One of the most common issues that tax attorneys help their clients with is disputes from the IRS. The IRS is the federal agency that governs tax collection, and they have ample resources available to go after people who evade taxes. If you have tax liabilities with the IRS, you might not be sure how to pay them. The issue is compounded by the fact that back taxes come with interest, penalties, and potentially huge fines.
There are some cases in which you are not the one who committed the tax fraud at all. Instead, you find yourself liable for back taxes because of the actions of an ex-spouse. When you two filed at least one of your joint returns, your spouse purposefully misrepresented their income or took a deduction they weren’t qualified for.
Since joint tax returns combine the income and assets of a married couple, both spouses are considered equally liable for the discrepancies. This liability continues even once you’ve divorced your spouse. You will be liable for the taxes you paid, any taxes you didn’t pay, and any penalties you incur because your household didn’t pay your full share of taxes.
There has been legislation passed by Congress to help protect innocent spouses. If a spouse can prove that they had no knowledge of the wrongdoing and were not part of the scheme to defraud the government, then they won’t need to take on half of the tax burden. Instead, all of the back taxes and additional fines will be the responsibility of the spouse who committed the tax fraud.
If you are an innocent spouse who is now facing serious tax problems because of your partner’s actions, it’s important to talk to a lawyer. They can help you establish your case and explain how to have your defense approved so you can find relief.
In order to qualify for relief as an innocent spouse, you must prove several elements of the situation. These include:
Every one of these aspects must be proven beyond a reasonable doubt. If you can’t prove any of the conditions, you won’t be able to get tax relief with an innocent spouse defense. Your lawyer can help you determine what evidence you have to prove the elements of the circumstances and defend your case.
The first element of the case is easy to prove. You will only receive a bill for a tax liability if you and your spouse filed a joint tax return. The one exception is if you own taxable property together, and you are now being billed for fraudulent filings your spouse made about it.
If that’s the case, you can’t use the innocent spouse defense. You have to have a tax return as evidence. But there are other parts of tax law that might help you.
With the second point, there are definitions of terms that need to be met. The specific term is “grossly erroneous” information, which can be anything in two broad categories. One of the categories is omission of income that the guilty spouse has. The other is the use of deductions or tax credits that the guilty spouse took even though they did not qualify for them.
If any liability was already disclosed on the tax form, you can’t use the innocent spouse defense. The defense only applies to tax liabilities that you find out about after the fact, because of the misinformation your spouse put on your tax return.
Some examples of when a deduction is erroneous include:
Some deductions might not be allowed because they do not have enough evidence. For example, if you can’t provide receipts of the purchase, or you can’t prove that the purchase was for your business, the IRS might not allow you to claim it. But that doesn’t mean you didn’t make the deduction based on the law.
In order for the problems to qualify as “grossly erroneous,” the judge must determine that the tax evasion was purposeful. Mistakes are not applicable. If your spouse made a mistake on your tax return, you will still be liable for the shared burden because the innocent spouse defense doesn’t apply.
Your lawyer will need to use your messages and documentation to show that you didn’t know about the issue as well.
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