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Commissioner, 83 T.C. 742, 747-748 (1984).
The separate liability election provisions originated in the
Senate version of section 6015.2 The legislative history
consistently shows that Congress intended “actual knowledge” to be
knowledge that the return is incorrect.
First, the Senate Committee on Finance report states that a
putative innocent spouse will not qualify for relief under section
6015(c) if the Commissioner shows that he or she had actual
knowledge that any item on the return was incorrect. The Senate
Committee on Finance report provides that:
if the IRS proves that the electing spouse had actual
knowledge that an item on a return is incorrect, the
election will not apply to the extent any deficiency is
attributable to such item. [Emphasis added.]
S. Rept. 105-174, at 59 (1998).
Second, the Senate Committee on Finance report, in the “Reasons
for Change” section, stated the following with respect to the
separate liability election:
The Committee intends that this election be
available to limit the liability of spouses for tax
attributable to items of which they had no knowledge.
The Committee is concerned that taxpayers not be allowed
to abuse these rules by knowingly signing false returns,
2 Under the Senate version of sec. 6015(c), the separate
liability election was a complete substitute for innocent spouse
relief under sec. 6013(e). Under the conference agreement and as
enacted, sec. 6013(e) was repealed and reenacted in liberalized
form as sec. 6015(b), and the separate liability election was
provided as an alternative, available only to individuals no
longer married, legally separated, or living apart for at least
12 months.
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