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exists, however, for spouses able to satisfy the statutory
requirements for what has traditionally been termed “innocent
spouse” relief.
A. Prior Innocent Spouse Law
Prior to the enactment of the Restructuring Act, section
6013(e) governed the granting or denial of claims for innocent
spouse relief. Section 6013(e) read in part as follows:
SEC. 6013(e). Spouse Relieved of Liability in
Certain Cases.--
(1) In general.--Under regulations prescribed
by the Secretary, if--
(A) a joint return has been made under
this section for a taxable year,
(B) on such return there is a
substantial understatement of tax
attributable to grossly erroneous items of
one spouse,
(C) the other spouse establishes that in
signing the return he or she did not know,
and had no reason to know, that there was
such substantial understatement, and
(D) taking into account all the facts
and circumstances, it is inequitable to hold
the other spouse liable for the deficiency in
tax for such taxable year attributable to
such substantial understatement,
then the other spouse shall be relieved of
liability for tax (including interest, penalties,
and other amounts) for such taxable year to the
extent such liability is attributable to such
substantial understatement.
The section then went on to impose an additional requirement that
the understatement exceed a specified percentage of the innocent
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