42-2201

42-2201. Election for relief from joint and
several liability; definition

A. Notwithstanding section 43-301, subsection B and section 43-562, after filing a
joint income tax return pursuant to section 43-309, a taxpayer may seek relief from joint
and several liability under the following circumstances:

1. There is an understatement of tax attributable to erroneous items of one of the
taxpayers filing the joint return.

2. The taxpayer making an election under this section establishes that in signing
the return the taxpayer did not know, and had no reason to know, that there was an
understatement.

3. Taking into account all of the facts and circumstances, it is inequitable to
hold that taxpayer liable for the deficiency attributable to the understatement.

B. If a taxpayer qualifies for relief under subsection A of this section, the
relief extends to the amount of liability for tax, interest and penalties that is
attributable to the understatement.

C. If a taxpayer would qualify for relief under subsection A of this section except
that under subsection A, paragraph 2 the taxpayer establishes that in signing the return
the taxpayer did not know, and had no reason to know, the extent of the understatement,
the relief extends only to the extent the liability for tax, interest and penalties is
attributable to the portion of the understatement of which the taxpayer did not know and
had no reason to know.

D. The department shall make any determination under this section without regard to
community property laws.

E. An election made by an individual under this section after the department has
collected tax attributable to the erroneous items is considered to be a claim for refund
pursuant to section 42-1118. The individual making an election after making the payment
shall make the election within six months after making the payment or within the time
limits prescribed by section 42-1106, whichever period expires later.

F. A taxpayer may appeal a determination under this section pursuant to section
42-1251 or 42-1253.

G. Except in the case of a jeopardy assessment under section 42-1111, the
department shall not levy or proceed in court to collect any tax for taxable years from
which the taxpayer is claiming relief under this section until all determinations are
final. The period of limitations under section 42-1104 is suspended for the same period
for which collection activities are suspended.

H. The department shall notify and allow the other joint filer to participate in
any administrative proceeding under this section.

I. For the purposes of this section, "understatement" has the same meaning
prescribed by section 6662(d)(2)(A) of the internal revenue code.