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2011 Tax Return Form 1040

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2011 Tax Return Form 1040

2011 tax return form 1040 5. 2011 tax return form 1040   Manufacturers Taxes Table of Contents Importer. 2011 tax return form 1040 Use considered sale. 2011 tax return form 1040 Lease considered sale. 2011 tax return form 1040 Bonus goods. 2011 tax return form 1040 Taxable Event ExemptionsRequirements for Exempt Sales Credits or Refunds Sport Fishing EquipmentRelated person. 2011 tax return form 1040 Bows, Quivers, Broadheads, and Points Arrow ShaftsExemption for certain wooden arrows. 2011 tax return form 1040 CoalExported. 2011 tax return form 1040 Taxable TiresQualifying intercity or local bus. 2011 tax return form 1040 Qualifying school bus. 2011 tax return form 1040 Gas Guzzler TaxVehicles not subject to tax. 2011 tax return form 1040 Imported automobiles. 2011 tax return form 1040 VaccinesConditions to allowance. 2011 tax return form 1040 Taxable Medical Devices The following discussion of manufacturers taxes applies to the tax on: Sport fishing equipment; Fishing rods and fishing poles; Electric outboard motors; Fishing tackle boxes; Bows, quivers, broadheads, and points; Arrow shafts; Coal; Taxable tires; Gas guzzler automobiles; and Vaccines. 2011 tax return form 1040 Manufacturer. 2011 tax return form 1040   The term “manufacturer” includes a producer or importer. 2011 tax return form 1040 A manufacturer is any person who produces a taxable article from new or raw material, or from scrap, salvage, or junk material, by processing or changing the form of an article or by combining or assembling two or more articles. 2011 tax return form 1040 If you furnish the materials and keep title to those materials and to the finished article, you are considered the manufacturer even though another person actually manufactures the taxable article. 2011 tax return form 1040   A manufacturer who sells a taxable article in knockdown (unassembled) condition is liable for the tax. 2011 tax return form 1040 The person who buys these component parts and assembles a taxable article may also be liable for tax as a further manufacturer depending on the labor, material, and overhead required to assemble the completed article if the article is assembled for business use. 2011 tax return form 1040 Importer. 2011 tax return form 1040   An importer is a person who brings a taxable article into the United States, or withdraws a taxable article from a customs bonded warehouse for sale or use in the United States. 2011 tax return form 1040 Sale. 2011 tax return form 1040   A sale is the transfer of the title to, or the substantial incidents of ownership in, an article to a buyer for consideration that may consist of money, services, or other things. 2011 tax return form 1040 Use considered sale. 2011 tax return form 1040   A manufacturer who uses a taxable article is liable for the tax in the same manner as if it were sold. 2011 tax return form 1040 Lease considered sale. 2011 tax return form 1040   The lease of an article (including any renewal or extension of the lease) by the manufacturer is generally considered a taxable sale. 2011 tax return form 1040 However, for the gas guzzler tax, only the first lease (excluding any renewal or extension) of the automobile by the manufacturer is considered a sale. 2011 tax return form 1040 Manufacturers taxes based on sale price. 2011 tax return form 1040   The manufacturers taxes imposed on the sale of sport fishing equipment, electric outboard motors, and bows are based on the sale price of the article. 2011 tax return form 1040 The taxes imposed on coal are based either on the sale price or the weight. 2011 tax return form 1040   The price for which an article is sold includes the total consideration paid for the article, whether that consideration is in the form of money, services, or other things. 2011 tax return form 1040 However, you include certain charges made when a taxable article is sold and you exclude others. 2011 tax return form 1040 To figure the price on which you base the tax, use the following rules. 2011 tax return form 1040 Include both the following charges in the price. 2011 tax return form 1040 Any charge for coverings or containers (regardless of their nature). 2011 tax return form 1040 Any charge incident to placing the article in a condition packed ready for shipment. 2011 tax return form 1040 Exclude all the following amounts from the price. 2011 tax return form 1040 The manufacturers excise tax, whether or not it is stated as a separate charge. 2011 tax return form 1040 The transportation charges pursuant to the sale. 2011 tax return form 1040 The cost of transportation of goods to a warehouse before their bona fide sale is not excludable. 2011 tax return form 1040 Delivery, insurance, installation, retail dealer preparation charges, and other charges you incur in placing the article in the hands of the purchaser under a bona fide sale. 2011 tax return form 1040 Discounts, rebates, and similar allowances actually granted to the purchaser. 2011 tax return form 1040 Local advertising charges. 2011 tax return form 1040 A charge made separately when the article is sold and that qualifies as a charge for “local advertising” may, within certain limits, be excluded from the sale price. 2011 tax return form 1040 Charges for warranty paid at the purchaser's option. 2011 tax return form 1040 However, a charge for a warranty of an article that the manufacturer requires the purchaser to pay to obtain the article is included in the sale price on which the tax is figured. 2011 tax return form 1040 Bonus goods. 2011 tax return form 1040   Allocate the sale price if you give free nontaxable goods with the purchase of taxable merchandise. 2011 tax return form 1040 Figure the tax only on the sale price attributable to the taxable articles. 2011 tax return form 1040 Example. 2011 tax return form 1040 A manufacturer sells a quantity of taxable articles and gives the purchaser certain nontaxable articles as a bonus. 2011 tax return form 1040 The sale price of the shipment is $1,500. 2011 tax return form 1040 The normal sale price is $2,000: $1,500 for the taxable articles and $500 for the nontaxable articles. 2011 tax return form 1040 Since the taxable items represent 75% of the normal sale price, the tax is based on 75% of the actual sale price, or $1,125 (75% of $1,500). 2011 tax return form 1040 The remaining $375 is allocated to the nontaxable articles. 2011 tax return form 1040 Taxable Event Tax attaches when the title to the article sold passes from the manufacturer to the buyer. 2011 tax return form 1040 When the title passes depends on the intention of the parties as gathered from the contract of sale. 2011 tax return form 1040 In the absence of expressed intention, the legal rules of presumption followed in the jurisdiction where the sale occurs determine when title passes. 2011 tax return form 1040 If the taxable article is used by the manufacturer, the tax attaches at the time use begins. 2011 tax return form 1040 The manufacturer is liable for the tax. 2011 tax return form 1040 Partial payments. 2011 tax return form 1040   The tax applies to each partial payment received when taxable articles are: Leased, Sold conditionally, Sold on installment with chattel mortgage, or Sold on installment with title to pass in the future. 2011 tax return form 1040 To figure the tax, multiply the partial payment by the tax rate in effect at the time of the payment. 2011 tax return form 1040 Exemptions The following sales by the manufacturer are exempt from the manufacturers tax. 2011 tax return form 1040 Sale of an article to a state or local government for the exclusive use of the state or local government. 2011 tax return form 1040 This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. 2011 tax return form 1040 State is defined in Definitions in chapter 1. 2011 tax return form 1040 Sale of an article to a nonprofit educational organization for its exclusive use. 2011 tax return form 1040 This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. 2011 tax return form 1040 Nonprofit educational organization is defined under Communications Tax in chapter 4. 2011 tax return form 1040 Sale of an article to a qualified blood collector organization. 2011 tax return form 1040 This exemption does not apply to gas guzzlers, recreational equipment, and vaccines. 2011 tax return form 1040 Qualified blood collector organizations are defined under Communications Tax in chapter 4. 2011 tax return form 1040 Sale of an article for use by the purchaser as supplies for vessels. 2011 tax return form 1040 This exemption does not apply to the taxes on coal and vaccines. 2011 tax return form 1040 Supplies for vessels means ships' stores, sea stores, or legitimate equipment on vessels of war of the United States or any foreign nation, vessels employed in the fisheries or whaling business, or vessels actually engaged in foreign trade. 2011 tax return form 1040 Sale of an article for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by the second purchaser for further manufacture. 2011 tax return form 1040 This exemption does not apply to the tax on coal and tires. 2011 tax return form 1040 Use for further manufacture means use in the manufacture or production of an article subject to the manufacturers excise taxes. 2011 tax return form 1040 If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and sold them. 2011 tax return form 1040 Sale of an article for export or for resale by the purchaser to a second purchaser for export. 2011 tax return form 1040 The article may be exported to a foreign country or to a possession of the United States. 2011 tax return form 1040 A vaccine shipped to a possession of the United States is not considered to be exported. 2011 tax return form 1040 If an article is sold tax free for export and the manufacturer does not receive proof of export, described later, the manufacturer is liable for the tax. 2011 tax return form 1040 Sales of articles of native Indian handicraft, such as bows and arrow shafts, manufactured by Indians on reservations, in Indian schools, or under U. 2011 tax return form 1040 S. 2011 tax return form 1040 jurisdiction in Alaska. 2011 tax return form 1040 For tire exemptions, see section 4221(e)(2). 2011 tax return form 1040 Requirements for Exempt Sales The following requirements must be met for a sale to be exempt from the manufacturers tax. 2011 tax return form 1040 Registration requirements. 2011 tax return form 1040   The manufacturer, first purchaser, and second purchaser in the case of resales must be registered. 2011 tax return form 1040 See the Form 637 instructions for more information. 2011 tax return form 1040 Exceptions to registration requirements. 2011 tax return form 1040   Registration is not required for: State or local governments, Foreign purchasers of articles sold or resold for export, The United States, or Parties to a sale of supplies for vessels and aircraft. 2011 tax return form 1040 Certification requirement. 2011 tax return form 1040   If the purchaser is required to be registered, the purchaser must give the manufacturer its registration number and certify the exempt purpose for which the article will be used. 2011 tax return form 1040 The information must be in writing and may be noted on the purchase order or other document furnished by the purchaser to the seller in connection with the sale. 2011 tax return form 1040   For a sale to a state or local government, an exemption certificate must be signed by an officer or employee authorized by the state or local government. 2011 tax return form 1040 See Regulations section 48. 2011 tax return form 1040 4221-5(c) for the certificate requirements. 2011 tax return form 1040   For sales for use as supplies for vessels and aircraft, if the manufacturer and purchaser are not registered, the owner or agent of the vessel must provide an exemption certificate to the manufacturer before or at the time of sale. 2011 tax return form 1040 See Regulations section 48. 2011 tax return form 1040 4221-4(d) for the certificate requirements. 2011 tax return form 1040 Proof of export requirement. 2011 tax return form 1040   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof of exportation. 2011 tax return form 1040 See Regulations section 48. 2011 tax return form 1040 4221-3(d) for evidence that qualifies as proof of exportation. 2011 tax return form 1040 Proof of resale for further manufacture requirement. 2011 tax return form 1040   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof that the article has been resold for use in further manufacture. 2011 tax return form 1040 See Regulations section 48. 2011 tax return form 1040 4221-2(c) for evidence that qualifies as proof of resale. 2011 tax return form 1040 Information to be furnished to purchaser. 2011 tax return form 1040   The manufacturer must indicate to the purchaser that the articles normally would be subject to tax and are being sold tax free for an exempt purpose because the purchaser has provided the required certificate. 2011 tax return form 1040 Credits or Refunds The manufacturer may be eligible to obtain a credit or refund of the manufacturers tax for certain uses, sales, exports, and price readjustments. 2011 tax return form 1040 The claim must set forth in detail the facts upon which the claim is based. 2011 tax return form 1040 Uses, sales, and exports. 2011 tax return form 1040   A credit or refund (without interest) of the manufacturers taxes may be allowable if a tax-paid article is, by any person: Exported, Used or sold for use as supplies for vessels (except for coal and vaccines), Sold to a state or local government for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a nonprofit educational organization for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a qualified blood collector organization for its exclusive use (except for gas guzzlers, recreational equipment, and vaccines), or Used for further manufacture of another article subject to the manufacturers taxes (except for coal). 2011 tax return form 1040 Export. 2011 tax return form 1040   If a tax-paid article is exported, the exporter or shipper may claim a credit or refund if the manufacturer waives its right to claim the credit or refund. 2011 tax return form 1040 In the case of a tax-paid article used to make another taxable article, the subsequent manufacturer may claim the credit or refund. 2011 tax return form 1040 Price readjustments. 2011 tax return form 1040   In addition, a credit or refund (without interest) may be allowable for a tax-paid article for which the price is readjusted by reason of return or repossession of the article or a bona fide discount, rebate, or allowance for taxes based on price. 2011 tax return form 1040 Conditions to allowance. 2011 tax return form 1040   To claim a credit or refund in the case of export; supplies for vessels; or sales to a state or local government, nonprofit educational organization, or qualified blood collector organization; the person who paid the tax must certify on the claim that one of the following applies and that the claimant has the required supporting information. 2011 tax return form 1040 The claimant sold the article at a tax-excluded price. 2011 tax return form 1040 The person has repaid, or agreed to repay, the tax to the ultimate vendor of the article. 2011 tax return form 1040 The person has obtained the written consent of the ultimate vendor to make the claim. 2011 tax return form 1040 The ultimate vendor generally is the seller making the sale that gives rise to the overpayment of tax. 2011 tax return form 1040 Claim for further manufacture. 2011 tax return form 1040   To claim a credit or refund for further manufacture, the claimant must include a statement that contains the following. 2011 tax return form 1040 The name and address of the manufacturer and the date of payment. 2011 tax return form 1040 An identification of the article for which the credit or refund is claimed. 2011 tax return form 1040 The amount of tax paid on the article and the date on which it was paid. 2011 tax return form 1040 Information indicating that the article was used as material in the manufacture or production of, or as a component part of, a second article manufactured or produced by the manufacturer, or was sold on or in connection with, or with the sale of a second article manufactured or produced by the manufacturer. 2011 tax return form 1040 An identification of the second article. 2011 tax return form 1040   For claims by the exporter or shipper, the claim must contain the proof of export and a statement signed by the person that paid the tax waiving the right to claim a credit or refund. 2011 tax return form 1040 The statement must include the amount of tax paid, the date of payment, and the office to which it was paid. 2011 tax return form 1040 Claim for price readjustment. 2011 tax return form 1040   To claim a credit or refund for a price readjustment, the person who paid the tax must include with the claim, a statement that contains the following. 2011 tax return form 1040 A description of the circumstances that gave rise to the price readjustment. 2011 tax return form 1040 An identification of the article whose price was readjusted. 2011 tax return form 1040 The price at which the article was sold. 2011 tax return form 1040 The amount of tax paid on the article and the date on which it was paid. 2011 tax return form 1040 The name and address of the purchaser. 2011 tax return form 1040 The amount repaid to the purchaser or credited to the purchaser's account. 2011 tax return form 1040 Sport Fishing Equipment A tax of 10% of the sale price is imposed on many articles of sport fishing equipment sold by the manufacturer. 2011 tax return form 1040 This includes any parts or accessories sold on or in connection with the sale of those articles. 2011 tax return form 1040 Pay this tax with Form 720. 2011 tax return form 1040 No tax deposits are required. 2011 tax return form 1040 Sport fishing equipment includes all the following items. 2011 tax return form 1040 Fishing rods and poles (and component parts), fishing reels, fly fishing lines, and other fishing lines not over 130 pounds test, fishing spears, spear guns, and spear tips. 2011 tax return form 1040 Items of terminal tackle, including leaders, artificial lures, artificial baits, artificial flies, fishing hooks, bobbers, sinkers, snaps, drayles, and swivels (but not including natural bait or any item of terminal tackle designed for use and ordinarily used on fishing lines not described in (1)). 2011 tax return form 1040 The following items of fishing supplies and accessories: fish stringers, creels, bags, baskets, and other containers designed to hold fish, portable bait containers, fishing vests, landing nets, gaff hooks, fishing hook disgorgers, and dressing for fishing lines and artificial flies. 2011 tax return form 1040 Fishing tip-ups and tilts. 2011 tax return form 1040 Fishing rod belts, fishing rodholders, fishing harnesses, fish fighting chairs, fishing outriggers, and fishing downriggers. 2011 tax return form 1040 See Revenue Ruling 88-52 in Cumulative Bulletin 1988-1 for a more complete description of the items of taxable equipment. 2011 tax return form 1040 Fishing rods and fishing poles. 2011 tax return form 1040   The tax on fishing rods and fishing poles (and component parts) is 10% of the sales price not to exceed $10 per article. 2011 tax return form 1040 The tax is paid by the manufacturer, producer, or importer. 2011 tax return form 1040 Fishing tackle boxes. 2011 tax return form 1040   The tax on fishing tackle boxes is 3% of the sales price. 2011 tax return form 1040 The tax is paid by the manufacturer, producer, or importer. 2011 tax return form 1040 Electric outboard boat motors. 2011 tax return form 1040   A tax of 3% of the sale price is imposed on the sale by the manufacturer of electric outboard motors. 2011 tax return form 1040 This includes any parts or accessories sold on or in connection with the sale of those articles. 2011 tax return form 1040 Certain equipment resale. 2011 tax return form 1040   The tax on the sale of sport fishing equipment is imposed a second time under the following circumstances. 2011 tax return form 1040 If the manufacturer sells a taxable article to any person, the manufacturer is liable for the tax. 2011 tax return form 1040 If the purchaser or any other person then sells it to a person who is related (discussed next) to the manufacturer, that related person is liable for a second tax on any subsequent sale of the article. 2011 tax return form 1040 The second tax, however, is not imposed if the constructive sale price rules under section 4216(b) apply to the sale by the manufacturer. 2011 tax return form 1040   If the second tax is imposed, a credit for tax previously paid by the manufacturer is available provided the related person can document the tax paid. 2011 tax return form 1040 The documentation requirement is generally satisfied only through submission of copies of actual records of the person that previously paid the tax. 2011 tax return form 1040 Related person. 2011 tax return form 1040   For the tax on sport fishing equipment, a person is a related person of the manufacturer if that person and the manufacturer have a relationship described in section 465(b)(3)(C). 2011 tax return form 1040 Bows, Quivers, Broadheads, and Points The tax on bows is 11% (. 2011 tax return form 1040 11) of the sales price. 2011 tax return form 1040 The tax is paid by the manufacturer, producer, or importer. 2011 tax return form 1040 It applies to bows having a peak draw weight of 30 pounds or more. 2011 tax return form 1040 The tax is also imposed on the sale of any part or accessory suitable for inclusion in or attachment to a taxable bow and any quiver, broadhead, or point suitable for use with arrows described below. 2011 tax return form 1040 Pay this tax with Form 720. 2011 tax return form 1040 No tax deposits are required. 2011 tax return form 1040 Arrow Shafts The tax on arrow shafts is listed on Form 720. 2011 tax return form 1040 The tax is paid by the manufacturer, producer, or importer of any arrow shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow that after its assembly meets either of the following conditions. 2011 tax return form 1040 It measures 18 inches or more in overall length. 2011 tax return form 1040 It measures less than 18 inches in overall length but is suitable for use with a taxable bow, described earlier. 2011 tax return form 1040 Exemption for certain wooden arrows. 2011 tax return form 1040   After October 3, 2008, the tax does not apply to any shaft made of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) and used in the manufacture of any arrow that after its assembly meets both of the following conditions. 2011 tax return form 1040 It measures 5/16 of an inch or less in diameter. 2011 tax return form 1040 It is not suitable for use with a taxable bow, described earlier. 2011 tax return form 1040 Pay this tax with Form 720. 2011 tax return form 1040 No tax deposits are required. 2011 tax return form 1040 Coal A tax is imposed on the first sale of coal mined in the United States. 2011 tax return form 1040 The producer of the coal is liable for the tax. 2011 tax return form 1040 The producer is the person who has vested ownership of the coal under state law immediately after the coal is severed from the ground. 2011 tax return form 1040 Determine vested ownership without regard to any contractual arrangement for the sale or other disposition of the coal or the payment of any royalties between the producer and third parties. 2011 tax return form 1040 A producer includes any person who extracts coal from coal waste refuse piles (or from the silt waste product that results from the wet washing of coal). 2011 tax return form 1040 The tax is not imposed on coal extracted from a riverbed by dredging if it can be shown that the coal has been taxed previously. 2011 tax return form 1040 Tax rates. 2011 tax return form 1040   The tax on underground-mined coal is the lower of: $1. 2011 tax return form 1040 10 a ton, or 4. 2011 tax return form 1040 4% of the sale price. 2011 tax return form 1040   The tax on surface-mined coal is the lower of: 55 cents a ton, or 4. 2011 tax return form 1040 4% of the sale price. 2011 tax return form 1040   Coal will be taxed at the 4. 2011 tax return form 1040 4% rate if the selling price is less than $25 a ton for underground-mined coal and less than $12. 2011 tax return form 1040 50 a ton for surface-mined coal. 2011 tax return form 1040 Apply the tax proportionately if a sale or use includes a portion of a ton. 2011 tax return form 1040 Example. 2011 tax return form 1040 If you sell 21,000 pounds (10. 2011 tax return form 1040 5 tons) of coal from an underground mine for $525, the price per ton is $50. 2011 tax return form 1040 The tax is $1. 2011 tax return form 1040 10 × 10. 2011 tax return form 1040 5 tons ($11. 2011 tax return form 1040 55). 2011 tax return form 1040 Coal production. 2011 tax return form 1040   Coal is produced from surface mines if all geological matter (trees, earth, rock) above the coal is removed before the coal is mined. 2011 tax return form 1040 Treat coal removed by auger and coal reclaimed from coal waste refuse piles as produced from a surface mine. 2011 tax return form 1040   Treat coal as produced from an underground mine when the coal is not produced from a surface mine. 2011 tax return form 1040 In some cases, a single mine may yield coal from both surface mining and underground mining. 2011 tax return form 1040 Determine if the coal is from a surface mine or an underground mine for each ton of coal produced and not on a mine-by-mine basis. 2011 tax return form 1040 Determining tonnage or selling price. 2011 tax return form 1040   The producer pays the tax on coal at the time of sale or use. 2011 tax return form 1040 In figuring the selling price for applying the tax, the point of sale is f. 2011 tax return form 1040 o. 2011 tax return form 1040 b. 2011 tax return form 1040 (free on board) mine or f. 2011 tax return form 1040 o. 2011 tax return form 1040 b. 2011 tax return form 1040 cleaning plant if you clean the coal before selling it. 2011 tax return form 1040 This applies even if you sell the coal for a delivered price. 2011 tax return form 1040 The f. 2011 tax return form 1040 o. 2011 tax return form 1040 b. 2011 tax return form 1040 mine or f. 2011 tax return form 1040 o. 2011 tax return form 1040 b. 2011 tax return form 1040 cleaning plant is the point at which you figure the number of tons sold for applying the applicable tonnage rate, and the point at which you figure the sale price for applying the 4. 2011 tax return form 1040 4% rate. 2011 tax return form 1040   The tax applies to the full amount of coal sold. 2011 tax return form 1040 However, the IRS allows a calculated reduction of the taxable weight of the coal for the weight of the moisture in excess of the coal's inherent moisture content. 2011 tax return form 1040 Include in the sale price any additional charge for a freeze-conditioning additive in figuring the tax. 2011 tax return form 1040   Do not include in the sales price the excise tax imposed on coal. 2011 tax return form 1040 Coal used by the producer. 2011 tax return form 1040   The tax on coal applies if the coal is used by the producer in other than a mining process. 2011 tax return form 1040 A mining process means the same for this purpose as for percentage depletion. 2011 tax return form 1040 For example, the tax does not apply if, before selling the coal, you break it, clean it, size it, or apply any other process considered mining under the rules for depletion. 2011 tax return form 1040 In this case, the tax applies only when you sell the coal. 2011 tax return form 1040 The tax does not apply to coal used as fuel in the coal drying process since it is considered to be used in a mining process. 2011 tax return form 1040 However, the tax does apply when you use the coal as fuel or as an ingredient in making coke since the coal is not used in a mining process. 2011 tax return form 1040   You must use a constructive sale price to figure the tax under the 4. 2011 tax return form 1040 4% rate if you use the coal in other than a mining process. 2011 tax return form 1040 Base your constructive sale price on sales of a like kind and grade of coal by you or other producers made f. 2011 tax return form 1040 o. 2011 tax return form 1040 b. 2011 tax return form 1040 mine or cleaning plant. 2011 tax return form 1040 Normally, you use the same constructive price used to figure your percentage depletion deduction. 2011 tax return form 1040 Blending. 2011 tax return form 1040   If you blend surface-mined coal with underground-mined coal during the cleaning process, you must figure the excise tax on the sale of the blended, cleaned coal. 2011 tax return form 1040 Figure the tax separately for each type of coal in the blend. 2011 tax return form 1040 Base the tax on the amount of each type in the blend if you can determine the proportion of each type of coal contained in the final blend. 2011 tax return form 1040 Base the tax on the ratio of each type originally put into the cleaning process if you cannot determine the proportion of each type of coal in the blend. 2011 tax return form 1040 However, the tax is limited to 4. 2011 tax return form 1040 4% of the sale price per ton of the blended coal. 2011 tax return form 1040 Exemption from tax. 2011 tax return form 1040   The tax does not apply to sales of lignite and imported coal. 2011 tax return form 1040 The only other exemption from the tax on the sale of coal is for coal exported as discussed next. 2011 tax return form 1040 Exported. 2011 tax return form 1040   The tax does not apply to the sale of coal if the coal is in the stream of export when sold by the producer and the coal is actually exported. 2011 tax return form 1040   Coal is in the stream of export when sold by the producer if the sale is a step in the exportation of the coal to its ultimate destination in a foreign country. 2011 tax return form 1040 For example, coal is in the stream of export when: The coal is loaded on an export vessel and title is transferred from the producer to a foreign purchaser, or The producer sells the coal to an export broker in the United States under terms of a contract showing that the coal is to be shipped to a foreign country. 2011 tax return form 1040   Proof of export includes any of the following items. 2011 tax return form 1040 A copy of the export bill of lading issued by the delivering carrier. 2011 tax return form 1040 A certificate signed by the export carrier's agent or representative showing actual exportation of the coal. 2011 tax return form 1040 A certificate of landing signed by a customs officer of the foreign country to which the coal is exported. 2011 tax return form 1040 If the foreign country does not have a customs administrator, a statement of the foreign consignee showing receipt of the coal. 2011 tax return form 1040 Taxable Tires Taxable tires are divided into three categories for reporting and figuring the tax as described below. 2011 tax return form 1040 A tax is imposed on taxable tires sold by the manufacturer, producer, or importer at the rate of $. 2011 tax return form 1040 0945 ($. 2011 tax return form 1040 04725 in the case of a biasply tire or super single tire) for each 10 pounds of the maximum rated load capacity over 3,500 pounds. 2011 tax return form 1040 The three categories for reporting the tax and the tax rate are listed below. 2011 tax return form 1040 Taxable tires other than biasply or super single tires at $. 2011 tax return form 1040 0945. 2011 tax return form 1040 Taxable tires, biasply or super single tires (other than super single tires designed for steering) at $. 2011 tax return form 1040 04725. 2011 tax return form 1040 Taxable tires, super single tires designed for steering at $. 2011 tax return form 1040 0945. 2011 tax return form 1040 A taxable tire is any tire of the type used on highway vehicles if wholly or partially made of rubber and if marked according to federal regulations for highway use. 2011 tax return form 1040 A biasply tire is a pneumatic tire on which the ply cords that extend to the beads are laid at alternate angles substantially less than 90 degrees to the centerline of the tread. 2011 tax return form 1040 A super single tire is a tire greater than 13 inches in cross section width designed to replace 2 tires in a dual fitment. 2011 tax return form 1040 Special rule, manufacturer's retail stores. 2011 tax return form 1040   The excise tax on taxable tires is imposed at the time the taxable tires are delivered to the manufacturer-owned retail stores, not at the time of sale. 2011 tax return form 1040 Tires on imported articles. 2011 tax return form 1040   The importer of an article equipped with taxable tires is treated as the manufacturer of the tires and is liable for the taxable tire excise tax when the article is sold (except in the case of an automobile bus chassis or body with tires). 2011 tax return form 1040 Tires exempt from tax. 2011 tax return form 1040   The tax on taxable tires does not apply to the following items. 2011 tax return form 1040 Domestically recapped or retreaded tires if the tires have been sold previously in the United States and were taxable tires at the time of sale. 2011 tax return form 1040 Tire carcasses not suitable for commercial use. 2011 tax return form 1040 Tires for use on qualifying intercity, local, and school buses. 2011 tax return form 1040 For tax-free treatment, the registration requirements discussed earlier under Requirements for Exempt Sales apply. 2011 tax return form 1040 Tires sold for the exclusive use of the Department of Defense or the Coast Guard. 2011 tax return form 1040 Tires of a type used exclusively on mobile machinery. 2011 tax return form 1040 A taxable tire used on mobile machinery is not exempt from tax. 2011 tax return form 1040 Qualifying intercity or local bus. 2011 tax return form 1040   This is any bus used mainly (more than 50%) to transport the general public for a fee and that either operates on a schedule along regular routes or seats at least 20 adults (excluding the driver). 2011 tax return form 1040 Qualifying school bus. 2011 tax return form 1040   This is any bus substantially all the use (85% or more) of which is to transport students and employees of schools. 2011 tax return form 1040 Credit or refund. 2011 tax return form 1040   A credit or refund (without interest) is allowable on tax-paid tires if the tires have been: Exported; Sold to a state or local government for its exclusive use; Sold to a nonprofit educational organization for its exclusive use (as defined under Communications Tax in chapter 4); Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in connection with a vehicle the organization certifies will be primarily used in the collection, storage, or transportation of blood; Used or sold for use as supplies for vessels; or Sold in connection with qualified intercity, local, or school buses. 2011 tax return form 1040   Also, a credit or refund (without interest) is allowable on tax-paid tires sold by any person on, or in connection with, any other article that is sold or used in an activity listed above. 2011 tax return form 1040   The person who paid the tax is eligible to make the claim. 2011 tax return form 1040 Gas Guzzler Tax Tax is imposed on the sale by the manufacturer of automobiles of a model type that has a fuel economy standard as measured by the Environmental Protection Agency (EPA) of less than 22. 2011 tax return form 1040 5 miles per gallon. 2011 tax return form 1040 If you import an automobile for personal use, you may be liable for this tax. 2011 tax return form 1040 Figure the tax on Form 6197, as discussed later. 2011 tax return form 1040 The tax rate is based on fuel economy rating. 2011 tax return form 1040 The tax rates for the gas guzzler tax are shown on Form 6197. 2011 tax return form 1040 A person that lengthens an existing automobile is the manufacturer of an automobile. 2011 tax return form 1040 Automobiles. 2011 tax return form 1040   An automobile (including limousines) means any four-wheeled vehicle that is: Rated at an unloaded gross vehicle weight of 6,000 pounds or less, Propelled by an engine powered by gasoline or diesel fuel, and Intended for use mainly on public streets, roads, and highways. 2011 tax return form 1040 Vehicles not subject to tax. 2011 tax return form 1040   For the gas guzzler tax, the following vehicles are not considered automobiles. 2011 tax return form 1040 Limousines with a gross unloaded vehicle weight of more than 6,000 pounds. 2011 tax return form 1040 Vehicles operated exclusively on a rail or rails. 2011 tax return form 1040 Vehicles sold for use and used primarily: As ambulances or combination ambulance-hearses, For police or other law enforcement purposes by federal, state, or local governments, or For firefighting purposes. 2011 tax return form 1040 Vehicles treated under 49 U. 2011 tax return form 1040 S. 2011 tax return form 1040 C. 2011 tax return form 1040 32901 (1978) as non-passenger automobiles. 2011 tax return form 1040 This includes limousines manufactured primarily to transport more than 10 persons. 2011 tax return form 1040   The manufacturer can sell a vehicle described in item (3) tax free only when the sale is made directly to a purchaser for the described emergency use and the manufacturer and purchaser (other than a state or local government) are registered. 2011 tax return form 1040   Treat an Indian tribal government as a state only if the police or other law enforcement purposes are an essential tribal government function. 2011 tax return form 1040 Model type. 2011 tax return form 1040   Model type is a particular class of automobile as determined by EPA regulations. 2011 tax return form 1040 Fuel economy. 2011 tax return form 1040   Fuel economy is the average number of miles an automobile travels on a gallon of gasoline (or diesel fuel) rounded to the nearest 0. 2011 tax return form 1040 1 mile as figured by the EPA. 2011 tax return form 1040 Imported automobiles. 2011 tax return form 1040   The tax also applies to automobiles that do not have a prototype-based fuel economy rating assigned by the EPA. 2011 tax return form 1040 An automobile imported into the United States without a certificate of conformity to United States emission standards and that has no assigned fuel economy rating must be either: Converted by installation of emission controls to conform in all material respects to an automobile already certified for sale in the United States, or Modified by installation of emission control components and individually tested to demonstrate emission compliance. 2011 tax return form 1040   An imported automobile that has been converted to conform to an automobile already certified for sale in the United States may use the fuel economy rating assigned to that certified automobile. 2011 tax return form 1040   A fuel economy rating is not generally available for modified imported automobiles because the EPA does not require a highway fuel economy test on them. 2011 tax return form 1040 A separate highway fuel economy test would be required to devise a fuel economy rating (otherwise the automobile is presumed to fall within the lowest fuel economy rating category). 2011 tax return form 1040   For more information about fuel economy ratings for imported automobiles, see Revenue Ruling 86-20 and Revenue Procedure 86-9 in Cumulative Bulletin 1986-1, and Revenue Procedure 87-10 in Cumulative Bulletin 1987-1. 2011 tax return form 1040 Exemptions. 2011 tax return form 1040   No one is exempt from the gas guzzler tax, including the federal government, state and local governments, qualified blood collector organizations, and nonprofit educational organizations. 2011 tax return form 1040 However, see Vehicles not subject to tax, earlier. 2011 tax return form 1040 Form 6197. 2011 tax return form 1040   Use Form 6197 to figure your tax liability for each quarter. 2011 tax return form 1040 Attach Form 6197 to your Form 720 for the quarter. 2011 tax return form 1040 See the Form 6197 instructions for more information and the one-time filing rules. 2011 tax return form 1040 Credit or refund. 2011 tax return form 1040   If the manufacturer paid the tax on a vehicle that is used or resold for an emergency use (see item (3) under Vehicles not subject to tax), the manufacturer can claim a credit or refund. 2011 tax return form 1040 For information about how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. 2011 tax return form 1040 Vaccines Tax is imposed on certain vaccines sold by the manufacturer in the United States. 2011 tax return form 1040 A taxable vaccine means any of the following vaccines. 2011 tax return form 1040 Any vaccine containing diphtheria toxoid. 2011 tax return form 1040 Any vaccine containing tetanus toxoid. 2011 tax return form 1040 Any vaccine containing pertussis bacteria, extracted or partial cell bacteria, or specific pertussis antigens. 2011 tax return form 1040 Any vaccine containing polio virus. 2011 tax return form 1040 Any vaccine against measles. 2011 tax return form 1040 Any vaccine against mumps. 2011 tax return form 1040 Any vaccine against rubella. 2011 tax return form 1040 Any vaccine against hepatitis A. 2011 tax return form 1040 Any vaccine against hepatitis B. 2011 tax return form 1040 Any vaccine against chicken pox. 2011 tax return form 1040 Any vaccine against rotavirus gastroenteritis. 2011 tax return form 1040 Any HIB vaccine. 2011 tax return form 1040 Any conjugate vaccine against streptococcus pneumoniae. 2011 tax return form 1040 Any trivalent vaccine against influenza or any other vaccine against influenza. 2011 tax return form 1040 Any meningococcal vaccine. 2011 tax return form 1040 Any vaccine against the human papillomavirus. 2011 tax return form 1040 The effective date for the tax on any vaccine against influenza, other than trivalent influenza vaccines, is the later of August 1, 2013, or the date the Secretary of Health and Human Services lists a vaccine against seasonal influenza for purposes of compensation for any vaccine-related injury or death through the Vaccine Injury Compensation Trust Fund. 2011 tax return form 1040 The tax is $. 2011 tax return form 1040 75 per dose of each taxable vaccine. 2011 tax return form 1040 The tax per dose on a vaccine that contains more than one taxable vaccine is $. 2011 tax return form 1040 75 times the number of taxable vaccines. 2011 tax return form 1040 Taxable use. 2011 tax return form 1040   Any manufacturer (including a governmental entity) that uses a taxable vaccine before it is sold will be liable for the tax in the same manner as if the vaccine was sold by the manufacturer. 2011 tax return form 1040 Credit or refund. 2011 tax return form 1040   A credit or refund (without interest) is available if the vaccine is: Returned to the person who paid the tax (other than for resale), or Destroyed. 2011 tax return form 1040 The claim for a credit or refund must be filed within 6 months after the vaccine is returned or destroyed. 2011 tax return form 1040 Conditions to allowance. 2011 tax return form 1040   To claim a credit or refund, the person who paid the tax must have repaid or agreed to repay the tax to the ultimate purchaser of the vaccine or obtained the written consent of such purchaser to allowance of the credit or refund. 2011 tax return form 1040 Taxable Medical Devices Taxable medical devices. 2011 tax return form 1040   The tax on the sale of certain medical devices by the manufacturer, producer, or importer of the device is 2. 2011 tax return form 1040 3% (. 2011 tax return form 1040 023) of the sales price. 2011 tax return form 1040 A taxable medical device is a device that is listed as a device with the Food and Drug Administration (FDA) under section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 CFR part 807, pursuant to FDA requirements. 2011 tax return form 1040 There are specific exemptions for eyeglasses, contact lenses, and hearing aids. 2011 tax return form 1040 There is also an exemption for devices that are determined by the Secretary to be of a type that are generally purchased by the general public at retail for individual use (this exemption is known as the retail exemption). 2011 tax return form 1040 See T. 2011 tax return form 1040 D. 2011 tax return form 1040 9604 for information on how to determine whether a device falls within the retail exemption, and examples of how a taxpayer might evaluate a given device. 2011 tax return form 1040 More information. 2011 tax return form 1040   For more information on the medical device tax, see section 4191, T. 2011 tax return form 1040 D. 2011 tax return form 1040 9604, and Notice 2012-77. 2011 tax return form 1040 You can find T. 2011 tax return form 1040 D. 2011 tax return form 1040 9604 and Notice 2012-77 on pages 730 and 781, respectively, of I. 2011 tax return form 1040 R. 2011 tax return form 1040 B. 2011 tax return form 1040 2012-52 at www. 2011 tax return form 1040 irs. 2011 tax return form 1040 gov/pub/irs-irbs/irb12-52. 2011 tax return form 1040 pdf. 2011 tax return form 1040 Prev  Up  Next   Home   More Online Publications
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The 2011 Tax Return Form 1040

2011 tax return form 1040 Publication 971 - Main Content Table of Contents How To Request ReliefException for agreements relating to TEFRA partnership proceedings. 2011 tax return form 1040 The IRS Must Contact Your Spouse or Former Spouse Tax Court Review of Request Community Property LawsRelief for Married Persons Who Did Not File Joint Returns Innocent Spouse ReliefUnderstated Tax Erroneous Items Actual Knowledge or Reason To Know Indications of Unfairness for Innocent Spouse Relief Separation of Liability ReliefLimitations on Relief Equitable ReliefConditions for Getting Equitable Relief Factors for Determining Whether To Grant Equitable Relief RefundsProof Required Refunds Under Equitable Relief Limit on Amount of Refund Filled-in Form 8857 Flowcharts How To Request Relief File Form 8857 to ask the IRS for the types of relief discussed in this publication. 2011 tax return form 1040 If you are requesting relief for more than three tax years, you must file an additional Form 8857. 2011 tax return form 1040 The IRS will review your Form 8857 and let you know if you qualify. 2011 tax return form 1040 A completed Form 8857 is shown later. 2011 tax return form 1040 When to file Form 8857. 2011 tax return form 1040   You should file Form 8857 as soon as you become aware of a tax liability for which you believe only your spouse or former spouse should be held responsible. 2011 tax return form 1040 The following are some of the ways you may become aware of such a liability. 2011 tax return form 1040 The IRS is examining your tax return and proposing to increase your tax liability. 2011 tax return form 1040 The IRS sends you a notice. 2011 tax return form 1040   You must file Form 8857 no later than two years after the date on which the IRS first attempted to collect the tax from you that occurs after July 22, 1998. 2011 tax return form 1040 (But see the exceptions below for different filing deadlines that apply. 2011 tax return form 1040 ) For this reason, do not delay filing because you do not have all the documentation. 2011 tax return form 1040   Collection activities that may start the 2-year period are: The IRS offset your income tax refund against an amount you owed on a joint return for another year and the IRS informed you about your right to file Form 8857. 2011 tax return form 1040 The filing of a claim by the IRS in a court proceeding in which you were a party or the filing of a claim in a proceeding that involves your property. 2011 tax return form 1040 This includes the filing of a proof of claim in a bankruptcy proceeding. 2011 tax return form 1040 The filing of a suit by the United States against you to collect the joint liability. 2011 tax return form 1040 The issuance of a section 6330 notice, which notifies you of the IRS' intent to levy and your right to a collection due process (CDP) hearing. 2011 tax return form 1040 The collection-related notices include, but are not limited to, Letter 11 and Letter 1058. 2011 tax return form 1040 Exception for equitable relief. 2011 tax return form 1040   On July 25, 2011, the IRS issued Notice 2011-70 (available at www. 2011 tax return form 1040 irs. 2011 tax return form 1040 gov/irb/2011-32_IRB/ar11. 2011 tax return form 1040 html) expanding the amount of time to request equitable relief. 2011 tax return form 1040 The amount of time to request equitable relief depends on whether you are seeking relief from a balance due, seeking a credit or refund, or both: Balance Due – Generally, you must file your request within the time period the IRS has to collect the tax. 2011 tax return form 1040 Generally, the IRS has 10 years from the date the tax liability was assessed to collect the tax. 2011 tax return form 1040 In certain cases, the 10-year period is suspended. 2011 tax return form 1040 The amount of time the suspension is in effect will extend the time the IRS has to collect the tax. 2011 tax return form 1040 See Pub. 2011 tax return form 1040 594, The IRS Collection Process, for details. 2011 tax return form 1040 Credit or Refund – Generally, you must file your request within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later. 2011 tax return form 1040 But you may have more time to file if you live in a federally declared disaster area or you are physically or mentally unable to manage your financial affairs. 2011 tax return form 1040 See Pub. 2011 tax return form 1040 556, Examination of Returns, Appeal Rights, and Claims for Refund, for details. 2011 tax return form 1040 Both a Balance Due and a Credit or Refund – If you are seeking a refund of amounts you paid and relief from a balance due over and above what you have paid, the time period for credit or refund will apply to any payments you have made, and the time period for collection of a balance due amount will apply to any unpaid liability. 2011 tax return form 1040 Exception for relief based on community property laws. 2011 tax return form 1040   If you are requesting relief based on community property laws, a different filing deadline applies. 2011 tax return form 1040 See Relief from liability arising from community property law discussed later under Community Property Laws . 2011 tax return form 1040 Form 8857 filed by or on behalf of a decedent. 2011 tax return form 1040   An executor (including any other duly appointed representative) may pursue a Form 8857 filed during the decedent's lifetime. 2011 tax return form 1040 An executor (including any other duly appointed representative) may also file Form 8857 as long as the decedent satisfied the eligibility requirements while alive. 2011 tax return form 1040 For purposes of separation of liability relief (discussed later), the decedent's marital status is determined on the earlier of the date relief was requested or the date of death. 2011 tax return form 1040 Situations in which you are not entitled to relief. 2011 tax return form 1040   You are not entitled to innocent spouse relief for any tax year to which the following situations apply. 2011 tax return form 1040 In a final decision dated after July 22, 1998, a court considered whether to grant you relief from joint liability and decided not to do so. 2011 tax return form 1040 In a final decision dated after July 22, 1998, a court did not consider whether to grant you relief from joint liability, but you meaningfully participated in the proceeding and could have asked for relief. 2011 tax return form 1040 You entered into an offer in compromise with the IRS. 2011 tax return form 1040 You entered into a closing agreement with the IRS that disposed of the same liability for which you want to seek relief. 2011 tax return form 1040 Exception for agreements relating to TEFRA partnership proceedings. 2011 tax return form 1040   You may be entitled to relief, discussed in (4) earlier, if you entered into a closing agreement for both partnership items and nonpartnership items, while you were a party to a pending TEFRA partnership proceeding. 2011 tax return form 1040 (TEFRA is an acronym that refers to the “Tax Equity and Fiscal Responsibility Act of 1982” that prescribed the tax treatment of partnership items. 2011 tax return form 1040 ) You are not entitled to relief for the nonpartnership items, but you will be entitled to relief for the partnership items (if you otherwise qualify). 2011 tax return form 1040 Transferee liability not affected by innocent spouse relief provisions. 2011 tax return form 1040   The innocent spouse relief provisions do not affect tax liabilities that arise under federal or state transferee liability or property laws. 2011 tax return form 1040 Therefore, even if you are relieved of the tax liability under the innocent spouse relief provisions, you may remain liable for the unpaid tax, interest, and penalties to the extent provided by these laws. 2011 tax return form 1040 Example. 2011 tax return form 1040 Herb and Wanda timely filed their 2008 joint income tax return on April 15, 2009. 2011 tax return form 1040 Herb died in March 2010, and the executor of Herb's will transferred all of the estate's assets to Wanda. 2011 tax return form 1040 In August 2010, the IRS assessed a deficiency for the 2008 return. 2011 tax return form 1040 The items causing the deficiency belong to Herb. 2011 tax return form 1040 Wanda is relieved of the deficiency under the innocent spouse relief provisions, and Herb's estate remains solely liable for it. 2011 tax return form 1040 However, the IRS may collect the deficiency from Wanda to the extent permitted under federal or state transferee liability or property laws. 2011 tax return form 1040 The IRS Must Contact Your Spouse or Former Spouse By law, the IRS must contact your spouse or former spouse. 2011 tax return form 1040 There are no exceptions, even for victims of spousal abuse or domestic violence. 2011 tax return form 1040 We will inform your spouse or former spouse that you filed Form 8857 and will allow him or her to participate in the process. 2011 tax return form 1040 If you are requesting relief from joint and several liability on a joint return, the IRS must also inform him or her of its preliminary and final determinations regarding your request for relief. 2011 tax return form 1040 However, to protect your privacy, the IRS will not disclose your personal information (for example, your current name, address, phone number(s), information about your employer, your income or assets) or any other information that does not relate to making a determination about your request for relief from liability. 2011 tax return form 1040 If you petition the Tax Court (explained below), your spouse or former spouse may see your personal information. 2011 tax return form 1040 Tax Court Review of Request After you file Form 8857, you may be able to petition (ask) the United States Tax Court to review your request for relief in the following two situations. 2011 tax return form 1040 The IRS sends you a final determination letter regarding your request for relief. 2011 tax return form 1040 You do not receive a final determination letter from the IRS within six months from the date you filed Form 8857. 2011 tax return form 1040 If you seek equitable relief for an underpaid tax, you will be able to get a Tax Court review of your request only if the tax arose or remained unpaid on or after December 20, 2006. 2011 tax return form 1040 The United States Tax Court is an independent judicial body and is not part of the IRS. 2011 tax return form 1040 You must file a petition with the United States Tax Court in order for it to review your request for relief. 2011 tax return form 1040 You must file the petition no later than the 90th day after the date the IRS mails its final determination notice to you. 2011 tax return form 1040 If you do not file a petition, or you file it late, the Tax Court cannot review your request for relief. 2011 tax return form 1040 You can get a copy of the rules for filing a petition by writing to the Tax Court at the following address:    United States Tax Court 400 Second Street, NW Washington, DC 20217 Or you can visit the Tax Court's website at www. 2011 tax return form 1040 ustaxcourt. 2011 tax return form 1040 gov Community Property Laws You must generally follow community property laws when filing a tax return if you are married and live in a community property state. 2011 tax return form 1040 Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 2011 tax return form 1040 Generally, community property laws require you to allocate community income and expenses equally between both spouses. 2011 tax return form 1040 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. 2011 tax return form 1040 Relief for Married Persons Who Did Not File Joint Returns Married persons who live in community property states, but who did not file joint returns, have two ways to get relief. 2011 tax return form 1040 Relief From Liability Arising From Community Property Law You are not responsible for the tax relating to an item of community income if all the following conditions exist. 2011 tax return form 1040 You did not file a joint return for the tax year. 2011 tax return form 1040 You did not include the item of community income in gross income. 2011 tax return form 1040 The item of community income you did not include is one of the following: Wages, salaries, and other compensation your spouse (or former spouse) received for services he or she performed as an employee. 2011 tax return form 1040 Income your spouse (or former spouse) derived from a trade or business he or she operated as a sole proprietor. 2011 tax return form 1040 Your spouse's (or former spouse's) distributive share of partnership income. 2011 tax return form 1040 Income from your spouse's (or former spouse's) separate property (other than income described in (a), (b), or (c)). 2011 tax return form 1040 Use the appropriate community property law to determine what is separate property. 2011 tax return form 1040 Any other income that belongs to your spouse (or former spouse) under community property law. 2011 tax return form 1040 You establish that you did not know of, and had no reason to know of, that community income. 2011 tax return form 1040 See  Actual Knowledge or Reason To Know , below. 2011 tax return form 1040 Under all facts and circumstances, it would not be fair to include the item of community income in your gross income. 2011 tax return form 1040 See Indications of unfairness for liability arising from community property law, later. 2011 tax return form 1040 Actual knowledge or reason to know. 2011 tax return form 1040   You knew or had reason to know of an item of community income if: You actually knew of the item of community income, or A reasonable person in similar circumstances would have known of the item of community income. 2011 tax return form 1040 Amount of community income unknown. 2011 tax return form 1040   If you are aware of the source of the item of community income or the income-producing activity, but are unaware of the specific amount, you are considered to know or have reason to know of the item of community income. 2011 tax return form 1040 Not knowing the specific amount is not a basis for relief. 2011 tax return form 1040 Reason to know. 2011 tax return form 1040   The IRS will consider all facts and circumstances in determining whether you had reason to know of an item of community income. 2011 tax return form 1040 The facts and circumstances include: The nature of the item of community income and the amount of the item relative to other income items. 2011 tax return form 1040 The financial situation of you and your spouse (or former spouse). 2011 tax return form 1040 Your educational background and business experience. 2011 tax return form 1040 Whether the item of community income represented a departure from a recurring pattern reflected in prior years' returns (for example, omitted income from an investment regularly reported on prior years' returns). 2011 tax return form 1040 Indications of unfairness for liability arising from community property law. 2011 tax return form 1040   The IRS will consider all of the facts and circumstances of the case in order to determine whether it is unfair to hold you responsible for the understated tax due to the item of community income. 2011 tax return form 1040   The following are examples of factors the IRS will consider. 2011 tax return form 1040 Whether you received a benefit, either directly or indirectly, from the omitted item of community income (defined below). 2011 tax return form 1040 Whether your spouse (or former spouse) deserted you. 2011 tax return form 1040 Whether you and your spouse have been divorced or separated. 2011 tax return form 1040  For other factors see Factors for Determining Whether To Grant Equitable Relief later. 2011 tax return form 1040 Benefit from omitted item of community income. 2011 tax return form 1040   A benefit includes normal support, but does not include de minimis (small) amounts. 2011 tax return form 1040 Evidence of a direct or indirect benefit may consist of transfers of property or rights to property, including transfers received several years after the filing of the return. 2011 tax return form 1040   For example, if you receive property, including life insurance proceeds, from your spouse (or former spouse) and the property is traceable to omitted items of community income attributable to your spouse (or former spouse), you are considered to have benefitted from those omitted items of community income. 2011 tax return form 1040 Equitable Relief If you do not qualify for the relief described above and are now liable for an underpaid or understated tax you believe should be paid only by your spouse (or former spouse), you may request equitable relief (discussed later). 2011 tax return form 1040 How and When To Request Relief You request relief by filing Form 8857, as discussed earlier. 2011 tax return form 1040 Fill in Form 8857 according to the instructions. 2011 tax return form 1040 For relief from liability arising from community property law, you must file Form 8857 no later than 6 months before the expiration of the period of limitations on assessment (including extensions) against your spouse for the tax year for which you are requesting relief. 2011 tax return form 1040 However, if the IRS begins an examination of your return during that 6-month period, the latest time for requesting relief is 30 days after the date the IRS' initial contact letter to you. 2011 tax return form 1040 The period of limitation on assessment is the amount of time, generally three years, that the IRS has from the date you filed the return to assess taxes that you owe. 2011 tax return form 1040 Innocent Spouse Relief By requesting innocent spouse relief, you can be relieved of responsibility for paying tax, interest, and penalties if your spouse (or former spouse) improperly reported items or omitted items on your tax return. 2011 tax return form 1040 Generally, the tax, interest, and penalties that qualify for relief can only be collected from your spouse (or former spouse). 2011 tax return form 1040 However, you are jointly and individually responsible for any tax, interest, and penalties that do not qualify for relief. 2011 tax return form 1040 The IRS can collect these amounts from either you or your spouse (or former spouse). 2011 tax return form 1040 You must meet all of the following conditions to qualify for innocent spouse relief. 2011 tax return form 1040 You filed a joint return. 2011 tax return form 1040 There is an understated tax on the return that is due to erroneous items (defined later) of your spouse (or former spouse). 2011 tax return form 1040 You can show that when you signed the joint return you did not know, and had no reason to know, that the understated tax existed (or the extent to which the understated tax existed). 2011 tax return form 1040 See Actual Knowledge or Reason To Know, later. 2011 tax return form 1040 Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated tax. 2011 tax return form 1040 See Indications of Unfairness for Innocent Spouse Relief , later. 2011 tax return form 1040 Innocent spouse relief will not be granted if the IRS proves that you and your spouse (or former spouse) transferred property to one another as part of a fraudulent scheme. 2011 tax return form 1040 A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. 2011 tax return form 1040 Understated Tax You have an understated tax if the IRS determined that your total tax should be more than the amount that was actually shown on your return. 2011 tax return form 1040 Erroneous Items Erroneous items are either of the following. 2011 tax return form 1040 Unreported income. 2011 tax return form 1040 This is any gross income item received by your spouse (or former spouse) that is not reported. 2011 tax return form 1040 Incorrect deduction, credit, or basis. 2011 tax return form 1040 This is any improper deduction, credit, or property basis claimed by your spouse (or former spouse). 2011 tax return form 1040 The following are examples of erroneous items. 2011 tax return form 1040 The expense for which the deduction is taken was never paid or incurred. 2011 tax return form 1040 For example, your spouse, a cash-basis taxpayer, deducted $10,000 of advertising expenses on Schedule C of your joint Form 1040, but never paid for any advertising. 2011 tax return form 1040 The expense does not qualify as a deductible expense. 2011 tax return form 1040 For example, your spouse claimed a business fee deduction of $10,000 that was for the payment of state fines. 2011 tax return form 1040 Fines are not deductible. 2011 tax return form 1040 No factual argument can be made to support the deductibility of the expense. 2011 tax return form 1040 For example, your spouse claimed $4,000 for security costs related to a home office, which were actually veterinary and food costs for your family's two dogs. 2011 tax return form 1040 Actual Knowledge or Reason To Know You knew or had reason to know of an understated tax if: You actually knew of the understated tax, or A reasonable person in similar circumstances would have known of the understated tax. 2011 tax return form 1040 Actual knowledge. 2011 tax return form 1040   If you actually knew about an erroneous item that belongs to your spouse (or former spouse), the relief discussed here does not apply to any part of the understated tax due to that item. 2011 tax return form 1040 You and your spouse (or former spouse) remain jointly liable for that part of the understated tax. 2011 tax return form 1040 For information about the criteria for determining whether you actually knew about an erroneous item, see Actual Knowledge later under Separation of Liability Relief. 2011 tax return form 1040 Reason to know. 2011 tax return form 1040   If you had reason to know about an erroneous item that belongs to your spouse (or former spouse), the relief discussed here does not apply to any part of the understated tax due to that item. 2011 tax return form 1040 You and your spouse (or former spouse) remain jointly liable for that part of the understated tax. 2011 tax return form 1040   The IRS will consider all facts and circumstances in determining whether you had reason to know of an understated tax due to an erroneous item. 2011 tax return form 1040 The facts and circumstances include: The nature of the erroneous item and the amount of the erroneous item relative to other items. 2011 tax return form 1040 The financial situation of you and your spouse (or former spouse). 2011 tax return form 1040 Your educational background and business experience. 2011 tax return form 1040 The extent of your participation in the activity that resulted in the erroneous item. 2011 tax return form 1040 Whether you failed to ask, at or before the time the return was signed, about items on the return or omitted from the return that a reasonable person would question. 2011 tax return form 1040 Whether the erroneous item represented a departure from a recurring pattern reflected in prior years' returns (for example, omitted income from an investment regularly reported on prior years' returns). 2011 tax return form 1040 Partial relief when a portion of erroneous item is unknown. 2011 tax return form 1040   You may qualify for partial relief if, at the time you filed your return, you had no knowledge or reason to know of only a portion of an erroneous item. 2011 tax return form 1040 You will be relieved of the understated tax due to that portion of the item if all other requirements are met for that portion. 2011 tax return form 1040 Example. 2011 tax return form 1040 At the time you signed your joint return, you knew that your spouse did not report $5,000 of gambling winnings. 2011 tax return form 1040 The IRS examined your tax return several months after you filed it and determined that your spouse's unreported gambling winnings were actually $25,000. 2011 tax return form 1040 You established that you did not know about, and had no reason to know about, the additional $20,000 because of the way your spouse handled gambling winnings. 2011 tax return form 1040 The understated tax due to the $20,000 will qualify for innocent spouse relief if you meet the other requirements. 2011 tax return form 1040 The understated tax due to the $5,000 of gambling winnings you knew about will not qualify for relief. 2011 tax return form 1040 Indications of Unfairness for Innocent Spouse Relief The IRS will consider all of the facts and circumstances of the case in order to determine whether it is unfair to hold you responsible for the understated tax. 2011 tax return form 1040 The following are examples of factors the IRS will consider. 2011 tax return form 1040 Whether you received a significant benefit (defined below), either directly or indirectly, from the understated tax. 2011 tax return form 1040 Whether your spouse (or former spouse) deserted you. 2011 tax return form 1040 Whether you and your spouse have been divorced or separated. 2011 tax return form 1040 Whether you received a benefit on the return from the understated tax. 2011 tax return form 1040 For other factors, see Factors for Determining Whether To Grant Equitable Relief later under Equitable Relief. 2011 tax return form 1040 Significant benefit. 2011 tax return form 1040   A significant benefit is any benefit in excess of normal support. 2011 tax return form 1040 Normal support depends on your particular circumstances. 2011 tax return form 1040 Evidence of a direct or indirect benefit may consist of transfers of property or rights to property, including transfers that may be received several years after the year of the understated tax. 2011 tax return form 1040 Example. 2011 tax return form 1040 You receive money from your spouse that is beyond normal support. 2011 tax return form 1040 The money can be traced to your spouse's lottery winnings that were not reported on your joint return. 2011 tax return form 1040 You will be considered to have received a significant benefit from that income. 2011 tax return form 1040 This is true even if your spouse gives you the money several years after he or she received it. 2011 tax return form 1040 Separation of Liability Relief Under this type of relief, the understated tax (plus interest and penalties) on your joint return is allocated between you and your spouse (or former spouse). 2011 tax return form 1040 The understated tax allocated to you is generally the amount you are responsible for. 2011 tax return form 1040 This type of relief is available only for unpaid liabilities resulting from the understated tax. 2011 tax return form 1040 Refunds are not allowed. 2011 tax return form 1040 To request 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. 2011 tax return form 1040 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. 2011 tax return form 1040 (Under this rule, you are no longer married if you are widowed. 2011 tax return form 1040 ) You were not a member of the same household (explained below) as the spouse with whom you filed the joint return at any time during the 12-month per- iod ending on the date you file Form 8857. 2011 tax return form 1040 Members of the same household. 2011 tax return form 1040   You and your spouse are not members of the same household if you are living apart and are estranged. 2011 tax return form 1040 However, you and your spouse are considered members of the same household if any of the following conditions are met. 2011 tax return form 1040 You and your spouse reside in the same dwelling. 2011 tax return form 1040 You and your spouse reside in separate dwellings but are not estranged, and one of you is temporarily absent from the other's household as explained in (3) below. 2011 tax return form 1040 Either spouse is temporarily absent from the household and it is reasonable to assume that the absent spouse will return to the household, and the household or a substantially equivalent household is maintained in anticipation of the absent spouse's return. 2011 tax return form 1040 Examples of temporary absences include absence due to imprisonment, illness, business, vacation, military service, or education. 2011 tax return form 1040 Burden of proof. 2011 tax return form 1040   You must be able to prove that you meet all of the requirements for separation of liability relief (except actual knowledge) and that you did not transfer property to avoid tax (discussed later). 2011 tax return form 1040 You must also establish the basis for allocating the erroneous items. 2011 tax return form 1040 Limitations on Relief Even if you meet the requirements discussed previously, separation of liability relief will not be granted in the following situations. 2011 tax return form 1040 The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. 2011 tax return form 1040 A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. 2011 tax return form 1040 The IRS proves that at the time you signed your joint return, you had actual knowledge (explained below) of any erroneous items giving rise to the deficiency that were allocable to your spouse (or former spouse). 2011 tax return form 1040 For the definition of erroneous items, see Erroneous Items earlier under Innocent Spouse Relief. 2011 tax return form 1040 Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. 2011 tax return form 1040 See Transfers of Property To Avoid Tax , later. 2011 tax return form 1040 Actual Knowledge The relief discussed here does not apply to any part of the understated tax due to your spouse's (or former spouse's) erroneous items of which you had actual knowledge. 2011 tax return form 1040 You and your spouse (or former spouse) remain jointly and severally liable for this part of the understated tax. 2011 tax return form 1040 If you had actual knowledge of only a portion of an erroneous item, the IRS will not grant relief for that portion of the item. 2011 tax return form 1040 You had actual knowledge of an erroneous item if: You knew that an item of unreported income was received. 2011 tax return form 1040 (This rule applies whether or not there was a receipt of cash. 2011 tax return form 1040 ) You knew of the facts that made an incorrect deduction or credit unallowable. 2011 tax return form 1040 For a false or inflated deduction, you knew that the expense was not incurred, or not incurred to the extent shown on the tax return. 2011 tax return form 1040 Knowledge of the source of an erroneous item is not sufficient to establish actual knowledge. 2011 tax return form 1040 Also, your actual knowledge may not be inferred when you merely had a reason to know of the erroneous item. 2011 tax return form 1040 Similarly, the IRS does not have to establish that you knew of the source of an erroneous item in order to establish that you had actual knowledge of the item itself. 2011 tax return form 1040 Your actual knowledge of the proper tax treatment of an erroneous item is not relevant for purposes of demonstrating that you had actual knowledge of that item. 2011 tax return form 1040 Neither is your actual knowledge of how the erroneous item was treated on the tax return. 2011 tax return form 1040 For example, if you knew that your spouse received dividend income, relief is not available for that income even if you did not know it was taxable. 2011 tax return form 1040 Example. 2011 tax return form 1040 Bill and Karen Green filed a joint return showing Karen's wages of $50,000 and Bill's self-employment income of $10,000. 2011 tax return form 1040 The IRS audited their return and found that Bill did not report $20,000 of self-employment income. 2011 tax return form 1040 The additional income resulted in a $6,000 understated tax, plus interest and penalties. 2011 tax return form 1040 After obtaining a legal separation from Bill, Karen filed Form 8857 to request separation of liability relief. 2011 tax return form 1040 The IRS proved that Karen actually knew about the $20,000 of additional income at the time she signed the joint return. 2011 tax return form 1040 Bill is liable for all of the understated tax, interest, and penalties because all of it was due to his unreported income. 2011 tax return form 1040 Karen is also liable for the understated tax, interest, and penalties due to the $20,000 of unreported income because she actually knew of the item. 2011 tax return form 1040 The IRS can collect the entire $6,000 plus interest and penalties from either Karen or Bill because they are jointly and individually liable for it. 2011 tax return form 1040 Factors supporting actual knowledge. 2011 tax return form 1040   The IRS may rely on all facts and circumstances in determining whether you actually knew of an erroneous item at the time you signed the return. 2011 tax return form 1040 The following are examples of factors the IRS may use. 2011 tax return form 1040 Whether you made a deliberate effort to avoid learning about the item in order to be shielded from liability. 2011 tax return form 1040 Whether you and your spouse (or former spouse) jointly owned the property that resulted in the erroneous item. 2011 tax return form 1040 Exception for spousal abuse or domestic violence. 2011 tax return form 1040   Even if you had actual knowledge, you may still qualify for relief if you establish that: You were the victim of spousal abuse or domestic violence before signing the return, and Because of that abuse, you did not challenge the treatment of any items on the return because you were afraid your spouse (or former spouse) would retaliate against you. 2011 tax return form 1040   If you establish that you signed your joint return under duress (threat of harm or other form of coercion), then it is not a joint return, and you are not liable for any tax shown on that return or any tax deficiency for that return. 2011 tax return form 1040 However, you may be required to file a separate return for that tax year. 2011 tax return form 1040 For more information about duress, see the instructions for Form 8857. 2011 tax return form 1040 Transfers of Property To Avoid Tax If your spouse (or former spouse) transfers property (or the right to property) to you for the main purpose of avoiding tax or payment of tax, the tax liability allocated to you will be increased by the fair market value of the property on the date of the transfer. 2011 tax return form 1040 The increase may not be more than the entire amount of the liability. 2011 tax return form 1040 A transfer will be presumed to have as its main purpose the avoidance of tax or payment of tax if the transfer is made after the date that is 1 year before the date on which the IRS sent its first letter of proposed deficiency. 2011 tax return form 1040 This presumption will not apply if: The transfer was made under a divorce decree, separate maintenance agreement, or a written instrument incident to such an agreement, or You establish that the transfer did not have as its main purpose the avoidance of tax or payment of tax. 2011 tax return form 1040 If the presumption does not apply, but the IRS can establish that the purpose of the transfer was the avoidance of tax or payment of tax, the tax liability allocated to you will be increased as explained above. 2011 tax return form 1040 Equitable Relief If you do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law, you may still be relieved of responsibility for tax, interest, and penalties through equitable relief. 2011 tax return form 1040 Unlike innocent spouse relief or separation of liability relief, you can get equitable relief from an understated tax (defined earlier under Innocent Spouse Relief ) or an underpaid tax. 2011 tax return form 1040 An underpaid tax is an amount of tax you properly reported on your return but you have not paid. 2011 tax return form 1040 For example, your joint 2009 return shows that you and your spouse owed $5,000. 2011 tax return form 1040 You paid $2,000 with the return. 2011 tax return form 1040 You have an underpaid tax of $3,000. 2011 tax return form 1040 Conditions for Getting Equitable Relief You may qualify for equitable relief if you meet all of the following conditions. 2011 tax return form 1040 You are not eligible for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. 2011 tax return form 1040 You have an understated tax or an underpaid tax. 2011 tax return form 1040 You did not pay the tax. 2011 tax return form 1040 However, see Refunds , later, for situations in which you are entitled to a refund of payments you made. 2011 tax return form 1040 You establish that, taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated or underpaid tax. 2011 tax return form 1040 See Factors for Determining Whether To Grant Equitable Relief, later. 2011 tax return form 1040 You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. 2011 tax return form 1040 A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. 2011 tax return form 1040 Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. 2011 tax return form 1040 See Transfers of Property To Avoid Tax, earlier, under Separation of Liability Relief. 2011 tax return form 1040 You did not file or fail to file your return with the intent to commit fraud. 2011 tax return form 1040 The income tax liability from which you seek relief must be attributable to an item of the spouse (or former spouse) with whom you filed the joint return, unless one of the following exceptions applies: The item is attributable or partially attributable to you solely due to the operation of community property law. 2011 tax return form 1040 If you meet this exception, that item will be considered attributable to your spouse (or former spouse) for purposes of equitable relief. 2011 tax return form 1040 If the item is titled in your name, the item is presumed to be attributable to you. 2011 tax return form 1040 However, you can rebut this presumption based on the facts and circumstances. 2011 tax return form 1040 You did not know, and had no reason to know, that funds intended for the payment of tax were misappropriated by your spouse (or former spouse) for his or her benefit. 2011 tax return form 1040 If you meet this exception, the IRS will consider granting equitable relief although the underpaid tax may be attributable in part or in full to your item, and only to the extent the funds intended for payment were taken by your spouse (or former spouse). 2011 tax return form 1040 You establish that you were the victim of spousal abuse or domestic violence before signing the return, and that, as a result of the prior abuse, you did not challenge the treatment of any items on the return for fear of your spouse's (or former spouse's) retaliation. 2011 tax return form 1040 If you meet this exception, relief will be considered although the understated tax or underpaid tax may be attributable in part or in full to your item. 2011 tax return form 1040 Factors for Determining Whether To Grant Equitable Relief The IRS will consider all of the facts and circumstances in order to determine whether it is unfair to hold you responsible for the understated or underpaid tax. 2011 tax return form 1040 The following are examples of factors that the IRS will consider to determine whether to grant equitable relief. 2011 tax return form 1040 The IRS will consider all factors and weigh them appropriately. 2011 tax return form 1040 Relevant Factors The following are examples of factors that may be relevant to whether the IRS will grant equitable relief. 2011 tax return form 1040 Whether you are separated (whether legally or not) or divorced from your spouse. 2011 tax return form 1040 A temporary absence, such as an absence due to imprisonment, illness, business, vacation, military service, or education, is not considered separation for this purpose. 2011 tax return form 1040 A temporary absence is one where it is reasonable to assume that the absent spouse will return to the household, and the household or a substantially equivalent household is maintained in anticipation of the absent spouse's return. 2011 tax return form 1040 Whether you would suffer a significant economic hardship if relief is not granted. 2011 tax return form 1040 (In other words, you would not be able to pay your reasonable basic living expenses. 2011 tax return form 1040 ) Whether you have a legal obligation under a divorce decree or agreement to pay the tax. 2011 tax return form 1040 This factor will not weigh in favor of relief if you knew or had reason to know, when entering into the divorce decree or agreement, that your former spouse would not pay the income tax liability. 2011 tax return form 1040 Whether you received a significant benefit (beyond normal support) from the underpaid tax or item causing the understated tax. 2011 tax return form 1040 (For a definition of significant benefit, see Indications of Unfairness for Innocent Spouse Relief earlier. 2011 tax return form 1040 ) Whether you have made a good faith effort to comply with federal income tax laws for the tax year for which you are requesting relief or the following years. 2011 tax return form 1040 Whether you knew or had reason to know about the items causing the understated tax or that the tax would not be paid, as explained next. 2011 tax return form 1040 Knowledge or reason to know. 2011 tax return form 1040   In the case of an underpaid tax, the IRS will consider whether you did not know and had no reason to know that your spouse (or former spouse) would not pay the income tax liability. 2011 tax return form 1040   In the case of an income tax liability that arose from an understated tax, the IRS will consider whether you did not know and had no reason to know of the item causing the understated tax. 2011 tax return form 1040 Reason to know of the item giving rise to the understated tax will not be weighed more heavily than other factors. 2011 tax return form 1040 Actual knowledge of the item giving rise to the understated tax, however, is a strong factor weighing against relief. 2011 tax return form 1040 This strong factor may be overcome if the factors in favor of equitable relief are particularly compelling. 2011 tax return form 1040 Reason to know. 2011 tax return form 1040   In determining whether you had reason to know, the IRS will consider your level of education, any deceit or evasiveness of your spouse (or former spouse), your degree of involvement in the activity generating the income tax liability, your involvement in business and household financial matters, your business or financial expertise, and any lavish or unusual expenditures compared with past spending levels. 2011 tax return form 1040 Example. 2011 tax return form 1040 You and your spouse filed a joint 2009 return. 2011 tax return form 1040 That return showed you owed $10,000. 2011 tax return form 1040 You had $5,000 of your own money and you took out a loan to pay the other $5,000. 2011 tax return form 1040 You gave 2 checks for $5,000 each to your spouse to pay the $10,000 liability. 2011 tax return form 1040 Without telling you, your spouse took the $5,000 loan and spent it on himself. 2011 tax return form 1040 You and your spouse were divorced in 2010. 2011 tax return form 1040 In addition, you had no knowledge or reason to know at the time you signed the return that the tax would not be paid. 2011 tax return form 1040 These facts indicate to the IRS that it may be unfair to hold you liable for the $5,000 underpaid tax. 2011 tax return form 1040 The IRS will consider these facts, together with all of the other facts and circumstances, to determine whether to grant you equitable relief from the $5,000 underpaid tax. 2011 tax return form 1040 Factors Weighing in Favor of Equitable Relief The following are examples of factors that will weigh in favor of equitable relief, but will not weigh against equitable relief. 2011 tax return form 1040 Whether your spouse (or former spouse) abused you. 2011 tax return form 1040 Whether you were in poor mental or physical health on the date you signed the return or at the time you requested relief. 2011 tax return form 1040 Refunds If you are granted relief, refunds are: Permitted under innocent spouse relief as explained later under Limit on Amount of Refund . 2011 tax return form 1040 Not permitted under separation of liability relief. 2011 tax return form 1040 Permitted in limited circumstances under equitable relief, as explained under Refunds Under Equitable Relief. 2011 tax return form 1040 Proof Required The IRS will only refund payments you made with your own money. 2011 tax return form 1040 However, you must provide proof that you made the payments with your own money. 2011 tax return form 1040 Examples of proof are a copy of your bank statement or a canceled check. 2011 tax return form 1040 No proof is required if your individual refund was used by the IRS to pay a tax you owed on a joint tax return for another year. 2011 tax return form 1040 Refunds Under Equitable Relief In the following situations, you are eligible to receive a refund of certain payments you made. 2011 tax return form 1040 Underpaid tax. 2011 tax return form 1040   If you are granted relief for an underpaid tax, you are eligible for a refund of separate payments that you made after July 22, 1998. 2011 tax return form 1040 However, you are not eligible for refunds of payments made with the joint return, joint payments, or payments that your spouse (or former spouse) made. 2011 tax return form 1040 For example, withholding tax and estimated tax payments cannot be refunded because they are considered made with the joint return. 2011 tax return form 1040   The amount of the refund is subject to the limit discussed later under Limit on Amount of Refund. 2011 tax return form 1040 Understated tax. 2011 tax return form 1040   If you are granted relief for an understated tax, you are eligible for a refund of certain payments made under an installment agreement that you entered into with the IRS, if you have not defaulted on the installment agreement. 2011 tax return form 1040 You are not in default if the IRS did not issue you a notice of default or take any action to end the installment agreement. 2011 tax return form 1040 Only installment payments made after the date you filed Form 8857 are eligible for a refund. 2011 tax return form 1040   The amount of the refund is subject to the limit discussed next. 2011 tax return form 1040 Limit on Amount of Refund The amount of your refund is limited. 2011 tax return form 1040 Read the following chart to find out the limit. 2011 tax return form 1040 IF you file Form 8857. 2011 tax return form 1040 . 2011 tax return form 1040 . 2011 tax return form 1040 THEN the refund cannot be more than. 2011 tax return form 1040 . 2011 tax return form 1040 . 2011 tax return form 1040 Within 3 years after filing your return The part of the tax paid within 3 years (plus any extension of time for filing your return) before you filed Form 8857. 2011 tax return form 1040 After the 3-year period, but within 2 years from the time you paid the tax The tax you paid within 2 years immediately before you filed Form 8857. 2011 tax return form 1040 Filled-in Form 8857 This part explains how Janie Boulder fills out Form 8857 to request innocent spouse relief. 2011 tax return form 1040 Janie and Joe Boulder filed a joint tax return for 2007. 2011 tax return form 1040 They claimed one dependency exemption for their son Michael. 2011 tax return form 1040 Their return was adjusted by the IRS because Joe did not report a $5,000 award he won that year. 2011 tax return form 1040 Janie did not know about the award when the return was filed. 2011 tax return form 1040 They agreed to the adjustment but could not pay the additional amount due of $815 ($650 tax + $165 penalty and interest). 2011 tax return form 1040 Janie and Joe were divorced on May 13, 2009. 2011 tax return form 1040 In February 2010, Janie filed her 2009 federal income tax return as head of household. 2011 tax return form 1040 She expected a refund of $1,203. 2011 tax return form 1040 In May 2010, she received a notice informing her that the IRS had offset her refund against the $815 owed on her joint 2007 income tax return and that she had a right to file Form 8857. 2011 tax return form 1040 Janie applies the conditions listed earlier under Innocent Spouse Relief to see if she qualifies for relief. 2011 tax return form 1040 Janie meets the first and second conditions because the joint tax return they filed has an understated tax due to Joe's erroneous item. 2011 tax return form 1040 Janie believes she meets the third condition. 2011 tax return form 1040 She did not know about the award and had no reason to know about it because of the secretive way Joe conducted his financial affairs. 2011 tax return form 1040 Janie believes she meets the fourth condition. 2011 tax return form 1040 She believes it would be unfair to be held liable for the tax because she did not benefit from the award. 2011 tax return form 1040 Joe spent it on personal items for his use only. 2011 tax return form 1040 Because Janie believes she qualifies for innocent spouse relief, she first completes Part I of Form 8857 to determine if she should file the form. 2011 tax return form 1040 In Part I, she makes all entries under the Tax Year 1 column because she is requesting relief for only one year. 2011 tax return form 1040 Part I Line 1. 2011 tax return form 1040   She enters “2007” on line 1 because this is the tax year for which she is requesting relief. 2011 tax return form 1040 Line 2. 2011 tax return form 1040   She checks the box because she wants a refund. 2011 tax return form 1040 Note. 2011 tax return form 1040 Because the IRS used her individual refund to pay the tax owed on the joint tax return, she does not need to provide proof of payment. 2011 tax return form 1040 Line 3. 2011 tax return form 1040   She checks the “No” box because the IRS did not use her share of a joint refund to pay Joe's past-due debts. 2011 tax return form 1040 Line 4. 2011 tax return form 1040   She checks the “Yes” box because she filed a joint tax return for tax year 2007. 2011 tax return form 1040 Line 5. 2011 tax return form 1040   She skips this line because she checked the “Yes” box on line 4. 2011 tax return form 1040 Part II Line 6. 2011 tax return form 1040   She enters her name, address, social security number, county, and best daytime phone number. 2011 tax return form 1040 Part III Line 7. 2011 tax return form 1040   She enters Joe's name, address, social security number, and best daytime phone number. 2011 tax return form 1040 Line 8. 2011 tax return form 1040   She checks the “divorced since” box and enters the date she was divorced as “05/13/2009. 2011 tax return form 1040 ” She attaches a copy of her entire divorce decree (not Illustrated) to the form. 2011 tax return form 1040 Line 9. 2011 tax return form 1040   She checks the box for “High school diploma, equivalent, or less,” because she had completed high school when her 2007 joint tax return was filed. 2011 tax return form 1040 Line 10. 2011 tax return form 1040   She checks the “No” box because she was not a victim of spousal abuse or domestic violence. 2011 tax return form 1040 Line 11. 2011 tax return form 1040   She checks the “No” box because neither she nor Joe incurred any large expenses during the year for which she wants relief. 2011 tax return form 1040 Line 12. 2011 tax return form 1040   She checks the “Yes” box because she signed the 2007 joint tax return. 2011 tax return form 1040 Line 13. 2011 tax return form 1040   She checks the “No” box because she did not have a mental or physical condition when the return was filed and does not have one now. 2011 tax return form 1040 Part IV Line 14. 2011 tax return form 1040   Because she was not involved in preparing the return, she checks the box, “You were not involved in preparing the returns. 2011 tax return form 1040 ” Line 15. 2011 tax return form 1040   She checks the box, “You did not know anything was incorrect or missing” because she did not know that Joe had received a $5,000 award. 2011 tax return form 1040 She explains this in the space provided. 2011 tax return form 1040 Line 16. 2011 tax return form 1040   She checks the box, “You knew that person had income” because she knew Joe had income from wages. 2011 tax return form 1040 She also lists Joe's income. 2011 tax return form 1040 Under “Type of Income” she enters “wages. 2011 tax return form 1040 ” Under “Who paid it to that person,” she enters the name of Joe's employer, “Allied. 2011 tax return form 1040 ” Under “Tax Year 1” she enters the amount of Joe's wages, “$40,000. 2011 tax return form 1040 ” Because she is only requesting relief for one tax year, she leaves the entry spaces for “Tax Year 2” and “Tax Year 3” blank. 2011 tax return form 1040 Line 17. 2011 tax return form 1040   She checks the “No” box because she did not know any amount was owed to the IRS when the 2007 return was signed. 2011 tax return form 1040 Line 18. 2011 tax return form 1040   She checks the “No” box because, when the return was signed, she was not having financial problems. 2011 tax return form 1040 Line 19. 2011 tax return form 1040   She checks the box, “You were not involved in handling money for the household” because Joe handled all the money for the household. 2011 tax return form 1040 She provides additional information in the space provided. 2011 tax return form 1040 Line 20. 2011 tax return form 1040   She checks the “No” box because Joe has never transferred money or property to her. 2011 tax return form 1040 Part V Line 21. 2011 tax return form 1040   She enters the number “1” on both the line for “Adults” and the line for “Children” because her current household consists of herself and her son. 2011 tax return form 1040 Line 22. 2011 tax return form 1040   She enters her average monthly income for her entire household. 2011 tax return form 1040 Line 23. 2011 tax return form 1040   She lists her assets, which are $500 for the fair market value of a car, $450 in her checking account, and $100 in her savings account. 2011 tax return form 1040 Signing and mailing Form 8857. 2011 tax return form 1040    Janie signs and dates the form. 2011 tax return form 1040 She attaches the copy of her divorce decree (not illustrated) required by line 8. 2011 tax return form 1040 Finally, she sends the form to the IRS address or fax number shown in the instructions for Form 8857. 2011 tax return form 1040 This image is too large to be displayed in the current screen. 2011 tax return form 1040 Please click the link to view the image. 2011 tax return form 1040 Boulder's filled-in Form 8857 page 1 This image is too large to be displayed in the current screen. 2011 tax return form 1040 Please click the link to view the image. 2011 tax return form 1040 Boulder's filled-in Form 8857 page 2 This image is too large to be displayed in the current screen. 2011 tax return form 1040 Please click the link to view the image. 2011 tax return form 1040 Boulder's filled-in Form 8857 page 3 This image is too large to be displayed in the current screen. 2011 tax return form 1040 Please click the link to view the image. 2011 tax return form 1040 Boulder's filled-in Form 8857 page 4 Flowcharts The following flowcharts provide a quick way for determining whether you may qualify for relief. 2011 tax return form 1040 But do not rely on these flowcharts alone. 2011 tax return form 1040 Also read the earlier discussions. 2011 tax return form 1040 Figure A. 2011 tax return form 1040 Do You Qualify for Innocent Spouse Relief? Please click here for the text description of the image. 2011 tax return form 1040 "Do You Qualify for Innocent Spouse Relief?" Figure B. 2011 tax return form 1040 Do You Qualify for Separation of Liability Relief? Please click here for the text description of the image. 2011 tax return form 1040 "Do You Qualify for Separation of Liability Relief?" Figure C. 2011 tax return form 1040 Do You Qualify for Equitable Relief? This image is too large to be displayed in the current screen. 2011 tax return form 1040 Please click the link to view the image. 2011 tax return form 1040 "Do You Qualify for Equitable Relief?" Prev  Up  Next   Home   More Online Publications