innocent spouse rule
- A regulation by the Internal Revenue Service exempting a spouse who unintentionally signs a deceptive shared tax return from paying penalties on it
- Under the innocent spouse rule, Jane was not penalized for the fraudulent tax return prepared by her ex-husband.
- Applying the innocent spouse rule can sometimes relieve a person from tax penalties due to their partner's deception.
- Despite his pleas, the court found that the innocent spouse rule did not apply as David was aware of the fraudulent activities.