One of the last things that divorcees may think about when beginning divorce proceedings is how they will deal with tax issues in the future. At the outset, their concerns may only center on where they will live, where the kids will live and where they will go to school, and who will be responsible for paying marital debt.
While these are important and noble concerns, divorcees can still be held liable years after a divorce decree is signed for unpaid taxes stemming from when the parties were married. This is especially troubling if a former spouse is accused of tax fraud. Federal law allows both spouses to be accused of tax fraud when both parties sign what is later found to be a fraudulent return.
For former spouses snared in these situations, they can apply for equitable relief from the IRS. This essentially is a request for leniency, or even a discharge of tax debt. Former spouses in these situations may argue that they did not commit fraud since they did not know, or had any reason to know, that the numbers set forth in the return were fraudulent.
There are a number of situations where innocent spouses would seek relief. Most notably, abused spouses who had no input or involvement into the preparation of a return are people who commonly are coerced into signing a bad return without any idea about the criminal or financial implications. Also, spouses who had no idea about a spouse’s financial crimes through a fraudulent business venture may be released from liability.
We invite you to contact us with questions about tax liability after a divorce.