Heidi Scott grew up both in Cedar Falls, Iowa, and in Bundenthal, Germany. Fluent in German, she went on to study international relations at Luther College in Decorah, Iowa, and then earned a law degree at SIU in Carbondale, Illinois. Today, she works in Mount Sterling, Illinois, as the owner of Schuyler-Brown Land Title and runs her own law offices where she focuses on tax law, real estate, and estate planning. Heidi Scott was instrumental in creating the innocent spouse relief provision.
Many married couples file their taxes together because of the tax benefits they will receive. This generally means that they are also jointly responsible for paying taxes and other consequences regardless of how much money each person makes. The innocent spouse tax relief provision comes into play when one spouse mishandled their taxes by failing to report income or claiming credits or deductions improperly. Applications for this type of relief are one of the top ten reasons for tax litigation in the US.
The innocent spouse provision comes into play only if a joint return has a deficiency that is clearly caused by a spouse’s improper filing. It must also be clear that the spouse applying for relief was unaware of the error being made. Other factors are also taken into account in order to ensure that the spouses or ex-spouses are being treated fairly and reasonably.
Recently the IRS updated the conditions for supplying this type of relief, placing a heavier emphasis on requesting the spouse’s economic position and whether or not the relationship included abuse, among other things. Relief may be granted even more frequently now that these factors will be given greater consideration.