Ways to Qualify for State (CA) Innocent Spouse Relief
California’s innocent spouse relief provisions are in conformity with the comparable Federal income tax provisions in IRC Sec 6015. To this end, any Federal regulations interpreting IRC Sec 6015 are applicable for California purposes so long as there is no conflict with state law or regulations. NOTE: Except for cross-references and agency names, it largely repeats the language of IRC Sec 6015 word-for-word. The California rules also apply to registered domestic partners.
Basic Requirements
To qualify, a taxpayer must meet these three tests. First, he/she must have filed a joint tax return for any year that he/she is seeking relief. Second, the taxpayer must prove eligibility for relief based on one of the methods described below. Third, the taxpayer must request the relief in writing. The written request should include taxpayer’s name, address, social security number, the years in question, a statement explaining why the taxpayer believes that he/she qualifies for relief, and if applicable, a copy of his/her court order.
Form FTB 705, Request for Innocent Spouse Relief, is the California equivalent to IRS Form 8857 for making the request and can be found on the FTB web site at: https://www.ftb.ca.gov/forms/misc/705.pdf. The FTB has a short brochure on this topic, available on their web site at: https://www.ftb.ca.gov/forms/misc/714.html The FTB web site has other information on this topic, which can be accessed at: https://www.ftb.ca.gov/file/personal/filing-situations/tax-debt-relief-for-spouse.html
Submit requests for innocent spouse relief to:
State of California
Innocent Spouse Unit MS A452
Franchise Tax Board
P.O. Box 2966
Rancho Cordova, CA 95741-2966
Telephone: (916) 845-7072
Alternately, the documents can be FAX to: (916) 845-0479
Relief by Court Order
Revenue and Taxation Code Section 19006(b) – As part of a divorce/termination of registered domestic partnership from a spouse/RDP, the court may have issued an order relieving the taxpayer of unpaid tax due from a joint liability. For a court order to be effective, ALL the following requirements must be met:
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The court order must have been entered after January 1, 1977.
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The court order must specify which California income tax years the taxpayer has been relieved from paying.
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The tax due on the income that the taxpayer earned, managed, or controlled is paid.
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The tax due for which the taxpayer is requesting relief is not already paid. (If it is already paid, there is nothing of which to be relieved.)
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The Franchise Tax Board issued a Tax Revision Clearance Certificate* if, for the tax years of requested relief:
-The taxpayer’s joint gross income was more than $150,000(1), or
-The taxpayers jointly owe more than $7,500(1) in state tax.
* A Tax Revision Clearance Certificate, Form FTB 2572, can be obtained from the Franchise Tax Board upon written request. Once issued, the Certificate must be filed with the court and incorporated into the taxpayer’s court order for divorce. A confirmed copy of the certificate and decree must be returned to the Franchise Tax Board to obtain relief.
(1) For divorce court orders issued before 1/1/2003, the amounts were $50,000 and $2,500, respectively.
Relief Automatic if Federal Relief Granted
SB 1065 enacted Sept. 27, 2010, requires that the FTB grant innocent spouse relief when the IRS has granted relief under the same facts and circumstances. This law is effective on January 1, 2011, and applies to requests for state relief that are based on an IRS request for similar relief made on or after January 1, 2009 and for requests for equitable relief received by the FTB on or after January 1, 2011. (R&TC § 18533) Copies of notices and correspondence from the IRS should be included with FTB 705 when requesting relief.
General Statute of Limitations for Refunds Applies
Assembly Bill 1748, enacted October 8, 2007, amends existing law (R&TC § 18533) to more closely conform to federal law by applying the general statute of limitations for claims for refund to complete/partial relief and by disallowing any claims for refund for separate allocation relief. Thus, such claims for relief made after the statute of limitations would be disallowed for claims for refunds to complete/partial relief. This act is effective January 1, 2008 and applies to requests for relief filed on or after that date.