Arizona Revised Statutes § 42-2201 Election For Relief From Joint And Several Liability; Definition

42-2201. Election for relief from joint and several liability; definition

A. Notwithstanding section 43-301, subsection B and section 43-562, after filing a joint income tax return pursuant to section 43-309, a taxpayer may seek relief from joint and several liability under the following circumstances:

1. There is an understatement of tax attributable to erroneous items of one of the taxpayers filing the joint return.

2. The taxpayer making an election under this section establishes that in signing the return the taxpayer did not know, and had no reason to know, that there was an understatement.

3. Taking into account all of the facts and circumstances, it is inequitable to hold that taxpayer liable for the deficiency attributable to the understatement.

B. If a taxpayer qualifies for relief under subsection A of this section, the relief extends to the amount of liability for tax, interest and penalties that is attributable to the understatement.

C. If a taxpayer would qualify for relief under subsection A of this section except that under subsection A, paragraph 2 the taxpayer establishes that in signing the return the taxpayer did not know, and had no reason to know, the extent of the understatement, the relief extends only to the extent the liability for tax, interest and penalties is attributable to the portion of the understatement of which the taxpayer did not know and had no reason to know.

D. The department shall make any determination under this section without regard to community property laws.

E. An election made by an individual under this section after the department has collected tax attributable to the erroneous items is considered to be a claim for refund pursuant to section 42-1118. The individual making an election after making the payment shall make the election within six months after making the payment or within the time limits prescribed by section 42-1106, whichever period expires later.

F. A taxpayer may appeal a determination under this section pursuant to section 42-1251 or 42-1253.

G. Except in the case of a jeopardy assessment under section 42-1111, the department shall not levy or proceed in court to collect any tax for taxable years from which the taxpayer is claiming relief under this section until all determinations are final. The period of limitations under section 42-1104 is suspended for the same period for which collection activities are suspended.

H. The department shall notify and allow the other joint filer to participate in any administrative proceeding under this section.

I. For the purposes of this section, " understatement" has the same meaning prescribed by section 6662(d)(2)(A) of the internal revenue code.

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Last modified: October 13, 2016