IRS scraps two-year deadline for innocent spouse claims

Under the new IRS policy, the usual deadlines for IRS collection and refund requests will apply to innocent-spouse claims.

In addition to scrapping the two-year limit, the IRS will also not move to collect in some innocent-spouse cases where a ruling already has been made. According to Monday’s announcement, taxpayers who had their request for protection denied solely because they did not meet the two-year deadline also can resubmit their claim, if the IRS collection window has not expired.

Nina Olson, the national taxpayer advocate, and a pair of veteran House Democrats applauded Monday's move, with Olson calling it “a welcome occasion where everyone has emerged a winner.”

"This is a huge victory that removes an arbitrary obstacle for innocent spouses, primarily women, and helps us move toward a more equitable tax system,” Rep. Pete Stark (D-Calif.), a senior member of the tax-writing House Ways and Means Committee, said in a statement.

Rep. Jim McDermottJim McDermottLobbying World Dem lawmaker: Israel's accusations start of 'war on the American government' Dem to Trump on House floor: ‘Stop tweeting’ MORE (D-Wash.), another Ways and Means member, and Stark had prodded Shulman to withdraw the two-year rule in an April letter signed by more than 45 other House Democrats.

Sen. Max BaucusMax Sieben BaucusBernie Sanders flexes power on single-payer ObamaCare architect supports single-payer system Trump has yet to travel west as president MORE (D-Mont.), the chairman of the Finance Committee, and two other Senate Democrats also called on the IRS to look into the matter, while Rep. Michele BachmannMichele Marie BachmannTom Petty dies at 66 Bachmann: Muslim immigrants trying to undermine Western civilization Religious leaders pray over Trump in Oval Office MORE (R-Minn.) introduced legislation this year to get rid of the two-year time limit.

The Treasury Department and the IRS installed the two-year deadline in 2002 regulations, after Congress did not set insert a time limit for this particular claim in legislation aimed at helping innocent spouses.