“Innocent spouse” relief may protect individuals from additional tax and penalties if they’ve filed joint tax returns with spouses or ex-spouses who underreported income without their knowledge. But as a recent U.S. Tax Court case showed, such relief isn’t available in every situation. After the IRS wrongly paid a refund to a divorced couple, the IRS sought to recoup it. The wife requested equitable relief as an innocent spouse. She argued the refund was a rebate that an innocent spouse could recover through deficiency procedures. But the court agreed with the IRS that she wasn’t eligible for relief in this circumstance. (163 TC No. 2)
