Not My Problem: When the Tax Debt Isn’t Yours

The letters addressed to her new husband from the IRS were sent certified mail, but he never opened them; they just kept piling up in his office. When asked about them, Bill said they were “just about work.” (He was a tax accountant, so it made sense.) Finally, Sarah decided to take matters in her own hands. After all, now they were married, and she could legally open his mail. When she did, she nearly fainted — Bill owed $45,000 in back taxes. Luckily for her, the debt was incurred before they were betrothed.

What is Innocent Spouse Relief in California?

When married taxpayers file a joint tax return, both taxpayers are liable for the tax plus any interest or penalties due on the joint return, even if they later divorce. But if you can demonstrate with reasonable cause that you were “innocent” and unaware of any understatement or misinformation given in the joint tax return, the IRS may consider you “innocent’ and excuse you from paying the tax, interest, and penalties. However, innocent spouse relief in California is very difficult to obtain and is issued on an individual case-by-case basis.

Qualifying for Innocent Spouse Relief in California

The IRS will take several factors into consideration. Already being divorced or in the process of getting a divorce from the spouse that filed the false return on your behalf work in your favor. However, just saying that your husband lied to you, or that you didn’t know what you were signing, is not enough to obtain equitable and innocent spouse relief from the IRS. If you had reason to know about the tax cheating, or suspect that the return was not accurate, you will not qualify for relief. In addition, you’ll not qualify if you benefited financially from the filing of an inaccurate return.

A taxpayer filing a joint tax return and seeking innocent spouse relief must meet all the following conditions:

  • The understatement of tax was due to erroneous items belonging to the other spouse; and
  • You didn’t know, and had no reason to know, that there was an understatement when the return was signed; and
  • It would be unfair to hold you responsible for the understated tax.

IRS Equitable Relief

The IRS will automatically consider this option for those denied or ineligible for innocent spouse relief. For the most part, the only time to reapply would be if you received a denial in the past due to the fact that you were still married. In order to qualify for IRS equitable relief, you must meet all of the following conditions:

  • You don’t meet the requirements for the other types of Innocent Spouse Relief.
  • With all situations and facts considered, the IRS deems it would be unfair to hold you liable (for example, if you were in an abusive marriage and threatened).
  • You and your Spouse/ex-spouse did not transfer assets to deceive the IRS or another third party
  • You didn’t file or fail to file a tax return with the intent to defraud the government
  • The tax debt from which you seek relief relates to something attributed to your spouse

To find out if you are a good candidate for Innocent Spouse Relief in California, a tax relief lawyer will assess the facts and circumstances surrounding the filing of your joint return and come up with a plan to find the best tax solution. It is critical that your Innocent Spouse Relief request is evaluated and assessed by an experienced tax attorney like those here at Delia Law to avoid payment of the IRS tax debt, interest and penalties if you qualify. Contact us today for a no-cost tax attorney consultation.

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