Summary: Under current tax laws, when a married couple files a joint federal income tax return, each spouse become individually responsible for paying the entire tax bill. As a result, one spouse can be held liable for tax deficiencies assessed after a joint return was filed, even if the additional taxes were solely attributable to the income of the other spouse. If the Internal Revenue Service (IRS) cannot collect the additional taxes owed on the unreported income from the culpable spouse, it may seek to collect the money from the "innocent spouse." The innocent spouse may obtain relief from the additional tax liability if certain conditions are met. However, GAO found that the existing innocent spouse provisions are complex, hard to understand, and pose serious challenges for IRS and taxpayers. This testimony discusses both administrative and statutory options for improving the innocent spouse provisions as well as the issue of replacing the joint and several liability standard with a proportionate liability standard.
