IRS Withdraws Proposed Regulations on Relief from Joint and Several Liability and Community Property Rules

The IRS and the Treasury Department  formally withdrew two notices of proposed rulemaking that addressed relief from joint and several tax liability under Internal Revenue Code § 6015 and relief from federal income tax liability arising from the operation of state community property laws under § 66.  The eliminated  Proposed regulations issued in 2013 and 2015  both  attempted to update and clarify the administrative framework governing innocent spouse and community-property-related relief claims. Married taxpayers seeking relief under existing statutory provisions remain subject to the current rules and procedures, which are not affected by this action.

The 2013 proposed regulations (REG-132251-11) sought to provide comprehensive guidance on the process for requesting innocent spouse relief and relief from community property allocation rules. The 2015 proposed regulations (REG-134219-08) attempted to incorporate statutory changes enacted in the Tax Relief and Health Care Act of 2006, as well as judicial developments that had reshaped the interpretation of § 6015. However, the agencies determined that the number of comments received, the passage of significant time since their publication, and shifting administrative priorities warranted reevaluating the proposals.

In announcing the withdrawal, the IRS noted that additional consideration is required given the substantial statutory and case-law developments that have occurred since the proposed regulations were issued. They also stated that if they decide to move forward with updated guidance, they will issue new proposed regulations and solicit fresh public comments, rather than finalize the decade-old proposals.

Importantly, the withdrawal does not alter the existing statutory framework governing innocent spouse relief and community property allocations. Taxpayers seeking relief must continue to rely on the current statutory provisions, existing regulations, and relevant case law. The decision may signal a potential future rulemaking effort but, for now, leaves the longstanding rules under §§ 6015 and 66 unchanged. If you have questions about this update, please contact Liskow attorneys Leon Rittenberg III, John Rouchell, Caroline Lafourcade, and Kevin Naccari and visit our Tax practice page.