Sec. 1. 36 MRSA §5287 is enacted to read:

§5287.__Liability of innocent spouse

1.__Relief.__Upon request, the assessor may relieve a spouse of liability for tax, including interest and penalties under this Part if:

A.__The spouses filed a joint return;

B.__On the joint return there was a substantial understatement of tax attributable to grossly erroneous items of one spouse;

C.__The spouse requesting relief from liability for tax establishes that in signing the return that spouse did not know and had no reason to know that there was a substantial understatement; and

D.__Taking into consideration all the facts and circumstances, it is inequitable to hold the requesting spouse liable for the deficiency in tax for the tax year attributable to the substantial understatement.

2.__Definitions.__As used in this section, unless the context otherwise indicates, the following terms have the following meanings.

A.__With respect to a spouse, "grossly erroneous items" means items of adjusted gross income attributable to that spouse that are omitted from adjusted gross income and any claim of a deduction, exemption, credit or basis by that spouse in an amount that has no basis in fact or law.

B.__"Substantial understatement" means any understatement that exceeds $100.

3.__Limitation.__This subsection is limited to circumstances when:

A.__If the requesting spouse's adjusted gross income for the most recent tax year ending before the date of the deficiency notice is mailed is $20,000 or less, and the liability is greater than 10% of that spouse's adjusted gross income; or

B.__If the requesting spouse's adjusted gross income for the most recent tax year ending before the date of the