IRC 6015(f) | Caraker Law Firm, P.C.

IRC 6015

The Tax Court in Vanover v. Comm’r filed April 22, 2025 at T.C. Memo 2025-37 held that the requesting spouse should be granted partial relief under Section 6015(c) with respect to an understatement of the non-requesting spouse, but be denied relief under section 6015(b)(c) and (f) for all other items. Seems like all of the Innocent Spouse cases are lengthy, and this one is no different at 16 pages plus 2 pages of footnotes. Most times this is due to the lengthy analysis of factors for equitable relief under 6015(f). This case is no different in format to others in that regard. What is of interest and highlighted here is the analysis under 6015(b) and (c). This case is fact heavy, from a nasty divorce that included a physical altercation, to financial mismanagement on behalf of all taxpayers, the Court did a good job of setting the scene. What’s key to know about 6015(b) and 6015(c) is that they both require understatements of income. Whereas 6015(f) can be used if there is an underpayment of tax. Under 6015(b), if an additional assessment arises, relief from joint liability can be had if the item is attributable to the other spouse. The requesting spouse must establish that when they signed the return, they did not know and had no reason to know that there was a possible understatement. This is the “traditional,” original form of innocent spouse relief. Under 6015(c), a requesting spouse shall be relieved from liability for deficiencies allocable to the nonrequesting spouse. In other words, they separate the liability. Under this provision, in order to obtain relief, you must be divorced, legally separated, or living apart for at least 12 months. The case carefully sorts through all factors of each statute, ultimately denying most relief for the requesting spouse. Regardless, it is much more common to see equitable relief cases under 6015(f), so this review is rather helpful.

IRC 6015 (c) & (f)

The Tax Court in Jurries v. Comm’r of Internal Revenue, Docket No. 2786-20S filed May 22, 2024 held that the taxpayer failed to establish fraud as a threshold requirement for Equitable Innocent Spouse relief in this matter. The taxpayers filed a joint income tax return for 2016 as they always had, by the wife preparing the return on Turbo Tax. The wife did not show the husband the return prior to, or after preparing it, as they were separated. On the return, she deducted $42,181 as unreimbursed business expenses. On the return, she attributed some of this to herself and some to the husband. The IRS issued a refund of $12,500 which she deposited part of into her own account and part into the husband’s account. The IRS examined and disallowed the expense. After receiving this notification, the husband then filed for Innocent Spouse Relief under IRC 6015 (c), which allocates the expense as if the taxpayers filed the return separately. The IRS agreed to this allocation. Husband then wanted to pursue full equitable relief from all liability through the use of IRC 6015(f) as an affirmative defense in this case. Equitable relief requires overcoming seven threshold conditions, one of which requires the item to be attributable to the nonrequesting spouse’s income, (it isn’t), and if not, then the requesting spouse could establish fraud. Mr. Jurries contended that the fraud exception applied in this matter. Ultimately, the Court did not think fraud was established because Mr. Jurries could have accessed the return in turbo tax. Most damaging was that upon receipt of the refund, his wife deposited a portion of the refund into his checking account, rather than keeping it for herself. And, he testified that he knew he could not take this deduction on this tax return.