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Publication 971

Separation of Liability Relief(p7)

Under this type of relief, the understated tax (plus interest and penalties) on your joint return is allocated between you and your spouse (or former spouse). The understated tax allocated to you is generally the amount you are responsible for.
This type of relief is available for liabilities resulting from understated tax. However, refunds are not allowed for any liabilities that have been paid.
To request separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857.

Members of the same household.(p7)

You and your spouse are not members of the same household if you are living apart and are estranged. However, you and your spouse are considered members of the same household if any of the following conditions are met.
  1. You and your spouse reside in the same dwelling.
  2. You and your spouse reside in separate dwellings but are not estranged, and one of you is temporarily absent from the other's household as explained in (3) below.
  3. Either spouse is temporarily absent from the household and it is reasonable to assume that the absent spouse will return to the household, and the household or a substantially equivalent household is maintained in anticipation of the absent spouse's return. Examples of temporary absences include absence due to imprisonment, illness, business, vacation, military service, or education.

Burden of proof.(p7)

You must be able to prove that you meet all of the requirements for separation of liability relief (except actual knowledge) and that you did not transfer property to avoid tax (discussed later). You must also establish the basis for allocating the erroneous items.

Limitations on Relief(p7)

Even if you meet the requirements discussed previously, separation of liability relief will not be granted in the following situations.

Actual Knowledge(p7)

The relief discussed here does not apply to any part of the understated tax due to your spouse's (or former spouse's) erroneous items of which you had actual knowledge. You and your spouse (or former spouse) remain jointly and severally liable for this part of the understated tax.
If you had actual knowledge of only a portion of an erroneous item, the IRS will not grant relief for that portion of the item.
You had actual knowledge of an erroneous item if:
Knowledge of the source of an erroneous item is not sufficient to establish actual knowledge. Also, your actual knowledge may not be inferred when you merely had a reason to know of the erroneous item. Similarly, the IRS does not have to establish that you knew of the source of an erroneous item in order to establish that you had actual knowledge of the item itself.
Your actual knowledge of the proper tax treatment of an erroneous item is not relevant for purposes of demonstrating that you had actual knowledge of that item. Neither is your actual knowledge of how the erroneous item was treated on the tax return. For example, if you knew that your spouse received dividend income, relief is not available for that income even if you did not know it was taxable.


Bill and Karen Green filed a joint return showing Karen's wages of $50,000 and Bill's self-employment income of $10,000. The IRS audited their return and found that Bill did not report $20,000 of self-employment income. The additional income resulted in a $6,000 understated tax, plus interest and penalties. After obtaining a legal separation from Bill, Karen filed Form 8857 to request separation of liability relief. The IRS proved that Karen actually knew about the $20,000 of additional income at the time she signed the joint return. Bill is liable for all of the understated tax, interest, and penalties because all of it was due to his unreported income. Karen is also liable for the understated tax, interest, and penalties due to the $20,000 of unreported income because she actually knew of the item. The IRS can collect the entire $6,000 plus interest and penalties from either Karen or Bill because they are jointly and individually liable for it.

Factors supporting actual knowledge.(p8)

The IRS may rely on all facts and circumstances in determining whether you actually knew of an erroneous item at the time you signed the return. The following are examples of factors the IRS may use.
You will not be considered to have had an ownership interest in an item based solely on the operation of community property law. Rather, if you resided in a community property state at the time the return was signed, you will be considered to have had an ownership interest in an item only if your name appeared on the ownership documents, or there otherwise is an indication that you asserted dominion and control over the item.


Harry and Wanda live in Arizona, a community property state. After their marriage, Harry opens a bank account in his name. Under the operation of the community property state laws of Arizona, Wanda owns ½ of the bank account. However, Wanda does not have an ownership interest in the account for purposes of demonstrating that Wanda had actual knowledge of an erroneous item because the account is not held in her name and there is no other indication that she asserted dominion and control over the item.

Exception for spousal abuse or domestic violence.(p8)

Even if you had actual knowledge, you may still qualify for relief if you establish that:
If you establish that you signed your joint return under duress (threat of harm or other form of coercion), then it is not a joint return, and you are not liable for any tax shown on that return or any tax deficiency for that return. However, you may be required to file a separate return for that tax year. For more information about duress, see the Instructions for Form 8857.

Transfers of Property To Avoid Tax(p8)

If your spouse (or former spouse) transfers property (or the right to property) to you for the main purpose of avoiding tax or payment of tax, the tax liability allocated to you will be increased by the fair market value of the property on the date of the transfer. The increase may not be more than the entire amount of the liability. A transfer will be presumed to have as its main purpose the avoidance of tax or payment of tax if the transfer is made after the date that is 1 year before the date on which the IRS sent its first letter of proposed deficiency. This presumption will not apply if:
If the presumption does not apply, but the IRS can establish that the purpose of the transfer was the avoidance of tax or payment of tax, the tax liability allocated to you will be increased as explained above.