What Is IRS Form 11652 for a Schedule C Audit?
Learn how IRS Form 11652 is used to evaluate your financial standing when requesting relief from a tax liability incurred by your spouse or former spouse.
When married couples file a joint tax return, the Internal Revenue Service (IRS) holds both individuals responsible for the entire tax liability under a rule known as joint and several liability. If circumstances like divorce or a spouse’s financial misconduct make this unfair, the IRS offers innocent spouse relief. The process begins with Form 8857, “Request for Innocent Spouse Relief.” During the evaluation, the IRS may also require Form 12510, “Questionnaire for Requesting Spouse,” to assess if a taxpayer should be held liable for tax debts created by their spouse or former spouse.
Understanding the Basis for Relief
The IRS offers three types of relief from joint and several liability. The first, Innocent Spouse Relief, is available if your spouse or former spouse created the tax debt by failing to report income, reporting income improperly, or claiming improper deductions. To qualify, you must show that when you signed the joint return, you did not know, and had no reason to know, about the understated tax. The IRS examines all facts and circumstances to decide if it would be unfair to hold you accountable.
A second option is Separation of Liability, which divides the understated tax liability between you and your spouse or former spouse. This relief applies only to unpaid liabilities for those who are divorced, legally separated, widowed, or have lived apart for at least 12 months. The additional tax is divided based on each person’s individual income and deductions, and you are only responsible for your allocated portion. You cannot receive a refund of taxes already paid under this type of relief.
The third path is Equitable Relief, available if you do not qualify for the other two options. This relief applies when it would be unfair to hold you liable for the tax debt, covering both understated tax and underpaid tax, which is tax that was correctly reported but not paid. The IRS considers factors like your marital status, potential economic hardship, and your knowledge of the items causing the tax debt.
Information and Documentation Required for Form 12510
To evaluate your claim, the IRS may require you to submit Form 12510, which provides a detailed financial picture. You can find the current version of this form on the IRS website. Before you begin, gather all documentation related to your finances to substantiate your claim of potential economic hardship.
The form begins with personal and marital information, asking for details about you, your spouse or former spouse, and your current marital status. You will need to provide dates of marriage, separation, and divorce, as these are relevant for determining eligibility for certain types of relief.
Next, the form requires a detailed breakdown of your monthly income from all sources. You should collect recent pay stubs, self-employment business records, and statements for Social Security, pensions, or other government benefits. Every source of incoming funds must be documented and reported as a monthly average.
A significant portion of the form is dedicated to your monthly living expenses. Be prepared to list amounts for items such as:
- Housing, including rent or mortgage payments, property taxes, and insurance
- Utilities, food, and clothing
- Transportation costs, including car payments and fuel
- Healthcare expenses, like insurance premiums and out-of-pocket medical bills
- Child care and court-ordered payments
Finally, the questionnaire requires a complete inventory of your assets and liabilities. For assets, you must list cash, bank account balances, the fair market value of real estate and vehicles, and the value of stocks, bonds, or retirement accounts. For liabilities, list all outstanding debts, including mortgages, auto loans, student loans, and credit card balances, along with the total amount owed and the minimum monthly payment.
The Submission Process
The initial request for relief, Form 8857, must be filed no later than two years from the date the IRS first attempted to collect the tax from you. After completing the necessary forms, assemble the submission package. You should attach supporting documents that substantiate the figures you provided, such as bank statements, pay stubs, or receipts for major expenses.
The completed forms and attachments can be sent to the IRS by mail or fax. For mail via USPS, use P.O. Box 120053, Covington, KY 41012. For private delivery services, use 7940 Kentucky Drive, Stop 840F, Florence, KY 41042. The fax number is 855-233-8558. Using a mailing service that provides tracking is advisable to create a record that the IRS received your submission.
After the IRS receives your request, you will receive a letter of acknowledgment, and your case will be assigned to an examiner. The IRS is required by law to contact your spouse or former spouse, inform them of your claim, and allow them to participate. Processing time can take six months or more, depending on the case’s complexity and the IRS’s workload.