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Innocent Spouses And The IRS

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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.

innocent spouse, relief, tax, taxes, irs, divorce, credit, audit, debt,

Article Body:
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.

Innocent Spouses And The IRS

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.

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