When going through a divorce, few couples think about the tax implications. It is usually an emotional time for everyone. It might only be afterward that you get a reminder of your marital past when the IRS (Internal Revenue Service) sends a notice about back taxes.
You might feel a sinking sensation when realizing that there is something that still binds you to your ex-spouse: your IRS bill. What, if anything, does your divorce decree say about back taxes? Does the IRS even care?
Debts and divorce
A creditor, like the IRS, is not bound by a divorce decree, as that is an agreement between you and your ex-spouse. If your ex was meant to pay back taxes per your agreement but does not, the IRS can come after you.
Authorities do not care who should pay and who does pay, provided they get their money. Then you will need to take your ex-spouse to court to have the decree enforced and get your money back.
This stems from the legal principle of joint and severable liability, which states that a married couple tacitly takes responsibility for debts incurred by either spouse.
This principle applies to everything that happens after the date of marriage and before the date of divorce. Fortress tax relief attorneys understand that a tax debt might not be your fault. They advise clients on IRS processes to follow to find relief.
Innocent Spouse Relief
The considerable onus of proof for Innocent Spouse Relief is on you, and a lawyer’s advice is invaluable. Once successful, your responsibility for back taxes is lifted, and the IRS will pursue your ex-spouse for its money.
You will need to prove that your ex-spouse understated their taxes or misled authorities, known as an erroneous item. Provide evidence that you had no knowledge or reason to know about what they had done when signing that return.
Each case is decided on its merits and should be prepared in detail. The IRS does its due diligence in investigating such matters before offering Innocent Spouse Relief. Afterward, authorities inform you how much of the back taxes total you will not be held responsible for, and you remain liable for any amount that remains.
Separation of Liability Relief
The IRS might declare a different allocation for a tax debt from an item that was not correctly reported on a joint return. It is still necessary to prove that you did not know anything about an erroneous item to exonerate yourself from the debt.
To qualify for Separation of Liability Relief, demonstrate that you are legally separated or divorced, widowed, or have not resided with the spouse you jointly filed with for at least twelve months before your application.
If successful, you will only be liable for a portion of the outstanding amount that the IRS allocates you. Your ex-spouse will be held responsible for whatever balance remains.
Equitable relief
If you are not eligible for Innocent Spouse Relief or Separation of Liability Relief, apply for Equitable Relief. It can be applied to an incorrectly reported item on a tax return that can be regarded generally as your ex-spouse’s fault.
The IRS will examine your current marital status and current financial situation. It also investigates who was at fault and determines if one or both ex-spouses benefitted from the tax return in question.
For Equitable Relief, the IRS will consider your divorce decree’s stipulations regarding outstanding taxes and whether you have a proven taxpayer record. You can raise issues about your physical or mental health when you signed the joint return, provided there is sufficient proof.