Standard Clauses and the Innocent Spouse

The invocation of Innocent Spouse under ? 6013(e) of the Internal Revenue Code of 1986 (I.R.C), as amended, is being used more than ever, especially by individuals who are divorced or in the process of divorcing and are subject to an I.R.S. audit. Unfortunately, standard boilerplate tax language is all too commonly used in a mari tal settlement agreement with respect to taxes: Any taxes arising out of the years in which a joint return was filed will be borne equally by both parties. Although this may be acceptable in most marital dis solution cases, the use of this language may nevertheless negate the benefit of innocent spouse protection afforded by the Internal Revenue Code. Under I.R.C. ? 6013(e), an individual who is deemed to be an innocent spouse can be relieved of any liability for taxes, interest, and penalties arising from the filing of a joint return. This section contains four requirements that a tax payer must satisfy to quality as an innocent spouse: 1. A joint return was filed for the year in question. 2. The return in question must contain a substantial understatement of tax attribut able to the grossly erroneous items of one spouse. 3. At the time of signing the return, the taxpayer claiming innocent spouse status did not know or have any reason to know that there was a sub stantial understatement of tax.