1. (1) A tax liability incurred by spouses filing a joint tax return is joint and several. Each spouse is responsible for the entire liability. However, the department may split a joint tax liability equally between two separated or divorced spouses. Either spouse may file a petition to split the joint liability equally between the spouses. In order to split the liability, the department must be satisfied that payment of the entire liability by the petitioning spouse will cause undue hardship on the petitioner and petitioner's household. Mere inconvenience is insufficient to establish hardship. A statement in the divorce decree is also insufficient to relieve either spouse of the liability.

2. (2) The conditions listed below may constitute hardship. The examples given are not intended to be all-inclusive.

   1. (a) Annual household income of the petitioning spouse, number of dependents and limited assets within the household are such that petitioner could not, in the department's opinion, pay the entire liability within five years.

      Example 1: The petitioning spouse receives social security income with no other income and only minimal assets.

      Example 2: The petitioning spouse earns $20,000 annually, is not receiving child or spousal support, and is the sole support of three adolescent dependents. Household assets are minimal. The liability owed jointly with the petitioner's ex-spouse is $4,000.

   2. (b) Major medical problems or a prolonged illness of either the petitioning spouse or a family member that either severely limits petitioning spouse's earning ability or creates an extreme financial burden on household resources.

      Example 3: Petitioning spouse or family member has a major illness and has been forced to retire. The only household income is from social security.

      Example 4: The petitioning spouse has a major illness and family is living on disability and attempting to meet high medical costs.

3. (3) Included within the petition must be:

   1. (a) An explanation of how payment of the entire liability will cause undue hardship on the petitioner and petitioner's household;
   2. (b) The current address of the non-petitioning spouse (if known);
   3. (c) A statement of financial condition submitted on a form prescribed by the department;
   4. (d) A copy of the legal separation or divorce decree; and
   5. (e) An explanation of how the petitioner will pay the remaining liability.

4. (4) Following review of the petition, the department will either:

   1. (a) Accept the petition, cause the liability to be split equally between spouses and notify both spouses of the action; or
   2. (b) Notify the petitioning spouse the petition has not been accepted.
5. (5) Acceptance by the department of the petition is discretionary. If the department denies a petition to split a joint liability, the petitioner may appeal that denial to the Magistrate Division of the Oregon Tax Court.

Statutory/Other Authority

ORS 305.100

Statutes/Other Implemented

ORS 316.368

History

REV 85-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-316.368, REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
REV 10-2013, f. 12-26-13, cert. ef. 1-1-14
RD 7-1994, f. 12-15-94, cert. ef. 12-30-94
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93