Reference no: EM133768728

Application for Innocent Spouse Relief: If a joint return has been filed and there is an understatement of tax on the return(s) due to erroneous items of one spouse (TAXPAYER), with whom a spouse has filed the joint return, it may be possible for the spouse who is attempting to claim innocent spouse status (SPOUSE) to be granted relief from the understated tax. In order to be granted relief, the SPOUSE must be able to show that the SPOUSE had no reason to know that the understated tax existed (or the extent to which the understated tax existed) as well as other criteria which you will be asked to list in your memo to Mrs. Lamprey (see below). It may also be possible to be granted relief with a showing that considering all the facts and circumstances, it would be unfair to hold the SPOUSE liable for the understated tax. In order to be considered for one of the three types of innocent spouse relief a Form 8857, "Request for Innocent Spouse Relief" must be filed.

Assignment: Based on the facts in the case below, prepare a 2-page memo to advise Mrs. C. Lamprey as to the criteria that must be met and whether innocent spouse relief might be granted to her. If so, prepare Form 8857, "Request for Innocent Spouse Relief," for her signature.