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Innocent Spouses - Relief From Taxes
By: Richard Chapo
Historically, tax issues arising from bad marriages fell into the category of
“better or worse” for marriages. The IRS granted no innocent spouse tax relief,
but has changed its views.
Tax Relief
When a marriage has problems, finances are almost always one of the elements
that contribute to the strife. This can be particularly true where spouses file
a joint tax return, which the both sign as tax payers. If the information
provided on the tax return is false or inaccurate, the IRS has historically
viewed both spouses as liable for the resulting assessments. If the relevant
taxes were not paid, the IRS would also look to both spouses to pay the
delinquent amount. In worse case scenarios, this can include criminal charges
for tax evasion.
Fortunately, the IRS has modified its view of the liability of joint filers. The
IRS now recognizes that innocent spouses can’t control their deadbeat former
spouses. It allows such innocent spouses to claim three types of tax relief:
1. Innocent Spouse Relief
2. Relief by Separation of Liability
3. Equitable Relief
If the IRS comes after you for the tax liability of a former spouse, you can
seek tax relief under these three theories if you meet all the following
requirements. First, you filed a joint return with inaccurate information.
Second, you didn’t know of the inaccuracies and didn’t have any reason to.
Finally, taking into consideration the situation, holding you liable for the tax
would be unfair.
The IRS will evaluate your application and render a ruling on your application.
The IRS may agree to simply waive any tax claim against you and go after the
deadbeat spouse as the sole debtor. Alternatively, the IRS may split the tax
into a his and her account, only requiring you to pay one half of the amount
due. While this may not sound great, it will immediately cut your tax bill in
half.
In rare cases, you can seek equitable relief from the IRS. Equitable relief
simply is another way of saying making you pay the tax would be manifestly
unfair. You must show you and the spouse did not transfer assets as part of an
fraudulent scheme, didn’t transfer assets with the intention of evading taxes,
didn’t intend to commit fraud, didn’t pay the taxes due and you didn’t know what
your spouse was up to. Equitable relief claims need to be handled very carefully
as the IRS views them with a very cynical eye. Nonetheless, they are a last step
that can be taken when all else has failed.
It is highly recommended that you use a professional when seeking innocent
spouse tax relief, as the IRS can be very cynical in evaluating such claims.
Unfortunately, we do not provide this service, but you can click the links on
the right hand of this page to find professionals that will help you out.
About the Author:
Richard A. Chapo is with
www.businesstaxrecovery.com - recovery of
business taxes through tax help and tax relief. Visit www.businesstaxrecovery.com/articles
to read more business tax articles.
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