BOE Chairman Jerome E. Horton Announces Important Changes to Innocent Spouse Relief

If your spouse owes income taxes, and you are an innocent spouse, you can request relief from that tax liability.

Board of Equalization Chairman Jerome E. Horton has called for state conformity with important changes to the Internal Revenue Service’s (IRS) Revenue Procedure 2013-34 governing Innocent Spouse Relief. The Franchise Tax Board (FTB) clarifies that in determining whether to grant a request for innocent spouse relief, FTB will rely on this new IRS procedure, which makes some important changes to the evaluation of this type of claim. Notably, there will now be a greater emphasis on the effect of abuse and financial control in the weight of the factors.

Horton said, "Where federal and California laws are the same, federal rulings dealing with the Internal Revenue Code (IRC) are persuasive authority in interpreting California statutes.”

Generally, to qualify for Innocent Spouse relief, you must meet all of these conditions:

  • You must have filed a joint return which has an understatement of tax;
  • The understatement of tax must be due to erroneous items of your spouse;
  • You must establish that at the time you signed the joint return, you did not know, and had no reason to know, that there was an understatement of tax;
  • Taking into account all of the facts and circumstances, it would be unfair to hold you liable for the understatement of tax; and
  • You must request relief within two years after the date on which the IRS first began collection activity against you after July 22, 1998.

If you are making a request for relief under the innocent spouse rules, allow us to help you understand these new guidelines. Please visit the IRS’s website at www.irs.gov/pub/irs-pdf/p971.pdf. For more information on the new regulations contact the FTB at 1-800-852-5711.

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