
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC66]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
   PART I--DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE 
                              INCOME, ETC.
 
Sec. 66. Treatment of community income


(a) Treatment of community income where spouses live apart

    If--
        (1) 2 individuals are married to each other at any time during a 
    calendar year;
        (2) such individuals--
            (A) live apart at all times during the calendar year, and
            (B) do not file a joint return under section 6013 with each 
        other for a taxable year beginning or ending in the calendar 
        year;

        (3) one or both of such individuals have earned income for the 
    calendar year which is community income; and
        (4) no portion of such earned income is transferred (directly or 
    indirectly) between such individuals before the close of the 
    calendar year,

then, for purposes of this title, any community income of such 
individuals for the calendar year shall be treated in accordance with 
the rules provided by section 879(a).

(b) Secretary may disregard community property laws where spouse not 
        notified of community income

    The Secretary may disallow the benefits of any community property 
law to any taxpayer with respect to any income if such taxpayer acted as 
if solely entitled to such income and failed to notify the taxpayer's 
spouse before the due date (including extensions) for filing the return 
for the taxable year in which the income was derived of the nature and 
amount of such income.

(c) Spouse relieved of liability in certain other cases

    Under regulations prescribed by the Secretary, if--
        (1) an individual does not file a joint return for any taxable 
    year,
        (2) such individual does not include in gross income for such 
    taxable year an item of community income properly includible therein 
    which, in accordance with the rules contained in section 879(a), 
    would be treated as the income of the other spouse,
        (3) the individual establishes that he or she did not know of, 
    and had no reason to know of, such item of community income, and
        (4) taking into account all facts and circumstances, it is 
    inequitable to include such item of community income in such 
    individual's gross income,

then, for purposes of this title, such item of community income shall be 
included in the gross income of the other spouse (and not in the gross 
income of the individual). Under procedures prescribed by the Secretary, 
if, taking into account all the facts and circumstances, it is 
inequitable to hold the individual liable for any unpaid tax or any 
deficiency (or any portion of either) attributable to any item for which 
relief is not available under the preceding sentence, the Secretary may 
relieve such individual of such liability.

(d) Definitions

    For purposes of this section--

                          (1) Earned income

        The term ``earned income'' has the meaning given to such term by 
    section 911(d)(2).

                        (2) Community income

        The term ``community income'' means income which, under 
    applicable community property laws, is treated as community income.

                     (3) Community property laws

        The term ``community property laws'' means the community 
    property laws of a State, a foreign country, or a possession of the 
    United States.

(Added Pub. L. 96-605, title I, Sec. 101(a), Dec. 28, 1980, 94 Stat. 
3521; amended Pub. L. 98-369, div. A, title IV, Sec. 424(b)(1)-(2)(B), 
July 18, 1984, 98 Stat. 802, 803; Pub. L. 101-239, title VII, 
Sec. 7841(d)(8), Dec. 19, 1989, 103 Stat. 2428; Pub. L. 105-206, title 
III, Sec. 3201(b), July 22, 1998, 112 Stat. 739.)


                               Amendments

    1998--Subsec. (c). Pub. L. 105-206 inserted at end ``Under 
procedures prescribed by the Secretary, if, taking into account all the 
facts and circumstances, it is inequitable to hold the individual liable 
for any unpaid tax or any deficiency (or any portion of either) 
attributable to any item for which relief is not available under the 
preceding sentence, the Secretary may relieve such individual of such 
liability.''
    1989--Subsec. (d)(1). Pub. L. 101-239 substituted ``section 
911(d)(2)'' for ``section 911(b)''.
    1984--Pub. L. 98-369, Sec. 424(b)(2)(A), struck out ``where spouses 
live apart'' in section catchline.
    Subsec. (a). Pub. L. 98-369, Sec. 424(b)(2)(B), substituted 
``Treatment of community income where spouses live apart'' for ``General 
rule'' in heading.
    Subsecs. (b) to (d). Pub. L. 98-369, Sec. 424(b)(1), added subsecs. 
(b) and (c) and redesignated former subsec. (b) as (d).


                    Effective Date of 1998 Amendment

    Amendment by Pub. L. 105-206 applicable to any liability for tax 
arising after July 22, 1998, and any liability for tax arising on or 
before such date but remaining unpaid as of such date, see section 
3201(g)(1) of Pub. L. 105-206, set out as a note under section 6015 of 
this title.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-369 applicable to all taxable years to which 
the Internal Revenue Code of 1986 [formerly I.R.C. 1954] applies with 
corresponding provisions deemed to be included in the Internal Revenue 
Code of 1939 and applicable to all taxable years to which such Code 
applies, except subsection (b) of this section is applicable to taxable 
years beginning after December 31, 1984, see section 424(c) of Pub. L. 
98-369, set out as a note under section 6013 of this title.


                             Effective Date

    Section 101(c) of Pub. L. 96-605 provided that: ``The amendments 
made by this section [enacting this section] shall apply to calendar 
years beginning after December 31, 1980.''
