Tax Defense ✦ Joint Returns
Your Spouse’s Tax Debt Doesn’t Have to Become Yours.
A joint return makes both spouses liable for the whole balance, including the part one spouse never knew about. Federal law provides three routes out, and Colorado’s separate-property rules shape how each one works. North Star Law Firm builds innocent spouse cases for Colorado taxpayers, including the divorced and separated, and defends against the ex-spouse’s version of events.
Overview
Three forms of relief, one request
Under I.R.C. § 6013(d)(3), spouses who sign a joint return are jointly and severally liable for the tax, the penalties, and the interest. Section 6015 provides relief in three forms: traditional relief for an understatement you didn’t know about, separation of liability for spouses who are divorced or apart, and equitable relief for the cases that don’t fit the first two, including balances that were reported correctly but never paid. Form 8857 requests all three at once. The IRS notifies your spouse or former spouse, who can participate, and an adverse decision can be taken to the Tax Court. We assemble the facts the IRS weighs (knowledge, benefit, abuse, financial control, compliance since) and present them as a case, not a form.
- Form 8857 prepared with a full factual statement and exhibits
- Relief under § 6015(b), (c), and (f) claimed together
- Deadlines computed from the first collection activity
- Refund claims for amounts already collected from you
- Tax Court petition when the IRS denies relief
- Coordination with family law counsel on the decree and indemnity
- Colorado innocent spouse request sequenced with the federal one
- Defense for the other spouse when the allocation is disputed
Colorado Is Different
Why separate property changes the analysis
Texas, New Mexico, and California treat most income earned during marriage as owned half by each spouse, which pulls a non-liable spouse’s earnings into the other spouse’s tax problem and requires a separate layer of relief under § 66. Colorado does not. Marital property in Colorado is divided equitably at divorce under C.R.S. § 14-10-113, but during the marriage each spouse owns what they earn and hold in their own name, and Colorado does not recognize tenancy by the entirety. For a Colorado couple that means:
| Situation | Community property state | Colorado (separate property) |
|---|---|---|
| Married filing separately | Each spouse reports half of the community income; § 66 relief needed to avoid the other spouse’s share | Each spouse reports only their own income; no § 66 issue |
| IRS levy for one spouse’s separate tax | Can reach the non-liable spouse’s community wages | Reaches only the liable spouse’s wages and property, and their interest in joint property |
| Joint return | Joint and several liability; § 6015 relief available | Same: joint and several liability; § 6015 relief available |
| Divorce decree allocating the tax | Binds the spouses, not the IRS | Same; a factor in equitable relief and a claim between the spouses |
The practical result is that filing separately is a stronger protective tool in Colorado than in the community property states, and that an innocent spouse case here is fought almost entirely on the § 6015 factors rather than on income allocation.
The Attorney-CPA Difference
Knowledge is proven with numbers.
The central question in most innocent spouse cases is what the requesting spouse knew or had reason to know about the understatement or the unpaid balance. The IRS answers it by looking at the household finances: who controlled the accounts, whether the lifestyle matched the reported income, whether the requesting spouse benefited. Those are forensic accounting questions, and we answer them from bank records, not recollection. We also prepare the separate-return computation that § 6015(c) allocation requires.
- Household cash flow reconstructed from records
- Allocation of the deficiency computed for § 6015(c)
- Equitable relief factors documented under Rev. Proc. 2013-34
- Abuse and financial control evidence handled with care and confidentiality
- Colorado relief request timed against the state offer rules
Questions & Answers
Innocent Spouse Relief questions, answered
What does it mean that Colorado is a separate-property state?
It means the income you earn and the property you own are yours, not half your spouse’s, during the marriage. For tax purposes that removes a whole category of problems that community property states create: there is no community-income allocation under I.R.C. § 66, a spouse who files separately reports only their own income, and the IRS cannot levy a non-liable spouse’s wages for the other spouse’s separate debt. The innocent spouse rules still matter because a joint return makes both spouses fully liable for everything on it.
Which kind of relief applies to me?
There are three under I.R.C. § 6015. Section 6015(b) relieves an understatement caused by your spouse’s erroneous items that you did not know about. Section 6015(c) lets a divorced, separated, or living-apart spouse allocate the deficiency as if separate returns had been filed. Section 6015(f), equitable relief, covers everything else, including underpayments where the return was correct but the tax was never paid. Most cases involve some combination, and the request should claim every one that fits.
Is there a deadline?
Two years from the first IRS collection activity against you for (b) and (c) relief. Equitable relief under (f) can be requested any time within the collection statute for an unpaid balance or the refund statute for a paid one. Collection activity includes an offset of your refund, so the clock often starts earlier than people realize.
What does my divorce decree have to do with it?
Less than most people think. A Colorado decree that assigns the tax debt to your ex-spouse binds the two of you, not the IRS, which can still collect from either of you on a joint return. It is, however, a factor in the equitable relief analysis, and it can support a separate claim against your ex-spouse in the domestic relations court. We coordinate with family law counsel on that piece.
Does Colorado grant innocent spouse relief?
Yes. The Department of Revenue provides relief from a joint Colorado liability and, in practice, generally follows the federal determination for the same return. Because Colorado’s offer in compromise program treats prior innocent spouse relief as disqualifying, the order in which the state and federal requests are made matters.
Talk to an attorney-CPA before you talk to the IRS.
A free consultation, a plain-English assessment, and a flat fee in writing if you decide to move forward.