5.5.d 2. Two Elements Must Be Proven

• Jurisdiction: United States

d. Innocent spouse, separate liability, and equitable defenses

See remarks ¶ 2.4(i)(13)

The debtor may raise the innocent spouse defense under IRC § 6013(e) as to liability in bankruptcy court. See, for example, In re Blanco 166 B.R. 759 (Bankr. M.D. Fla. 1994).

See In re Lesnick, 202 B.R. 82 (Bankr. N. D. Ohio 1996), where the debtor's spouse was held not liable for taxes on the basis of the innocent spouse defense because evidence showed that the wife's standard of living did not reflect failure to pay taxes: she had limited education, and there was understatement of income on joint tax return.

Note, also, that the IRS Restructuring & Reform Act of 1998 amended the IRC to add § 6015(b)(1)(B) and in other respects to substantially liberalize the spouse's ability to qualify for this defense. In addition, the Act creates a new defense called the "Election of separate liability." And, new IRC § 6015 adds a third possible remedy, the "equitable" defense that, in view of the totality of circumstances, it would be unfair to hold one spouse liable for the tax mistakes of the other.

The criteria and ramifications of these defenses are beyond the...