Innocent Spouse Relief

Have you just experienced the difficulty of a separation or divorce, only to discover, courtesy of correspondence from Uncle Sam, that your soon-to-be or former spouse may have incorrectly reported your joint tax liability during the time you were married?  If so, you’ve now found yourself in a complicated situation that’s been increasingly present in the last decade or so.  All too often one spouse will control the family finances, including preparing and filing tax returns, which the other spouse will simply sign without realizing that the tax returns may not be correct.

Beware. Always verify that your return is accurate, especially if you file jointly. If a return shows tax liability, or if an IRS audit results in additional amounts due on the return, the IRS finds each spouse individually liable for the taxes.  If your ex-spouse doesn’t clear the debt promptly, the IRS will pursue collections from you.

However, the IRS follows the general American dictum that the innocent should not suffer. When that party’s actions did not result in the tax debt, certain provisions of the Internal Revenue Code allow for tax relief releasing a party from responsibility for principal taxes, interest, and penalties.  This is known as the Innocent Spouse Relief.

No matter your intent as the taxpayer, you must prove that you were an innocent party to the tax liability. The IRS examines multiple facets when it comes to the various types of Innocent Spouse Relief:

  • No assets were transferred between spouses to avoid tax debt or to perpetrate fraud.
  • You did not intend to commit tax fraud when you failed to file accurate tax returns.
  • The tax liability was a direct result of your spouse’s actions and the income was related to your spouse.
  • You were unaware of your spouse’s noncompliance with the IRS.
  • You endured abuse by your spouse, and your fear of retribution prevented you from objecting to signing the tax return.
  • And community property law does not impact the IRS’s decision.

You can claim Innocent Spouse Relief from heavy tax debt, but navigating the process is difficult.  Therefore, unless they have legal assistance, statistics show that very few taxpayers are successful in their application to the IRS based on this provision.  There are 3 situations that may qualify you for relief:

  • Innocent Spouse Relief. The IRS will look at whether you are divorced, legally separated, or abandoned by your spouse. Also, and more importantly, the IRS will determine whether you received benefit from the underreported tax liability. This can be an extremely tricky issue to negate, as the definition of benefit is all-encompassing and can include basic life necessities such as food and shelter.
  • Relief by Separation of Liability. The IRS will collect from your spouse the amount of taxes your spouse was liable for, and from you what you were liable for.  For this type of relief, you and your spouse cannot be members of the same household for the time period involved, and you and your spouse must be legally separated or divorced.  If you are widowed, you are considered no longer married.  The IRS will thoroughly investigate both parties’ financial records, in effect performing an extended audit on bank accounts, proof of expenditures, evidence of who in the marriage paid what bills, and so forth.
  • Equitable Relief. The option for those who do not qualify under original innocent spouse relief or relief by separation of liability.  Under this type of relief, you may obtain relief if the tax returns were filed correctly, but the entire amount due was not paid.

If you believe that your ex-spouse’s financial control unfairly burdened you with tax debt, take advantage of the opportunity to seek relief from the IRS.  But do so under the guidance of legal counsel who will protect your rights and ensure the best possible outcome for you.  Consult with a tax attorney at Law Offices of Christy Lee, P.C.  Our team of professionals will:

  • Discuss with you the facts surrounding your case and review documentation from the IRS concerning the matter.
  • Assess the most viable options for moving forward to claim Innocent Spouse Relief and inform you about the possible ramifications of each.  We will decide with you the best techniques to adopt to secure debt relief.
  • Complete all required forms and communicate with the IRS on your behalf, relieving you of the stress associated with the debt.
  • And submit all necessary documentation to the IRS concerning the matter, redacting irrelevant material from your financials and providing the paperwork in the format most conducive to satisfactory resolution.

Innocent spouse relief is designed to mitigate unfair, burdensome tax debt.  If you now find that your soon-to-be or former spouse left you owing a large tax liability, you owe it to yourself to ask for relief.  At Law Offices of Christy Lee, P.C., we ensure that your rights are observed as you work to become and to remain compliant with the Internal Revenue Code.