Why this matters in a divorce
It usually turns up as a threat. One spouse tries to frighten the other into giving ground on other issues by threatening to report them to the IRS, then claim innocent spouse on whatever tax comes out of it.
In most divorces, once tax issues like this come up, each spouse is told to go and hire a tax attorney on top of the divorce lawyer they already have. That adds a great deal to what both of you pay.
We handle innocent spouse and other tax issues ourselves, so you do not need to bring in another firm and your costs do not jump to protect your position.
Who the IRS comes after
Under IRC 6013(d)(3), tax owed on a joint return is joint and several. In plain terms the IRS can collect all of it from either one of you. Not half from each. All of it, from whichever of you it chooses.
The divorce does not end that. If tax is still owed on a joint return after you divorce, both of you remain responsible. If that joint return is audited years later and money is found to be owed, both of you are still on the hook for it.
That is the problem innocent spouse relief exists to solve. Under IRC 6015 the IRS can relieve a requesting spouse of part or all of the tax, if that spouse meets one of three tests.
What has to be proven
Start from this: proving innocent spouse is very difficult.
There are three tests:
- Traditional innocent spouse relief
- Separation of liability relief
- Equitable relief
Each has its own list of requirements. All three are available where the tax bill came from the IRS finding a deficiency after the return was filed. Equitable relief can only be used where the requesting spouse fails the first two tests.
There is one important exception. If you are asking to be relieved of tax that simply went unpaid on a return you filed, rather than a deficiency the IRS found later, equitable relief is the only test available to you.
Why we handle this in house
One of our attorneys is a former IRS employee with direct knowledge of how the agency works, and has appeared in United States Tax Court. That is not something most divorce firms have, and it is why this work stays with us instead of being farmed out.