If you filed your federal income tax returns jointly with your current or former spouse and it is later discovered that there were problems with the returns or additional taxes are owed, you and your spouse are both considered liable for the taxes due—plus any accrued interest or penalties.
This is true even if you are now divorced. It does not matter if your divorce decree states that your ex must pay any tax debts owed; the IRS can (and will) still come after you.
You are also both liable even if your spouse or ex was the sole income earner and you did not work, or if your spouse or ex is the person responsible for any filing errors. In fact, if the IRS is unable to collect from your spouse or ex, you can be personally liable for the full amount owed—even though there were two of you and even if you had no earnings.
IRS collection efforts can include garnishing your wages, levying your bank accounts, or placing IRS tax liens on your real estate or other assets.
The good news is, there are innocent spouse relief rules designed to protect people in these types of situations. Having an experienced tax attorney on your side can be helpful if you file for relief under the innocent spouse rules for taxes.
Typically, parties that apply and qualify for innocent spouse relief don’t have to pay the tax, interest, or penalties in question. In some cases, the spouse may be relieved in full, in other cases in part. If the requested relief is not granted, it is also possible to appeal the decision to the IRS Appeals Division or potentially the United States Tax Court.
You cannot seek innocent spouse relief for sales and excise tax, household employment tax, trust fund recovery, or individual shared responsibility payments.
Qualifying for Innocent Spouse Relief
Innocent spouse relief qualifications are straightforward. In general, to qualify, you must:
- Have filed a joint return, which includes errors that resulted in an understatement of income, with your current or former spouse
- Prove that when you signed the tax filing in question, you had no idea about the error
- Establish that it would be unreasonable to hold you liable for the mistake and subsequent understatement
- Prove that you and the other party haven’t engaged in property swapping as part of a larger scheme
There are three types of relief potentially available: Depending on the facts and circumstances, you may qualify for innocent spouse relief, separation of liability relief, or equitable relief. Your attorney can help you understand the differences between these options and help you qualify for the relief you are entitled to receive.
What counts as an “erroneous item” in terms of innocent spouse relief?
- Unreported income
- Improper deductions, credits, or property claims
Actual Knowledge vs. Reason to Know
People with “actual knowledge” or “reason to know” about the erroneous claim don’t qualify for innocent spouse relief. Actual knowledge is fairly straight forward, but reason to know is nuanced.
Theoretically, if your business or educational background is impressive, the IRS could deny your innocent spouse claim on the premise that you “should” have known.
Ignorance, or not asking about certain items on a return, may also not be a good excuse in the eyes of the IRS.
Find Out If You Qualify for Innocent Spouse Relief
Gordon Law Group has helped countless people qualify for innocent spouse tax relief. Gordon Law Group has the experience and knowledge you need to get the job done right.
It may be tempting to go it alone, but doing so demolishes your chances, because a single misstep can knock you out of contention.
Recommended for you
Understanding the eBay 1099-K
What Happens When the IRS Audits You? 4 Steps of an IRS Audit
What Triggers a Tax Audit?
What Happens If You Don’t File Taxes?
Non-filing penalties, non-payment penalties, and interest add up each month if you don’t file and pay your taxes on time.…
Top 10 Self-Employed Tax Deductions for 2021
Powerful tax savings for anyone who’s…
How Long to Keep Tax Records (and What to Keep)
Anyone can be the target of an IRS audit. These tips will make the process run much more…
Contact our innocent spouse relief attorneys
If you need to file for innocent spouse relief, get in touch today and let’s see if we’re the right fit for you.