California Franchise Tax Board Innocent Spouse Rules Change

Beginning January 1, 2004 the California Franchise Tax Board (FTB) was required, with some limitations, to grant innocent spouse relief to individuals who had previously been granted innocent spouse relief by the Internal Revenue Service (IRS) pursuant to Revenue and Taxation Code Section 18533(h). The idea was that someone who had gone through all of the expense and trouble of obtaining innocent spouse relief from the IRS should not have to go through the same process with the FTB again. After all, portions of the California innocent spouse statute are identical to the federal innocent spouse statute Internal Revenue Code Section 6015. Unfortunately the Revenue and Taxation Code Section 18533(h) expired at the end of 2008.

The California Franchise Tax Board, however, announced that it would apply the same rules as existed under former Section 18533(h) in determining whether or not innocent spouse relief should be granted. However, since there is no longer a statutory basis for doing so if the FTB were to decide for any reason that the old statute didn’t apply a person could no longer appeal to the California Board of Equalization (SBE or BOE) or the courts on the basis that the FTB hadn’t followed Revenue and Taxation Code Section 18533(h) in applying the innocent spouse rules.

If you think that you are an innocent spouse, and would like to arrange a consultation with one of our tax litigation lawyers please contact Brager Tax Law Group, A P.C. Alternatively, if your spouse is requesting innocent spouse relief, and you don’t believe he or she should qualify, our tax attorneys may be able help too.