The IRS is well-known for aggressively pursuing taxpayers whom the agency has determined owe additional taxes. This is especially true when the IRS feels that the taxpayer was less than forthcoming about their income or deductions or, in its view, tried to game the system. It comes as no surprise then that the IRS will, if possible, pursue both the taxpayer and the taxpayer’s spouse if it is able to do so.
Generally speaking, whether the IRS is able to do so depends on whether a person filed a joint return. When two spouses, or former spouses, file separately, they are each individually responsible for the income and deductions they report. Likewise, a joint return generally means both spouses are responsible, even if one spouse did all the work preparing the return and the other spouse just signed it.
There are some exceptions to this rule. One such exception is innocent spouse relief, which we discussed in detail in a previous blog post.
To summarize, a so-called innocent spouse can avoid collection if he can show that he did not know, and could not have reasonably known, that the return he signed and filed was incorrect because of his spouse’s misstatements. Other criteria also apply.
Another form of relief, called separation of liability, is available to those who are divorced, widowed, or legally separated and who otherwise meet eligibility requirements. In this case, a person is only financially responsible for that part of the tax bill about which she had knowledge.
Finally, in some cases, a spouse can ask for equitable relief if she does not qualify for other types of protection. In this case, the spouse must show that under her unique circumstances it wouldn’t be fair to hold her responsible for her spouse’s misstatements.
A person who feels he qualifies for one of these types of protections should consider speaking to an attorney with experience in federal income tax collections. By developing a compelling legal strategy, individuals who are facing pressure from the IRS may be able to protect themselves from aggressive collection tactics and additional legal action.