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1040nr 4. 1040nr   Other Section 501(c) Organizations Table of Contents Introduction 501(c)(4) - Civic Leagues and Social Welfare OrganizationsSpecific Organizations 501(c)(5) - Labor, Agricultural and Horticultural OrganizationsLabor Organizations Agricultural and Horticultural Organizations 501(c)(6) - Business Leagues, etc. 1040nr Line of business. 1040nr Examples. 1040nr Improvement of business conditions. 1040nr Exception for local legislation. 1040nr De minimis exception. 1040nr Grass roots lobbying. 1040nr 501(c)(7) - Social and Recreation ClubsLimited membership. 1040nr Support. 1040nr Facilities open to public. 1040nr Gross receipts from nonmembership sources. 1040nr Gross receipts. 1040nr Nontraditional activities. 1040nr 501(c)(8) and 501(c)(10) - Fraternal Beneficiary Societies and Domestic Fraternal SocietiesFraternal Beneficiary Societies (501(c)(8)) Domestic Fraternal Societies (501(c)(10)) 501(c)(4), 501(c)(9), and 501(c)(17) - Employees' AssociationsLocal Employees' Associations (501(c)(4)) Voluntary Employees' Beneficiary Associations (501(c)(9)) Supplemental Unemployment Benefit Trusts (501(c)(17)) 501(c)(12) - Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like OrganizationsMembership. 1040nr Losses and expenses. 1040nr Distributions of proceeds. 1040nr The 85% Requirement Local Life Insurance Associations Mutual or Cooperative Associations 501(c)(13) - Cemetery CompaniesBuying cemetery property. 1040nr Perpetual care organization. 1040nr Care of individual plots. 1040nr 501(c)(14) - Credit Unions and Other Mutual Financial OrganizationsState-Chartered Credit Unions Other Mutual Financial Organizations 501(c)(19) - Veterans' Organizations 501(c)(20) - Group Legal Services Plan Organizations 501(c)(21) - Black Lung Benefit TrustsExcise taxes. 1040nr 501(c)(2) - Title-Holding Corporations for Single Parent CorporationsExpenses. 1040nr Waiver of payment of income. 1040nr 501(c)(25) - Title-Holding Corporations or Trusts for Multiple Parent CorporationsUnrelated Business Income 501(c)(26) - State-Sponsored High-Risk Health Coverage Organizations 501(c)(27) - Qualified State-Sponsored Workers' Compensation Organizations 501(c)(29) - CO-OP Health Insurance Issuers New Guidance for IRC 501(c)(29) Qualified Nonprofit Health Insurance Issuers General Requirements for Exemption under 501(c)(29) and Annual Filing Requirement Additional Guidance for Prospective 501(c)(29) Organizations Introduction This chapter contains specific information for certain organizations described in section 501(c), other than those organizations that are described in section 501(c)(3). 1040nr Section 501(c)(3) organizations are covered in chapter 3 of this publication. 1040nr The Table of Contents at the beginning of this publication, as well as the Organization Reference Chart, may help you locate at a glance the type of organization discussed in this chapter. 1040nr 501(c)(4) - Civic Leagues and Social Welfare Organizations If your organization is not organized for profit and will be operated primarily to promote social welfare to benefit the community, you should file Form 1024 to apply for recognition of exemption from federal income tax under section 501(c)(4). 1040nr The discussion that follows describes the information you must provide when applying. 1040nr For application procedures, see chapter 1. 1040nr To qualify for exemption under section 501(c)(4), the organization's net earnings must be devoted primarily to charitable, educational, or recreational purposes. 1040nr In addition, no part of the organization's net earnings can inure to the benefit of any private shareholder or individual. 1040nr If the organization provides an excess benefit to certain persons, an excise tax may be imposed. 1040nr See Excise tax on excess benefit transactions , under Excess Benefit Transactions in chapter 5 for more information about this tax. 1040nr Examples. 1040nr   Types of organizations that are considered to be social welfare organizations are civic associations and volunteer fire companies. 1040nr Nonprofit operation. 1040nr   You must submit evidence that your organization is organized and will be operated on a nonprofit basis. 1040nr However, such evidence, including the fact that your organization is organized under a state law relating to nonprofit corporations, will not in itself establish a social welfare purpose. 1040nr Social welfare. 1040nr   To establish that your organization is organized primarily to promote social welfare, you should submit evidence with your application showing that your organization will operate primarily to further (in some way) the common good and general welfare of the people of the community (such as by bringing about civic betterment and social improvements). 1040nr   An organization that restricts the use of its facilities to employees of selected corporations and their guests is primarily benefiting a private group rather than the community. 1040nr It therefore does not qualify as a section 501(c)(4) organization. 1040nr Similarly, an organization formed to represent member-tenants of an apartment complex does not qualify, since its activities benefit the member-tenants and not all tenants in the community. 1040nr However, an organization formed to promote the legal rights of all tenants in a particular community may qualify under section 501(c)(4) as a social welfare organization. 1040nr Political activity. 1040nr   Promoting social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. 1040nr However, if you submit proof that your organization is organized primarily to promote social welfare, it can obtain exemption even if it participates legally in some political activity on behalf of or in opposition to candidates for public office. 1040nr See the discussion in chapter 2 under Political Organization Income Tax Return . 1040nr Social or recreational activity. 1040nr   If social activities will be the primary purpose of your organization, you should not file an application for exemption as a social welfare organization but should file for exemption as a social club described in section 501(c)(7). 1040nr Retirement benefit program. 1040nr   An organization established by its members that has as its primary activity providing supplemental retirement benefits to its members or death benefits to their beneficiaries does not qualify as an exempt social welfare organization. 1040nr It may qualify under another paragraph of section 501(c) depending on all the facts. 1040nr   However, a nonprofit association that is established, maintained, and funded by a local government to provide the only retirement benefits to a class of employees may qualify as a social welfare organization under section 501(c)(4). 1040nr Tax treatment of donations. 1040nr   Donations to volunteer fire companies are deductible on the donor's federal income tax return, but only if made for exclusively public purposes. 1040nr Contributions to civic leagues or other section 501(c)(4) organizations generally are not deductible as charitable contributions for federal income tax purposes. 1040nr They may be deductible as trade or business expenses, if ordinary and necessary in the conduct of the taxpayer's business. 1040nr However, see Deduction not allowed for dues used for political or legislative activities , under 501(c)(6) - Business Leagues, etc. 1040nr for more information. 1040nr For more information on social welfare organizations, see Life Cycle of a Social Welfare Organization at IRS. 1040nr gov. 1040nr Specific Organizations The following information should be contained in the application form and accompanying statements of certain types of civic leagues or social welfare organizations. 1040nr Volunteer fire companies. 1040nr   If your organization wishes to obtain exemption as a volunteer fire company or similar organization, you should submit evidence that its members are actively engaged in fire fighting and similar disaster assistance, whether it actually owns the fire fighting equipment, and whether it provides any assistance for its members, such as death and medical benefits in case of injury to them. 1040nr   If your organization does not have an independent social purpose, such as providing recreational facilities for members, it may be exempt under section 501(c)(3). 1040nr In this event, your organization should file Form 1023. 1040nr Homeowners' associations. 1040nr   A membership organization formed by a real estate developer to own and maintain common green areas, streets, and sidewalks and to enforce covenants to preserve the appearance of the development should show that it is operated for the benefit of all the residents of the community. 1040nr The term community generally refers to a geographical unit recognizable as a governmental subdivision, unit, or district thereof. 1040nr Whether a particular association meets the requirement of benefiting a community depends on the facts and circumstances of each case. 1040nr Even if an area represented by an association is not a community, the association can still qualify for exemption if its activities benefit a community. 1040nr   The association should submit evidence that areas such as roadways and park land that it owns and maintains are open to the general public and not just its own members. 1040nr It also must show that it does not engage in exterior maintenance of private homes. 1040nr   A homeowners' association that is not exempt under section 501(c)(4) and that is a condominium management association, a residential real estate management association, or a timeshare association generally can elect under the provisions of section 528 to receive certain tax benefits that, in effect, permit it to exclude its exempt function income from its gross income. 1040nr Other organizations. 1040nr   Other nonprofit organizations that qualify as social welfare organizations include: An organization operating an airport that is on land owned by a local government, which supervises the airport's operation, and that serves the general public in an area with no other airport, A community association that works to improve public services, housing, and residential parking; publishes a free community newspaper; sponsors a community sports league, holiday programs, and meetings; and contracts with a private security service to patrol the community, A community association devoted to preserving the community's traditions, architecture, and appearance by representing it before the local legislature and administrative agencies in zoning, traffic, and parking matters, An organization that tries to encourage industrial development and relieve unemployment in an area by making loans to businesses so they will relocate to the area, and An organization that holds an annual festival of regional customs and traditions. 1040nr 501(c)(5) - Labor, Agricultural and Horticultural Organizations If you are a member of an organization that wants to obtain recognition of exemption from federal income tax as a labor, agricultural, or horticultural organization, you should submit an application on Form 1024. 1040nr You must indicate in your application for exemption and accompanying statements that no part of the organization's net earnings will inure to the benefit of any member. 1040nr In addition, you should follow the procedure for obtaining recognition of exempt status described in chapter 1. 1040nr Submit any additional information that may be required, as described in this section. 1040nr Tax treatment of donations. 1040nr   Contributions to labor, agricultural, and horticultural organizations are not deductible as charitable contributions on the donor's federal income tax return. 1040nr However, such payments may be deductible as business expenses if they are ordinary and necessary in the conduct of the taxpayer's trade or business. 1040nr For more information about certain limits affecting the deductibility of these business expenses, see Deduction not allowed for dues used for political or legislative activities , under 501(c)(6) - Business Leagues, etc. 1040nr Labor Organizations A labor organization is an association of workers who have combined to protect and promote the interests of the members by bargaining collectively with their employers to secure better working conditions. 1040nr To show that your organization has the purpose of a labor organization, you should include in the articles of organization or accompanying statements (submitted with your exemption application) information establishing that the organization is organized to better the conditions of workers, improve the grade of their products, and develop a higher degree of efficiency in their respective occupations. 1040nr In addition, no net earnings of the organization can inure to the benefit of any member. 1040nr Composition of membership. 1040nr   While a labor organization generally is composed of employees or representatives of the employees (in the form of collective bargaining agents) and similar employee groups, evidence that an organization's membership consists mainly of workers does not in itself indicate an exempt purpose. 1040nr You must show in your application that your organization has the purposes described in the preceding paragraph. 1040nr These purposes can be accomplished by a single labor organization acting alone or by several organizations acting together through a separate organization. 1040nr Benefits to members. 1040nr   The payment by a labor organization of death, sick, accident, and similar benefits to its individual members with funds contributed by its members, if made under a plan to better the conditions of the members, does not preclude exemption as a labor organization. 1040nr However, an organization does not qualify for exemption as a labor organization if it has no authority to represent members in job-related matters, even if it provides weekly income to its members in the event of a lawful strike by the members' union, in return for an annual payment by the member. 1040nr   For more information on labor organizations, see Life Cycle of a Labor Organization at IRS. 1040nr gov. 1040nr Agricultural and Horticultural Organizations Agricultural and horticultural organizations are connected with raising livestock, forestry, cultivating land, raising and harvesting crops or aquatic resources, cultivating useful or ornamental plants, and similar pursuits. 1040nr For the purpose of these provisions, aquatic resources include only animal or vegetable life, but not mineral resources. 1040nr The term harvesting, in this case, includes fishing and related pursuits. 1040nr Agricultural organizations can be quasi-public in character and are often designed to encourage the development of better agricultural and horticultural products through a system of awards, using income from entry fees, gate receipts, and donations to meet the necessary expenses of upkeep and operation. 1040nr When the activities are directed toward the improvement of marketing or other business conditions in one or more lines of business, rather than the improvement of production techniques or the betterment of the conditions of persons engaged in agriculture, the organization must qualify for exemption as a business league, board of trade, or other organization, as discussed next in the section on 501(c)(6) organizations. 1040nr The primary purpose of exempt agricultural and horticultural organizations must be to better the conditions of those engaged in agriculture or horticulture, develop more efficiency in agriculture or horticulture, or improve the products. 1040nr The following list contains some examples of activities that show an agricultural or horticultural purpose. 1040nr Promoting various cooperative agricultural, horticultural, and civic activities among rural residents by a state, farm, or home bureau. 1040nr Exhibiting livestock, farm products, and other characteristic features of agriculture and horticulture. 1040nr Testing soil for members and nonmembers of the farm bureau on a cost basis, the results of the tests and other recommendations being furnished to the community members to educate them in soil treatment. 1040nr Guarding the purity of a specific breed of livestock. 1040nr Encouraging improvements in the production of fish on privately owned fish farms. 1040nr Negotiating with processors for the price to be paid to members for their crops. 1040nr For more information on agricultural or horticultural organizations, see Life Cycle of an Agricultural or Horticultural Organization at IRS. 1040nr gov. 1040nr 501(c)(6) - Business Leagues, etc. 1040nr If your association wants to apply for recognition of exemption from federal income tax as a nonprofit business league, chamber of commerce, real estate board, or board of trade, it should file Form 1024. 1040nr For a discussion of the procedure to follow, see chapter 1. 1040nr Your organization must indicate in its application form and attached statements that no part of its net earnings will inure to the benefit of any private shareholder or individual and that it is not organized for profit or organized to engage in an activity ordinarily carried on for profit (even if the business is operated on a cooperative basis or produces only sufficient income to be self-sustaining). 1040nr In addition, your organization must be primarily engaged in activities or functions that are the basis for its exemption. 1040nr It must be primarily supported by membership dues and other income from activities substantially related to its exempt purpose. 1040nr A business league, in general, is an association of persons having some common business interest, the purpose of which is to promote that common interest and not to engage in a regular business of a kind ordinarily carried on for profit. 1040nr Trade associations and professional associations are considered business leagues. 1040nr Chamber of commerce. 1040nr   A chamber of commerce usually is composed of the merchants and traders of a city. 1040nr Board of trade. 1040nr   A board of trade often consists of persons engaged in similar lines of business. 1040nr For example, a nonprofit organization formed to regulate the sale of a specified agricultural commodity to assure equal treatment of producers, warehouse workers, and buyers is a board of trade. 1040nr   Chambers of commerce and boards of trade usually promote the common economic interests of all the commercial enterprises in a given trade community. 1040nr Real estate board. 1040nr   A real estate board consists of members interested in improving the business conditions in the real estate field. 1040nr It is not organized for profit and no part of the net earnings inures to the benefit of any private shareholder or individual. 1040nr Professional football leagues. 1040nr   The Internal Revenue Code specifically defines professional football leagues as exempt organizations under section 501(c)(6). 1040nr They are exempt whether or not they administer a pension fund for football players. 1040nr General purpose. 1040nr   You must indicate in the material submitted with your application that your organization will be devoted to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons. 1040nr It must be shown that the conditions of a particular trade or the interests of the community will be advanced. 1040nr Merely indicating the name of the organization or the object of the local statute under which it is created is not enough to demonstrate the required general purpose. 1040nr Line of business. 1040nr   This term generally refers either to an entire industry or to all components of an industry within a geographic area. 1040nr It does not include a group composed of businesses that market a particular brand within an industry. 1040nr Common business interest. 1040nr   A common business interest of all members of the organization must be established by the application documents. 1040nr Examples. 1040nr   Activities that would tend to illustrate a common business interest are: Promotion of higher business standards and better business methods and encouragement of uniformity and cooperation by a retail merchants association, Education of the public in the use of credit, Establishment of uniform casualty rates and compilation of statistical information by an insurance rating bureau operated by casualty insurance companies, Establishment and maintenance of the integrity of a local commercial market, Operation of a trade publication primarily intended to benefit an entire industry, and Encouragement of the use of goods and services of an entire industry (such as a lawyer referral service whose main purpose is to introduce individuals to the use of the legal profession in the hope that they will enter into lawyer-client relationships on a paying basis as a result). 1040nr Improvement of business conditions. 1040nr   Generally, this must be shown to be the purpose of the organization. 1040nr This is not established by evidence of particular services that provide a convenience or economy to individual members in their businesses, such as advertising that carries the name of members, interest-free loans, assigning exclusive franchise areas, operation of a real estate multiple listing system, or operation of a credit reporting agency. 1040nr Stock or commodity exchange. 1040nr   A stock or commodity exchange is not a business league, chamber of commerce, real estate board, or board of trade and is not exempt under section 501(c)(6). 1040nr Legislative activity. 1040nr   An organization that is exempt under section 501(c)(6) can work for the enactment of laws to advance the common business interests of the organization's members. 1040nr Deduction not allowed for dues used for political or legislative activities. 1040nr   A taxpayer cannot deduct the part of dues or other payments to a business league, trade association, labor union, or similar organization that is reported to the taxpayer by the organization as having been used for any of the following activities. 1040nr Influencing legislation. 1040nr Participating or intervening in a political campaign for, or against, any candidate for public office. 1040nr Trying to influence the general public, or part of the general public, with respect to elections, legislative matters, or referendums (also known as grass roots lobbying). 1040nr Communicating directly with certain executive branch officials to try to influence their official actions or positions. 1040nr See Dues Used for Lobbying or Political Activities under Required Disclosures in chapter 2 for more information. 1040nr Exception for local legislation. 1040nr   Members can deduct dues (or assessments) to an organization that are for expenses of: Appearing before, submitting statements to, or sending communications to members of a local council or similar governing body with respect to legislation or proposed legislation of direct interest to the member, or Communicating information between the member and the organization with respect to local legislation or proposed legislation of direct interest to the organization or the member. 1040nr Legislation or proposed legislation is of direct interest to a taxpayer if it will, or can reasonably be expected to, affect the taxpayer's trade or business. 1040nr De minimis exception. 1040nr   In-house expenditures of $2,000 or less for the year for activities (1) – (4) listed earlier will not prevent a deduction for dues if the dues meet all other tests to be deductible as a business expense. 1040nr Grass roots lobbying. 1040nr   A tax-exempt trade association, labor union, or similar organization is considered to be engaging in grass roots lobbying if it contacts prospective members or calls upon its own members to contact their employees and customers for the purpose of urging such persons to communicate with their elected state or Congressional representatives to support the promotion, defeat, or repeal of legislation that is of direct interest to the organization. 1040nr Any dues or assessments directly related to such activities are not deductible by the taxpayer, since the individuals being contacted, who are not members of the organization, are a segment of the general public. 1040nr Tax treatment of donations. 1040nr   Contributions to organizations described in this section are not deductible as charitable contributions on the donor's federal income tax return. 1040nr They may be deductible as trade or business expenses if ordinary and necessary in the conduct of the taxpayer's business. 1040nr   For more information on business leagues, see Life Cycle of a Business League (Trade Association) on IRS. 1040nr gov. 1040nr 501(c)(7) - Social and Recreation Clubs If your club is organized for pleasure, recreation, and other similar nonprofitable purposes and substantially all of its activities are for these purposes, it should file Form 1024 to apply for recognition of exemption from federal income tax. 1040nr In applying for recognition of exemption, you should submit the information described in this section. 1040nr Also see chapter 1 for the procedures to follow. 1040nr Typical organizations that should file for recognition of exemption as social clubs include: College alumni associations that are not described in chapter 3 under Alumni association , College fraternities or sororities operating chapter houses for students, Country clubs, Amateur hunting, fishing, tennis, swimming, and other sport clubs, Dinner clubs that provide a meeting place, library, and dining room for members, Hobby clubs, Garden clubs, and Variety clubs. 1040nr Discrimination prohibited. 1040nr   Your organization will not be recognized as tax exempt if its charter, bylaws, or other governing instrument, or any written policy statement provides for discrimination against any person on the basis of race, color, or religion. 1040nr   However, a club that in good faith limits its membership to the members of a particular religion to further the teachings or principles of that religion and not to exclude individuals of a particular race or color will not be considered as discriminating on the basis of religion. 1040nr Also, the restriction on religious discrimination does not apply to a club that is an auxiliary of a fraternal beneficiary society (discussed later) if that society is described in section 501(c)(8) and exempt from tax under section 501(a) and limits its membership to the members of a particular religion. 1040nr Private benefit prohibited. 1040nr   No part of the organization's net earnings can inure to the benefit of any person having a personal and private interest in the activities of the organization. 1040nr For purposes of this requirement, it is not necessary that net earnings be actually distributed. 1040nr Even undistributed earnings can benefit members. 1040nr Examples of this include a decrease in membership dues or an increase in the services the club provides to its members without a corresponding increase in dues or other fees paid for club support. 1040nr However, fixed-fee payments to members who bring new members into the club are not an inurement of the club's net earnings, if the payments are reasonable compensation for performance of a necessary administrative service. 1040nr Purposes. 1040nr   To show that your organization possesses the characteristics of a club within the meaning of the exemption law, you should submit evidence with your application that personal contact, commingling, and fellowship exist among members. 1040nr You must show that members are bound together by a common objective of pleasure, recreation, and other nonprofitable purposes. 1040nr   Fellowship need not be present between each member and every other member of a club if it is a material part in the life of the organization. 1040nr A statewide or nationwide organization that is made up of individual members, but is divided into local groups, satisfies this requirement if fellowship is a material part of the life of each local group. 1040nr   The term other nonprofitable purposes means other purposes similar to pleasure and recreation. 1040nr For example, a club that, in addition to its social activities, has a plan for the payment of sick and death benefits is not operating exclusively for pleasure, recreation, and other nonprofitable purposes. 1040nr Limited membership. 1040nr   The membership in a social club must be limited. 1040nr To show that your organization has a purpose that would characterize it as a club, you should submit evidence with your application that there are limits on admission to membership consistent with the character of the club. 1040nr   A social club that issues corporate membership is dealing with the general public in the form of the corporation's employees. 1040nr Corporate members of a club are not the kind of members contemplated by the law. 1040nr Gross receipts from these members would be a factor in determining whether the club qualifies as a social club. 1040nr See Gross receipts from nonmembership sources , later. 1040nr Bona fide individual memberships paid for by a corporation would not have an effect on the gross receipts source. 1040nr   The fact that a social club may have an associate (nonvoting) class of membership will not be, in and of itself, a cause for nonrecognition of exemption. 1040nr However, if one membership class pays substantially lower dues and fees than another membership class, although both classes enjoy the same rights and privileges in using the club facilities, there may be an inurement of income to the benefited class, resulting in a denial of the club's exemption. 1040nr Support. 1040nr   In general, your club should be supported solely by membership fees, dues, and assessments. 1040nr However, if otherwise entitled to exemption, your club will not be disqualified because it raises revenue from members through the use of club facilities or in connection with club activities. 1040nr Business activities. 1040nr   If your club will engage in business, such as selling real estate, timber, or other products or services, it generally will be denied exemption. 1040nr However, evidence submitted with your application form that your organization will provide meals, refreshments, or services related to its exempt purposes only to its own members or their dependents or guests will not cause denial of exemption. 1040nr Facilities open to public. 1040nr   Evidence that your club's facilities will be open to the general public (persons other than members or their dependents or guests) may cause denial of exemption. 1040nr This does not mean, however, that any dealing with outsiders will automatically deprive a club of exemption. 1040nr Gross receipts from nonmembership sources. 1040nr   A section 501(c)(7) organization can receive up to 35% of its gross receipts, including investment income, from sources outside of its membership without losing its tax-exempt status. 1040nr Income from nontraditional business activity with members is not exempt function income, and thus is included as income from sources outside of the membership. 1040nr Of the 35% gross receipts listed above, up to 15% of the gross receipts can be derived from the use of the club's facilities or services by the general public. 1040nr If an organization has outside income that is more than these limits, all the facts and circumstances will be taken into account in determining whether the organization qualifies for exempt status. 1040nr Gross receipts. 1040nr   Gross receipts, for this purpose, are receipts from the normal and usual (traditionally conducted) activities of the club. 1040nr These receipts include charges, admissions, membership fees, dues, assessments, investment income, and normal recurring capital gains on investments. 1040nr Receipts do not include initiation fees and capital contributions. 1040nr Unusual amounts of income, such as from the sale of a clubhouse or similar facility, are not included in gross receipts or in figuring the percentage limits. 1040nr Nontraditional activities. 1040nr   Activities conducted by a social club need to further its exempt purposes. 1040nr Traditional business activities are those that further a social club's exempt purposes. 1040nr Nontraditional business activities do not further the exempt purposes of a social club even if conducted solely on a membership basis. 1040nr Nontraditional business activities are prohibited (subject to an insubstantial, trivial, and nonrecurrent test) for businesses conducted with both members and nonmembers. 1040nr Examples of nontraditional business activities include sale of package liquor, take-out food, and long-term room rental. 1040nr Fraternity foundations. 1040nr   If your organization is a foundation formed for the exclusive purpose of acquiring and leasing a chapter house to a local fraternity chapter or sorority chapter maintained at an educational institution and does not engage in any social or recreational activities, it may be a title holding corporation (discussed later under section 501(c)(2) organizations and under section 501(c)(25) organizations) rather than a social club. 1040nr Tax treatment of donations. 1040nr   Donations to exempt social and recreation clubs are not deductible as charitable contributions on the donor's federal income tax return. 1040nr 501(c)(8) and 501(c)(10) - Fraternal Beneficiary Societies and Domestic Fraternal Societies This section describes the information to be provided upon application for recognition of exemption by two types of fraternal societies: beneficiary and domestic. 1040nr The major distinction is that fraternal beneficiary societies provide for the payment of life, sick, accident, or other benefits to their members or their dependents, while domestic fraternal societies do not provide these benefits but rather devote their earnings to fraternal, religious, charitable, etc. 1040nr , purposes. 1040nr The procedures to follow in applying for recognition of exemption are described in chapter 1. 1040nr If your organization is controlled by a central organization, you should check with your controlling organization to determine whether your unit has been included in a group exemption letter or can be added. 1040nr If so, your organization need not apply for individual recognition of exemption. 1040nr For more information, see Group Exemption Letter in chapter 1 of this publication. 1040nr Tax treatment of donations. 1040nr   Donations by an individual to a domestic fraternal beneficiary society or a domestic fraternal society operating under the lodge system are deductible as charitable contributions only if used exclusively for religious, charitable, scientific, literary, or educational purposes or for the prevention of cruelty to children or animals. 1040nr Fraternal Beneficiary Societies (501(c)(8)) A fraternal beneficiary society, order, or association must file an application for recognition of exemption from federal income tax on Form 1024. 1040nr The application and accompanying statements should establish that the organization: Is a fraternal organization, Operates under the lodge system or for the exclusive benefit of the members of a fraternal organization itself operating under the lodge system, and Provides for the payment of life, sick, accident, or other benefits to the members of the society, order, or association or their dependents. 1040nr Lodge system. 1040nr   Operating under the lodge system means carrying on activities under a form of organization that comprises local branches, chartered by a parent organization and largely self-governing, called lodges, chapters, or the like. 1040nr Payment of benefits. 1040nr   It is not essential that every member be covered by the society's program of sick, accident, or death benefits. 1040nr An organization can qualify for exemption if most of its members are eligible for benefits, and the benefits are paid from contributions or dues paid by those members. 1040nr   The benefits must be limited to members and their dependents. 1040nr If members will have the ability to confer benefits to other than themselves and their dependents, exemption will not be recognized. 1040nr Whole-life insurance. 1040nr   Whole-life insurance constitutes a life benefit under section 501(c)(8) even though the policy may contain investment features such as a cash surrender value or a policy loan. 1040nr Reinsurance pool. 1040nr   Payments by a fraternal beneficiary society into a state-sponsored reinsurance pool that protects participating insurers against excessive losses on major medical health and accident insurance will not preclude exemption as a fraternal beneficiary society. 1040nr Domestic Fraternal Societies (501(c)(10)) A domestic fraternal society, order, or association must file an application for recognition of exemption from federal income tax on Form 1024. 1040nr The application and accompanying statements should establish that the organization: Is a domestic fraternal organization organized in the U. 1040nr S. 1040nr , Operates under the lodge system, Devotes its net earnings exclusively to religious, charitable, scientific, literary, educational, and fraternal purposes, and Does not provide for the payment of life, sick, accident, or other benefits to its members. 1040nr The organization can arrange with insurance companies to provide optional insurance to its members without jeopardizing its exempt status. 1040nr 501(c)(4), 501(c)(9), and 501(c)(17) - Employees' Associations This section describes the information to be provided upon application for recognition of exemption by the following types of employees' associations: A voluntary employees' beneficiary association (including federal employees' associations) organized to pay life, sick, accident, and similar benefits to members or their dependents, or designated beneficiaries, if no part of the net earnings of the association inures to the benefit of any private shareholder or individual, and A supplemental unemployment benefit trust whose primary purpose is providing for payment of supplemental unemployment benefits. 1040nr Both the application form to file and the information to provide are discussed later under the section that describes your employee association. 1040nr Chapter 1 describes the procedures to follow in applying for exemption. 1040nr Tax treatment of donations. 1040nr   Donations to these organizations are not deductible as charitable contributions on the donor's federal income tax return. 1040nr Local Employees' Associations (501(c)(4)) A local association of employees whose membership is limited to employees of a designated person or persons in a particular municipality, and whose income will be devoted exclusively to charitable, educational, or recreational purposes. 1040nr A local employees' association must apply for recognition of exemption by filing Form 1024. 1040nr The organization must submit evidence that: It is of a purely local character, Its membership is limited to employees of a designated person or persons in a particular locality, and Its net earnings will be devoted exclusively to charitable, educational, or recreational purposes. 1040nr A local association of employees that has established a system of paying retirement or death benefits, or both, to its members will not qualify for exemption since the payment of these benefits is not considered as being for charitable, educational, or recreational purposes. 1040nr Similarly, a local association of employees that is operated primarily as a cooperative buying service for its members in order to obtain discount prices on merchandise, services, and activities does not qualify for exemption. 1040nr Voluntary Employees' Beneficiary Associations (501(c)(9)) An application for recognition of exemption as a voluntary employees' beneficiary association must be filed on Form 1024. 1040nr The material submitted with the application must show that your organization: Is a voluntary association of employees, Will provide for payment of life, sick, accident, or other benefits to members or their dependents or designated beneficiaries and substantially all of its operations are for this purpose, and Will not allow any of its net earnings to inure to the benefit of any private individual or shareholder except in the form of scheduled benefit payments. 1040nr To be complete, an application must include a copy of the document (such as the trust instrument) by which the organization was created; a full description of the benefits available to participants and the terms and conditions of eligibility for benefits (usually contained in a plan document); and, if providing benefits pursuant to a collective bargaining agreement, a copy of that agreement. 1040nr Note. 1040nr Under section 4976, the reversion of funds from a section 501(c)(9) organization to the employer who created the beneficiary association may subject the employer to a 100% penalty excise tax on the amount of the reversion. 1040nr Notice requirement. 1040nr   An organization will not be considered tax exempt under this section unless the organization gives notice to the IRS that it is applying for recognition of exempt status. 1040nr The organization gives notice by filing Form 1024. 1040nr If the notice is not given by 15 months after the end of the month in which the organization was created, the organization will not be exempt for any period before notice is given. 1040nr An extension of time for filing the notice can be granted under the same procedures as those described for section 501(c)(3) organizations in chapter 3 under Application for Recognition of Exemption . 1040nr Membership. 1040nr   Membership of a section 501(c)(9) organization must consist of individuals who are employees and have an employment-related common bond. 1040nr This common bond can be a common employer (or affiliated employers), coverage under one or more collective bargaining agreements, membership in a labor union, or membership in one or more locals of a national or international labor union. 1040nr   The membership of an association can include some individuals who are not employees, provided they have an employment-related bond with the employee-members. 1040nr For example, the owner of a business whose employees are members of the association can be a member. 1040nr An association will be considered composed of employees if 90% of its total membership on one day of each quarter of its tax year consists of employees. 1040nr Employees. 1040nr   Employees include individuals who became entitled to membership because they are or were employees. 1040nr For example, an individual will qualify as an employee even though the individual is on a leave of absence or has been terminated due to retirement, disability, or layoff. 1040nr   Generally, membership is voluntary if an affirmative act is required on the part of an employee to become a member. 1040nr Conversely, membership is involuntary if the designation as a member is due to employee status. 1040nr However, an association will be considered voluntary if employees are required to be members of the organization as a condition of their employment and they do not incur a detriment (such as a payroll deduction) as a result of their membership. 1040nr An employer has not imposed involuntary membership on the employee if membership is required as the result of a collective bargaining agreement or as an incident of membership in a labor organization. 1040nr Payment of benefits. 1040nr   The information submitted with your application must show that your organization will pay life, sick, accident, supplemental unemployment, or other similar benefits. 1040nr The benefits can be provided directly by your association or indirectly by your association through the payments of premiums to an insurance company (or fees to a medical clinic). 1040nr Benefits can be in the form of medical, clinical, or hospital services, transportation furnished for medical care, or money payments. 1040nr Nondiscrimination requirements. 1040nr   An organization that is part of a plan will not be exempt unless the plan meets certain nondiscrimination requirements. 1040nr However, if the organization is part of a plan that is a collective bargaining agreement that was the subject of good faith bargaining between employee organizations and employers, the plan need not meet these requirements for the organization to qualify as tax exempt. 1040nr   A plan meets the nondiscrimination requirements only if both of the following statements are true. 1040nr Each class of benefits under the plan is provided under a classification of employees that is set forth in the plan and does not discriminate in favor of employees who are highly compensated individuals. 1040nr The benefits provided under each class of benefits do not discriminate in favor of highly compensated individuals. 1040nr A life insurance, disability, severance pay, or supplemental unemployment compensation benefit does not discriminate in favor of highly compensated individuals merely because the benefits available bear a uniform relationship to the total compensation, or the basic or regular rate of compensation, of employees covered by the plan. 1040nr   For purposes of determining whether a plan meets the nondiscrimination requirements, the employer can elect to exclude all disability or severance payments payable to individuals who are in pay status as of January 1, 1985. 1040nr This will not apply to any increase in such payment by any plan amendment adopted after June 22, 1984. 1040nr   If a plan provides a benefit for which there is a nondiscrimination provision provided under Chapter 1 of the Internal Revenue Code as a condition of that benefit being excluded from gross income, these nondiscrimination requirements do not apply. 1040nr The benefit will be considered nondiscriminatory only if it meets the nondiscrimination provision of the applicable Code section. 1040nr For example, benefits provided under a medical reimbursement plan would meet the nondiscrimination requirements for an association, if the benefits meet the nondiscrimination requirements of section 105(h)(3) and 105(h)(4). 1040nr Excluded employees. 1040nr   Certain employees who are not covered by a plan can be excluded from consideration in applying these requirements. 1040nr These include employees: Who have not completed 3 years of service, Who have not attained age 21, Who are seasonal or less than half-time employees, Who are not in the plan and who are included in a unit of employees covered by a collective bargaining agreement if the class of benefits involved was the subject of good faith bargaining, or Who are nonresident aliens and who receive no earned income from the employer that has United States source income. 1040nr Highly compensated individual. 1040nr   A highly compensated individual is one who: Owned 5 percent or more of the employer at any time during the current year or the preceding year, Received more than $115,000 in compensation from the employer for the preceding year (the amount is annualized for inflation. 1040nr Go to IRS. 1040nr gov, and search “Pension Plan Limitation” for the year), and Was among the top 20% of employees by compensation for the preceding year. 1040nr However, the employer can choose not to have (3) apply. 1040nr Aggregation rules. 1040nr   The employer can choose to treat two or more plans as one plan for purposes of meeting the nondiscrimination requirements. 1040nr Employees of controlled groups of corporations, trades, or businesses under common control, or members of an affiliated service group, are treated as employees of a single employer. 1040nr Leased employees are treated as employees of the recipient. 1040nr One employee. 1040nr   A trust created to provide benefits to one employee will not qualify as a voluntary employees' beneficiary association under section 501(c)(9). 1040nr Supplemental Unemployment Benefit Trusts (501(c)(17)) A trust or trusts forming part of a written plan (established and maintained by an employer, his or her employees, or both) providing solely for the payment of supplemental unemployment compensation benefits must file the application for recognition of exemption on Form 1024. 1040nr The trust must be a valid, existing trust under local law and must be evidenced by an executed document. 1040nr A conformed copy of the plan of which the trust is a part should be attached to the application. 1040nr To be complete, an application must include a copy of the document (such as the trust instrument) by which the organization was created; a full description of the benefits available to participants and the terms and conditions of eligibility for benefits (usually contained in a plan document); and, if providing benefits pursuant to a collective bargaining agreement, a copy of that agreement. 1040nr Note. 1040nr Under section 4976, the reversion of funds from a section 501(c)(17) organization to the employer who created the supplemental unemployment benefit trust may subject the employer to a 100% penalty excise tax on the amount of the reversion. 1040nr Notice requirement. 1040nr   An organization will not be considered tax exempt under this section unless the organization gives notice to the IRS that it is applying for recognition of exempt status. 1040nr The organization gives notice by filing Form 1024. 1040nr If the notice is not given by 15 months after the end of the month in which the organization was created, the organization will not be exempt for any period before such notice is given. 1040nr An extension of time for filing the notice is granted under the same procedures as those described for section 501(c)(3) organizations in chapter 3 under Application for Recognition of Exemption . 1040nr Types of payments. 1040nr   You must show that the supplemental unemployment compensation benefits will be benefits paid to an employee because of the employee's involuntary separation from employment (whether or not the separation is temporary) resulting directly from a reduction-in-force, discontinuance of a plant or operation, or other similar conditions. 1040nr In addition, sickness and accident benefits (but not vacation, retirement, or death benefits) may be included in the plan if these are subordinate to the unemployment compensation benefits. 1040nr Diversion of funds. 1040nr   It must be impossible under the plan (at any time before the satisfaction of all liabilities with respect to employees under the plan) to use or to divert any of the corpus or income of the trust to any purpose other than the payment of supplemental unemployment compensation benefits (or sickness or accident benefits to the extent just explained). 1040nr Discrimination in benefits. 1040nr   Neither the terms of the plan nor the actual payment of benefits can be discriminatory in favor of the company's officers, stockholders, supervisors, or highly paid employees. 1040nr However, a plan is not discriminatory merely because benefits bear a uniform relationship to compensation or the rate of compensation. 1040nr Prohibited transactions and exemption. 1040nr   If your organization is a supplemental unemployment benefit trust and has received a denial of exemption because it engaged in a prohibited transaction, as defined by section 503(b), it can file a claim for exemption in any tax year following the tax year in which the notice of denial was issued. 1040nr It must file the claim on Form 1024. 1040nr The organization must include a written declaration that it will not knowingly again engage in a prohibited transaction. 1040nr An authorized principal officer of your organization must make this declaration under the penalties of perjury. 1040nr   If your organization has satisfied all requirements as a supplemental unemployment benefit trust described in section 501(c)(17), it will be notified in writing that it has been recognized as exempt. 1040nr However, the organization will be exempt only for those tax years after the tax year in which the claim for exemption (Form 1024) is filed. 1040nr Tax year in this case means the established annual accounting period of the organization or, if the organization has not established an annual accounting period, the calendar year. 1040nr For more information about the requirements for reestablishing an exemption previously denied, contact the IRS. 1040nr 501(c)(12) - Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like Organizations Each of the following organizations apply for recognition of exemption from federal income tax by filing Form 1024. 1040nr Benevolent life insurance associations of a purely local character and like organizations. 1040nr Mutual ditch or irrigation companies and like organizations. 1040nr Mutual or cooperative telephone companies and like organizations. 1040nr A like organization is an organization that performs a service comparable to that performed by any one of the above organizations. 1040nr The information to be provided upon application by each of these organizations is described in this section. 1040nr For information as to the procedures to follow in applying for exemption, see chapter 1. 1040nr General requirements. 1040nr   These organizations must use their income solely to cover losses and expenses, with any excess being returned to members or retained to cover future losses and expenses. 1040nr They must collect at least 85% of their income from members for the sole purpose of meeting losses and expenses. 1040nr Mutual character. 1040nr   These organizations, other than benevolent life insurance associations, must be organized and operated on a mutual or cooperative basis. 1040nr They are associations of persons or organizations, or both, banded together to provide themselves a mutually desirable service approximately at cost and on a mutual basis. 1040nr To maintain the mutual characteristic of democratic ownership and control, they must be so organized and operated that their members have the right to choose the management, to receive services at cost, to receive a return of any excess of payments over losses and expenses, and to share in any assets upon dissolution. 1040nr   The rights and interests of members in the annual savings of the organization must be determined in proportion to their business with the organization. 1040nr Upon dissolution, gains from the sale of appreciated assets must be distributed to all persons who were members during the period the assets were owned by the organization in proportion to the amount of business done during that period. 1040nr The bylaws must not provide for forfeiture of a member's rights and interest upon withdrawal or termination. 1040nr Membership. 1040nr   Membership of a mutual organization consists of those who join the organization to obtain its services, and have a voice in its management. 1040nr In a stock company, the stockholders are members. 1040nr However, a mutual life insurance organization cannot have policyholders other than its members. 1040nr Losses and expenses. 1040nr   In furnishing services substantially at cost, an organization must use its income solely for paying losses and expenses. 1040nr Any excess income not retained in reasonable reserves for future losses and expenses belongs to members in proportion to their patronage or business done with the organization. 1040nr If such patronage refunds are retained in reasonable amounts for purposes of expanding and improving facilities, retiring capital indebtedness, acquiring other assets, and unexpected expenses, the organization must maintain records sufficient to reflect the equity of each member in the assets acquired with the funds. 1040nr Distributions of proceeds. 1040nr   The cooperative may distribute the unexpended balance of collections or assessments remaining on hand at the end of the year to members or patrons prorated on the basis of their patronage or business done with the cooperative. 1040nr Such distribution represents a refund in the costs of services rendered to the member. 1040nr The 85% Requirement All of the organizations listed above must submit evidence with their application that they receive 85% or more of their gross income from their members for the sole purpose of meeting losses and expenses. 1040nr Nevertheless, certain items of income are excluded from the computation of the 85% requirement if the organization is a mutual or cooperative telephone or electric company. 1040nr Mutual or cooperative telephone company. 1040nr   A mutual or cooperative telephone company will exclude from the computation of the 85% requirement any income received or accrued from: A nonmember telephone company for the performance of communication services involving the completion of long distance calls to, from, or between members of the mutual or cooperative telephone company, Qualified pole rentals, The sale of display listings in a directory furnished to its members, or The prepayment of a loan created in 1987, 1988, or 1989, under section 306A, 306B, or 311 of the Rural Electrification Act of 1936. 1040nr Mutual or cooperative electric company. 1040nr   A mutual or cooperative electric company will exclude from the computation of the 85% requirement any income received or accrued from: Qualified pole rentals, Any provision or sale of electric energy transmission services or ancillary service if the services are provided on a nondiscriminatory open access basis under an open access transmission tariff approved or accepted by the Federal Energy Regulatory Commission (FERC) or under an independent transmission provider agreement approved or accepted by FERC (other than income received or accrued directly or indirectly from a member), The provision or sale of electric energy distribution services or ancillary services if the services are provided on a nondiscriminatory open-access basis to distribute electric energy not owned by the mutual or electric cooperative company: To end-users who are served by distribution facilities not owned by the company or any of its members (other than income received or accrued directly or indirectly from a member), or Generated by a generation facility not owned or leased by the company or any of its members and which is directly connected to distribution facilities owned by the company or any of its members (other than income received or accrued directly or indirectly from a member), Any nuclear decommissioning transaction, or Any asset exchange or conversion transaction. 1040nr   An electric cooperative's sale of excess fuel at cost in the year of purchase is not income for purposes of determining compliance with the 85% requirement. 1040nr Qualified pole rental. 1040nr   The term qualified pole rental means any rental of a pole (or other structure used to support wires) if the pole (or other structure) is used: By the telephone or electric company to support one or more wires that are used by the company in providing telephone or electric services to its members, and Pursuant to the rental to support one or more wires (in addition to wires described in (1)) for use in connection with the transmission by wire of electricity or of telephone or other communications. 1040nr   The term rental, for this purpose, includes any sale of the right to use the pole (or other structure). 1040nr The 85% requirement is applied on the basis of an annual accounting period. 1040nr Failure of an organization to meet the requirement in a particular year precludes exemption for that year, but has no effect upon exemption for years in which the 85% requirement is met. 1040nr Gain from the sale or conversion of the organization's property is not considered an amount received from members in determining whether the organization's income consists of amounts collected from members. 1040nr Because the 85% income test is based on gross income, capital losses cannot be used to reduce capital gains for purposes of this test. 1040nr Example. 1040nr   The books of an organization reflect the following for the calendar year. 1040nr Collections from members $2,400 Short-term capital gains 600 Short-term capital losses 400 Other income None Gross income ($2,400 + $600 =$3000) 100% Collected from members ($2,400) 80%   Since amounts collected from members do not constitute at least 85% of gross income, the organization is not entitled to exemption from federal income tax for the year. 1040nr   Voluntary contributions in the nature of gifts are not taken into account for purposes of the 85% computation. 1040nr   Other tax-exempt income besides gifts is considered as income received from other than members in applying the 85% test. 1040nr   If the 85% test is not met, your organization, if classifiable under this section, will not qualify for exemption as any other type of organization described in this publication. 1040nr Tax treatment of donations. 1040nr   Donations to an organization described in this section are not deductible as charitable contributions on the donor's federal income tax return. 1040nr Local Life Insurance Associations A benevolent life insurance association or an organization seeking recognition of exemption on grounds of similarity to a benevolent life insurance association must submit evidence upon applying for recognition of exemption that it will be of a purely local character, that its excess funds will be refunded to members or retained in reasonable reserves to meet future losses and expenses, and that it meets the 85% income requirement. 1040nr If an organization issues policies for stipulated cash premiums, or if it requires advance deposits to cover the cost of the insurance and maintains investments from which more than 15% of its income is derived, it will not be entitled to exemption. 1040nr To establish that your organization is of a purely local character, it should show that its activities will be confined to a particular community, place, or district irrespective of political subdivisions. 1040nr If the activities of an organization are limited only by the borders of a state, it cannot be purely local in character. 1040nr A benevolent life insurance association that does not terminate membership when a member moves from the local area in which the association operates will qualify for exemption if it meets the other requirements. 1040nr A copy of each type of policy issued by your organization should be included with the application for recognition of exemption. 1040nr Organizations similar to local benevolent life insurance companies. 1040nr   These organizations include those that in addition to paying death benefits also provide for the payment of sick, accident, or health benefits. 1040nr However, an organization that pays only sick, accident, or health benefits, but not life insurance benefits, is not an organization similar to a benevolent life insurance association and should not apply for recognition of exemption as described in this section. 1040nr Burial and funeral benefit insurance organization. 1040nr   This type of organization can apply for recognition of exemption as an organization similar to a benevolent life insurance company if it establishes that the benefits are paid in cash and if it is not engaged directly in the manufacture of funeral supplies or the performance of funeral services. 1040nr An organization that provides its benefits in the form of supplies and service is not a life insurance company. 1040nr Such an organization can seek recognition of exemption from federal income tax, however, as a mutual insurance company other than life. 1040nr Mutual or Cooperative Associations Mutual ditch or irrigation companies, mutual or cooperative telephone companies, and like organizations need not establish that they are of a purely local character. 1040nr They can serve noncontiguous areas. 1040nr Like organization. 1040nr   A like organization is a cooperative or mutual organization that performs a service similar to mutual ditch, irrigation, telephone, or electric companies. 1040nr Examples include the following: cooperatives that provide protection of river banks to prevent erosion, water and sewer services, cable television, satellite, television, cellular phone services, two-way radio service, or natural gas services. 1040nr 501(c)(13) - Cemetery Companies If your organization wishes to obtain recognition of exemption from federal income tax as a cemetery company or a corporation chartered solely for the purpose of the disposal of human bodies by burial or cremation, it must file an application on Form 1024. 1040nr For the procedure to follow to file an application, see Application, Approval, and Appeal Procedures in chapter 1. 1040nr A nonprofit mutual cemetery company that seeks recognition of exemption should submit evidence with its application that it is owned and operated exclusively for the benefit of its lot owners who hold lots for bona fide burial purposes and not for purposes of resale. 1040nr A mutual cemetery company that also engages in charitable activities, such as the burial of paupers, will be regarded as operating within this standard. 1040nr The fact that a mutual cemetery company limits its membership to a particular class of individuals, such as members of a family, will not affect its status as mutual so long as all the other requirements of section 501(c)(13) are met. 1040nr If your organization is a nonprofit corporation chartered solely for the purpose of the disposal of human bodies by burial or cremation, you should show that it is not permitted by its charter to engage in any business not necessarily incident to that purpose. 1040nr Operating a mortuary is not permitted. 1040nr However, selling monuments, markers, vaults, and flowers solely for use in the cemetery is permitted if the profits from these sales are used to maintain the cemetery as a whole. 1040nr How income can be used. 1040nr   You should show that your organization's earnings are or will be used only in one or more of the following ways. 1040nr To pay the ordinary and necessary expenses of operating, maintaining, and improving the cemetery or crematorium. 1040nr To buy cemetery property. 1040nr To create a fund that will provide a source of income for the perpetual care of the cemetery or a reasonable reserve for any ordinary or necessary purpose. 1040nr No part of the net earnings of your organization can inure to the benefit of any private shareholder or individual. 1040nr Ordinary and necessary expenses in connection with the operation, management, maintenance, and improvement of the cemetery are permitted, as are reasonable fees for the services of a manager. 1040nr Buying cemetery property. 1040nr   Payments can be made to amortize debt incurred to buy land, but cannot be in the nature of profit distributions. 1040nr You must show the method used to finance the purchase of the cemetery property and that the purchase price of the land at the time of its sale to the cemetery was not unreasonable. 1040nr   Except for holders of preferred stock (discussed later), no person can have any interest in the net earnings of a tax-exempt cemetery company or crematorium. 1040nr Therefore, if property is transferred to the organization in exchange for an interest in the organization's net earnings, the organization will not
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Tax Relief for Victims of the Remnants of Tropical Storm Lee in New York

IRS e-File to Remain Open through Oct. 31 for Victims of Tropical Storm Lee

Updated 10/24/11 to add Herkimer and Schoharie counties.
Updated 10/11/11 to add Fulton county.
Updated 10/5/11 to add Oneida, Orange and Ulster counties.
Updated 9/20/11 to add Chemung and Schenectady counties.

NY-2011-36, Sept. 14, 2011

NEW YORK — Victims of the remnants of Tropical Storm Lee that began on Sept. 7, 2011 in parts of New York State may qualify for tax relief from the Internal Revenue Service.

The President has declared the following counties a federal disaster area: Broome, Chemung, Chenango, Delaware, Fulton, Herkimer Oneida, Orange, Otsego, Schenectady, Schoharie, Tioga and Ulster. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Sept. 7, and on or before Oct. 31, have been postponed to Oct. 31, 2011. This includes corporations and other businesses that previously obtained an extension until Sept. 15 to file their 2010 returns, and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter, normally due Sept. 15.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Sept. 7, and on or before Sept. 22, as long as the deposits are made by Sept. 22, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Oct. 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Sept. 7 and on or before Oct. 31.

The IRS also gives affected taxpayers until Oct. 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Sept. 7 and on or before Oct. 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Sept. 7 and on or before Sept. 22 provided the taxpayer makes these deposits by Sept. 22.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “New York/Remnants of Tropical Storm Lee” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

Page Last Reviewed or Updated: 26-Mar-2014

The 1040nr

1040nr Publication 971 - Additional Material Table of Contents How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). 1040nr Questions & AnswersThis section answers questions commonly asked by taxpayers about innocent spouse relief. 1040nr . 1040nr What is joint and several liability? . 1040nr How can I get relief from joint and several liability? . 1040nr What are the rules for innocent spouse relief? . 1040nr What are erroneous items? . 1040nr What is an understated tax? . 1040nr Will I qualify for innocent spouse relief in any situation where there is an understated tax? . 1040nr What are the rules for separation of liability relief? . 1040nr Why would a request for separation of liability relief be denied? . 1040nr What are the rules for equitable relief? . 1040nr How do state community property laws affect my ability to qualify for relief? . 1040nr How do I request relief? . 1040nr When should I file Form 8857? . 1040nr Where should I file Form 8857? . 1040nr I am currently undergoing an examination of my return. 1040nr How do I request innocent spouse relief? . 1040nr What if the IRS has given me notice that it will levy my account for the tax liability and I decide to request relief? . 1040nr What is injured spouse relief? . 1040nr What is joint and several liability? When you file a joint income tax return, the law makes both you and your spouse responsible for the entire tax liability. 1040nr This is called joint and several liability. 1040nr Joint and several liability applies not only to the tax liability you show on the return but also to any additional tax liability the IRS determines to be due, even if the additional tax is due to the income, deductions, or credits of your spouse or former spouse. 1040nr You remain jointly and severally liable for taxes, and the IRS still can collect from you, even if you later divorce and the divorce decree states that your former spouse will be solely responsible for the tax. 1040nr There are three types of relief for filers of joint returns: “innocent spouse relief,” “separation of liability relief,” and “equitable relief. 1040nr ” Each type has different requirements. 1040nr They are explained separately below. 1040nr To qualify for innocent spouse relief, you must meet all of the following conditions. 1040nr You must have filed a joint return which has an understated tax. 1040nr The understated tax must be due to erroneous items of your spouse (or former spouse). 1040nr You must establish that at the time you signed the joint return, you did not know, and had no reason to know, that there was an understated tax. 1040nr Taking into account all of the facts and circumstances, it would be unfair to hold you liable for the understated tax. 1040nr You must request relief within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. 1040nr Erroneous items are any deductions, credits, or bases that are incorrectly stated on the return, and any income that is not properly reported on the return. 1040nr You have an understated tax if the IRS determined that your total tax should be more than the amount actually shown on your return. 1040nr For example, you reported total tax on your 2008 return of $2,500. 1040nr IRS determined in an audit of your 2008 return that the total tax should be $3,000. 1040nr You have a $500 understated tax. 1040nr No. 1040nr There are many situations in which you may owe tax that is related to your spouse (or former spouse), but not be eligible for innocent spouse relief. 1040nr For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. 1040nr You are not eligible for innocent spouse relief because you have knowledge of the understated tax. 1040nr Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). 1040nr The understated tax allocated to you is generally the amount you are responsible for. 1040nr To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. 1040nr You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. 1040nr (Under this rule, you are no longer married if you are widowed. 1040nr ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. 1040nr In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. 1040nr Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. 1040nr The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. 1040nr The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). 1040nr Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. 1040nr Equitable relief is only available if you meet all of the following conditions. 1040nr You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. 1040nr You have an understated tax or underpaid tax. 1040nr See Note later. 1040nr You did not pay the tax. 1040nr However, see Refunds , earlier, for exceptions. 1040nr The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. 1040nr You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. 1040nr Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. 1040nr You did not file or fail to file your return with the intent to commit fraud. 1040nr The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. 1040nr For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. 1040nr You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. 1040nr Note. 1040nr Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. 1040nr (An underpaid tax is tax that is properly shown on the return, but has not been paid. 1040nr ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 1040nr Generally, community property laws require you to allocate community income and expenses equally between both spouses. 1040nr However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. 1040nr      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. 1040nr You must file an additional Form 8857 if you are requesting relief for more than three years. 1040nr If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. 1040nr If you are requesting equitable relief, see Exception for equitable relief. 1040nr under How To Request Relief, earlier, for when to file Form 8857. 1040nr If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. 1040nr Use the address or fax number shown in the Instructions for Form 8857. 1040nr File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. 1040nr Do not file it with the employee assigned to examine your return. 1040nr Generally, the IRS has 10 years to collect an amount you owe. 1040nr This is the collection statute of limitations. 1040nr By law, the IRS is not allowed to collect from you after the 10-year period ends. 1040nr If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. 1040nr But interest and penalties continue to accrue. 1040nr Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. 1040nr This includes the time the Tax Court is considering your request. 1040nr After your case is resolved, the IRS can begin or resume collecting from you. 1040nr The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. 1040nr See Publication 594 for more information. 1040nr Injured spouse relief is different from innocent spouse relief. 1040nr When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. 1040nr The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. 1040nr You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). 1040nr You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. 1040nr You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. 1040nr Note. 1040nr If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. 1040nr . 1040nr How can I get relief from joint and several liability? There are three types of relief for filers of joint returns: “innocent spouse relief,” “separation of liability relief,” and “equitable relief. 1040nr ” Each type has different requirements. 1040nr They are explained separately below. 1040nr To qualify for innocent spouse relief, you must meet all of the following conditions. 1040nr You must have filed a joint return which has an understated tax. 1040nr The understated tax must be due to erroneous items of your spouse (or former spouse). 1040nr You must establish that at the time you signed the joint return, you did not know, and had no reason to know, that there was an understated tax. 1040nr Taking into account all of the facts and circumstances, it would be unfair to hold you liable for the understated tax. 1040nr You must request relief within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. 1040nr Erroneous items are any deductions, credits, or bases that are incorrectly stated on the return, and any income that is not properly reported on the return. 1040nr You have an understated tax if the IRS determined that your total tax should be more than the amount actually shown on your return. 1040nr For example, you reported total tax on your 2008 return of $2,500. 1040nr IRS determined in an audit of your 2008 return that the total tax should be $3,000. 1040nr You have a $500 understated tax. 1040nr No. 1040nr There are many situations in which you may owe tax that is related to your spouse (or former spouse), but not be eligible for innocent spouse relief. 1040nr For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. 1040nr You are not eligible for innocent spouse relief because you have knowledge of the understated tax. 1040nr Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). 1040nr The understated tax allocated to you is generally the amount you are responsible for. 1040nr To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. 1040nr You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. 1040nr (Under this rule, you are no longer married if you are widowed. 1040nr ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. 1040nr In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. 1040nr Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. 1040nr The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. 1040nr The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). 1040nr Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. 1040nr Equitable relief is only available if you meet all of the following conditions. 1040nr You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. 1040nr You have an understated tax or underpaid tax. 1040nr See Note later. 1040nr You did not pay the tax. 1040nr However, see Refunds , earlier, for exceptions. 1040nr The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. 1040nr You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. 1040nr Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. 1040nr You did not file or fail to file your return with the intent to commit fraud. 1040nr The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. 1040nr For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. 1040nr You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. 1040nr Note. 1040nr Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. 1040nr (An underpaid tax is tax that is properly shown on the return, but has not been paid. 1040nr ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 1040nr Generally, community property laws require you to allocate community income and expenses equally between both spouses. 1040nr However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. 1040nr      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. 1040nr You must file an additional Form 8857 if you are requesting relief for more than three years. 1040nr If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. 1040nr If you are requesting equitable relief, see Exception for equitable relief. 1040nr under How To Request Relief, earlier, for when to file Form 8857. 1040nr If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. 1040nr Use the address or fax number shown in the Instructions for Form 8857. 1040nr File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. 1040nr Do not file it with the employee assigned to examine your return. 1040nr Generally, the IRS has 10 years to collect an amount you owe. 1040nr This is the collection statute of limitations. 1040nr By law, the IRS is not allowed to collect from you after the 10-year period ends. 1040nr If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. 1040nr But interest and penalties continue to accrue. 1040nr Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. 1040nr This includes the time the Tax Court is considering your request. 1040nr After your case is resolved, the IRS can begin or resume collecting from you. 1040nr The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. 1040nr See Publication 594 for more information. 1040nr Injured spouse relief is different from innocent spouse relief. 1040nr When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. 1040nr The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. 1040nr You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). 1040nr You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. 1040nr You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. 1040nr Note. 1040nr If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. 1040nr . 1040nr What are the rules for innocent spouse relief? To qualify for innocent spouse relief, you must meet all of the following conditions. 1040nr You must have filed a joint return which has an understated tax. 1040nr The understated tax must be due to erroneous items of your spouse (or former spouse). 1040nr You must establish that at the time you signed the joint return, you did not know, and had no reason to know, that there was an understated tax. 1040nr Taking into account all of the facts and circumstances, it would be unfair to hold you liable for the understated tax. 1040nr You must request relief within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. 1040nr Erroneous items are any deductions, credits, or bases that are incorrectly stated on the return, and any income that is not properly reported on the return. 1040nr You have an understated tax if the IRS determined that your total tax should be more than the amount actually shown on your return. 1040nr For example, you reported total tax on your 2008 return of $2,500. 1040nr IRS determined in an audit of your 2008 return that the total tax should be $3,000. 1040nr You have a $500 understated tax. 1040nr No. 1040nr There are many situations in which you may owe tax that is related to your spouse (or former spouse), but not be eligible for innocent spouse relief. 1040nr For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. 1040nr You are not eligible for innocent spouse relief because you have knowledge of the understated tax. 1040nr Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). 1040nr The understated tax allocated to you is generally the amount you are responsible for. 1040nr To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. 1040nr You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. 1040nr (Under this rule, you are no longer married if you are widowed. 1040nr ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. 1040nr In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. 1040nr Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. 1040nr The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. 1040nr The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). 1040nr Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. 1040nr Equitable relief is only available if you meet all of the following conditions. 1040nr You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. 1040nr You have an understated tax or underpaid tax. 1040nr See Note later. 1040nr You did not pay the tax. 1040nr However, see Refunds , earlier, for exceptions. 1040nr The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. 1040nr You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. 1040nr Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. 1040nr You did not file or fail to file your return with the intent to commit fraud. 1040nr The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. 1040nr For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. 1040nr You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. 1040nr Note. 1040nr Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. 1040nr (An underpaid tax is tax that is properly shown on the return, but has not been paid. 1040nr ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 1040nr Generally, community property laws require you to allocate community income and expenses equally between both spouses. 1040nr However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. 1040nr      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. 1040nr You must file an additional Form 8857 if you are requesting relief for more than three years. 1040nr If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. 1040nr If you are requesting equitable relief, see Exception for equitable relief. 1040nr under How To Request Relief, earlier, for when to file Form 8857. 1040nr If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. 1040nr Use the address or fax number shown in the Instructions for Form 8857. 1040nr File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. 1040nr Do not file it with the employee assigned to examine your return. 1040nr Generally, the IRS has 10 years to collect an amount you owe. 1040nr This is the collection statute of limitations. 1040nr By law, the IRS is not allowed to collect from you after the 10-year period ends. 1040nr If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. 1040nr But interest and penalties continue to accrue. 1040nr Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. 1040nr This includes the time the Tax Court is considering your request. 1040nr After your case is resolved, the IRS can begin or resume collecting from you. 1040nr The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. 1040nr See Publication 594 for more information. 1040nr Injured spouse relief is different from innocent spouse relief. 1040nr When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. 1040nr The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. 1040nr You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). 1040nr You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. 1040nr You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. 1040nr Note. 1040nr If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. 1040nr . 1040nr What are “erroneous items”? Erroneous items are any deductions, credits, or bases that are incorrectly stated on the return, and any income that is not properly reported on the return. 1040nr You have an understated tax if the IRS determined that your total tax should be more than the amount actually shown on your return. 1040nr For example, you reported total tax on your 2008 return of $2,500. 1040nr IRS determined in an audit of your 2008 return that the total tax should be $3,000. 1040nr You have a $500 understated tax. 1040nr No. 1040nr There are many situations in which you may owe tax that is related to your spouse (or former spouse), but not be eligible for innocent spouse relief. 1040nr For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. 1040nr You are not eligible for innocent spouse relief because you have knowledge of the understated tax. 1040nr Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). 1040nr The understated tax allocated to you is generally the amount you are responsible for. 1040nr To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. 1040nr You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. 1040nr (Under this rule, you are no longer married if you are widowed. 1040nr ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. 1040nr In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. 1040nr Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. 1040nr The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. 1040nr The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). 1040nr Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. 1040nr Equitable relief is only available if you meet all of the following conditions. 1040nr You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. 1040nr You have an understated tax or underpaid tax. 1040nr See Note later. 1040nr You did not pay the tax. 1040nr However, see Refunds , earlier, for exceptions. 1040nr The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. 1040nr You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. 1040nr Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. 1040nr You did not file or fail to file your return with the intent to commit fraud. 1040nr The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. 1040nr For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. 1040nr You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. 1040nr Note. 1040nr Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. 1040nr (An underpaid tax is tax that is properly shown on the return, but has not been paid. 1040nr ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 1040nr Generally, community property laws require you to allocate community income and expenses equally between both spouses. 1040nr However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. 1040nr      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. 1040nr You must file an additional Form 8857 if you are requesting relief for more than three years. 1040nr If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. 1040nr If you are requesting equitable relief, see Exception for equitable relief. 1040nr under How To Request Relief, earlier, for when to file Form 8857. 1040nr If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. 1040nr Use the address or fax number shown in the Instructions for Form 8857. 1040nr File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. 1040nr Do not file it with the employee assigned to examine your return. 1040nr Generally, the IRS has 10 years to collect an amount you owe. 1040nr This is the collection statute of limitations. 1040nr By law, the IRS is not allowed to collect from you after the 10-year period ends. 1040nr If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. 1040nr But interest and penalties continue to accrue. 1040nr Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. 1040nr This includes the time the Tax Court is considering your request. 1040nr After your case is resolved, the IRS can begin or resume collecting from you. 1040nr The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. 1040nr See Publication 594 for more information. 1040nr Injured spouse relief is different from innocent spouse relief. 1040nr When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. 1040nr The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. 1040nr You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). 1040nr You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. 1040nr You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. 1040nr Note. 1040nr If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. 1040nr . 1040nr What is an “understated tax”? You have an understated tax if the IRS determined that your total tax should be more than the amount actually shown on your return. 1040nr For example, you reported total tax on your 2008 return of $2,500. 1040nr IRS determined in an audit of your 2008 return that the total tax should be $3,000. 1040nr You have a $500 understated tax. 1040nr No. 1040nr There are many situations in which you may owe tax that is related to your spouse (or former spouse), but not be eligible for innocent spouse relief. 1040nr For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. 1040nr You are not eligible for innocent spouse relief because you have knowledge of the understated tax. 1040nr Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). 1040nr The understated tax allocated to you is generally the amount you are responsible for. 1040nr To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. 1040nr You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. 1040nr (Under this rule, you are no longer married if you are widowed. 1040nr ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. 1040nr In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. 1040nr Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. 1040nr The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. 1040nr The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). 1040nr Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. 1040nr Equitable relief is only available if you meet all of the following conditions. 1040nr You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. 1040nr You have an understated tax or underpaid tax. 1040nr See Note later. 1040nr You did not pay the tax. 1040nr However, see Refunds , earlier, for exceptions. 1040nr The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. 1040nr You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. 1040nr Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. 1040nr You did not file or fail to file your return with the intent to commit fraud. 1040nr The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. 1040nr For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. 1040nr You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. 1040nr Note. 1040nr Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. 1040nr (An underpaid tax is tax that is properly shown on the return, but has not been paid. 1040nr ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 1040nr Generally, community property laws require you to allocate community income and expenses equally between both spouses. 1040nr However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. 1040nr      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. 1040nr You must file an additional Form 8857 if you are requesting relief for more than three years. 1040nr If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. 1040nr If you are requesting equitable relief, see Exception for equitable relief. 1040nr under How To Request Relief, earlier, for when to file Form 8857. 1040nr If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. 1040nr Use the address or fax number shown in the Instructions for Form 8857. 1040nr File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. 1040nr Do not file it with the employee assigned to examine your return. 1040nr Generally, the IRS has 10 years to collect an amount you owe. 1040nr This is the collection statute of limitations. 1040nr By law, the IRS is not allowed to collect from you after the 10-year period ends. 1040nr If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. 1040nr But interest and penalties continue to accrue. 1040nr Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. 1040nr This includes the time the Tax Court is considering your request. 1040nr After your case is resolved, the IRS can begin or resume collecting from you. 1040nr The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. 1040nr See Publication 594 for more information. 1040nr Injured spouse relief is different from innocent spouse relief. 1040nr When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. 1040nr The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. 1040nr You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). 1040nr You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. 1040nr You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. 1040nr Note. 1040nr If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. 1040nr . 1040nr Will I qualify for innocent spouse relief in any situation where there is an understated tax? No. 1040nr There are many situations in which you may owe tax that is related to your spouse (or former spouse), but not be eligible for innocent spouse relief. 1040nr For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. 1040nr You are not eligible for innocent spouse relief because you have knowledge of the understated tax. 1040nr Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). 1040nr The understated tax allocated to you is generally the amount you are responsible for. 1040nr To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. 1040nr You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. 1040nr (Under this rule, you are no longer married if you are widowed. 1040nr ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. 1040nr In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. 1040nr Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. 1040nr The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. 1040nr The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). 1040nr Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. 1040nr Equitable relief is only available if you meet all of the following conditions. 1040nr You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. 1040nr You have an understated tax or underpaid tax. 1040nr See Note later. 1040nr You did not pay the tax. 1040nr However, see Refunds , earlier, for exceptions. 1040nr The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. 1040nr You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. 1040nr Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. 1040nr You did not file or fail to file your return with the intent to commit fraud. 1040nr The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. 1040nr For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. 1040nr You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. 1040nr Note. 1040nr Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. 1040nr (An underpaid tax is tax that is properly shown on the return, but has not been paid. 1040nr ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 1040nr Generally, community property laws require you to allocate community income and expenses equally between both spouses. 1040nr However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. 1040nr      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. 1040nr You must file an additional Form 8857 if you are requesting relief for more than three years. 1040nr If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. 1040nr If you are requesting equitable relief, see Exception for equitable relief. 1040nr under How To Request Relief, earlier, for when to file Form 8857. 1040nr If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. 1040nr Use the address or fax number shown in the Instructions for Form 8857. 1040nr File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. 1040nr Do not file it with the employee assigned to examine your return. 1040nr Generally, the IRS has 10 years to collect an amount you owe. 1040nr This is the collection statute of limitations. 1040nr By law, the IRS is not allowed to collect from you after the 10-year period ends. 1040nr If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. 1040nr But interest and penalties continue to accrue. 1040nr Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. 1040nr This includes the time the Tax Court is considering your request. 1040nr After your case is resolved, the IRS can begin or resume collecting from you. 1040nr The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. 1040nr See Publication 594 for more information. 1040nr Injured spouse relief is different from innocent spouse relief. 1040nr When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. 1040nr The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. 1040nr You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). 1040nr You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. 1040nr You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. 1040nr Note. 1040nr If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. 1040nr . 1040nr What are the rules for separation of liability relief? Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). 1040nr The understated tax allocated to you is generally the amount you are responsible for. 1040nr To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. 1040nr You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. 1040nr (Under this rule, you are no longer married if you are widowed. 1040nr ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. 1040nr In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. 1040nr Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. 1040nr The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. 1040nr The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). 1040nr Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. 1040nr Equitable relief is only available if you meet all of the following conditions. 1040nr You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. 1040nr You have an understated tax or underpaid tax. 1040nr See Note later. 1040nr You did not pay the tax. 1040nr However, see Refunds , earlier, for exceptions. 1040nr The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. 1040nr You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. 1040nr Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. 1040nr You did not file or fail to file your return with the intent to commit fraud. 1040nr The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. 1040nr For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. 1040nr You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. 1040nr Note. 1040nr Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. 1040nr (An underpaid tax is tax that is properly shown on the return, but has not been paid. 1040nr ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 1040nr Generally, community property laws require you to allocate community income and expenses equally between both spouses. 1040nr However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. 1040nr      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. 1040nr You must file an additional Form 8857 if you are requesting relief for more than three years. 1040nr If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. 1040nr If you are requesting equitable relief, see Exception for equitable relief. 1040nr under How To Request Relief, earlier, for when to file Form 8857. 1040nr If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. 1040nr Use the address or fax number shown in the Instructions for Form 8857. 1040nr File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. 1040nr Do not file it with the employee assigned to examine your return. 1040nr Generally, the IRS has 10 years to collect an amount you owe. 1040nr This is the collection statute of limitations. 1040nr By law, the IRS is not allowed to collect from you after the 10-year period ends. 1040nr If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. 1040nr But interest and penalties continue to accrue. 1040nr Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. 1040nr This includes the time the Tax Court is considering your request. 1040nr After your case is resolved, the IRS can begin or resume collecting from you. 1040nr The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. 1040nr See Publication 594 for more information. 1040nr Injured spouse relief is different from innocent spouse relief. 1040nr When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. 1040nr The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. 1040nr You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). 1040nr You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. 1040nr You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. 1040nr Note. 1040nr If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. 1040nr . 1040nr Why would a request for separation of liability relief be denied? Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. 1040nr The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. 1040nr The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). 1040nr Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. 1040nr Equitable relief is only available if you meet all of the following conditions. 1040nr You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. 1040nr You have an understated tax or underpaid tax. 1040nr See Note later. 1040nr You did not pay the tax. 1040nr However, see Refunds , earlier, for exceptions. 1040nr The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. 1040nr You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. 1040nr Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. 1040nr You did not file or fail to file your return with the intent to commit fraud. 1040nr The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. 1040nr For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. 1040nr You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. 1040nr Note. 1040nr Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. 1040nr (An underpaid tax is tax that is properly shown on the return, but has not been paid. 1040nr ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 1040nr Generally, community property laws require you to allocate community income and expenses equally between both spouses. 1040nr However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. 1040nr      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. 1040nr You must file an additional Form 8857 if you are requesting relief for more than three years. 1040nr If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. 1040nr If you are requesting equitable relief, see Exception for equitable relief. 1040nr under How To Request Relief, earlier, for when to file Form 8857. 1040nr If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. 1040nr Use the address or fax number shown in the Instructions for Form 8857. 1040nr File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. 1040nr Do not file it with the employee assigned to examine your return. 1040nr Generally, the IRS has 10 years to collect an amount you owe. 1040nr This is the collection statute of limitations. 1040nr By law, the IRS is not allowed to collect from you after the 10-year period ends. 1040nr If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. 1040nr But interest and penalties continue to accrue. 1040nr Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. 1040nr This includes the time the Tax Court is considering your request. 1040nr After your case is resolved, the IRS can begin or resume collecting from you. 1040nr The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. 1040nr See Publication 594 for more information. 1040nr Injured spouse relief is different from innocent spouse relief. 1040nr When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. 1040nr The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. 1040nr You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). 1040nr You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. 1040nr You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. 1040nr Note. 1040nr If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. 1040nr . 1040nr What are the rules for equitable relief? Equitable relief is only available if you meet all of the following conditions. 1040nr You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. 1040nr You have an understated tax or underpaid tax. 1040nr See Note later. 1040nr You did not pay the tax. 1040nr However, see Refunds , earlier, for exceptions. 1040nr The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. 1040nr You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. 1040nr Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. 1040nr You did not file or fail to file your return with the intent to commit fraud. 1040nr The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. 1040nr For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. 1040nr You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. 1040nr Note. 1040nr Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. 1040nr (An underpaid tax is tax that is properly shown on the return, but has not been paid. 1040nr ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 1040nr Generally, community property laws require you to allocate community income and expenses equally between both spouses. 1040nr However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. 1040nr      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. 1040nr You must file an additional Form 8857 if you are requesting relief for more than three years. 1040nr If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. 1040nr If you are requesting equitable relief, see Exception for equitable relief. 1040nr under How To Request Relief, earlier, for when to file Form 8857. 1040nr If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. 1040nr Use the address or fax number shown in the Instructions for Form 8857. 1040nr File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. 1040nr Do not file it with the employee assigned to examine your return. 1040nr Generally, the IRS has 10 years to collect an amount you owe. 1040nr This is the collection statute of limitations. 1040nr By law, the IRS is not allowed to collect from you after the 10-year period ends. 1040nr If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. 1040nr But interest and penalties continue to accrue. 1040nr Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. 1040nr This includes the time the Tax Court is considering your request. 1040nr After your case is resolved, the IRS can begin or resume collecting from you. 1040nr The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. 1040nr See Publication 594 for more information. 1040nr Injured spouse relief is different from innocent spouse relief. 1040nr When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. 1040nr The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. 1040nr You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). 1040nr You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. 1040nr You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. 1040nr Note. 1040nr If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. 1040nr . 1040nr How do state community property laws affect my ability to qualify for relief? Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 1040nr Generally, community property laws require you to allocate community income and expenses equally between both spouses. 1040nr However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. 1040nr      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. 1040nr You must file an additional Form 8857 if you are requesting relief for more than three years. 1040nr If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. 1040nr If you are requesting equitable relief, see Exception for equitable relief. 1040nr under How To Request Relief, earlier, for when to file Form 8857. 1040nr If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. 1040nr Use the address or fax number shown in the Instructions for Form 8857. 1040nr File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. 1040nr Do not file it with the employee assigned to examine your return. 1040nr Generally, the IRS has 10 years to collect an amount you owe. 1040nr This is the collection statute of limitations. 1040nr By law, the IRS is not allowed to collect from you after the 10-year period ends. 1040nr If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. 1040nr But interest and penalties continue to accrue. 1040nr Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. 1040nr This includes the time the Tax Court is considering your request. 1040nr After your case is resolved, the IRS can begin or