OAR 150-316-0440
Innocent Spouse, Separation of Liability, and Equitable Relief Provisions

(1)

Internal Revenue Service (IRS) Determination Made to Grant Relief. The department will grant relief from liability for tax under ORS 316.369 (Circumstances where one spouse relieved of joint return liability) if the person seeking relief provides proof that the IRS has made a determination under IRC §6015 that relieved the person of liability for federal taxes for the same tax year. As soon as the determination is made regarding the request for relief, the department will send a letter to each spouse informing them of the department’s determination.

(2)

Intentionally left blank —Ed.

(a)

No IRS Determination Made or IRS Denied Relief. A taxpayer who has filed an Oregon joint return may seek relief from liability by applying to the Department of Revenue even if the taxpayer has not applied for relief to the IRS. Or, if the IRS has denied relief, the taxpayer may ask the department to make a separate determination for relief from state liability. To request innocent spouse relief under the provisions of section (4), allocation of liability under the provisions of section (5), or equitable relief under the provisions of section (6), the taxpayer must write a letter to the department that includes the taxpayer’s name, address, Social Security number, the taxpayer’s spouse’s (or former spouse’s) name and Social Security number, the tax years for which the taxpayer is requesting relief for, and the type of relief the taxpayer is requesting. The department will treat the request for relief from liability as also constituting a request for any applicable refund. A taxpayer may file a request for innocent spouse relief, allocation of liability, or equitable relief with the department at any time. There is no statute of limitation on requesting relief under these provisions.

(b)

The department will send a letter to the nonrequesting spouse if relief is requested from joint and several liability on a joint return and will allow the nonrequesting spouse to submit information related to the determination of the request for relief from liability. As soon as the determination is made regarding the request for relief, the department will send a letter to each spouse informing them of the department’s determination.

(3)

Definitions. For purposes of this rule:

(a)

Understatement of Tax. An understatement of tax generally is the difference between the total amount of tax that should have been shown on the taxpayer’s Oregon return and the amount of tax that actually was shown on the Oregon return. This includes a deficiency that arises in the original processing of the return and a deficiency due to an audit.

(b)

Erroneous Items. Erroneous items include unreported income and an incorrectly reported deduction, credit, or basis. Unreported income is any gross income item the spouse of the requesting taxpayer received but did not report. An incorrectly reported deduction, credit, or basis is any improper deduction, credit, or property basis the spouse of the requesting taxpayer claims.

(c)

Spouse. All references to spouse mean the spouse on the joint return for which relief is requested.

(4)

Innocent Spouse. Innocent spouse relief is available only for deficiencies or assessed deficiencies. This provision does not authorize relief from liabilities that taxpayers reported properly on the joint return but did not pay. If the following four conditions are met, the individual will qualify for innocent spouse relief. The department will relieve the individual of state liability for tax in whole or in part (including interest, penalties, and other amounts) for the taxable year.

(a)

Conditions:

(A)

The requesting spouse filed a joint return for the taxable year for which relief is sought;

(B)

On such return there is an understatement of tax attributable to erroneous items of the spouse with whom the requesting spouse filed the return;

(C)

The requesting spouse establishes that he or she did not know, and had no reason to know, of the understatement when signing the return;

(D)

Taking into account all of the facts and circumstances, it is unreasonable in the department’s judgment to hold the requesting spouse liable for the deficiency attributable to the understatement.

(b)

If the taxpayer seeking relief asks for a refund of state tax payments, the taxpayer also must provide proof that he or she made the payments to the Oregon Department of Revenue. If the department grants relief, it will refund payments made by the requesting spouse according to the procedures and refund limitations of ORS 305.270 (Refund of excess tax paid) and 314.415 (Refunds). This applies to any requests for relief received by the department on or after August 1, 2004.

(5)

Allocation of liabilities for taxpayers no longer married, legally separated, or no longer living together. Relief is available only for deficiencies or assessed deficiencies. This provision does not authorize relief from liabilities that taxpayers reported properly on the joint return but did not pay.

(a)

An individual may apply to allocate a deficiency if the following two conditions are met:

(A)

The requesting spouse filed a joint return for the taxable year for which relief is sought; and

(B)

At the time of the request, the requesting spouse is no longer married to, is legally separated from, or has not been a member of the same household as the other spouse at any time during the 12-month period ending on the filing date of the request.

(b)

Relief under allocation of liability is subject to several limitations:

(A)

A request will be denied if assets were transferred between the requesting spouse and the other spouse as part of a fraudulent scheme.

(B)

Relief is not available if the department can demonstrate that the requesting spouse had actual knowledge when he or she signed the return of an item that gave rise to a deficiency.

(C)

Relief will only be available if the liability exceeds the value of any disqualified assets (as defined in Internal Revenue Code §6015(c)(4)(B)) transferred to the requesting spouse by the nonrequesting spouse.

(D)

The department will not refund payments made by the requesting spouse on the liability for which relief was granted if those payments were made before relief was granted. This applies to any requests for relief the department receives on or after August 1, 2004.

(6)

Equitable relief. Equitable relief is available for unpaid liabilities that were reported properly on the joint return and for understatements of tax.

(a)

To be eligible for equitable relief, all of the following conditions must be satisfied:

(A)

The requesting spouse filed a joint return for the taxable year for which relief is sought;

(B)

Relief is not available under either the innocent spouse or allocation of liability provisions;

(C)

No assets were transferred between the spouses filing the joint return as part of a fraudulent scheme by the spouses;

(D)

There were no disqualified assets transferred to the requesting spouse by the other spouse; and

(E)

The requesting spouse did not file the return with fraudulent intent.

(b)

The department will grant equitable relief generally in cases where all of the following elements are satisfied:

(A)

At the time relief is requested, the requesting spouse is no longer married to the other spouse, or is legally separated from the other spouse, or has not been a member of the same household as the other spouse at any time during the 12-month period ending on the date relief was requested;

(B)

When the requesting spouse signed the return, the requesting spouse had no knowledge or reason to know that the tax would not be paid; and

(C)

The requesting spouse will suffer economic hardship if relief is not granted. The department will determine economic hardship by taking into account all of the facts and circumstances concerning the requesting spouse’s financial situation, including but not limited to:
(i)
Ability to pay now and in the future;
(ii)
Personal assets such as stocks, bonds, dividends, retirement accounts, automobiles, equipment, etc.;
(iii)
Ability to borrow funds;
(iv)
Financial statements provided by the taxpayer; and
(v)
Any other financial information that the department requests.

(c)

The following is a partial list of the positive and negative factors that the department will take into account in determining whether to grant relief. No single factor will be determinative of whether equitable relief will or will not be granted in any particular case. All factors will be considered and weighed appropriately. The list includes but is not limited to the following:

(A)

Factors in favor of relief.
(i)
Marital status. The requesting spouse is separated (whether legally separated or living apart) or divorced from the nonrequesting spouse.
(ii)
Economic hardship. The requesting spouse would suffer economic hardship if relief from liability is not granted.
(iii)
Abuse. The requesting spouse was abused by the nonrequesting spouse, but such abuse did not amount to duress.
(iv)
No knowledge or reason to know. In the case of a liability that was properly reported but not paid, the requesting spouse did not know and had no reason to know that the liability would not be paid. In the case of a liability that arose from a deficiency, the requesting spouse did not know and had no reason to know of the items giving rise to the deficiency.
(v)
Other spouse’s legal obligation. The other spouse has a legal obligation as part of a divorce decree or agreement to pay the outstanding liability. This will not be a factor weighing in favor of relief if the requesting spouse knew or had reason to know, when the divorce decree or agreement was entered into that the other spouse would not pay the liability.
(vi)
Attributable to the nonrequesting spouse. The liability for which relief is sought is solely attributable to the nonrequesting spouse.

(B)

Factors weighing against relief.
(i)
Attributable to the requesting spouse. The unpaid liability or item giving rise to the deficiency is attributable to the requesting spouse.
(ii)
Knowledge or reason to know. When the requesting spouse signed the return, the requesting spouse knew or had reason to know of the item giving rise to a deficiency or that the reported liability would not be paid.
(iii)
Significant benefit. The requesting spouse has significantly benefited from the unpaid liability or items giving rise to the deficiency.
(iv)
Lack of economic hardship. The requesting spouse will not experience economic hardship if relief from the liability is not granted.
(v)
Noncompliance with Oregon income tax laws. The requesting spouse has not made a good faith effort to comply with Oregon income tax laws in the tax years following the tax year or years to which the request for relief relates.
(vi)
Requesting spouse’s legal obligation. The requesting spouse has a legal obligation as part of a divorce decree or agreement to pay the liability. If, taking into account all the facts and circumstances, the department determines that it would be unreasonable, in the department’s judgment, to hold the requesting spouse liable for the liability, the department may relieve a requesting spouse of all or part of the joint liability.

(d)

If the taxpayer seeking relief asks for a refund of state tax payments, the taxpayer also must provide proof that he or she made the payments to the Oregon Department of Revenue. If the department grants relief, it will refund only payments the requesting spouse made after the request for relief was filed with the department. Refunds are subject to the refund procedures and limitations of ORS 305.270 (Refund of excess tax paid) and 314.415 (Refunds). This applies to any request for relief the department receives on or after August 1, 2004.

(7)

Appeal Rights. If the department denies the relief requested under any of the provisions described above, the department will send the requesting spouse a conference decision letter that will have appeal rights. To appeal the conference decision, the requesting spouse must file an appeal with the Magistrate Division of the Oregon Tax Court within 90 days of the date of the conference decision letter. Whether or not relief was granted, the nonrequesting spouse can not appeal the determination.

(8)

Time Period For Requesting Relief. A taxpayer may request relief from liability for tax at any time. There is no statute of limitation on requesting relief. However, the department will not grant relief under any provision of ORS 316.369 (Circumstances where one spouse relieved of joint return liability) if the requesting spouse has entered into a closing agreement or settlement agreement with the department or if the year at issue has been litigated at the Oregon Tax Court, and the requesting spouse was a party to the litigation.

(9)

Relief provided under ORS 316.368 (When joint return liability divided). If the requesting spouse does not qualify for relief under 316.369 (Circumstances where one spouse relieved of joint return liability), the department will determine if relief can be granted under 316.368 (When joint return liability divided).

Source: Rule 150-316-0440 — Innocent Spouse, Separation of Liability, and Equitable Relief Provisions, https://secure.­sos.­state.­or.­us/oard/view.­action?ruleNumber=150-316-0440.

150–316–0006
Application of Capital Losses and Capital Loss Carryforwards 150–316–0007
Policy — Application of Various Provisions of the Federal Internal Revenue Code 150–316–0009
Policy — Application of Various Provisions of Tax Law to Domestic Partners 150–316–0015
Adoption of Federal Law 150–316–0020
Tax Reform Act of 1984 Adjustments 150–316–0025
Definition: “Resident” 150–316–0027
Status of Individuals in a Foreign Country 150–316–0035
Oregon Net Operating Losses — Treatment After 1984 150–316–0040
Administrative and Judicial Interpretations 150–316–0043
Qualified Business Income Reduced Tax Rate (QBIRTR) 150–316–0045
Taxable Income of Nonresidents and Part-year Residents 150–316–0050
Farm Capital Gain 150–316–0055
Transitional Provision to Prevent Doubling Income or Deductions 150–316–0060
Taxable Income of Resident 150–316–0065
Social Security and Railroad Retirement Benefits Eligible for Subtraction 150–316–0080
Credit for Income Taxes Paid to Another State 150–316–0082
Credit for Taxes Paid to Another State When Paid by a Pass-Through Entity 150–316–0084
Credit for Income Taxes Paid to Another State — Computation 150–316–0086
Credit for Income Taxes Paid to Other States — Proof Required and Procedure for Obtaining the Credit 150–316–0088
Addition of Taxes Paid to Another State Claimed as an Itemized Deduction 150–316–0090
Credit for Duplicative State Taxation Relating to Different Years 150–316–0115
Disabled Child Exemption Credit 150–316–0120
Credit for Political Contributions 150–316–0125
Credit for the Gain on the Sale of a Residence Taxed by Another State 150–316–0130
Credit for Installation of Alternative Energy Devices 150–316–0135
Proration of Income and Deductions for Nonresidents and Part-Year Residents 150–316–0145
Proration for Pass-through Entity Income of Part Year Oregon Residents 150–316–0150
Separate or Joint Federal Returns for Spouses in a Marriage 150–316–0155
Nonresident Partners: Guaranteed Payments 150–316–0157
Nonresident Partners: Other Methods of Allocation and Apportionment 150–316–0165
Gross Income of Nonresidents 150–316–0167
Gross Income of Nonresidents 150–316–0169
Gross Income of Nonresidents 150–316–0171
Gross Income of Nonresidents 150–316–0173
Gross Income of Nonresidents 150–316–0175
Gross Income of Nonresidents 150–316–0179
Student Loan Interest Deduction — for Part-Year and Nonresidents 150–316–0181
Moving Expense Deduction — for Part-year and Nonresidents 150–316–0183
Gross Income of Nonresidents 150–316–0185
Gross Income of Nonresidents: Waterway Workers 150–316–0195
Alimony Deduction — for Part-Year and Nonresidents 150–316–0197
Nonresident Deduction for Contributions to IRA, Keogh, or Qualified Medical Savings Accounts 150–316–0205
Credit for Taxes Paid to State of Residence 150–316–0225
Retirement Income Credit 150–316–0230
Subtraction for Previously Taxed Contributions 150–316–0234
“Withholding Statement” and “Exemption Certificate” 150–316–0235
Withholding: Basis of Amount Withheld 150–316–0237
Employees Exempt from Withholding 150–316–0239
Withholding on Fringe Benefits 150–316–0241
Independent Contractor Definition 150–316–0243
Personal Liability of Responsible Officers, Members, or Employees for Taxes Withheld 150–316–0250
Bonding Requirements for Delinquent Withholding Employers 150–316–0255
Withholding by Employers 150–316–0257
Employer’s Election of Method of Computing Withholding 150–316–0265
Withholding Payments: Cash Basis 150–316–0267
Additional Time to File Reports 150–316–0275
Treatment of Payroll Based Program Overpayments 150–316–0282
Exemptions for Military Personnel 150–316–0284
Penalty 150–316–0290
Procedure for Correcting the Filing of Withholding Certificates 150–316–0295
Credit for Tax Withheld 150–316–0297
Where Taxpayer Reports on Fiscal Year Basis 150–316–0305
Withholding Income Taxes on IRAs, Annuities, and Compensation Plans 150–316–0307
Withholding Income Taxes on IRAs, Annuities, and Compensation Plans 150–316–0315
Alternative Withholding Payment Method for Employers to Avoid Undue Burden 150–316–0320
Voluntary Withholding for Retired Members of the Uniformed Services 150–316–0325
Voluntary Withholding for Civil Service Annuitants 150–316–0330
Semiannual Reports and Payments 150–316–0332
Withholding: Payment Due Dates 150–316–0334
Withholding Tax Payment Requirements for Agricultural Employers 150–316–0336
Employee’s Rights 150–316–0345
Requirement to use Electronic Funds Transfer 150–316–0347
Electronic Funds Transfer. Payroll taxes and corporation estimated income and excise taxes not combined in determining mandate. Payments to be included. 150–316–0355
Withholding: Payment and Reports 150–316–0357
Waiver of Termination Reports 150–316–0359
Withholding: Annual Report by Employer 150–316–0361
Combined Reports and Statewide Transit Tax Reports: Agricultural Employers 150–316–0370
Liability for Unpaid Withholdings 150–316–0372
Officer Liability: Joint Determination of Liability Conference 150–316–0380
Withholding Penalties 150–316–0385
Nonresident Alternate Filing 150–316–0390
Deductions Allowed on Either the Inheritance Tax Return or the Fiduciary Income Tax Return 150–316–0395
Tax Treatment of Unincorporated Organization 150–316–0400
Resident and Nonresident Estates and Trusts 150–316–0402
Oregon Qualified Trust Tax Return 150–316–0410
Fiduciary Adjustment 150–316–0415
Accumulation Distribution Credit for Oregon Taxes Paid by Trust During Income Accumulation Years 150–316–0420
Taxable Income of Nonresident Estate or Trust 150–316–0425
Oregon Multiple Funeral Trust Tax Return 150–316–0427
Persons Required to Make Returns 150–316–0435
Petitioning Department to Equally Split Joint Liability 150–316–0440
Innocent Spouse, Separation of Liability, and Equitable Relief Provisions 150–316–0445
Liability of Fiduciaries 150–316–0450
Decedent’s Estate: Request for a Final Tax Determination 150–316–0452
Decedents’ Estate: Application for Discharge from Personal Liability for Tax on Decedent’s Income 150–316–0465
Estimated Tax 150–316–0470
Allocation of Joint Estimated Tax Payments 150–316–0475
Estimated Tax: Farmer’s and Fisher’s 150–316–0480
Estimated Tax: Application of Prior Year Overpayment (Refund) 150–316–0485
Tax Used to Compute Underpayment of Estimated Tax 150–316–0487
Estimated Tax: Underpayment Interest Not Imposed if There is a Casualty, Disaster or Other Unusual Circumstances 150–316–0489
Estimated Tax: Underpayment Interest Not Imposed If There Is Reasonable Cause 150–316–0491
Estimated Tax: Partnership and S Corporation Income of Part-year Residents and Nonresidents 150–316–0493
Required Installments for Estimated Tax 150–316–0495
Estimated Tax: Joint Return to Single or Separate Return 150–316–0497
Estimated Tax: Single or Separate Returns to Joint Return 150–316–0505
Oregon Lottery Winnings and Losses 150–316–0507
Modification of Federal Taxable Income: Interest and Dividends 150–316–0509
U.S. Government Obligations 150–316–0511
Addition for Original Issue Discount (OID) 150–316–0513
Modification of Federal Taxable Income: Adding Interest or Dividends of the United States Exempted by Federal Income Tax Law 150–316–0515
Modification of Federal Taxable Income: Adding Federal Estate Tax Attributable to Income in Respect of a Decedent Not Taxable by Oregon 150–316–0519
Gain or Loss Upon the Sale of State and Municipal Bonds of Other States (Foreign States) 150–316–0525
U.S. Government Interest in Retirement Accounts 150–316–0530
Pool of Assets that Qualify to Pay State Exempt-Interest Dividends 150–316–0535
Federal Tax Deduction: Accrual Method of Accounting Required 150–316–0537
Adjustment of Federal Tax Liability 150–316–0545
Election to Include Child’s Unearned Income — Addition Required 150–316–0550
Special Oregon Medical Subtraction 150–316–0555
Modification of Federal Taxable Income: Itemized vs. Standard Deduction 150–316–0557
Modification of Federal Taxable Income: Oregon Income Tax Claimed as an Itemized Deduction 150–316–0559
Modification of Federal Taxable Income: Previously Taxed Contributions to Pension or Annuity 150–316–0565
Basis of Depreciable Assets Moved into Oregon 150–316–0567
Property Subject to Accelerated Cost Recovery System 150–316–0569
Adjustment to Income for Basis Differences 150–316–0575
Amount Specially Taxed Under Federal Law to Be Included in Computation of State Taxable Income: Accumulation Distributions 150–316–0580
Definition for Severely Disabled Exemption 150–316–0585
Exemption for Blind and Severely Disabled 150–316–0590
Substantiation for Permanently Severely Disabled 150–316–0595
Exempt Income of Native Americans 150–316–0600
Oregon Investment Advantage Apportionable Income Exemption 150–316–0605
Military Pay Subtraction 150–316–0607
First-time Home Buyer Savings Account 150–316–0610
Road Construction Worker’s Travel Expenses 150–316–0615
Substantiation Required for Construction Worker and Loggers Expenses 150–316–0625
(Miscellaneous) Valuation of Forest Land or “Farm Use” Land for Oregon Inheritance Tax Purposes 150–316–0630
Scholarship Awards used for Housing Expenses 150–316–0635
Subtraction for Land Contributed to Educational Institutions 150–316–0640
Subtraction for Qualified Investment of Severance Pay 150–316–0650
Waiver of Frivolous Return Penalty Imposed Under ORS 316.992 150–316–0652
Frivolous Return Penalty
Last Updated

Jun. 8, 2021

Rule 150-316-0440’s source at or​.us