Divorce and the Innocent Spouse Tax Relief!

A common concern that attorneys see divorced spouses dealing with from time to time is the filing of fraudulent or incorrect tax returns by their former spouses.

The ex-spouse files their income taxes first and files jointly, taking advantage of the tax benefits allowed by doing so.

By the time the second spouse files their return, they have technically already filed, so it triggers a response from the IRS.

Lawyers usually advise that the unsuspecting ex-spouse has no idea a problem exists until they receive a letter from the IRS claiming they have committed tax fraud.

Understandably, this can be quite a shock!

Is There Any Recourse When This Happens?

Whether it happens unintentionally or the ex-spouse knew exactly what they were doing, lawyers receive calls from panicked clients wondering what happened and what needs to be done about it.

Since it is a common enough occurrence, the IRS has actually addressed this in the form of the Innocent Spouse rule which protects people from liability if their spouse or ex-spouse has committed tax fraud in some way.

Law firms advise their clients that any spouse or ex who is unaware that this has occurred is deemed innocent of tax fraud or filing mistakes if they can prove their innocent spouse status. 

What Is Needed to Prove an Innocent Spouse Claim to the IRS?

According to divorce attorneys, how can an ex-spouse prove their innocent spouse status?

The IRS requires a person to meet the following conditions: 

  • There is a joint tax return filed for the year that the IRS is questioning.
  • Due to the tax mistake or fraud, an understatement of actual taxes owed exists.
  • The reporting spouse claims that they did not know nor had any reason to know that their ex-spouse filed jointly. As a result of this lack of knowledge, it would be unfair to hold the spouse liable for this mistake or fraud. 
  • The reporting spouse files IRS form 8857 immediately with their request for innocent spouse relief. 

A Summary of Innocent Spouse Claims

Divorce attorneys understand how sudden letters from the IRS claiming a mistake equating to tax fraud was committed can be unsettling and frightening to a divorced spouse.

When that spouse has no idea a mistake was made, they might naturally worry that they will be held liable for their ex filing jointly when they should not have.

Thankfully, through the IRS Innocent Spouse rule, unsuspecting spouses can prove they were not involved and should not be held liable.

Anyone in need of legal help when facing tax issues after divorce should contact a law firm that can help them prove their innocence as required by the IRS.