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procedures which would affect such
compliance.’’
(d) The FHWA Division
Administrator shall periodically review
the State DOT’s management process to
determine if the State is in compliance
with the requirements of this subpart. If
the Division Administrator determines
that a State DOT is not complying with
the requirements of this subpart, or is
not performing in accordance with its
RD&T management process, the FHWA
Division Administrator shall issue a
written notice of proposed
determination of noncompliance to the
State DOT. The notice will set forth the
reasons for the proposed determination
and inform the State DOT that it may
reply in writing within 30 calendar days
from the date of the notice. The State
DOT’s reply should address the
deficiencies cited in the notice and
provide documentation as necessary. If
the State DOT and the Division
Administrator cannot resolve the
differences set forth in the
determination of nonconformity, the
State DOT may appeal to the Federal
Highway Administrator whose action
shall constitute the final decision of the
FHWA. An adverse decision shall result
in immediate withdrawal of approval of
FHWA planning and research funds for
the State DOT’s RD&T activities until
the State DOT is in full compliance.

filing joint returns who seek relief from
joint and several liability.
EFFECTIVE DATE: These regulations are
effective July 18, 2002.
FOR FURTHER INFORMATION CONTACT:
Charles A. Hall, 202–622–4940 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act

[TD 9003]

The collection of information
contained in these final regulations has
been reviewed and approved by the
Office of Management and Budget in
accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under
control number 1545–1719. Responses
to this collection of information are
required in order for certain individuals
to receive relief from the joint and
several liability imposed by section
6013(d)(3).
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid control number
assigned by the Office of Management
and Budget.
The burden contained in § 1.6015–5 is
reflected in the burden of Form 8857.
Comments concerning the accuracy of
the burden estimate and suggestions for
reducing the burden should be sent to
the Internal Revenue Service, Attn: IRS
Reports Clearance Officer,
W:CAR:MP:FP:S Washington, DC 20224,
and to the Office of Management and
Budget, Attn: Desk Officer for the
Department of the Treasury, Office of
Information and Regulatory Affairs,
Washington, DC 20503.
Books or records relating to this
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.

RIN 1545–AW64

Background

(The information collection
requirements in § 420.209 have been
approved by the OMB and assigned
control number 2125–0039.)
[FR Doc. 02–18007 Filed 7–17–02; 8:45 am]
BILLING CODE 4910–22–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602

Relief From Joint and Several Liability
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
SUMMARY: This document contains final
regulations relating to relief from joint
and several liability under section 6015
of the Internal Revenue Code. The
regulations reflect changes in the law
made by the Internal Revenue Service
Restructuring and Reform Act of 1998
and by the Community Renewal Tax
Relief Act of 2000. The regulations
provide guidance to married individuals

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This document contains amendments
to the Regulations on Procedure and
Administration (26 CFR part 301) under
section 6013 of the Internal Revenue
Code (Code), relating to the election to
file a joint Federal income tax return,
and section 6015, relating to relief from
the joint and several liability. Section
6015 was added to the Code by section
3201 of the Internal Revenue Service
Restructuring and Reform Act of 1998,
Public Law 105–206 (112 Stat. 685)
(1998) (RRA), effective for any joint
liability that was unpaid as of July 22,
1998, and for any liability that arises
after July 22, 1998. Section 6015 was

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amended by section 313 of the
Community Renewal Tax Relief Act of
2000, which was enacted as part of the
Consolidated Appropriations Act, 2001,
Public Law 106–554 (114 Stat.
2763)(2000)(CRA).
This document also removes final
regulation § 1.6013–5, relating to relief
from joint and several liability under
former section 6013(e). The final
regulation under § 1.6013–5 is obsolete
due to amendments to section 6013 of
the Code by the Internal Revenue
Service Restructuring and Reform Act of
1998. The removal of this regulation
will not affect taxpayers.
A notice of proposed rulemaking
(REG–106446–98) was published in the
Federal Register (66 FR 3888) on
January 17, 2001, with correction dated
March 29, 2001 (66 FR 17130). Several
comment letters were received, and
three of the commentators spoke at the
public hearing on May 30, 2001. After
consideration of the comments, the
proposed regulations are adopted as
modified by this Treasury decision. The
comments are discussed below.
Summary of Comments and
Explanation of Revisions
1. Section 1.6015–1
Section 1.6015–1 of the proposed
regulations contains general provisions
that apply to all three types of relief
from joint and several liability.
A. Types of Relief Considered
Section 1.6015–1 of the proposed
regulations provides that if a requesting
spouse only requests equitable relief
under section 6015(f) and does not elect
relief under section 6015(b) or (c), the
IRS may not grant relief under either
section 6015(b) or (c). Several
commentators suggested that, regardless
of the type of relief requested, the
regulations should require that the IRS
consider all three types of relief.
Relief under section 6015(b) and (c)
must be elected by the requesting
spouse. When an election is made, the
statute of limitations on collection of the
requesting spouse’s liability relating to
such election is suspended. In addition,
the IRS is statutorily prohibited from
pursuing certain collection activities
until the claim for relief under section
6015(b) or (c) is resolved. When,
however, a requesting spouse only
requests equitable relief under section
6015(f), the statute of limitations on
collection is not suspended, and the IRS
is not prohibited from collecting the
liability from the requesting spouse. The
IRS cannot assume, absent an election
under section 6015(b) or (c), that a
requesting spouse, in only requesting

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relief under section 6015(f), would have
elected relief under section 6015(b) or
(c). Such an assumption would
improperly suspend the requesting
spouse’s statute of limitations on
collection when the requesting spouse
did not elect relief under section
6015(b) or (c). Thus, the final
regulations do not adopt this
recommendation.
If, in the course of reviewing a request
for relief only under section 6015(f), the
IRS determines that the requesting
spouse may qualify for relief under
section 6015(b) or (c) instead of section
6015(f), the IRS will contact the
requesting spouse to see if he or she
wishes to amend the claim for relief by
affirmatively electing relief under
section 6015(b) or (c). If the requesting
spouse so chooses, he or she may
submit a statement that amends the
claim for relief and elects relief under
section 6015(b) or (c). The final
regulations provide that the amended
claim for relief will relate back to the
original claim for purposes of
determining the timeliness of the claim.
B. Duress
Section 1.6013–4(d) of the proposed
regulations provides that if an
individual asserts and establishes that
he or she signed a return under legal
duress, the return is not a joint return,
and the individual is not jointly and
severally liable for the tax shown on the
return, or any deficiency in tax with
respect to the return.
Two commentators suggested that
§ 1.6013–4(d) of the proposed
regulations improperly denies the
benefits of section 6015 to those
individuals who establish that they
signed returns under duress. The rule in
§ 1.6013–4(d) reflects well established
case law regarding the consequences of
filing a joint return under duress.
Compare Stanley v. Commissioner, 45
T.C. 555 (1966), with Brown v.
Commissioner, 51 T.C. 116 (1968).
Under section 6013, married taxpayers
may elect to file a joint return. If such
an election is made, section 6013(d)(3)
provides that both spouses are jointly
and severally liable for the combined
liability of both spouses. The election
under section 6013 must be voluntarily
made by both spouses. If either spouse
involuntarily makes the election under
duress, then the election is invalid with
respect to both spouses.
One commentator suggested that the
invalidation of the joint election when
one spouse signs a return under duress
inappropriately denies such spouse the
benefits of certain credits (e.g., the
earned income credit) and the joint
filing rates. An allegation that a spouse

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was forced to sign a joint return against
his or her will indicates that, in the
absence of the threat, the spouse would
have filed a separate return. In order to
qualify for the earned income credit or
the joint return rates, the Code mandates
that the spouse file a joint return. If the
spouse filed a joint return in order to
benefit from the earned income credit,
the joint return rates, or other benefits
flowing from a joint return, and not due
to duress, then the election to file the
joint return was voluntary and valid. If
the requesting spouse raises the issue of
duress and it is determined that the
requesting spouse would owe more tax
if he or she filed a married filing
separately return, then the requesting
spouse may choose not to pursue the
issue of duress.
Both commentators suggested that the
rule regarding the treatment of returns
signed under duress was inconsistent
with the language of section
6015(c)(3)(C). Section 6015(c)(3)(C)
provides that the limitation on relief
under section 6015(c), when the
requesting spouse has actual knowledge
of the item giving rise to the deficiency,
does not apply if the requesting spouse
establishes that he or she signed the
return under duress. Neither the
limitation of section 6015(c)(3)(C), nor
any portion of section 6013 or 6015
applies to a return signed under duress,
i.e., a return for which no valid joint
return election was made. To interpret
the rule to allow the benefits of a joint
return in the absence of a valid joint
return election, as the commentators
suggest, would require that the IRS treat
joint return elections as valid for
purposes of section 6015(c), but invalid
for purposes of sections 6015(b) and (f),
when the requesting spouse establishes
that the return was signed under duress.
Placing the duress rule in the
regulations under section 6013 results
in consistent treatment of a claim of
duress that would apply to the three
relief provisions under section 6015.
One commentator suggested that, the
Treasury and IRS refer to duress as
opposed to legal duress because the
term legal duress suggests that
something more specific than duress is
intended. In particular, the
commentator noted that in some cases
courts have declined to define legal
duress to include domestic abuse.
Although the final regulations use the
term, duress rather than legal duress,
Treasury and the IRS believe the terms
are synonymous, and duress continues
to provide a basis for invalidating the
joint return election.
Nonetheless, Treasury and the IRS
have taken these comments into
consideration in interpreting the

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specific duress provision in section
6015(c)(3)(C). See the discussion of the
abuse exception to actual knowledge
(§ 1.6015–3(c)(2)(v)) in section 3.B. of
this preamble.
C. Prior Closing Agreement or Offer in
Compromise
Section 1.6015–1(c) of the proposed
regulations provides that relief is not
available if the requesting spouse signed
a closing agreement or entered into an
offer in compromise with the IRS for the
same tax year for which he or she seeks
relief under section 6015. One
commentator suggested that there was
no support for this position in the
statute. Section 6015(g)(1) provides that
‘‘[e]xcept as provided in paragraphs (2)
and (3), notwithstanding any other law
or rule of law (other than section 6511,
6512(b), 7121, 7122), credit or refund
shall be allowed or made to the extent
attributable to the application of this
section.’’ (Emphasis added). Sections
7121 and 7122 deal with closing
agreements and offers in compromise,
respectively. Section 301.7121–1(c) of
the Regulations on Procedure and
Administration provides that a closing
agreement is final and will not be set
aside in the absence of fraud,
malfeasance, or misrepresentation.
Section 301.7122–1T(d)(5) of the
Temporary Regulations on Procedure
and Administration provides a similar
rule for the finality of offers in
compromise. Thus, the statute and the
regulations directly support the position
in the proposed regulations that relief
under section 6015 is not available if the
requesting spouse signed a closing
agreement or offer in compromise
disposing of the same liability that is the
subject of the claim for relief.
Another commentator suggested that
the requesting spouse should be given
an opportunity to establish that he or
she was not a party to the closing
agreement or offer in compromise and
that such signed documents should not
preclude relief. In Hopkins v.
Commissioner, 146 F.3d 729 (9th Cir.
1998), the United States Court of
Appeals for the Ninth Circuit held that
a claim for relief from joint and several
liability under section 6013(e) was
precluded if a closing agreement was
signed by the requesting spouse for the
tax year in question. Nothing in section
6015 nor the legislative history indicates
that Congress intended to change the
rules regarding the finality of such
documents when relief is requested
under section 6015. If the requesting
spouse did not sign the closing
agreement or offer in compromise, then
the requesting spouse is not bound by
that document, and relief under section

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6015 would be available. Thus, there is
no need to amend the final regulations
to incorporate this comment.
D. Fraudulent Scheme and Fraud
Section 1.6015–1(d) of the proposed
regulations provides that if the Secretary
establishes that one spouse transferred
assets to the other spouse as part of a
fraudulent scheme, relief is not
available under section 6015. Section
1.6015–3(d)(2)(ii) of the proposed
regulations provides that the Service
may allocate any item between the
spouses if the Service establishes that
the allocation is appropriate due to
fraud by one or both spouses. Two
commentators requested that the
Treasury and IRS provide examples to
distinguish between a fraudulent
scheme and fraud.
Fraudulent scheme in § 1.6015–1(d)
refers to a fraudulent transfer of assets.
The final regulations clarify that a
fraudulent scheme is a scheme to
defraud the IRS or another third party,
including, but not limited to, creditors,
ex-spouses, and business partners. In
contrast, fraud in § 1.6015–3(d)(2)(ii)
encompasses any fraud of either spouse
including, but not limited to, the
fraudulent alteration of documents, the
fraudulent filing of a return or claim for
relief, or any other fraud that may be
relevant to the claim for relief. The
fraudulent scheme and fraud exceptions
are very broad and might overlap in
some circumstances. It would be
misleading to provide discrete examples
that attempt to distinguish between a
fraudulent scheme and fraud. Thus, the
final regulations do not adopt this
recommendation.
E. Definition of Item
Section 1.6015–1(g)(3) of the
proposed regulations defines item as
that which is required to be separately
listed on an individual income tax
return or any required attachments,
subject to one exception. The exception
provides that interest and dividend
income from the same source would be
treated as one item. Several
commentators suggested that this rule
be eliminated because the source of the
income should not be relevant. The
requesting spouse’s ability to receive
partial relief from the deficiency relating
to an erroneous item when the
requesting spouse knew of part but not
all of the item addresses the concern for
which this rule was originally drafted.
Thus, the final regulations adopt this
recommendation.
F. Definition of ‘‘Erroneous Item’’
Section 1.6015–1(g)(4) of the
proposed regulations defines erroneous

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item as any item resulting in an
understatement or deficiency in tax to
the extent that such item is omitted
from, or improperly reported (including
improperly characterized) on an
individual income tax return. One
commentator suggested that it was
improper to include items that were
improperly characterized on the return
as erroneous items. The commentator
suggested that such a rule would require
a requesting spouse to know the proper
characterization of an item in order for
the spouse to receive relief. The
proposed regulations, however, do not
require a requesting spouse to know the
proper characterization of an item for
the item to be ‘‘erroneous.’’ To the
contrary, if the requesting spouse knew
of the item that gave rise to an
understatement or deficiency, regardless
of whether the requesting spouse also
knew the item was improperly
characterized, the item is ‘‘erroneous’’
under § 1.6015–1(g)(4). To remove
improper characterization from the
definition of erroneous item might
create an inference that requesting
spouses are not entitled to relief for an
item that was improperly characterized
on a return. Such a rule would be
inconsistent with the statutory language.
Therefore, the final regulations do not
adopt this recommendation.
This provision was also amended to
clarify that penalties and interest are not
erroneous items. Rather, relief from
penalties and interest will generally be
determined based on the proportion of
the total erroneous items from which
the requesting spouse is relieved. If a
penalty relates to a particular erroneous
item, then relief from such penalty will
be determined based on whether the
requesting spouse was relieved of
liability from the erroneous item.
G. Collection
Section 1.6015–1(h) of the proposed
regulations provides that the relief
provisions of section 6015 do not negate
liability that arises under the operation
of other laws. One commentator
suggested that the regulations adopt a
rule that the IRS would not look to
community property as a collection
source when a requesting spouse with
an interest in such community property
is granted relief under section 6015. A
federal tax lien arising under section
6321 attaches to all property and rights
to property of the taxpayer. Whether a
taxpayer has an interest in property to
which the lien can attach is determined
by state law. Aquilino v. United States,
363 U.S. 509 (1960). Once that property
interest is defined, federal law alone
determines the consequences resulting
from the attachment of the federal lien

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on the property. United States v. Drye,
528 U.S. 49 (1999). If under the law of
the community property state in which
the spouses reside, the IRS can look to
community property to collect a liability
of one of the spouses, the determination
that the other spouse is entitled to relief
under section 6015 does not affect the
Service’s ability to collect the
nonrequesting spouse’s liability from
the community property. See, e.g.,
United States v. Stolle, 2000–1 U.S.T.C.
¶50,329 (C.D. Cal. 2000); Hegg v. IRS, 28
P.3d 1004 (Idaho 2001). The final
regulations do not adopt this
recommendation because it goes beyond
the scope of the statute.
H. Res Judicata
Section 6015(g)(2) provides that, in
the case of any election under section
6015(b) or (c), if a decision of a court in
any prior proceeding for the same
taxable year has become final, such
decision shall be conclusive except with
respect to the qualification of the
requesting spouse for relief which was
not at issue in that proceeding. This
exception does not apply if the court
determines that the requesting spouse
participated meaningfully in the prior
proceeding. In other words, a requesting
spouse who participated meaningfully
in a prior court proceeding concerning
the underlying liability for which relief
is sought is precluded by section
6015(g)(2) from electing relief under
section 6015(b) or (c) after the decision
becomes final, whether or not the
requesting spouse’s eligibility for relief
under section 6015(b) or (c) was at issue
in the prior proceeding. In addition,
under section 6015(g)(2) if the
requesting spouse’s entitlement to relief
from liability under section 6015 for the
same tax year was at issue in a prior
proceeding, then, regardless of the
extent of the requesting spouse’s
participation in such proceeding, the
requesting spouse would be precluded
from electing relief under section
6015(b) or (c) after the decision in such
proceeding has become final. Thus,
§ 1.6015–1(e) of the final regulations
was amended to emphasize that res
judicata will apply if relief under
section 6015 was at issue in the prior
proceeding, or if the requesting spouse
meaningfully participated in the prior
proceeding.
I. Scope of Section 6015
The final regulations add § 1.6015–
1(g), and redesignate § 1.6015–1(g) and
(h) of the proposed regulations as
§ 1.6015–1(h) and (j), respectively.
Section 1.6015–1(g) of the final
regulations clarifies that relief under
section 6015 will not be available for

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any portion of a liability for any taxable
year for which a claim for credit or
refund is barred by operation of any law
or rule of law.
2. Section 1.6015–2
Section 1.6015–2 of the proposed
regulations provides the rules regarding
relief from joint and several liability
under section 6015(b) that are
applicable to all qualifying joint filers.
A. Knowledge or Reason to Know
Section 1.6015–2(a)(3) of the
proposed regulations provides that one
of the requirements of relief under
section 6015(b) is that the requesting
spouse establish that he or she had no
knowledge or reason to know of the
item giving rise to the understatement.
Two commentators pointed out that the
underlined language is not consistent
with section 6015(b)(1)(C), which
articulates the requirement as
knowledge or reason to know of the
understatement. Both commentators
suggested that the rules regarding
knowledge under section 6015(b)
should be consistent with the
knowledge standard developed under
former section 6013(e).
The language in § 1.6015–2(a)(3) of
the proposed regulations was not
intended to reflect a new standard of
knowledge in section 6015(b) cases.
Indeed, the standards for knowledge or
reason to know that were developed
under former section 6013(e) should be
used in determining a requesting
spouse’s knowledge or reason to know
under section 6015(b). The Treasury and
IRS did not intend to suggest a harsher
standard of knowledge under section
6015(b) than that which existed under
section 6013(e). Therefore, the final
regulations adopt this recommendation
by amending the language of § 1.6015–
2(a)(3) of the proposed regulations to be
consistent with the language of section
6015(b)(1)(C).
B. Inequity
Section 1.6015–2(d) of the proposed
regulations provides that all of the facts
and circumstances are considered in
determining whether it was inequitable
to hold a requesting spouse liable for the
understatement attributable to the
nonrequesting spouse. Among the
factors considered is whether the
requesting spouse significantly
benefitted, in excess of normal support,
either directly or indirectly from the
understatement. Such significant benefit
may include transfers of property or
rights to property, including transfers
that may be received several years after
the year of the understatement (e.g., life

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insurance proceeds) that are traceable to
items omitted from gross income.
Two commentators suggested that the
Treasury and IRS define normal support
for purposes of this section. Normal
support depends on the taxpayer’s
particular circumstances, including the
cost of living, which varies across the
country. Thus, a general definition in
the final regulations would not be
useful. Rules regarding normal support
have been developed in case law under
section 6013(e) and are applicable to
section 6015(b) as well. The final
regulations do not adopt this
recommendation.
Another commentator questioned the
conclusion in the example within
§ 1.6015–2(d) of the proposed
regulations that life insurance proceeds
that are traceable to items of omitted
income of the nonrequesting spouse are
considered a significant benefit. The
commentator pointed to the legislative
history as suggesting that Congress
intended widows to benefit from the
relief provided by the statute, and it is
likely that widows would receive such
a benefit. The reference to widows in
the legislative history to section 6015 is
contained in a footnote to the legislative
history for section 6015(c). The footnote
provides that no longer married for
purposes of that section includes
widowed. The reference to widows is
not in the legislative history for section
6015(b) with respect to the rules
regarding equity under section 6015(b).
The courts have recognized that the
rules regarding knowledge or reason to
know and equity under section 6015(b)
are consistent with the rules regarding
knowledge or reason to know that were
developed under section 6013(e). See,
e.g., Von Kalinowski v. Commissioner,
T.C. Memo. 2001–21. The rule regarding
significant benefit from life insurance
proceeds was contained in the
regulations under § 1.6013–5. As life
insurance proceeds traceable to items of
omitted income were considered a
significant benefit for purposes of
section 6013(e), they are also considered
a significant benefit for purposes of
section 6015(b). While, the final
regulations do not adopt this
recommendation, they do clarify that
the receipt of property, such as
insurance proceeds or the value of life
insurance, traceable to items omitted by
the nonrequesting spouse must be
beyond normal support before they are
considered a significant benefit.
One commentator suggested that the
final regulations provide that the IRS
should consider the entire property
settlement, if any, in order to determine
whether the requesting spouse
significantly benefitted from the

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understatement. The commentator
suggested that if the requesting spouse
did not receive an equitable distribution
of assets during the divorce
proceedings, the Service should not
consider any items received by the
requesting spouse that are traceable to
items of omitted income as a significant
benefit. Such a rule, however, would
require the IRS to make a determination
of whether the distribution of assets was
fair in a divorce proceeding, which may
have taken place years before and to
which the IRS was not a party. Many
factors, including equity, are typically
considered under state and local laws in
determining the distribution of assets in
a divorce proceeding. It would be
inappropriate for the IRS to pass
judgment on the equity of such
determinations. The final regulations do
not adopt this recommendation.
One commentator suggested that the
final regulations adopt a de minimis
exception to significant benefit.
However, if the benefit was de minimis,
it would not be significant. Thus, the
final regulations do not adopt this
recommendation.
Section 1.6015–2(d) of the proposed
regulations also provides a list of factors
that may be considered in determining
whether it would be inequitable to hold
the requesting spouse liable for an
understatement. Such factors include
the fact that the nonrequesting spouse
has not fulfilled support obligations, or
that the spouses are divorced, legally
separated, or have not been members of
the same household for the 12 months
directly preceding the election. One
commentator suggested that whether the
spouses are divorced or legally
separated, and the duration of the
spouses’ separation, should not be
relevant to a determination of equity.
The language in the proposed
regulations was used in an attempt to be
consistent with the marital status
determination in section 6015(c). After
further consideration, the Treasury and
IRS have determined that, as the rules
regarding equity under section 6015(b)
are the same as those developed under
section 6013(e), the final regulations
should adopt the language that was used
in former § 1.6013–5 regarding the
couple’s marital status. Thus, although
the final regulations do not adopt the
commentator’s recommendation, the
final regulations amend the language of
§ 1.6015–2(d) of the proposed
regulations to be consistent with the
language regarding equity under former
§ 1.6013–5, which provided that facts
relevant to the determination of equity
include whether the requesting spouse
was abandoned by the nonrequesting

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spouse and whether the spouses are
divorced or separated.
Section 1.6015–2(d) of the proposed
regulations cross-references Rev. Proc.
2000–15 (2000–1 C.B. 447), for
additional guidance on the definition of
inequitable. Two commentators
suggested that this cross-reference was
inappropriate because the public did
not have an opportunity to comment on
the procedures in Rev. Proc. 2000–15.
The procedures in Rev. Proc. 2000–15
were originally published in Notice 98–
61 (1998–2 C.B. 756). Notice 98–61 was
published on December 21, 1998, and
the Treasury and IRS specifically
requested comments on the procedures
prescribed therein. The comment period
was extended from April 30, 1999, to
June 30, 1999, by Notice 99–29 (1999–
1 C.B. 1101). Those procedures were
finalized, with minor changes, in Rev.
Proc. 2000–15, in January 2000. In
addition, as the proposed regulations
cross-referenced Rev. Proc. 2000–15, the
procedures prescribed therein were
again subject to comment during the
comment period for the proposed
regulations. No such comments were
received.
Both §§ 1.6015–2 and 1.6015–4
require a determination of whether it
was inequitable to hold a requesting
spouse liable, and such a determination
should be consistent under both relief
provisions. Thus, it is appropriate for
the final regulations to cross-reference
the procedures for determining whether
it is inequitable to hold a requesting
spouse liable as outlined in Rev. Proc.
2000–15. The final regulations do not
adopt this recommendation.
3. Section 1.6015–3
Section 1.6015–3 of the proposed
regulations provides the rules regarding
the allocation of a deficiency under
section 6015(c) for spouses who are no
longer married, legally separated, or not
members of the same household.
A. Marital Status
Section 1.6015–3(a) of the proposed
regulations provides that spouses who
are no longer married, legally separated,
or who have not been members of the
same household for the 12 months
preceding the election may allocate a
deficiency between the spouses in
proportion to each spouse’s share of the
deficiency. Section 1.6015–3(b)(1) of the
proposed regulations defines divorced
as a requesting spouse having a decree
of divorce that is recognized in the
jurisdiction in which the requesting
spouse resides. Section 1.6015–3(b)(2)
defines legally separated as a separation
that is recognized under the laws of the
jurisdiction in which the requesting

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spouse resides. Several commentators
suggested that the final regulations
cross-reference the rules of section 7703,
and the regulations thereunder, for a
determination of whether a requesting
spouse is divorced or legally separated.
The final regulations adopt this
recommendation.
Section 1.6015–3(b)(3)(i) of the
proposed regulations defines members
of the same household and provides
that spouses are considered members of
the same household if one of the
spouses is temporarily absent from the
household, and the household is
maintained in anticipation of that
spouse’s return. Such temporary
absences include, but are not limited to,
incarceration, hospitalization, business
travel, vacation travel, military service,
or education away from home. One
commentator suggested that the
inclusion of incarceration and
hospitalization as temporary absences
was inappropriate under the
circumstances of a typical case where a
spouse is requesting relief from joint
and several liability. Section 6015(c),
however, provides relief to spouses who
are divorced, widowed, legally
separated, or who were not members of
the same household for the 12 months
preceding the election. H.R. Conf. Rept.
No. 599, 105th Cong., 2d Sess. 252
(1998); S. Rep. No. 105–174 (1998). The
Treasury and IRS have interpreted ‘‘not
members of the same household’’ as
meaning that the spouses live apart and
are estranged. Thus, if the spouses live
apart due to a temporary absence, but
the household is being maintained in
anticipation of the absent spouse’s
return, then the spouses are still
considered members of the same
household. The exceptions regarding
temporary absences are also consistent
with the regulations under section 152,
regarding temporary absences for
purposes of a dependency exemption.
The election to allocate liability is not
available to spouses who are not
divorced, widowed, legally separated, or
living apart and estranged. Although the
language in the final regulations was
modified to more closely track the
language of the regulations under
section 152, the final regulations do not
adopt this recommendation.
One commentator suggested that,
because the election to allocate liability
was meant to address the situation
where spouses were divorced, widowed,
or estranged, the final regulations
should adopt a rule that spouses who
indefinitely maintain separate
households (the spouses have jobs in
different cities, for example) but who
are not estranged are considered
members of the same household for

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purposes of this provision. This
clarification is adopted in the final
regulations.
In addition, § 1.6015–3(a) of the final
regulations clarifies that, for purposes of
section 6015(c), the marital status of a
deceased requesting spouse is
determined on the earlier of the date of
the election or the date of the requesting
spouse’s death in accordance with
section 7703(a)(1).
B. Actual Knowledge
Section 1.6015–3(c)(2) of the
proposed regulations provides that relief
under section 6015(c) is not available if
the IRS demonstrates that the requesting
spouse had actual knowledge of the
item giving rise to the deficiency at the
time he or she signed the return. The
proposed regulations adopt the holding
in Cheshire v. Commissioner, 115 T.C.
183 (2000), aff’d, 282 F.3d 326 (5th Cir.
2002), that, in an omission of income
case, the relevant inquiry is whether the
requesting spouse had actual knowledge
of the item, rather than whether the
requesting spouse had actual knowledge
of the tax consequences of the item.
Several commentators suggested that the
regulations provide that actual
knowledge of the item means actual
knowledge of the proper tax treatment
of the item. The legislative history to
section 6015(c) provides an example of
a requesting spouse who had actual
knowledge of a portion of the
nonrequesting spouse’s selfemployment income that was omitted
from the return. See H.R. Conf. Rep. No.
599, 105th Cong., 2d Sess. 253 (1998).
The example provides that the
requesting spouse remains liable for the
portion of the income tax and selfemployment tax deficiency attributable
to the portion of the self-employment
income of which the requesting spouse
had actual knowledge. Id. Nothing in
the example indicates that the IRS
would have to establish that such
spouse had actual knowledge that selfemployment income was subject to
income tax and self-employment tax in
order to invalidate the requesting
spouse’s section 6015(c) election under
section 6015(c)(3)(C). In addition, in
many cases, neither spouse may know
the proper tax treatment of an item, and
both spouses may have equal knowledge
regarding the item. The fact that the
spouse to whom the item is not
attributable does not understand the
intricacies of tax law should not be
relevant to a determination of whether
the spouse had actual knowledge of the
item. Therefore, the final regulations do
not adopt the recommendation to have
the regulations provide that actual
knowledge of the item means actual

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knowledge of the proper tax treatment
of the item.
The Tax Court also held that, in an
erroneous deduction case, the relevant
inquiry is whether the requesting
spouse had actual knowledge of the
factual circumstances which made the
item unallowable as a deduction, rather
than whether the requesting spouse
knew the proper tax consequences of
the item. King v. Commissioner, 116
T.C. 198 (2001). The final regulations
adopt the standard for erroneous
deductions set forth in King in § 1.6015–
3(c)(2)(i)(B)(1).
Section 1.6015–3(c)(2)(i)(B)(2) of the
final regulations also clarifies that if a
deduction or credit is fictitious or
inflated, the relevant inquiry is whether
the requesting spouse had actual
knowledge that the expense was not
incurred, or not incurred to that extent.
Section 1.6015–3(c)(2)(iii) of the
proposed regulations provides that one
factor that may be relied upon in
demonstrating that a requesting spouse
had actual knowledge of an item giving
rise to a deficiency is whether the
requesting spouse deliberately avoided
learning about the item. Several
commentators suggested that this factor
was inappropriate in that it would harm
those individuals who do not pay
attention to the family finances, or who
are afraid to confront the nonrequesting
spouse about financial matters. This
rule, however, addresses situations
where the requesting spouse makes a
deliberate effort to avoid learning about
an item in an attempt to be shielded
from liability. For an example of
deliberate avoidance, see United States
v. Campbell, 977 F.2d 854 (4th Cir.
1992) (Criminal money laundering case
where the Fourth Circuit found that a
finding of knowledge may be made by
inferences drawn when a party
deliberately closes his or her eyes to
what would otherwise be obvious, i.e.,
willful blindness to the existence of a
fact).
As discussed above in section 1.B. of
this preamble, section 6015(c)(3)(C)
provides that the limitation on a
requesting spouse’s ability to allocate an
erroneous item to the nonrequesting
spouse when the requesting spouse had
actual knowledge of that item does not
apply if the requesting spouse
establishes that he or she signed the
return under duress. When a requesting
spouse signs a return under duress, it is
not that spouse’s return, and
accordingly, the spouse is not jointly
and severally liable for the tax on that
return. Thus, such spouse does not need
the relief from joint and several liability
provided by section 6015. The final
regulations interpret the ‘‘duress’’

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provision in section 6015(c)(3)(C) to
mean that a requesting spouse in an
abusive situation who does not establish
that he or she signed the joint return
under duress and elects relief from joint
and several liability can receive such
relief regardless of the requesting
spouse’s knowledge of the erroneous
item at the time the return was signed.
Although the requesting spouse may
have voluntarily signed the joint return
without a direct threat of abuse from the
nonrequesting spouse, he or she may
have not challenged the content of the
joint return due to a long history of
abuse from the nonrequesting spouse,
resulting in a general fear of the
nonrequesting spouse’s reprisal. Thus,
§ 1.6015–3(c)(2)(v) of the final
regulations provides that if a requesting
spouse establishes that he or she was
the victim of domestic abuse prior to the
time the return was signed, and that, as
a result of the prior abuse, the
requesting spouse did not challenge the
treatment of any items on the return for
fear of the nonrequesting spouse’s
reprisal, the actual knowledge limitation
in § 1.6015–3(c)(2) will not apply.
C. Disqualified Assets
Section 1.6015–3 of the proposed
regulations provides that the portion of
a deficiency for which a requesting
spouse remains liable will be increased
(up to the entire amount of the
deficiency) by the value of any
disqualified asset that is transferred to
the requesting spouse. A disqualified
asset is defined as that which is
transferred for the purpose of avoidance
of tax or payment of tax. Any asset
transferred from the date that is 1 year
prior to the date the first letter of
proposed deficiency (30-day letter) is
mailed, is presumed disqualified. The
presumption will not apply if the asset
is transferred pursuant to a divorce
decree or separate maintenance
agreement. Two commentators
suggested that the use of the terms
divorce decree and separate
maintenance agreement is inconsistent
with the language of the statute. The
final regulations adopt this
recommendation by amending the
language of the regulation to read
‘‘decree of divorce or separate
maintenance or written instrument
incident to such decree.’’
One commentator suggested that there
should be a de minimis exception to the
disqualified asset limitation of $5,000.
The Treasury and IRS have determined
that a de minimis exception to the
disqualified asset rule is inappropriate.
The disqualified asset rule limits relief
under section 6015(c) when an asset is
transferred to the requesting spouse for

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the purpose of avoidance of tax or
payment of tax. The requesting spouse’s
participation in the attempt to avoid tax
or the payment of tax should prevent
the spouse from obtaining relief no
matter how small the value of the asset.
Thus, the final regulations do not adopt
this recommendation for a de minimis
exception.
One commentator suggested that an
example of when a requesting spouse
overcomes the disqualified asset
presumption in § 1.6015–3(c)(3)(iii) be
included in the final regulations. The
final regulations adopt this
recommendation.
One commentator suggested that some
assets should be disqualified, even if
they are transferred pursuant to a decree
of divorce or separate maintenance or a
written instrument incident to such a
decree, if it can be shown that the assets
are transferred for the purpose of
avoidance of tax or payment of tax. The
final regulations adopt this
recommendation by clarifying the rule.
A disqualified asset is defined as that
which is transferred for the purpose of
avoidance of tax or payment of tax.
Regardless of the situation, if the asset
is transferred for that purpose, it is a
disqualified asset. The rule regarding a
transfer pursuant to a decree of divorce
or separate maintenance provides that
the ‘‘presumption’’ that an asset is
disqualified will not apply if the asset
is transferred pursuant to a decree
unless the IRS can establish that the
asset was transferred for the purpose of
avoidance of tax or the payment of tax.
If, however, in the absence of a decree,
the requesting spouse cannot establish
that the purpose of the transfer was not
the avoidance of tax or payment of tax,
the asset will be disqualified, and its
value will be added to the amount of the
deficiency for which the requesting
spouse remains liable.
D. Burden of Proof for Allocation
Section 1.6015–3(d)(3) of the
proposed regulations provides that a
requesting spouse seeking to allocate
liability under section 6015(c) has the
burden of proof to establish the proper
allocation of items. One commentator
suggested that the final regulations
provide an exception to this rule for
cases where the requesting spouse is
unable to locate the appropriate
documents to establish the proper
allocation. Section 6015(c)(2) places the
burden on the requesting spouse. The
final regulations do not adopt this
recommendation.

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E. Other Comments on Allocation of
Items
Section 1.6015–3(d)(4)(ii) of the
proposed regulations provides that any
portion of a deficiency that is
attributable to an item allocable solely
to one spouse and that results from the
disallowance of a credit, or a tax or
addition to tax (other than a tax
imposed by section 1 or 55) is allocated
separately to that spouse. One
commentator suggested that such items
should be allocated proportionately
between the spouses instead of solely to
one spouse or the other. Section
6015(d)(2) provides that if a deficiency
is attributable to the disallowance of a
credit, or any tax (other than tax
imposed by section 1 or 55) required to
be included with the joint return, and
the item is allocated to one individual,
the deficiency shall be allocated to that
individual. The item will not be subject
to the proportionate allocation in
section 6015(d)(1). The statutory
language of section 6015(d)(2) suggests
that separate treatment of items is only
appropriate when the item is allocable
solely to one spouse or the other. Thus,
the final regulations adopt this
recommendation by providing that the
allocation of taxes and credits
attributable to both spouses will be
determined by the IRS on a case-by-case
basis.
F. Child’s Liability
Section 1.6015–3(d)(4)(iii) of the
proposed regulations provides that any
portion of a deficiency relating to the
liability of a child of the requesting and
nonrequesting spouse will be allocated
jointly to both spouses. If one of the
spouses has sole custody of the child,
the proposed regulations provided that
the liability will be allocated solely to
that spouse. One commentator
suggested that the liability should be
allocated based on the child’s residence;
another commentator suggested that the
liability be allocated based on which
parent is in control of the child’s
finances; and a third commentator
suggested that it is not clear to which
spouse a child’s liability should be
allocated. The final regulations address
these recommendations, in part, by
removing the exception to allocating the
child’s liability jointly to both parents
when only one parent has custody of the
child.
4. Section 1.6015–4
Section 1.6015–4 of the proposed
regulations provides the rules regarding
equitable relief from joint and several
liability under section 6015(f). Section
1.6015–4(b) of the proposed regulations

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provides that relief under § 1.6015–4 is
not available to circumvent the ‘‘no
refund’’ rule of § 1.6015–3(c)(1). Several
commentators suggested that this rule
be removed. Under Rev. Proc. 2000–15,
refunds under section 6015(f) are
generally limited to amounts paid
pursuant to an installment agreement,
on which the requesting spouse is not
in default, from the date the claim for
relief is filed until a final determination
is made. The rule regarding installment
payments is intended to encourage
individuals to remain current on their
installment agreements. Therefore, the
Treasury and IRS determined that
limited refunds would be appropriate to
encourage such compliance. Section
6015(g)(3), however, precludes the
allowance of a credit or refund under
section 6015(c). It would be
inappropriate to circumvent the rule of
section 6015(g)(3) by giving equitable
relief in the form of a refund when the
requesting spouse qualifies for relief
under section 6015(c). Thus, the final
regulations do not adopt this
recommendation.
5. Section 1.6015–5
Section 1.6015–5(b)(2) of the
proposed regulations defines collection
activity as, among other things, an
administrative levy or seizure described
by section 6331. Section 1.6015–5(b)(2)
of the final regulations provides that the
term collection activity includes a
collection due process (CDP) notice
under section 6330. That notice, which
occurs in all cases before levy or seizure
except in the case of levies on state tax
refunds and in jeopardy situations,
provides taxpayer notice of the Service’s
intent to levy and the taxpayer’s right to
a pre-levy CDP hearing. This change is
consistent with the legislative history of
section 6015(e). See H.R. Conf. Rep. No.
599, 105th Cong. 2d Sess. 250–251
(1998).
6. Section 1.6015–6
Section 1.6015–6 of the proposed
regulations provides rules regarding the
nonrequesting spouse’s right to notice
and to participate in the administrative
determination of whether the requesting
spouse is entitled to relief under any of
the provisions of section 6015. Some
commentators suggested that the
proposed regulations are overly broad in
providing rights to the nonrequesting
spouse, while other commentators
suggested that the proposed regulations
unnecessarily limit the rights of the
nonrequesting spouse. One
commentator suggested that the IRS
have minimal contact with the
nonrequesting spouse and that the
nonrequesting spouse not be

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automatically notified at the
administrative level. This commentator
also suggested that all of the information
submitted by the nonrequesting spouse
be shared with the requesting spouse,
but not vice versa. The commentator
suggested that the nonrequesting spouse
should only be given information
submitted by the requesting spouse if
the nonrequesting spouse files his or her
own request for relief. Section 6015
specifically provides the nonrequesting
spouse with two opportunities to
participate in the determination of
whether the requesting spouse is
entitled to relief (once at the
administrative level under section
6015(h)(2), and once when the petition
has been filed in the Tax Court under
section 6015(e)(4)). The nonrequesting
spouse’s participation is necessary to
ensure that relief is only granted in
meritorious cases. The final regulations
do not adopt these recommendations.
Section 1.6015–6(a)(1) of the
proposed regulations provides that, at
the request of one spouse, the IRS will
omit from shared documents the
spouse’s new name, address, employer,
telephone number, and any other
information that would reasonably
identify the spouse’s location. One
commentator suggested that this
information always be omitted from
shared documents regardless of whether
a spouse requests such treatment. The
final regulations do not adopt this
recommendation. Instead, this statement
is removed from the final regulations.
To address this concern, however, the
Internal Revenue Manual provides that
the IRS will omit from shared
documents any information that could
reasonably identify a spouse’s location.
A commentator made several
suggestions to help ensure that the
nonrequesting spouse will have a
meaningful opportunity to participate in
the administrative determination. One
suggestion is that the nonrequesting
spouse have access to all information
submitted by the requesting spouse,
including the basis for relief. Under the
proposed regulations, the IRS has the
discretion to share information
submitted by one spouse with the other
spouse. It is the Service’s practice to
share information at the request of one
of the spouses. The final regulations
adopt this recommendation by
clarifying that information will be
shared on request as long as the
information would not impair tax
administration.
Another suggestion was that the
nonrequesting spouse be afforded
administrative appeal rights if the
nonrequesting spouse disagrees with the
Service’s determination that the

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requesting spouse is entitled to relief.
The nonrequesting spouse’s
participation is essential to a proper
determination of relief. The
nonrequesting spouse may participate
during the preliminary determination of
relief, and if the requesting spouse files
an administrative appeal or a petition in
court, the nonrequesting spouse may
participate in those proceedings as well.
In addition, if a requesting spouse files
a petition in Tax Court, the IRS is
precluded from settling with the
requesting spouse unless the
nonrequesting spouse agrees to the
settlement. See Corson v. Commissioner,
114 T.C. 354 (2000). The nonrequesting
spouse is afforded a meaningful
opportunity to participate in the
administrative determination of relief,
as well. Thus, the final regulations do
not prohibit the nonrequesting spouse
from administratively appealing the
IRS’s determination that the requesting
spouse is entitled to relief from joint
and several liability.
7. Section 1.6015–7
Section 1.6015–7 of the final
regulations reflects changes to section
6015 that were made by section 313 of
the CRA with respect to waivers and the
90-day period for filing a Tax Court
petition.
Section 1.6015–7(c)(1) of the final
regulations reflects the fact that when
the requesting spouse elects relief under
§ 1.6015–2 or 1.6015–3, the IRS is
restricted from taking collection actions
until a decision of the Tax Court
becomes final. Section 1.6015–7(c)(1)
also reflects the fact that section
6015(e)(1)(B)(i) provides that rules
similar to the rules of section 7485 will
apply with respect to collection actions.
Section 7485 provides that the IRS may
begin collection activity upon the filing
of a notice of appeal from a Tax Court
decision unless the taxpayer files an
appeal bond. Because refunds may be
limited under section 6015, a requesting
spouse may be denied a refund of
amounts collected during the pendency
of an appeal proceeding, even if he or
she is granted relief on appeal.
Therefore, the IRS has determined that
at this time it will not begin any
collection activities against the
requesting spouse upon the filing of a
notice of appeal unless the expiration of
the statute of limitations on collection is
imminent, or that collection will be
jeopardized by delay.
Special Analyses
It has been determined that these final
regulations are not a significant
regulatory action as defined in
Executive Order 12866. Therefore, a

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regulatory assessment is not required. It
has also been determined that section
553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply
to the regulations, and because these
regulations do not impose a collection
of information on small entities, the
Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply.

return. The return is adjusted to reflect
only the tax liability of the individual
who voluntarily signed the return, and
the liability is determined at the
applicable rates in section 1(d) for
married individuals filing separate
returns. Section 6212 applies to the
assessment of any deficiency in tax on
such return.

Drafting Information
The principal authors of the
regulations are Bridget E. Finkenaur and
Charles A. Hall of the Office of
Associate Chief Counsel, Procedure and
Administration (Administrative
Provisions and Judicial Practice
Division).

§ 1.6013–5

List of Subjects
26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping
requirements.
Amendments to the Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:
PART 1—INCOME TAXES
1. The authority citation for part 1 is
amended by adding the following
entries in numerical order to read as
follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.6015–1 also issued under 26
U.S.C. 6015(h).
Section 1.6015–2 also issued under 26
U.S.C. 6015(h).
Section 1.6015–3 also issued under 26
U.S.C. 6015(h).
Section 1.6015–4 also issued under 26
U.S.C. 6015(h).
Section 1.6015–5 also issued under 26
U.S.C. 6015(h).
Section 1.6015–6 also issued under 26
U.S.C. 6015(h).
Section 1.6015–7 also issued under 26
U.S.C. 6015(h).
Section 1.6015–8 also issued under 26
U.S.C. 6015(h).
Section 1.6015–9 also issued under 26
U.S.C. 6015(h). * * *

2. In § 1.6013–4, paragraph (d) is
added to read as follows:
§ 1.6013–4

Applicable rules.

*

*
*
*
*
(d) Return signed under duress. If an
individual asserts and establishes that
he or she signed a return under duress,
the return is not a joint return. The
individual who signed such return
under duress is not jointly and severally
liable for the tax shown on the return or
any deficiency in tax with respect to the

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[Removed]

3. Section 1.6013–5 is removed.
4. Sections 1.6015–0 through 1.6015–
9 are added to read as follows:
§ 1.6015–0

Table of contents.

This section lists captions contained
in §§ 1.6015–1 through 1.6015–9.
§ 1.6015–1 Relief from joint and several
liability on a joint return.
(a) In general.
(b) Duress.
(c) Prior closing agreement or offer in
compromise.
(1) In general.
(2) Exception for agreements relating to
TEFRA partnership proceedings.
(3) Examples.
(d) Fraudulent scheme.
(e) Res judicata and collateral estoppel.
(f) Community property laws.
(1) In general.
(2) Example.
(g) Scope of this section and §§ 1.6015–2
through 1.6015–9.
(h) Definitions.
(1) Requesting spouse.
(2) Nonrequesting spouse.
(3) Item.
(4) Erroneous item.
(5) Election or request.
(i) [Reserved]
(j) Transferee liability.
(1) In general.
(2) Example.
§ 1.6015–2 Relief from liability applicable
to all qualifying joint filers.
(a) In general.
(b) Understatement.
(c) Knowledge or reason to know.
(d) Inequity.
(e) Partial relief.
(1) In general.
(2) Example.
§ 1.6015–3 Allocation of liability for
individuals who are no longer married, are
legally separated, or are not members of the
same household.
(a) Election to allocate liability.
(b) Definitions.
(1) Divorced.
(2) Legally separated.
(3) Members of the same household.
(i) Temporary absences.
(ii) Separate dwellings.
(c) Limitations.
(1) No refunds.
(2) Actual knowledge.
(i) In general.
(A) Omitted income.
(B) Deduction or credit.

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(1) Erroneous deductions in general.
(2) Fictitious or inflated deduction.
(ii) Partial knowledge.
(iii) Knowledge of the source not sufficient.
(iv) Factors supporting actual knowledge.
(v) Abuse exception.
(3) Disqualified asset transfers.
(i) In general.
(ii) Disqualified asset defined.
(iii) Presumption.
(4) Examples.
(d) Allocation.
(1) In general.
(2) Allocation of erroneous items.
(i) Benefit on the return.
(ii) Fraud.
(iii) Erroneous items of income.
(iv) Erroneous deduction items.
(3) Burden of proof.
(4) General allocation method.
(i) Proportionate allocation.
(ii) Separate treatment items.
(iii) Child’s liability.
(iv) Allocation of certain items.
(A) Alternative minimum tax.
(B) Accuracy-related and fraud penalties.
(5) Examples.
(6) Alternative allocation methods.
(i) Allocation based on applicable tax rates.
(ii) Allocation methods provided in
subsequent published guidance.
(iii) Example.
§ 1.6015–4

Equitable relief.

§ 1.6015–5 Time and manner for
requesting relief.
(a) Requesting relief.
(b) Time period for filing a request for
relief.
(1) In general.
(2) Definitions.
(i) Collection activity.
(ii) Section 6330 notice.
(3) Requests for relief made before
commencement of collection activity.
(4) Examples.
(5) Premature requests for relief.
(c) Effect of a final administrative
determination.
§ 1.6015–6 Nonrequesting spouse’s notice
and opportunity to participate in
administrative proceedings.
(a) In general.
(b) Information submitted.
(c) Effect of opportunity to participate.
(2) Waiver of the restrictions on collection.
§ 1.6015–7 Tax Court review.
(a) In general.
(b) Time period for petitioning the Tax
Court.
(c) Restrictions on collection and
suspension of the running of the period of
limitations.
(1) Restrictions on collection under
§ 1.6015–2 or 1.6015–3.
(2) Waiver of the restrictions on collection.
(3) Suspension of the running of the period
of limitations.
(i) Relief under § 1.6015–2 or 1.6015–3.
(ii) Relief under § 1.6015–4.
(4) Definitions.
(i) Levy.
(ii) Proceedings in court.
(iii) Assessment to which the election
relates.

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§ 1.6015–8 Applicable liabilities.
(a) In general.
(b) Liabilities paid on or before July 22,
1998.
(c) Examples.
§ 1.6015–9

Effective date.

§ 1.6015–1 Relief from joint and several
liability on a joint return.

(a) In general. (1) An individual who
qualifies and elects under section 6013
to file a joint Federal income tax return
with another individual is jointly and
severally liable for the joint Federal
income tax liabilities for that year. A
spouse or former spouse may be
relieved of joint and several liability for
Federal income tax for that year under
the following three relief provisions:
(i) Innocent spouse relief under
§ 1.6015–2.
(ii) Allocation of deficiency under
§ 1.6015–3.
(iii) Equitable relief under § 1.6015–4.
(2) A requesting spouse may submit a
single claim electing relief under both or
either §§ 1.6015–2 and 1.6015–3, and
requesting relief under § 1.6015–4.
However, equitable relief under
§ 1.6015–4 is available only to a
requesting spouse who fails to qualify
for relief under §§ 1.6015–2 and 1.6015–
3. If a requesting spouse elects the
application of either § 1.6015–2 or
1.6015–3, the Internal Revenue Service
will consider whether relief is
appropriate under the other elective
provision and, to the extent relief is
unavailable under either, under
§ 1.6015–4. If a requesting spouse seeks
relief only under § 1.6015–4, the
Secretary may not grant relief under
§ 1.6015–2 or 1.6015–3 in the absence of
an affirmative election made by the
requesting spouse under either of those
sections. If in the course of reviewing a
request for relief only under § 1.6015–4,
the IRS determines that the requesting
spouse may qualify for relief under
§ 1.6015–2 or 1.6015–3 instead of
§ 1.6015–4, the Internal Revenue Service
will correspond with the requesting
spouse to see if the requesting spouse
would like to amend his or her request
to elect the application of § 1.6015–2 or
1.6015–3. If the requesting spouse
chooses to amend the claim for relief,
the requesting spouse must submit an
affirmative election under § 1.6015–2 or
1.6015–3. The amended claim for relief
will relate back to the original claim for
purposes of determining the timeliness
of the claim.
(3) Relief is not available for liabilities
that are required to be reported on a
joint Federal income tax return but are
not income taxes imposed under
Subtitle A of the Internal Revenue Code
(e.g., domestic service employment
taxes under section 3510).

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(b) Duress. For rules relating to the
treatment of returns signed under
duress, see § 1.6013–4(d).
(c) Prior closing agreement or offer in
compromise—(1) In general. A
requesting spouse is not entitled to
relief from joint and several liability
under § 1.6015–2, 1.6015–3, or 1.6015–
4 for any tax year for which the
requesting spouse has entered into a
closing agreement with the
Commissioner that disposes of the same
liability that is the subject of the claim
for relief. In addition, a requesting
spouse is not entitled to relief from joint
and several liability under § 1.6015–2,
1.6015–3, or 1.6015–4 for any tax year
for which the requesting spouse has
entered into an offer in compromise
with the Commissioner. For rules
relating to the effect of closing
agreements and offers in compromise,
see sections 7121 and 7122, and the
regulations thereunder.
(2) Exception for agreements relating
to TEFRA partnership proceedings. The
rule in paragraph (c)(1) of this section
regarding the unavailability of relief
from joint and several liability when the
liability to which the claim for relief
relates was the subject of a prior closing
agreement entered into by the
requesting spouse, shall not apply to an
agreement described in section 6224(c)
with respect to partnership items (or
any penalty, addition to tax, or
additional amount that relates to
adjustments to partnership items) that is
entered into while the requesting spouse
is a party to a pending partnership-level
proceeding conducted under the
provisions of subchapter C of chapter 63
of subtitle F of the Internal Revenue
Code (TEFRA partnership proceeding).
If, however, a requesting spouse enters
into a closing agreement pertaining to
any penalty, addition to tax, or
additional amount that relates to
adjustments to partnership items, at a
time when the requesting spouse is not
a party to a pending TEFRA partnership
proceeding (e.g., in connection with an
affected items proceeding), then the
provisions of paragraph (c)(1) shall
apply. Similarly, if a requesting spouse
enters into a closing agreement with
respect to both partnership items
(including affected items) and
nonpartnership items, while the
requesting spouse is a party to a
pending TEFRA partnership proceeding,
the provisions of paragraph (c)(1) shall
apply to the portion of the closing
agreement that relates to nonpartnership
items and the provisions of this
paragraph (c)(2) shall apply to the
remainder of the closing agreement.

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(3) Examples. The following examples
illustrate the rules of this paragraph (c):
Example 1. H and W file joint returns for
taxable years 2002–2004, on which they
claim losses attributable to H’s limited
partnership interest in Partnership A. In
January 2006, the Internal Revenue Service
commences an audit under the provisions of
subchapter C of chapter 63 of subtitle F of the
Internal Revenue Code (TEFRA partnership
proceeding) regarding Partnership A’s 2002–
2004 taxable years, and sends H and W a
notice under section 6223(a)(1). In September
2007, H files a bankruptcy petition under
chapter 7 of the Bankruptcy Code and
receives a discharge in April 2008. In August
2008, H and W enter into a closing agreement
with the Internal Revenue Service, in which
H and W agree to the disallowance of some
of the claimed losses from Partnership A for
taxable years 2002 through 2007. W may not
later claim relief from joint and several
liability under section 6015 as to the
disallowed losses attributable to Partnership
A for taxable years 2002 to 2007. This is
because at the time W entered into the
closing agreement, H’s partnership items
attributable to Partnership A had converted
to nonpartnership items as a result of H’s
filing of the bankruptcy petition. The
conversion of H’s items also terminated W’s
status as a partner in the TEFRA partnership
proceeding regarding Partnership A.
Consequently, the closing agreement did not
pertain to partnership items and W was not
a party to a pending partnership-level
proceeding regarding Partnership A when
she entered into the closing agreement.
Accordingly, the exception in paragraph
(c)(2) of this section for agreements relating
to TEFRA partnership proceedings does not
apply.
Example 2. H and W file a joint return for
taxable year 2002, on which they claim
$25,000 in losses attributable to H’s general
partnership interest in Partnership B. In
November 2003, the Service proposes a
deficiency in tax relating to H’s and W’s 2002
joint return arising from omitted taxable
interest income in the amount of $2,000 that
is attributable to H. In July 2005, the Internal
Revenue Service commences a TEFRA
partnership proceeding regarding Partnership
B’s 2002 and 2003 taxable years, and sends
H and W a notice under section 6223(a)(1).
In March 2006, H and W enter into a closing
agreement with the Service. The closing
agreement provides for the disallowance of
the claimed losses from Partnership B in
excess of H’s and W’s out-of-pocket
expenditures relating to Partnership B for
taxable year 2002 and any subsequent year(s)
in which H and W claimed losses from
Partnership B. In addition, H and W agree to
the imposition of the accuracy-related
penalty under section 6662 with respect to
the disallowed losses attributable to
partnership B. In the closing agreement, H
and W also agree to the deficiency resulting
from the omitted interest income for taxable
year 2002. W may not later claim relief from
joint and several liability under section 6015
as to the deficiency in tax attributable to the
omitted income of $2,000 for taxable year
2002, because this portion of the closing
agreement pertains to nonpartnership items.

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In contrast, W may claim relief from joint and
several liability as to the disallowed losses
and accuracy-related penalty attributable to
Partnership B for taxable year 2002 or any
subsequent year(s). This is because this
portion of the closing agreement pertains to
partnership and affected items and was
entered into at a time when W was a party
to the pending partnership-level proceeding
regarding Partnership B. Consequently, W
never had the opportunity to raise the
innocent spouse defense in the course of that
TEFRA partnership proceeding. (See
§ 1.6015–5(b)(5) relating to premature
claims).

(d) Fraudulent scheme. If the
Secretary establishes that a spouse
transferred assets to the other spouse as
part of a fraudulent scheme, relief is not
available under section 6015, and
section 6013(d)(3) applies to the return.
For purposes of this section, a
fraudulent scheme includes a scheme to
defraud the Service or another third
party, including, but not limited to,
creditors, ex-spouses, and business
partners.
(e) Res judicata and collateral
estoppel. A requesting spouse is barred
from relief from joint and several
liability under section 6015 by res
judicata for any tax year for which a
court of competent jurisdiction has
rendered a final decision on the
requesting spouse’s tax liability if relief
under section 6015 was at issue in the
prior proceeding, or if the requesting
spouse meaningfully participated in that
proceeding and could have raised relief
under section 6015. A requesting spouse
has not meaningfully participated in a
prior proceeding if, due to the effective
date of section 6015, relief under section
6015 was not available in that
proceeding. Also, any final decisions
rendered by a court of competent
jurisdiction regarding issues relevant to
section 6015 are conclusive and the
requesting spouse may be collaterally
estopped from relitigating those issues.
(f) Community property laws—(1) In
general. In determining whether relief is
available under § 1.6015–2, 1.6015–3, or
1.6015–4, items of income, credits, and
deductions are generally allocated to the
spouses without regard to the operation
of community property laws. An
erroneous item is attributed to the
individual whose activities gave rise to
such item. See § 1.6015–3(d)(2).
(2) Example. The following example
illustrates the rule of this paragraph (f):
Example. (i) H and W are married and have
lived in State A (a community property state)
since 1987. On April 15, 2003, H and W file
a joint Federal income tax return for the 2002
taxable year. In August 2005, the Internal
Revenue Service proposes a $17,000
deficiency with respect to the 2002 joint
return. A portion of the deficiency is
attributable to $20,000 of H’s unreported

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47287

interest income from his individual bank
account. The remainder of the deficiency is
attributable to $30,000 of W’s disallowed
business expense deductions. Under the laws
of State A, H and W each own 1⁄2 of all
income earned and property acquired during
the marriage.
(ii) In November 2005, H and W divorce
and W timely elects to allocate the
deficiency. Even though the laws of State A
provide that 1⁄2 of the interest income is W’s,
for purposes of relief under this section, the
$20,000 unreported interest income is
allocable to H, and the $30,000 disallowed
deduction is allocable to W. The community
property laws of State A are not considered
in allocating items for this purpose.

(g) Scope of this section and
§§ 1.6015–2 through 1.6015–9. This
section and §§ 1.6015–2 through
1.6015–9 do not apply to any portion of
a liability for any taxable year for which
a claim for credit or refund is barred by
operation of law or rule of law.
(h) Definitions—(1) Requesting
spouse. A requesting spouse is an
individual who filed a joint return and
elects relief from Federal income tax
liability arising from that return under
§ 1.6015–2 or 1.6015–3, or requests
relief from Federal income tax liability
arising from that return under § 1.6015–
4.
(2) Nonrequesting spouse. A
nonrequesting spouse is the individual
with whom the requesting spouse filed
the joint return for the year for which
relief from liability is sought.
(3) Item. An item is that which is
required to be separately listed on an
individual income tax return or any
required attachments. Items include, but
are not limited to, gross income,
deductions, credits, and basis.
(4) Erroneous item. An erroneous item
is any item resulting in an
understatement or deficiency in tax to
the extent that such item is omitted
from, or improperly reported (including
improperly characterized) on an
individual income tax return. For
example, unreported income from an
investment asset resulting in an
understatement or deficiency in tax is
an erroneous item. Similarly, ordinary
income that is improperly reported as
capital gain resulting in an
understatement or deficiency in tax is
also an erroneous item. In addition, a
deduction for an expense that is
personal in nature that results in an
understatement or deficiency in tax is
an erroneous item of deduction. An
erroneous item is also an improperly
reported item that affects the liability on
other returns (e.g., an improper net
operating loss that is carried back to a
prior year’s return). Penalties and
interest are not erroneous items. Rather,
relief from penalties and interest will

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generally be determined based on the
proportion of the total erroneous items
from which the requesting spouse is
relieved. If a penalty relates to a
particular erroneous item, see § 1.6015–
3(d)(4)(iv)(B).
(5) Election or request. A qualifying
election under § 1.6015–2 or 1.6015–3,
or request under § 1.6015–4, is the first
timely claim for relief from joint and
several liability for the tax year for
which relief is sought. A qualifying
election also includes a requesting
spouse’s second election to seek relief
from joint and several liability for the
same tax year under § 1.6015–3 when
the additional qualifications of
paragraphs (h)(5)(i) and (ii) of this
section are met—
(i) The requesting spouse did not
qualify for relief under § 1.6015–3 when
the Internal Revenue Service considered
the first election solely because the
qualifications of § 1.6015–3(a) were not
satisfied; and
(ii) At the time of the second election,
the qualifications for relief under
§ 1.6015–3(a) are satisfied.
(i) [Reserved]
(j) Transferee liability—(1) In general.
The relief provisions of section 6015 do
not negate liability that arises under the
operation of other laws. Therefore, a
requesting spouse who is relieved of
joint and several liability under
§ 1.6015–2, 1.6015–3, or 1.6015–4 may
nevertheless remain liable for the
unpaid tax (including additions to tax,
penalties, and interest) to the extent
provided by Federal or state transferee
liability or property laws. For the rules
regarding the liability of transferees, see
sections 6901 through 6904 and the
regulations thereunder. In addition, the
requesting spouse’s property may be
subject to collection under Federal or
state property laws.
(2) Example. The following example
illustrates the rule of this paragraph (j):
Example. H and W timely file their 1998
joint income tax return on April 15, 1999. H
dies in March 2000, and the executor of H’s
will transfers all of the estate’s assets to W.
In July 2001, the Internal Revenue Service
assesses a deficiency for the 1998 return. The
items giving rise to the deficiency are
attributable to H. W is relieved of the liability
under section 6015, and H’s estate remains
solely liable. The Internal Revenue Service
may seek to collect the deficiency from W to
the extent permitted under Federal or state
transferee liability or property laws.
§ 1.6015–2 Relief from liability applicable
to all qualifying joint filers.

(a) In general. A requesting spouse
may be relieved of joint and several
liability for tax (including additions to
tax, penalties, and interest) from an
understatement for a taxable year under

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this section if the requesting spouse
elects the application of this section in
accordance with §§ 1.6015–1(h)(5) and
1.6015–5, and—
(1) A joint return was filed for the
taxable year;
(2) On the return there is an
understatement attributable to
erroneous items of the nonrequesting
spouse;
(3) The requesting spouse establishes
that in signing the return he or she did
not know and had no reason to know of
the understatement; and
(4) It is inequitable to hold the
requesting spouse liable for the
deficiency attributable to the
understatement.
(b) Understatement. The term
understatement has the meaning given
to such term by section 6662(d)(2)(A)
and the regulations thereunder.
(c) Knowledge or reason to know. A
requesting spouse has knowledge or
reason to know of an understatement if
he or she actually knew of the
understatement, or if a reasonable
person in similar circumstances would
have known of the understatement. For
rules relating to a requesting spouse’s
actual knowledge, see § 1.6015–3(c)(2).
All of the facts and circumstances are
considered in determining whether a
requesting spouse had reason to know of
an understatement. The facts and
circumstances that are considered
include, but are not limited to, the
nature of the erroneous item and the
amount of the erroneous item relative to
other items; the couple’s financial
situation; the requesting spouse’s
educational background and business
experience; the extent of the requesting
spouse’s participation in the activity
that resulted in the erroneous item;
whether the requesting spouse failed to
inquire, at or before the time the return
was signed, about items on the return or
omitted from the return that a
reasonable person would question; and
whether the erroneous item represented
a departure from a recurring pattern
reflected in prior years’ returns (e.g.,
omitted income from an investment
regularly reported on prior years’
returns).
(d) Inequity. All of the facts and
circumstances are considered in
determining whether it is inequitable to
hold a requesting spouse jointly and
severally liable for an understatement.
One relevant factor for this purpose is
whether the requesting spouse
significantly benefitted, directly or
indirectly, from the understatement. A
significant benefit is any benefit in
excess of normal support. Evidence of
direct or indirect benefit may consist of
transfers of property or rights to

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property, including transfers that may
be received several years after the year
of the understatement. Thus, for
example, if a requesting spouse receives
property (including life insurance
proceeds) from the nonrequesting
spouse that is beyond normal support
and traceable to items omitted from
gross income that are attributable to the
nonrequesting spouse, the requesting
spouse will be considered to have
received significant benefit from those
items. Other factors that may also be
taken into account, if the situation
warrants, include the fact that the
requesting spouse has been deserted by
the nonrequesting spouse, the fact that
the spouses have been divorced or
separated, or that the requesting spouse
received benefit on the return from the
understatement. For guidance
concerning the criteria to be used in
determining whether it is inequitable to
hold a requesting spouse jointly and
severally liable under this section, see
Rev. Proc. 2000–15 (2000–1 C.B. 447), or
other guidance published by the
Treasury and IRS (see § 601.601(d)(2) of
this chapter).
(e) Partial relief—(1) In general. If a
requesting spouse had no knowledge or
reason to know of only a portion of an
erroneous item, the requesting spouse
may be relieved of the liability
attributable to that portion of that item,
if all other requirements are met with
respect to that portion.
(2) Example. The following example
illustrates the rules of this paragraph (e):
Example. H and W are married and file
their 2004 joint income tax return in March
2005. In April 2006, H is convicted of
embezzling $2 million from his employer
during 2004. H kept all of his embezzlement
income in an individual bank account, and
he used most of the funds to support his
gambling habit. H and W had a joint bank
account into which H and W deposited all of
their reported income. Each month during
2004, H transferred an additional $10,000
from the individual account to H and W’s
joint bank account. W paid the household
expenses using this joint account, and
regularly received the bank statements
relating to the account. W had no knowledge
or reason to know of H’s embezzling
activities. However, W did have knowledge
and reason to know of $120,000 of the $2
million of H’s embezzlement income at the
time she signed the joint return because that
amount passed through the couple’s joint
bank account. Therefore, W may be relieved
of the liability arising from $1,880,000 of the
unreported embezzlement income, but she
may not be relieved of the liability for the
deficiency arising from $120,000 of the
unreported embezzlement income of which
she knew and had reason to know.

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§ 1.6015–3 Allocation of deficiency for
individuals who are no longer married, are
legally separated, or are not members of the
same household.

(a) Election to allocate deficiency. A
requesting spouse may elect to allocate
a deficiency if, as defined in paragraph
(b) of this section, the requesting spouse
is divorced, widowed, or legally
separated, or has not been a member of
the same household as the
nonrequesting spouse at any time
during the 12-month period ending on
the date an election for relief is filed.
For purposes of this section, the marital
status of a deceased requesting spouse
will be determined on the earlier of the
date of the election or the date of death
in accordance with section 7703(a)(1).
Subject to the restrictions of paragraph
(c) of this section, an eligible requesting
spouse who elects the application of
this section in accordance with
§§ 1.6015–1(h)(5) and 1.6015–5
generally may be relieved of joint and
several liability for the portion of any
deficiency that is allocated to the
nonrequesting spouse pursuant to the
allocation methods set forth in
paragraph (d) of this section. Relief may
be available to both spouses filing the
joint return if each spouse is eligible for
and elects the application of this
section.
(b) Definitions—(1) Divorced. A
determination of whether a requesting
spouse is divorced for purposes of this
section will be made in accordance with
section 7703 and the regulations
thereunder. Such determination will be
made as of the date the election is filed.
(2) Legally separated. A determination
of whether a requesting spouse is legally
separated for purposes of this section
will be made in accordance with section
7703 and the regulations thereunder.
Such determination will be made as of
the date the election is filed.
(3) Members of the same household—
(i) Temporary absences. A requesting
spouse and a nonrequesting spouse are
considered members of the same
household during either spouse’s
temporary absences from the household
if 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 such
return. Examples of temporary absences
may include, but are not limited to,
absence due to incarceration, illness,
business, vacation, military service, or
education.
(ii) Separate dwellings. A husband
and wife who reside in the same
dwelling are considered members of the
same household. In addition, a husband
and wife who reside in two separate

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dwellings are considered members of
the same household if the spouses are
not estranged or one spouse is
temporarily absent from the other’s
household within the meaning of
paragraph (b)(3)(i) of this section.
(c) Limitations—(1) No refunds. Relief
under this section is only available for
unpaid liabilities resulting from
understatements of liability. Refunds are
not authorized under this section.
(2) Actual knowledge—(i) In general.
If, under section 6015(c)(3)(C), the
Secretary demonstrates that, at the time
the return was signed, the requesting
spouse had actual knowledge of an
erroneous item that is allocable to the
nonrequesting spouse, the election to
allocate the deficiency attributable to
that item is invalid, and the requesting
spouse remains liable for the portion of
the deficiency attributable to that item.
The Service, having both the burden of
production and the burden of
persuasion, must establish, by a
preponderance of the evidence, that the
requesting spouse had actual knowledge
of the erroneous item in order to
invalidate the election.
(A) Omitted income. In the case of
omitted income, knowledge of the item
includes knowledge of the receipt of the
income. For example, assume W
received $5,000 of dividend income
from her investment in X Co. but did
not report it on the joint return. H knew
that W received $5,000 of dividend
income from X Co. that year. H had
actual knowledge of the erroneous item
(i.e., $5,000 of unreported dividend
income from X Co.), and no relief is
available under this section for the
deficiency attributable to the dividend
income from X Co. This rule applies
equally in situations where the other
spouse has unreported income although
the spouse does not have an actual
receipt of cash (e.g., dividend
reinvestment or a distributive share
from a flow-through entity shown on
Schedule K–1, ‘‘Partner’s Share of
Income, Credits, Deductions, etc.’’).
(B) Deduction or credit—(1) Erroneous
deductions in general. In the case of an
erroneous deduction or credit,
knowledge of the item means
knowledge of the facts that made the
item not allowable as a deduction or
credit.
(2) Fictitious or inflated deduction. If
a deduction is fictitious or inflated, the
IRS must establish that the requesting
spouse actually knew that the
expenditure was not incurred, or not
incurred to that extent.
(ii) Partial knowledge. If a requesting
spouse had actual knowledge of only a
portion of an erroneous item, then relief
is not available for that portion of the

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47289

erroneous item. For example, if H knew
that W received $1,000 of dividend
income and did not know that W
received an additional $4,000 of
dividend income, relief would not be
available for the portion of the
deficiency attributable to the $1,000 of
dividend income of which H had actual
knowledge. A requesting spouse’s actual
knowledge of the proper tax treatment
of an item is not relevant for purposes
of demonstrating that the requesting
spouse had actual knowledge of an
erroneous item. For example, assume H
did not know W’s dividend income
from X Co. was taxable, but knew that
W received the dividend income. Relief
is not available under this section. In
addition, a requesting spouse’s
knowledge of how an erroneous item
was treated on the tax return is not
relevant to a determination of whether
the requesting spouse had actual
knowledge of the item. For example,
assume that H knew of W’s dividend
income, but H failed to review the
completed return and did not know that
W omitted the dividend income from
the return. Relief is not available under
this section.
(iii) Knowledge of the source not
sufficient. Knowledge of the source of
an erroneous item is not sufficient to
establish actual knowledge. For
example, assume H knew that W owned
X Co. stock, but H did not know that X
Co. paid dividends to W that year. H’s
knowledge of W’s ownership in X Co. is
not sufficient to establish that H had
actual knowledge of the dividend
income from X Co. In addition, a
requesting spouse’s actual knowledge
may not be inferred when the requesting
spouse merely had reason to know of
the erroneous item. Even if H’s
knowledge of W’s ownership interest in
X Co. indicates a reason to know of the
dividend income, actual knowledge of
such dividend income cannot be
inferred from H’s reason to know.
Similarly, the IRS need not establish
that a requesting spouse knew of the
source of an erroneous item in order to
establish that the requesting spouse had
actual knowledge of the item itself. For
example, assume H knew that W
received $1,000, but he did not know
the source of the $1,000. W and H omit
the $1,000 from their joint return. H has
actual knowledge of the item giving rise
to the deficiency ($1,000), and relief is
not available under this section.
(iv) Factors supporting actual
knowledge. To demonstrate that a
requesting spouse had actual knowledge
of an erroneous item at the time the
return was signed, the IRS may rely
upon all of the facts and circumstances.
One factor that may be relied upon in

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demonstrating that a requesting spouse
had actual knowledge of an erroneous
item is whether the requesting spouse
made a deliberate effort to avoid
learning about the item in order to be
shielded from liability. This factor,
together with all other facts and
circumstances, may demonstrate that
the requesting spouse had actual
knowledge of the item, and the
requesting spouse’s election would be
invalid with respect to that entire item.
Another factor that may be relied upon
in demonstrating that a requesting
spouse had actual knowledge of an
erroneous item is whether the
requesting spouse and the
nonrequesting spouse jointly owned the
property that resulted in the erroneous
item. Joint ownership is a factor
supporting a finding that the requesting
spouse had actual knowledge of an
erroneous item. For purposes of this
paragraph, a requesting spouse will not
be considered to have had an ownership
interest in an item based solely on the
operation of community property law.
Rather, a requesting spouse who resided
in a community property state at the
time the return was signed will be
considered to have had an ownership
interest in an item only if the requesting
spouse’s name appeared on the
ownership documents, or there
otherwise is an indication that the
requesting spouse asserted dominion
and control over the item. For example,
assume H and W live in State A, a
community property state. After their
marriage, H opens a bank account in his
name. Under the operation of the
community property laws of State A, W
owns 1⁄2 of the bank account. However,
W does not have an ownership interest
in the account for purposes of this
paragraph (c)(2)(iv) because the account
is not held in her name and there is no
other indication that she asserted
dominion and control over the item.
(v) Abuse exception. If the requesting
spouse establishes that he or she was
the victim of domestic abuse prior to the
time the return was signed, and that, as
a result of the prior abuse, the
requesting spouse did not challenge the
treatment of any items on the return for
fear of the nonrequesting spouse’s
retaliation, the limitation on actual
knowledge in this paragraph (c) will not
apply. However, if the requesting
spouse involuntarily executed the
return, the requesting spouse may
choose to establish that the return was
signed under duress. In such a case,
§ 1.6013–4(d) applies.
(3) Disqualified asset transfers—(i) In
general. The portion of the deficiency
for which a requesting spouse is liable
is increased (up to the entire amount of

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the deficiency) by the value of any
disqualified asset that was transferred to
the requesting spouse. For purposes of
this paragraph (c)(3), the value of a
disqualified asset is the fair market
value of the asset on the date of the
transfer.
(ii) Disqualified asset defined. A
disqualified asset is any property or
right to property that was transferred
from the nonrequesting spouse to the
requesting spouse if the principal
purpose of the transfer was the
avoidance of tax or payment of tax
(including additions to tax, penalties,
and interest).
(iii) Presumption. Any asset
transferred from the nonrequesting
spouse to the requesting spouse during
the 12-month period before the mailing
date of the first letter of proposed
deficiency (e.g., a 30-day letter or, if no
30-day letter is mailed, a notice of
deficiency) is presumed to be a
disqualified asset. The presumption also
applies to any asset that is transferred
from the nonrequesting spouse to the
requesting spouse after the mailing date
of the first letter of proposed deficiency.
The presumption does not apply,
however, if the requesting spouse
establishes that the asset was transferred
pursuant to a decree of divorce or
separate maintenance or a written
instrument incident to such a decree. If
the presumption does not apply, but the
Internal Revenue Service can establish
that the purpose of the transfer was the
avoidance of tax or payment of tax, the
asset will be disqualified, and its value
will be added to the amount of the
deficiency for which the requesting
spouse remains liable. If the
presumption applies, a requesting
spouse may still rebut the presumption
by establishing that the principal
purpose of the transfer was not the
avoidance of tax or payment of tax.
(4) Examples. The following examples
illustrate the rules in this paragraph (c):
Example 1. Actual knowledge of an
erroneous item. (i) H and W file their 2001
joint Federal income tax return on April 15,
2002. On the return, H and W report W’s selfemployment income, but they do not report
W’s self-employment tax on that income. H
and W divorce in July 2003. In August 2003,
H and W receive a 30-day letter from the
Internal Revenue Service proposing a
deficiency with respect to W’s unreported
self-employment tax on the 2001 return. On
November 4, 2003, H files an election to
allocate the deficiency to W. The erroneous
item is the self-employment income, and it
is allocable to W. H knows that W earned
income in 2001 as a self-employed musician,
but he does not know that self-employment
tax must be reported on and paid with a joint
return.
(ii) H’s election to allocate the deficiency
to W is invalid because, at the time H signed

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the joint return, H had actual knowledge of
W’s self-employment income. The fact that H
was unaware of the tax consequences of that
income (i.e., that an individual is required to
pay self-employment tax on that income) is
not relevant.
Example 2. Actual knowledge not inferred
from a requesting spouse’s reason to know.
(i) H has long been an avid gambler. H
supports his gambling habit and keeps all of
his gambling winnings in an individual bank
account, held solely in his name. W knows
about H’s gambling habit and that he keeps
a separate bank account, but she does not
know whether he has any winnings because
H does not tell her, and she does not
otherwise know of H’s bank account
transactions. H and W file their 2001 joint
Federal income tax return on April 15, 2002.
On October 31, 2003, H and W receive a 30day letter proposing a $100,000 deficiency
relating to H’s unreported gambling income.
In February 2003, H and W divorce, and in
March 2004, W files an election under
section 6015(c) to allocate the $100,000
deficiency to H.
(ii) While W may have had reason to know
of the gambling income because she knew of
H’s gambling habit and separate account, W
did not have actual knowledge of the
erroneous item (i.e., the gambling winnings).
The Internal Revenue Service may not infer
actual knowledge from W’s reason to know
of the income. Therefore, W’s election to
allocate the $100,000 deficiency to H is valid.
Example 3. Actual knowledge and failure
to review return. (i) H and W are legally
separated. In February 1999, W signs a blank
joint Federal income tax return for 1998 and
gives it to H to fill out. The return was timely
filed on April 15, 1999. In September 2001,
H and W receive a 30-day letter proposing a
deficiency relating to $100,000 of unreported
dividend income received by H with respect
to stock of ABC Co. owned by H. W knew
that H received the $100,000 dividend
payment in August 1998, but she did not
know whether H reported that payment on
the joint return.
(ii) On January 30, 2002, W files an
election to allocate the deficiency from the
1998 return to H. W claims she did not
review the completed joint return, and
therefore, she had no actual knowledge that
there was an understatement of the dividend
income. W’s election to allocate the
deficiency to H is invalid because she had
actual knowledge of the erroneous item
(dividend income from ABC Co.) at the time
she signed the return. The fact that W signed
a blank return is irrelevant. The result would
be the same if W had not reviewed the
completed return or if W had reviewed the
completed return and had not noticed that
the item was omitted.
Example 4. Actual knowledge of an
erroneous item of income. (i) H and W are
legally separated. In June 2004, a deficiency
is proposed with respect to H’s and W’s 2002
joint Federal income tax return that is
attributable to $30,000 of unreported income
from H’s plumbing business that should have
been reported on a Schedule C. No Schedule
C was attached to the return. At the time W
signed the return, W knew that H had a
plumbing business but did not know whether

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H received any income from the business.
W’s election to allocate to H the deficiency
attributable to the $30,000 of unreported
plumbing income is valid.
(ii) Assume the same facts as in paragraph
(i) of this Example 5 except that, at the time
W signed the return, W knew that H received
$20,000 of plumbing income. W’s election to
allocate to H the deficiency attributable to the
$20,000 of unreported plumbing income (of
which W had actual knowledge) is invalid.
W’s election to allocate to H the deficiency
attributable to the $10,000 of unreported
plumbing income (of which W did not have
actual knowledge) is valid.
(iii) Assume the same facts as in paragraph
(i) of this Example 5 except that, at the time
W signed the return, W did not know the
exact amount of H’s plumbing income. W did
know, however, that H received at least
$8,000 of plumbing income. W’s election to
allocate to H the deficiency attributable to
$8,000 of unreported plumbing income (of
which W had actual knowledge) is invalid.
W’s election to allocate to H the deficiency
attributable to the remaining $22,000 of
unreported plumbing income (of which W
did not have actual knowledge) is valid.
(iv) Assume the same facts as in paragraph
(i) of this Example 5 except that H reported
$26,000 of plumbing income on the return
and omitted $4,000 of plumbing income from
the return. At the time W signed the return,
W knew that H was a plumber, but she did
not know that H earned more than $26,000
that year. W’s election to allocate to H the
deficiency attributable to the $4,000 of
unreported plumbing income is valid
because she did not have actual knowledge
that H received plumbing income in excess
of $26,000.
(v) Assume the same facts as in paragraph
(i) of this Example 5 except that H reported
only $20,000 of plumbing income on the
return and omitted $10,000 of plumbing
income from the return. At the time W signed
the return, W knew that H earned at least
$26,000 that year as a plumber. However, W
did not know that, in reality, H earned
$30,000 that year as a plumber. W’s election
to allocate to H the deficiency attributable to
the $6,000 of unreported plumbing income
(of which W had actual knowledge) is
invalid. W’s election to allocate to H the
deficiency attributable to the $4,000 of
unreported plumbing income (of which W
did not have actual knowledge) is valid.
Example 5. Actual knowledge of a
deduction that is an erroneous item. (i) H and
W are legally separated. In February 2005, a
deficiency is asserted with respect to their
2002 joint Federal income tax return. The
deficiency is attributable to a disallowed
$1,000 deduction for medical expenses H
claimed he incurred. At the time W signed
the return, W knew that H had not incurred
any medical expenses. W’s election to
allocate to H the deficiency attributable to the
disallowed medical expense deduction is
invalid because W had actual knowledge that
H had not incurred any medical expenses.
(ii) Assume the same facts as in paragraph
(i) of this Example 6 except that, at the time
W signed the return, W did not know
whether H had incurred any medical
expenses. W’s election to allocate to H the

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deficiency attributable to the disallowed
medical expense deduction is valid because
she did not have actual knowledge that H
had not incurred any medical expenses.
(iii) Assume the same facts as in paragraph
(i) of this Example 6 except that the Internal
Revenue Service disallowed $400 of the
$1,000 medical expense deduction. At the
time W signed the return, W knew that H had
incurred some medical expenses but did not
know the exact amount. W’s election to
allocate to H the deficiency attributable to the
disallowed medical expense deduction is
valid because she did not have actual
knowledge that H had not incurred medical
expenses (in excess of the floor amount
under section 213(a)) of more than $600.
(iv) Assume the same facts as in paragraph
(i) of this Example 6 except that H claims a
medical expense deduction of $10,000 and
the Internal Revenue Service disallows
$9,600. At the time W signed the return, W
knew H had incurred some medical expenses
but did not know the exact amount. W also
knew that H incurred medical expenses (in
excess of the floor amount under section
213(a)) of no more than $1,000. W’s election
to allocate to H the deficiency attributable to
the portion of the overstated deduction of
which she had actual knowledge ($9,000) is
invalid. W’s election to allocate the
deficiency attributable to the portion of the
overstated deduction of which she had no
knowledge ($600) is valid.
Example 6. Disqualified asset presumption.
(i) H and W are divorced. In May 1999, W
transfers $20,000 to H, and in April 2000, H
and W receive a 30-day letter proposing a
$40,000 deficiency on their 1998 joint
Federal income tax return. The liability
remains unpaid, and in October 2000, H
elects to allocate the deficiency under this
section. Seventy-five percent of the net
amount of erroneous items are allocable to
W, and 25% of the net amount of erroneous
items are allocable to H.
(ii) In accordance with the proportionate
allocation method (see paragraph (d)(4) of
this section), H proposes that $30,000 of the
deficiency be allocated to W and $10,000 be
allocated to himself. H submits a signed
statement providing that the principal
purpose of the $20,000 transfer was not the
avoidance of tax or payment of tax, but he
does not submit any documentation
indicating the reason for the transfer. H has
not overcome the presumption that the
$20,000 was a disqualified asset. Therefore,
the portion of the deficiency for which H is
liable ($10,000) is increased by the value of
the disqualified asset ($20,000). H is relieved
of liability for $10,000 of the $30,000
deficiency allocated to W, and remains
jointly and severally liable for the remaining
$30,000 of the deficiency (assuming that H
does not qualify for relief under any other
provision).
Example 7. Disqualified asset presumption
inapplicable. On May 1, 2001, H and W
receive a 30-day letter regarding a proposed
deficiency on their 1999 joint Federal income
tax return relating to unreported capital gain
from H’s sale of his investment in Z stock.
W had no actual knowledge of the stock sale.
The deficiency is assessed in November
2001, and in December 2001, H and W

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47291

divorce. According to a decree of divorce, H
must transfer 1⁄2 of his interest in mutual
fund A to W. The transfer takes place in
February 2002. In August 2002, W elects to
allocate the deficiency to H. Although the
transfer of 1⁄2 of H’s interest in mutual fund
A took place after the 30-day letter was
mailed, the mutual fund interest is not
presumed to be a disqualified asset because
the transfer of H’s interest in the fund was
made pursuant to a decree of divorce.
Example 8. Overcoming the disqualified
asset presumption. (i) H and W are married
for 25 years. Every September, on W’s
birthday, H gives W a gift of $500. On
February 28, 2002, H and W receive a 30-day
letter from the Internal Revenue Service
relating to their 1998 joint individual Federal
income tax return. The deficiency relates to
H’s Schedule C business, and W had no
knowledge of the items giving rise to the
deficiency. H and W are legally separated in
June 2003, and, despite the separation, H
continues to give W $500 each year for her
birthday. H is not required to give such
amounts pursuant to a decree of divorce or
separate maintenance.
(ii) On January 27, 2004, W files an
election to allocate the deficiency to H. The
$1,500 transferred from H to W from
February 28, 2001 (a year before the 30-day
letter was mailed) to the present is presumed
disqualified. However, W may overcome the
presumption that such amounts were
disqualified by establishing that such
amounts were birthday gifts from H and that
she has received such gifts during their entire
marriage. Such facts would show that the
amounts were not transferred for the purpose
of avoidance of tax or payment of tax.

(d) Allocation—(1) In general. (i) An
election to allocate a deficiency limits
the requesting spouse’s liability to that
portion of the deficiency allocated to the
requesting spouse pursuant to this
section.
(ii) Only a requesting spouse may
receive relief. A nonrequesting spouse
who does not also elect relief under this
section remains liable for the entire
amount of the deficiency. Even if both
spouses elect to allocate a deficiency
under this section, there may be a
portion of the deficiency that is not
allocable, for which both spouses
remain jointly and severally liable.
(2) Allocation of erroneous items. For
purposes of allocating a deficiency
under this section, erroneous items are
generally allocated to the spouses as if
separate returns were filed, subject to
the following four exceptions:
(i) Benefit on the return. An erroneous
item that would otherwise be allocated
to the nonrequesting spouse is allocated
to the requesting spouse to the extent
that the requesting spouse received a tax
benefit on the joint return.
(ii) Fraud. The Internal Revenue
Service may allocate any item between
the spouses if the Internal Revenue
Service establishes that the allocation is

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appropriate due to fraud by one or both
spouses.
(iii) Erroneous items of income.
Erroneous items of income are allocated
to the spouse who was the source of the
income. Wage income is allocated to the
spouse who performed the services
producing such wages. Items of business
or investment income are allocated to
the spouse who owned the business or
investment. If both spouses owned an
interest in the business or investment,
the erroneous item of income is
generally allocated between the spouses
in proportion to each spouse’s
ownership interest in the business or
investment, subject to the limitations of
paragraph (c) of this section. In the
absence of clear and convincing
evidence supporting a different
allocation, an erroneous income item
relating to an asset that the spouses
owned jointly is generally allocated
50% to each spouse, subject to the
limitations in paragraph (c) of this

section and the exceptions in paragraph
(c)(2)(iv) of this section. For rules
regarding the effect of community
property laws, see § 1.6015–1(f) and
paragraph (c)(2)(iv) of this section.
(iv) Erroneous deduction items.
Erroneous deductions related to a
business or investment are allocated to
the spouse who owned the business or
investment. If both spouses owned an
interest in the business or investment,
an erroneous deduction item is
generally allocated between the spouses
in proportion to each spouse’s
ownership interest in the business or
investment. In the absence of clear and
convincing evidence supporting a
different allocation, an erroneous
deduction item relating to an asset that
the spouses owned jointly is generally
allocated 50% to each spouse, subject to
the limitations in paragraph (c) of this
section and the exceptions in paragraph
(d)(4) of this section. Deduction items
unrelated to a business or investment

are also generally allocated 50% to each
spouse, unless the evidence shows that
a different allocation is appropriate.
(3) Burden of proof. Except for
establishing actual knowledge under
paragraph (c)(2) of this section, the
requesting spouse must prove that all of
the qualifications for making an election
under this section are satisfied and that
none of the limitations (including the
limitation relating to transfers of
disqualified assets) apply. The
requesting spouse must also establish
the proper allocation of the erroneous
items.
(4) General allocation method—(i)
Proportionate allocation. (A) The
portion of a deficiency allocable to a
spouse is the amount that bears the
same ratio to the deficiency as the net
amount of erroneous items allocable to
the spouse bears to the net amount of all
erroneous items. This calculation may
be expressed as follows:

net amount of erroneous items
allocable to the spouse
X = (deficiency) ×
net amount of all erroneous items

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return (a separate treatment item) is
allocated separately to that spouse. If
such credit or tax is attributable in
whole or in part to both spouses, then
the IRS will determine on a case by case
basis how such item will be allocated.
Once the proportionate allocation is
made, the liability for the requesting
spouse’s separate treatment items is
added to the requesting spouse’s share
of the liability.
(iii) Child’s liability. Any portion of a
deficiency relating to the liability of a
child of the requesting and
nonrequesting spouse is allocated
jointly to both spouses. For purposes of
this paragraph, a child does not include
the taxpayer’s stepson or stepdaughter,
unless such child was legally adopted
by the taxpayer. If the child is the child
of only one of the spouses, and the other
spouse had not legally adopted such
child, any portion of a deficiency
relating to the liability of such child is
allocated solely to the parent spouse.
(iv) Allocation of certain items—(A)
Alternative minium tax. Any portion of
a deficiency relating to the alternative
minimum tax under section 55 will be
allocated appropriately.
(B) Accuracy-related and fraud
penalties. Any accuracy-related or fraud
penalties under section 6662 or 6663 are
allocated to the spouse whose item
generated the penalty.
(5) Examples. The following examples
illustrate the rules of this paragraph (d).

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In each example, assume that the
requesting spouse or spouses qualify to
elect to allocate the deficiency, that any
election is timely made, and that the
deficiency remains unpaid. In addition,
unless otherwise stated, assume that
neither spouse has actual knowledge of
the erroneous items allocable to the
other spouse. The examples are as
follows:
Example 1. Allocation of erroneous items.
(i) H and W file a 2003 joint Federal income
tax return on April 15, 2004. On April 28,
2006, a deficiency is assessed with respect to
their 2003 return. Three erroneous items give
rise to the deficiency—
(A) Unreported interest income, of which
W had actual knowledge, from H’s and W’s
joint bank account;
(B) A disallowed business expense
deduction on H’s Schedule C; and
(C) A disallowed Lifetime Learning Credit
for W’s post-secondary education, paid for by
W.
(ii) H and W divorce in May 2006, and in
September 2006, W timely elects to allocate
the deficiency. The erroneous items are
allocable as follows:
(A) The interest income would be allocated
1⁄2 to H and 1⁄2 to W, except that W has actual
knowledge of it. Therefore, W’s election to
allocate the portion of the deficiency
attributable to this item is invalid, and W
remains jointly and severally liable for it.
(B) The business expense deduction is
allocable to H.
(C) The Lifetime Learning Credit is
allocable to W.
Example 2. Proportionate allocation. (i) W
and H timely file their 2001 joint Federal

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where X = the portion of the deficiency
allocable to the spouse.
(B) The proportionate allocation
applies to any portion of the deficiency
other than—
(1) Any portion of the deficiency
attributable to erroneous items allocable
to the nonrequesting spouse of which
the requesting spouse had actual
knowledge;
(2) Any portion of the deficiency
attributable to separate treatment items
(as defined in paragraph (d)(4)(ii) of this
section);
(3) Any portion of the deficiency
relating to the liability of a child (as
defined in paragraph (d)(4)(iii) of this
section) of the requesting spouse or
nonrequesting spouse;
(4) Any portion of the deficiency
attributable to alternative minimum tax
under section 55;
(5) Any portion of the deficiency
attributable to accuracy-related or fraud
penalties;
(6) Any portion of the deficiency
allocated pursuant to alternative
allocation methods authorized under
paragraph (d)(6) of this section.
(ii) Separate treatment items. Any
portion of a deficiency that is
attributable to an item allocable solely
to one spouse and that results from the
disallowance of a credit, or a tax or an
addition to tax (other than tax imposed
by section 1 or section 55) that is
required to be included with a joint

Federal Register / Vol. 67, No. 138 / Thursday, July 18, 2002 / Rules and Regulations
income tax return on April 15, 2002. On
August 16, 2004, a $54,000 deficiency is
assessed with respect to their 2001 joint
return. H and W divorce on October 14, 2004,
and W timely elects to allocate the
deficiency. Five erroneous items give rise to
the deficiency—

(A) A disallowed $15,000 business
deduction allocable to H;
(B) $20,000 of unreported income allocable
to H;
(C) A disallowed $5,000 deduction for
educational expense allocable to H;
(D) A disallowed $40,000 charitable
contribution deduction allocable to W; and

W’s items
$40,000
40,000

charitable deduction
interest deduction

$15,000
20,000
5,000

Example 3. Proportionate allocation with
joint erroneous item. (i) On September 4,
2001, W elects to allocate a $3,000 deficiency
for the 1998 tax year to H. Three erroneous
items give rise to the deficiency—
(A) Unreported interest in the amount of
$4,000 from a joint bank account;
(B) A disallowed deduction for business
expenses in the amount of $2,000 attributable
to H’s business; and
(C) Unreported wage income in the amount
of $6,000 attributable to W’s second job.

H’s items

(ii) The erroneous items total $12,000.
Generally, income, deductions, or credits
from jointly held property that are erroneous
items are allocable 50% to each spouse.
However, in this case, both spouses had
actual knowledge of the unreported interest
income. Therefore, W’s election to allocate
the portion of the deficiency attributable to
this item is invalid, and W and H remain
jointly and severally liable for this portion.
Assume that this portion is $1,000. W may
allocate the remaining $2,000 of the
deficiency.

W’s items

business deduction

$6,000

Total allocable items: $8,000
(iii) The ratio of erroneous items allocable
to W to the total erroneous items is 3⁄4
($6,000/$8,000). W’s liability is limited to
$1,500 of the deficiency (3⁄4 of $2,000)
allocated to her. The Internal Revenue
Service may collect up to $2,500 from W (3⁄4
of the total allocated deficiency plus $1,000
of the deficiency attributable to the joint bank
account interest) and up to $3,000 from H
(the total amount collected, however, cannot
exceed $3,000).
(iv) Assume H also elects to allocate the
1998 deficiency. H is relieved of liability for
3⁄4 of the deficiency, which is allocated to W.
H’s relief totals $1,500 (3⁄4 of $2,000). H
remains liable for $1,500 of the deficiency (1⁄4

(v) W’s liability for the portion of the
deficiency subject to proportionate
allocation is limited to $9,000 (3⁄4 of
$12,000) and H’s liability for such

wage income

of the allocated deficiency plus $1,000 of the
deficiency attributable to the joint bank
account interest).
Example 4. Separate treatment items
(STIs). (i) On September 1, 2006, a $28,000
deficiency is assessed with respect to H’s and
W’s 2003 joint return. The deficiency is the
result of 4 erroneous items—
(A) A disallowed Lifetime Learning Credit
of $2,000 attributable to H;
(B) A disallowed business expense
deduction of $8,000 attributable to H;
(C) Unreported income of $24,000
attributable to W; and
(D) Unreported self-employment tax of
$14,000 attributable to W.

W’s share of allocable items
3⁄4 ($24,000/$32,000)

(ii) H and W both elect to allocate the
deficiency.
(iii) The $2,000 Lifetime Learning Credit
and the $14,000 self-employment tax are STIs
totaling $16,000. The amount of erroneous
items included in computing the
proportionate allocation ratio is $32,000
($24,000 unreported income and $8,000
disallowed business expense deduction). The
amount of the deficiency subject to
proportionate allocation is reduced by the
amount of STIs ($28,000¥$16,000 =
$12,000).

(iv) Of the $32,000 of proportionate
allocation items, $24,000 is allocable to
W, and $8,000 is allocable to H.

H’s share of allocable items
⁄ ($8,000/$32,000)

14

portion is limited to $3,000 (1⁄4 of
$12,000).
(vi) After the proportionate allocation
is completed, the amount of the STIs is

W’s share of total deficiency

added to each spouse’s allocated share
of the deficiency.

H’s share of total deficiency

allocated deficiency
self-employment tax

$3,000
2,000

$23,000

allocated deficiency
Lifetime Learning Credit

$5,000

(vii) Therefore, W’s liability is limited
to $23,000 and H’s liability is limited to
$5,000.

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business deduction
unreported income
education deduction

$40,000

(iii) The ratio of erroneous items allocable
to W to the total erroneous items is 2⁄3
($80,000/$120,000). W’s liability is limited to
$36,000 of the deficiency (2⁄3 of $54,000). The
Internal Revenue Service may collect up to
$36,000 from W and up to $54,000 from H
(the total amount collected, however, may
not exceed $54,000). If H also made an
election, there would be no remaining joint
and several liability, and the Internal
Revenue Service would be permitted to
collect $36,000 from W and $18,000 from H.

$ 9,000
14,000

(E) A disallowed $40,000 interest
deduction allocable to W.
(ii) In total, there are $120,000 worth of
erroneous items, of which $80,000 are
attributable to W and $40,000 are attributable
to H.

H’s items

$80,000

$2,000

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Example 5. Requesting spouse receives a
benefit on the joint return from the
nonrequesting spouse’s erroneous item. (i) In
2001, H reports gross income of $4,000 from

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his business on Schedule C, and W reports
$50,000 of wage income. On their 2001 joint
Federal income tax return, H deducts $20,000
of business expenses resulting in a net loss

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from his business of $16,000. H and W
divorce in September 2002, and on May 22,
2003, a $5,200 deficiency is assessed with
respect to their 2001 joint return. W elects to
allocate the deficiency. The deficiency on the
joint return results from a disallowance of all
of H’s $20,000 of deductions.
(ii) Since H used only $4,000 of the
disallowed deductions to offset gross income
from his business, W benefitted from the
other $16,000 of the disallowed deductions
used to offset her wage income. Therefore,
$4,000 of the disallowed deductions are
allocable to H and $16,000 of the disallowed
deductions are allocable to W. W’s liability
is limited to $4,160 (4⁄5 of $5,200). If H also
elected to allocate the deficiency, H’s
election to allocate the $4,160 of the
deficiency to W would be invalid because H
had actual knowledge of the erroneous items.
Example 6. Calculation of requesting
spouse’s benefit on the joint return when the
nonrequesting spouse’s erroneous item is
partially disallowed. Assume the same facts
as in Example 5, except that H deducts
$18,000 for business expenses on the joint
return, of which $16,000 are disallowed.
Since H used only $2,000 of the $16,000
disallowed deductions to offset gross income
from his business, W received benefit on the
return from the other $14,000 of the
disallowed deductions used to offset her
wage income. Therefore, $2,000 of the
disallowed deductions are allocable to H and
$14,000 of the disallowed deductions are
allocable to W. W’s liability is limited to
$4,550 (7⁄8 of $5,200).

(6) Alternative allocation methods—
(i) Allocation based on applicable tax
rates. If a deficiency arises from two or
more erroneous items that are subject to
tax at different rates (e.g., ordinary
income and capital gain items), the
deficiency will be allocated after first
separating the erroneous items into
categories according to their applicable
tax rate. After all erroneous items are
categorized, a separate allocation is
made with respect to each tax rate
category using the proportionate
allocation method of paragraph (d)(4) of
this section.
(ii) Allocation methods provided in
subsequent published guidance.
Additional alternative methods for
allocating erroneous items under section
6015(c) may be prescribed by the
Treasury and IRS in subsequent revenue
rulings, revenue procedures, or other
appropriate guidance.
(iii) Example. The following example
illustrates the rules of this paragraph
(d)(6):
Example. Allocation based on applicable
tax rates. H and W timely file their 1998 joint
Federal income tax return. H and W divorce
in 1999. On July 13, 2001, a $5,100
deficiency is assessed with respect to H’s and
W’s 1998 return. Of this deficiency, $2,000
results from unreported capital gain of $6,000
that is attributable to W and $4,000 of capital
gain that is attributable to H (both gains being

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subject to tax at the 20% marginal rate). The
remaining $3,100 of the deficiency is
attributable to $10,000 of unreported
dividend income of H that is subject to tax
at a marginal rate of 31%. H and W both
timely elect to allocate the deficiency, and
qualify under this section to do so. There are
erroneous items subject to different tax rates;
thus, the alternative allocation method of this
paragraph (d)(6) applies. The three erroneous
items are first categorized according to their
applicable tax rates, then allocated. Of the
total amount of 20% tax rate items ($10,000),
60% is allocable to W and 40% is allocable
to H. Therefore, 60% of the $2,000 deficiency
attributable to these items (or $1,200) is
allocated to W. The remaining 40% of this
portion of the deficiency ($800) is allocated
to H. The only 31% tax rate item is allocable
to H. Accordingly, H is liable for $3,900 of
the deficiency ($800 + $3,100), and W is
liable for the remaining $1,200.
§ 1.6015–4

Equitable relief.

(a) A requesting spouse who files a
joint return for which a liability remains
unpaid and who does not qualify for full
relief under § 1.6015–2 or 1.6015–3 may
request equitable relief under this
section. The Internal Revenue Service
has the discretion to grant equitable
relief from joint and several liability to
a requesting spouse when, considering
all of the facts and circumstances, it
would be inequitable to hold the
requesting spouse jointly and severally
liable.
(b) This section may not be used to
circumvent the limitation of § 1.6015–
3(c)(1) (i.e., no refunds under § 1.6015–
3). Therefore, relief is not available
under this section to obtain a refund of
liabilities already paid, for which the
requesting spouse would otherwise
qualify for relief under § 1.6015–3.
(c) For guidance concerning the
criteria to be used in determining
whether it is inequitable to hold a
requesting spouse jointly and severally
liable under this section, see Rev. Proc.
2000–15 (2000–1 C.B. 447), or other
guidance published by the Treasury and
IRS (see § 601.601(d)(2) of this chapter).
§ 1.6015–5 Time and manner for
requesting relief.

(a) Requesting relief. To elect the
application of § 1.6015–2 or 1.6015–3,
or to request equitable relief under
§ 1.6015–4, a requesting spouse must
file Form 8857, ‘‘Request for Innocent
Spouse Relief’’ (or other specified form);
submit a written statement containing
the same information required on Form
8857, which is signed under penalties of
perjury; or submit information in the
manner prescribed by the Treasury and
IRS in forms, relevant revenue rulings,
revenue procedures, or other published
guidance (see § 601.601(d)(2) of this
chapter).

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(b) Time period for filing a request for
relief—(1) In general. To elect the
application of § 1.6015–2 or 1.6015–3,
or to request equitable relief under
§ 1.6015–4, a requesting spouse must
file Form 8857 or other similar
statement with the Internal Revenue
Service no later than two years from the
date of the first collection activity
against the requesting spouse after July
22, 1998, with respect to the joint tax
liability.
(2) Definitions—(i) Collection activity.
For purposes of this paragraph (b),
collection activity means a section 6330
notice; an offset of an overpayment of
the requesting spouse against a liability
under section 6402; the filing of a suit
by the United States against the
requesting spouse for the collection of
the joint tax liability; or the filing of a
claim by the United States in a court
proceeding in which the requesting
spouse is a party or which involves
property of the requesting spouse.
Collection activity does not include a
notice of deficiency; the filing of a
Notice of Federal Tax Lien; or a demand
for payment of tax. The term property of
the requesting spouse, for purposes of
this paragraph (b), means property in
which the requesting spouse has an
ownership interest (other than solely
through the operation of community
property laws), including property
owned jointly with the nonrequesting
spouse.
(ii) Section 6330 notice. A section
6330 notice refers to the notice sent,
pursuant to section 6330, providing
taxpayers notice of the Service’s intent
to levy and of their right to a collection
due process (CDP) hearing.
(3) Requests for relief made before
commencement of collection activity.
An election or request for relief may be
made before collection activity has
commenced. For example, an election or
request for relief may be made in
connection with an audit or
examination of the joint return or a
demand for payment, or pursuant to the
CDP hearing procedures under sections
6320 in connection with the filing of a
Notice of Federal Tax Lien. For more
information on the rules regarding
collection due process for liens, see the
Treasury regulations under section
6320. However, no request for relief may
be made before the date specified in
paragraph (b)(5) of this section.
(4) Examples. The following examples
illustrate the rules of this paragraph (b):
Example 1. On January 11, 2000, a section
6330 notice is mailed to H and W regarding
their 1997 joint Federal income tax liability.
The Internal Revenue Service levies on W’s
employer on June 5, 2000. The Internal
Revenue Service levies on H’s employer on

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July 10, 2000. An election or request for relief
must be made by January 11, 2002, which is
two years after the Internal Revenue Service
sent the section 6330 notice.
Example 2. The Internal Revenue Service
offsets an overpayment against a joint
liability for 1995 on January 12, 1998. The
offset only partially satisfies the liability. The
Internal Revenue Service takes no other
collection actions. On July 24, 2001, W elects
relief with respect to the unpaid portion of
the 1995 liability. W’s election is timely
because the Internal Revenue Service has not
taken any collection activity after July 22,
1998; therefore, the two-year period has not
commenced.
Example 3. Assume the same facts as in
Example 2, except that the Internal Revenue
Service sends a section 6330 notice on
January 22, 1999. W’s election is untimely
because it is filed more than two years after
the first collection activity after July 22, 1998.
Example 4. H and W do not remit full
payment with their timely filed joint Federal
income tax return for the 1989 tax year. No
collection activity is taken after July 22, 1998,
until the United States files a suit against
both H and W to reduce the tax assessment
to judgment and to foreclose the tax lien on
their jointly-held business property on July 1,
1999. H elects relief on October 2, 2000. The
election is timely because it is made within
two years of the filing of a collection suit by
the United States against H.
Example 5. W files a Chapter 7 bankruptcy
petition on July 10, 2000. On September 5,
2000, the United States files a proof of claim
for her joint 1998 income tax liability. W
elects relief with respect to the 1998 liability
on August 20, 2002. The election is timely
because it is made within two years of the
date the United States filed the proof of claim
in W’s bankruptcy case.

(5) Premature requests for relief. The
Internal Revenue Service will not
consider premature claims for relief
under § 1.6015–2, 1.6015–3, or 1.6015–
4. A premature claim is a claim for relief
that is filed for a tax year prior to the
receipt of a notification of an audit or
a letter or notice from the IRS indicating
that there may be an outstanding
liability with regard to that year. Such
notices or letters do not include notices
issued pursuant to section 6223 relating
to TEFRA partnership proceedings. A
premature claim is not considered an
election or request under § 1.6015–
1(h)(5).
(c) Effect of a final administrative
determination—(1) In general. A
requesting spouse is entitled to only one
final administrative determination of
relief under § 1.6015–1 for a given
assessment, unless the requesting
spouse properly submits a second
request for relief that is described in
§ 1.6015–1(h)(5).
(2) Example. The following example
illustrates the rule of this paragraph (c):
Example: In January 2001, W becomes a
limited partner in partnership P, and in

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February 2001, she starts her own business
from which she earns $100,000 of net income
for the year. H and W file a joint return for
tax year 2001, on which they claim $20,000
in losses from their investment in P, and they
omit W’s self-employment tax. In March
2003, the Internal Revenue Service
commences an audit under the provisions of
subchapter C of chapter 63 of subtitle F of the
Internal Revenue Code (TEFRA partnership
proceeding) and sends H and W a notice
under section 6223(a)(1). In September 2003,
the Internal Revenue Service audits H’s and
W’s 2001 joint return regarding the omitted
self-employment tax. H may file a claim for
relief from joint and several liability for the
self-employment tax liability because he has
received a notification of an audit indicating
that there may be an outstanding liability on
the joint return. However, his claim for relief
regarding the TEFRA partnership proceeding
is premature under paragraph (b)(5) of this
section. H will have to wait until the Internal
Revenue Service sends him a notice of
computational adjustment or assesses the
liability resulting from the TEFRA
partnership proceeding before he files a
claim for relief with respect to any such
liability. The assessment relating to the
TEFRA partnership proceeding is separate
from the assessment for the self-employment
tax; therefore, H’s subsequent claim for relief
for the liability from the TEFRA partnership
proceeding is not precluded by his previous
claim for relief from the self-employment tax
liability under this paragraph (c).
§ 1.6015–6 Nonrequesting spouse’s notice
and opportunity to participate in
administrative proceedings.

(a) In general. (1) When the Internal
Revenue Service receives an election
under § 1.6015–2 or 1.6015–3, or a
request for relief under § 1.6015–4, the
Internal Revenue Service must send a
notice to the nonrequesting spouse’s last
known address that informs the
nonrequesting spouse of the requesting
spouse’s claim for relief. For further
guidance regarding the definition of last
known address, see § 301.6212–2 of this
chapter. The notice must provide the
nonrequesting spouse with an
opportunity to submit any information
that should be considered in
determining whether the requesting
spouse should be granted relief from
joint and several liability. A
nonrequesting spouse is not required to
submit information under this section.
Upon the request of either spouse, the
Internal Revenue Service will share
with one spouse the information
submitted by the other spouse, unless
such information would impair tax
administration.
(2) The Internal Revenue Service must
notify the nonrequesting spouse of the
Service’s preliminary and final
determinations with respect to the
requesting spouse’s claim for relief
under section 6015.

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47295

(b) Information submitted. The
Internal Revenue Service will consider
all of the information (as relevant to
each particular relief provision) that the
nonrequesting spouse submits in
determining whether relief from joint
and several liability is appropriate,
including information relating to the
following—
(1) The legal status of the requesting
and nonrequesting spouses’ marriage;
(2) The extent of the requesting
spouse’s knowledge of the erroneous
items or underpayment;
(3) The extent of the requesting
spouse’s knowledge or participation in
the family business or financial affairs;
(4) The requesting spouse’s education
level;
(5) The extent to which the requesting
spouse benefitted from the erroneous
items;
(6) Any asset transfers between the
spouses;
(7) Any indication of fraud on the part
of either spouse;
(8) Whether it would be inequitable,
within the meaning of §§ 1.6015–2(d)
and 1.6015–4, to hold the requesting
spouse jointly and severally liable for
the outstanding liability;
(9) The allocation or ownership of
items giving rise to the deficiency; and
(10) Anything else that may be
relevant to the determination of whether
relief from joint and several liability
should be granted.
(c) Effect of opportunity to participate.
The failure to submit information
pursuant to paragraph (b) of this section
does not affect the nonrequesting
spouse’s ability to seek relief from joint
and several liability for the same tax
year. However, information that the
nonrequesting spouse submits pursuant
to paragraph (b) of this section is
relevant in determining whether relief
from joint and several liability is
appropriate for the nonrequesting
spouse should the nonrequesting spouse
also submit an application for relief.
§ 1.6015–7

Tax Court review.

(a) In general. Requesting spouses
may petition the Tax Court to review the
denial of relief under § 1.6015–1.
(b) Time period for petitioning the
Tax Court. Pursuant to section 6015(e),
the requesting spouse may petition the
Tax Court to review a denial of relief
under § 1.6015–1 within 90 days after
the date notice of the Service’s final
determination is mailed by certified or
registered mail (90-day period). If the
IRS does not mail the requesting spouse
a final determination letter within 6
months of the date the requesting
spouse files an election under § 1.6015–
2 or 1.6015–3, the requesting spouse

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may petition the Tax Court to review the
election at any time after the expiration
of the 6-month period, and before the
expiration of the 90-day period. The Tax
Court also may review a claim for relief
if Tax Court jurisdiction has been
acquired under another section of the
Internal Revenue Code such as section
6213(a) or 6330(d).
(c) Restrictions on collection and
suspension of the running of the period
of limitations—(1) Restrictions on
collection under § 1.6015–2 or 1.6015–3.
Unless the Internal Revenue Service
determines that collection will be
jeopardized by delay, no levy or
proceeding in court shall be made,
begun, or prosecuted against a
requesting spouse electing the
application of § 1.6015–2 or 1.6015–3
for the collection of any assessment to
which the election relates until the
expiration of the 90-day period
described in paragraph (b) of this
section, or if a petition is filed with the
Tax Court, until the decision of the Tax
Court becomes final under section 7481.
For more information regarding the date
on which a decision of the Tax Court
becomes final, see section 7481 and the
regulations thereunder.
Notwithstanding the above, if the
requesting spouse appeals the Tax
Court’s decision, the Internal Revenue
Service may resume collection of the
liability from the requesting spouse on
the date the requesting spouse files the
notice of appeal, unless the requesting
spouse files an appeal bond pursuant to
the rules of section 7485. Jeopardy
under this paragraph (c)(1) means
conditions exist that would require an
assessment under section 6851 or 6861
and the regulations thereunder.
(2) Waiver of the restrictions on
collection. A requesting spouse may, at
any time (regardless of whether a notice
of the Service’s final determination of
relief is mailed), waive the restrictions
on collection in paragraph (c)(1) of this
section.
(3) Suspension of the running of the
period of limitations—(i) Relief under
§ 1.6015–2 or 1.6015–3. The running of
the period of limitations in section 6502
on collection against the requesting
spouse of the assessment to which an
election under § 1.6015–2 or 1.6015–3
relates is suspended for the period
during which the Internal Revenue
Service is prohibited by paragraph (c)(1)
of this section from collecting by levy or
a proceeding in court and for 60 days
thereafter. However, if the requesting
spouse signs a waiver of the restrictions
on collection in accordance with
paragraph (c)(2) of this section, the
suspension of the period of limitations
in section 6502 on collection against the

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requesting spouse will terminate on the
date that is 60 days after the date the
waiver is filed with the Internal
Revenue Service.
(ii) Relief under § 1.6015–4. If a
requesting spouse seeks only equitable
relief under § 1.6015–4, the restrictions
on collection of paragraph (c)(1) of this
section do not apply. Accordingly, the
request for relief does not suspend the
running of the period of limitations on
collection.
(4) Definitions—(i) Levy. For purposes
of this paragraph (c), levy means an
administrative levy or seizure described
by section 6331.
(ii) Proceedings in court. For purposes
of this paragraph (c), proceedings in
court means suits filed by the United
States for the collection of Federal tax.
Proceedings in court does not refer to
the filing of pleadings and claims and
other participation by the Internal
Revenue Service or the United States in
suits not filed by the United States,
including Tax Court cases, refund suits,
and bankruptcy cases.
(iii) Assessment to which the election
relates. For purposes of this paragraph
(c), the assessment to which the election
relates is the entire assessment of the
deficiency to which the election relates,
even if the election is made with respect
to only part of that deficiency.
§ 1.6015–8

Applicable liabilities.

(a) In general. Section 6015 applies to
liabilities that arise after July 22, 1998,
and to liabilities that arose prior to July
22, 1998, that were not paid on or before
July 22, 1998.
(b) Liabilities paid on or before July
22, 1998. A requesting spouse seeking
relief from joint and several liability for
amounts paid on or before July 22, 1998,
must request relief under section
6013(e) and the regulations thereunder.
(c) Examples. The following examples
illustrate the rules of this section:
Example 1. H and W file a joint Federal
income tax return for 1995 on April 15, 1996.
There is an understatement on the return
attributable to an omission of H’s wage
income. On October 15, 1998, H and W
receive a 30-day letter proposing a deficiency
on the 1995 joint return. W pays the
outstanding liability in full on November 30,
1998. In March 1999, W files Form 8857,
requesting relief from joint and several
liability under section 6015(b). Although W’s
liability arose prior to July 22, 1998, it was
unpaid as of that date. Therefore, section
6015 is applicable.
Example 2. H and W file their 1995 joint
Federal income tax return on April 15, 1996.
On October 14, 1997, a deficiency of $5,000
is assessed regarding a disallowed business
expense deduction attributable to H. On June
30, 1998, the Internal Revenue Service levies
on the $3,000 in W’s bank account in partial
satisfaction of the outstanding liability. On

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August 31, 1998, W files a request for relief
from joint and several liability. The liability
arose prior to July 22, 1998. Section 6015 is
applicable to the $2,000 that remained
unpaid as of July 22, 1998, and section
6013(e) is applicable to the $3,000 that was
paid prior to July 22, 1998.
§ 1.6015–9

Effective date.

Sections 1.6015–0 through 1.6015–9
are applicable for all elections under
§ 1.6015–2 or 1.6015–3 or any requests
for relief under § 1.6015–4 filed on or
after July 18, 2002.
PART 602—OMB CONTROL NUMBERS
UNDER THE PAPERWORK
REDUCTION ACT
5. In § 602.101, paragraph (b) is
amended by adding an entry in
numerical order to read as follow:
§ 602.101

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OMB Control Numbers.

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(b) * * *

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CFR part or section where
identified and described
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1.6015–5 ...............................
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Current OMB
control No.
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1545–1719
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Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
Approved: July 3, 2002.
Pamela F. Olson,
Acting Assistant Secretary of the Treasury.
[FR Doc. 02–17866 Filed 7–17–02; 8:45 am]
BILLING CODE 4830–01–P

DEPARTMENT OF LABOR
Mine Safety and Health Administration
30 CFR Part 57
RIN 1219–AB11

Diesel Particulate Matter Exposure of
Underground Metal and Nonmetal
Miners
AGENCY: Mine Safety and Health
Administration (MSHA), Labor.
ACTION: Final rule; stay of effectiveness.
SUMMARY: The Mine Safety and Health
Administration is staying the
effectiveness of certain provisions of the
final rule addressing ‘‘Diesel Particulate
Matter Exposure of Underground Metal
and Nonmetal Miners,’’ published in the
Federal Register on January 19, 2001
(66 FR 5706) and amended on February
27, 2002 (67 FR 9180).

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PsN: 18JYR1