You filed a joint return with your spouse. Your spouse had unreported crypto income you knew nothing about — or underreported crypto gains in a way you did not understand. Now the IRS has assessed additional tax, and because it was a joint return, they are coming after you. Innocent spouse relief under §6015 may eliminate your liability entirely.
Three Types of Relief
Section 6015 provides three forms of relief. Innocent spouse relief under §6015(b) applies when the other spouse understated income without your knowledge. Separation of liability under §6015(c) allocates the deficiency between spouses — available only if you are divorced, separated, or have lived apart for 12 months. Equitable relief under §6015(f) is a catch-all for situations that do not fit the other two categories.
Crypto-Specific Issues
Cryptocurrency is particularly well-suited to innocent spouse claims because: (1) one spouse can trade extensively on self-custody wallets without the other's knowledge, (2) the technical complexity of crypto taxation means a non-trading spouse may not have understood the tax implications even if they knew about the trading, and (3) crypto can be hidden more easily than traditional financial accounts.
What You Must Show
For innocent spouse relief under §6015(b), you must establish that: (1) there was an understatement on the joint return, (2) you did not know and had no reason to know of the understatement, (3) it would be inequitable to hold you liable, and (4) you request relief within the applicable time period. The "no reason to know" standard is evaluated based on your education, business experience, and involvement in the family finances.
Timing
You can request innocent spouse relief at any time the IRS is pursuing collection — there is no fixed deadline for equitable relief under §6015(f). However, for traditional innocent spouse relief under §6015(b), you must file within two years of the IRS's first collection activity. Do not wait.
Professional Help
Innocent spouse claims are fact-intensive and require careful presentation. Attorney Darrin T. Mish has filed innocent spouse petitions for 32 years and understands what the IRS looks for. Free consultation to evaluate your claim.