For Immediate Release: Monday, July 25, 2011
WASHINGTON, DC – Today,
Congressman Jim McDermott (D-WA) and Congressman Pete Stark (D-CA) praised IRS
Commissioner Doug Shulman for correcting the “innocent spouse” rule that
limited the time period available to taxpayers to defend themselves from the
misdeeds of a spouse. The IRS made the rule-change
announcement today.
In the IRS’s announcement, Commissioner Shulman stated, “This change is a dramatic step to improve our process to make it
fairer for an important group of taxpayers.”
Today’s rule-change comes after McDermott, Stark and 47 additional
Democratic members of Congress called on the
IRS in mid-April to address the long-standing problem. Commissioner Shulman responded in late-April and indicated that the
IRS was reviewing the innocent spouse rules.
“It is critical that taxpayers who are
the victim of fraud are given the strongest protections possible under the
law,” said Congressman McDermott. “Today’s
decision is a victory for fairness and will provide innocent taxpayers with
enough time to seek the relief that they deserve. I applaud the Administration
for reviewing the ‘innocent spouse’ rule and revising it in favor of stronger
taxpayer protections consistent with Congress’s original intent.”
Congressman Stark added, “This is a
huge victory that removes an arbitrary obstacle for innocent spouses, primarily
women, and helps us move toward a more equitable tax system. I'm very pleased
that the combined efforts of our letter to Commissioner Shulman and the
tireless work of National Taxpayer Advocate Nina Olson have led to this
positive result.”
The IRS Code’s “innocent spouse” rule protects individuals from liability
for a tax return filed with a spouse who broke the law. The rule, however, has
only allowed for two years of protection for an innocent spouse, while the IRS
has ten years to go after both tax filers. Because of this hole in the tax
code, innocent spouses of people who have evaded tax laws have been left on the
hook for crimes they did not commit.
Fixing the “innocent spouse’ rule has had widespread support – it was the #3
legislative recommendation included in the IRS’s National Taxpayer Advocate’s 2010 Annual Report to Congress (see page 348).
The U.S. Tax Court has also ruled in multiple decisions that the two-year
limitation is invalid.
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Follow McDermott on Twitter: @RepJimMcDermott.
