior to the return being filed, or the date you reasonably believed the return was filed, you knew of your spouse’s (or former spouse’s) prior bankruptcies, financial difficulties, or other issues with the IRS or other creditors, or was otherwise aware of difficulties in timely paying bills, then this factor will generally weigh against relief.
Depending on the facts and circumstances, if you were abused by your spouse or former spouse (as discussed later), or your spouse (or former spouse) maintained control of the household finances by restricting your access to financial information, and because of the abuse or financial control, you were not able to question the payment of the taxes reported as due on the return or challenge your spouse’s (or former spouse’s) assurance regarding payment of the taxes for fear of his or her retaliation, this factor will weigh in favor of relief even if you knew or had reason to know about your spouse’s (or former spouse’s) intent or ability to pay the taxes due.
In the case of an unpaid tax on an amended return that reports a liability based on items not properly reported on the original return, the initial inquiry is whether (as of the date the amended return was filed, or the date you reasonably believed the amended return was filed) you reasonably expected that your spouse (or former spouse) would pay the tax within a reasonable period of time. If so, this factor will weigh in favor of relief. However, if it was not reasonable for you to expect that your spouse (or former spouse) would pay the tax, your knowledge or reason to know of the understated tax on the original return will also be considered. If you knew or had reason to know of the item giving rise to the understated tax on the original return, then this factor will weigh against relief. If you did not know or have reason to know of the item, then this factor will weigh in favor of relief.
taxmap/pubs/p971-004.htm#en_us_publink100013003

Reason to know.(p10)

rule
The facts and circumstances that are considered in determining whether you had reason to know of an understated tax, or reason to know whether your spouse (or former spouse) could or would pay the reported tax liability, include, but are not limited to the following.
taxmap/pubs/p971-004.htm#en_us_publink100013004

Example.(p10)

You and your spouse filed a joint 2011 return. That return showed you owed $10,000. You had $5,000 of your own money and you took out a loan to pay the other $5,000. You gave two checks for $5,000 each to your spouse to pay the $10,000 liability. Without telling you, your spouse took the $5,000 loan and spent it on himself. You and your spouse were divorced in 2012. In addition, you had no knowledge or reason to know at the time you signed the return that the tax would not be paid. These facts indicate to the IRS that it may be unfair to hold you liable for the $5,000 unpaid tax. The IRS will consider these facts, together with all of the other facts and circumstances, to determine whether to grant you equitable relief from the $5,000 unpaid tax.
taxmap/pubs/p971-004.htm#en_us_publink100013005

Abuse by your spouse (or former spouse). (p11)

rule
For purposes of the equitable relief rules, if you establish that you were the victim of abuse (not amounting to duress, which is discussed in the Instructions for Form 8857), then depending on the facts and circumstances of your situation, the abuse may result in certain factors weighing in favor of relief when otherwise the factor may have weighed against relief. Abuse comes in many forms and can include physical, psychological, sexual, or emotional abuse, including efforts to control, isolate, humiliate, and intimidate you, or to undermine your ability to reason independently and be able to do what is required under the tax laws. The IRS will consider all the facts and circumstances in determining whether you were abused. The IRS also will consider the impact of your spouse’s (or former spouse’s) alcohol or drug abuse in determining whether you were abused. Depending on the facts and circumstances, abuse of your child or other family member living in the household may constitute abuse of you.
taxmap/pubs/p971-004.htm#en_us_publink100013007

Legal Obligation(p11)

rule
The IRS will consider whether you or your spouse (or former spouse) has a legal obligation to pay the outstanding federal income tax liability. For purposes of this factor, a legal obligation is an obligation arising from a divorce decree or other legally binding agreement. This factor will weigh in favor of relief if your former spouse has the sole legal obligation to pay the outstanding income tax liability pursuant to a divorce decree or agreement. This factor will be neutral if you knew or had reason to know, when entering into the divorce decree or agreement, that your former spouse would not pay the income tax liability. This factor will weigh against relief if you have the sole legal obligation. The fact that your spouse (or former spouse) has been relieved of liability for the taxes at issue as a result of a discharge in bankruptcy is disregarded in determining whether you have the sole legal obligation. This factor will be neutral if, based on an agreement or consent order, both spouses have a legal obligation to pay the outstanding income tax liability, the spouses are not separated or divorced, or the divorce decree or agreement is silent as to any obligation to pay the outstanding income tax liability.
taxmap/pubs/p971-004.htm#en_us_publink100013008

Significant Benefit(p11)

rule
The IRS will consider whether you significantly benefited from the unpaid income tax liability or understated tax. A significant benefit is any benefit in excess of normal support. For example, if you enjoyed the benefits of a lavish lifestyle, such as owning luxury assets and taking expensive vacations, this factor will weigh against relief. If, however, your spouse (or former spouse) controlled the household and business finances or there was abuse (discussed earlier) such that he or she made the decision on spending funds for a lavish lifestyle, then this mitigates this factor so that it is neutral. If only your spouse (or former spouse) significantly benefitted from the unpaid tax or understatement, and you had little or no benefit, or your spouse (or former spouse) enjoyed the benefit to your detriment, this factor will weigh in favor of relief. If the amount of unpaid tax or understated tax was small such that neither spouse received a significant benefit, then this factor is neutral. Whether the amount of unpaid tax or understated tax is small such that neither spouse received a significant benefit will vary depending on the facts and circumstances of each case.
taxmap/pubs/p971-004.htm#en_us_publink100013009

Compliance With Income Tax Laws(p11)

rule
The IRS will consider whether you have made a good faith effort to comply with the income tax laws in the tax years following the tax year or years to which the request for relief relates.
If you are compliant for tax years after being divorced from your spouse, then this factor will weigh in favor of relief. If you are not compliant, then this factor will weigh against relief. If you made a good faith effort to comply with the tax laws but were unable to fully comply, then this factor will be neutral. For example, if you timely filed an income tax return but were unable to fully pay the tax liability due to your poor financial or economic situation after the divorce, then this factor will be neutral.
If you remain married to your spouse, whether or not legally separated or living apart, and continue to file joint returns with your spouse after requesting relief, then this factor will be neutral if the joint returns are compliant with the tax laws. If the joint returns are not compliant with the tax laws, then this factor will weigh against relief.
If you remain married to your spouse but file separate returns, this factor will weigh in favor of relief if you are compliant with the tax laws. If you are not compliant with the tax laws, then this factor will weigh against relief. If you made a good faith effort to comply with the tax laws but were unable to fully comply, then this factor will be neutral. For example, if you timely filed an income tax return but were unable to fully pay the tax liability due to your poor financial or economic situation as a result of being separated or living apart from your spouse, then this factor will be neutral.
taxmap/pubs/p971-004.htm#en_us_publink100013010

Mental or Physical Health(p11)

rule
The IRS will consider whether you were in poor physical or mental health. This factor will weigh in favor of relief if you were in poor mental or physical health at one of the following times.
IRS will consider the nature, extent, and duration of your condition, including the ongoing economic impact of your illness. If you were in neither poor physical nor poor mental health, this factor is neutral.