(a) If a return required under any state tax law has been filed by a husband and wife and the amount of tax due on the return was understated by either the omission of an amount properly includable in the return or by erroneous deductions or credits attributable to one (1) spouse, upon written request, the director may relieve the other spouse of liability for any tax, penalty, or interest attributable to the understatement of tax for that return.
(b) In determining whether to grant the relief set out in subsection (a) of this section, the director may take into consideration the following factors:
(1) Whether the spouse making the request for relief has significantly benefited, either directly or indirectly, from the understatement of tax;
(2) Whether the spouse making the request for relief knew or had reason to know of the understatement of tax; and
(3) Any other fact or circumstance that would make it inequitable to hold the spouse making the request for relief liable for the deficiency resulting from the understatement of tax.
(c) As used in subdivision (b)(2) of this section, "reason to know" means whether a reasonably prudent person would have known that an understatement was made.
(d) As used in subsection (a) of this section, "attributable to one (1) spouse" means that the understatement on the return was the result of the actions taken or information supplied by that spouse.
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